Dapper Labs, the developer of NBA Top Shot, is being sued for allegedly selling the non-fungible tokens (NFTs) as unregistered securities.
The allegations are based on lead plaintiff Jeeun Friel’s “personal knowledge,” according to documents filed Wednesday in the Supreme Court of New York.
The documents claim that NBA Top Shot moments are securities because their value increases with the success of the project. The plaintiff says Dapper should therefore be registered with the U.S. Securities and Exchanges Commission, which Dapper Labs has allegedly failed to do.
The company is also said to have used its control of NBA Top Shot to prevent investors from withdrawing funds for “months on end,” ensuring the money stays on the platform “propping up” its value.
Dapper Labs has 30 days to respond to the summons. The company didn't immediately respond to an email seeking comment.
Read the full complaint:
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish, a cryptocurrency exchange, which in turn is owned by Block.one, a firm with interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets including bitcoin and EOS. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.