Dapper Labs has reached a $4 million settlement to resolve a class-action lawsuit claiming its NBA Top Shot NFTs are unregistered securities. CEO Roham Gharegozlou confirmed that the court’s legal discovery concluded the NFTs are not securities, akin to trading cards.
The lawsuit, initiated in 2021, accused Dapper Labs of issuing unregistered securities and restricting cash-outs to keep funds locked on the platform. The settlement requires plaintiffs to stop asserting the NFTs are securities. Dapper Labs is also decentralizing its Flow blockchain and initiating staff training on federal securities regulations.
Despite Judge Marrero previously suggesting the NFTs could be securities under the Howey test, Dapper Labs’ lawyers likened them to collectible cards. The company has since allowed trading on other marketplaces, addressing one of the plaintiffs’ complaints.
This settlement marks a significant step in clarifying the legal status of NFTs, potentially influencing future regulatory approaches and business models in the digital collectibles space.
