Dapper Labs Sued on Allegations NBA Top Shot Moments Are Unregistered Securities
The complaint alleges that NBA Top Shot “moments” are securities because their value increases with the success of the project.
May 14, 2021 at 3:31 p.m. UTC:format(webp)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/T5WF37S5TFGFJFRBODOFGCY76M.png)
:format(webp)/downloads.coindesk.com/arc/failsafe/user/1x1.png)
Dapper Labs, the developer of NBA Top Shot, is being sued for allegedly selling the non-fungible tokens (NFTs) as unregistered securities.
NBA Top Shot is a blockchain-based digital collectibles platform that allows users to buy, sell and trade video highlights, called moments, as NFTs. Demand for the product has exploded this year, and Dapper is reportedly raising new funding at a $7.5 billion valuation.
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:
DISCLOSURE
Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.
:format(webp)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/XHFH4FMDAFGCZKHQADNCP5HF3E.jpg)
:format(webp)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/3BSP666GJFGSVECTZFFZMGOKTM.jpg)
:format(webp)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/CYHVTRY5IJERZOTKSXU7I7MPQE.png)
:format(webp)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/UWS4BPIVFRCORKBA3MSHFNPKPE.jpg)