The offering of Dapper Labs’ NBA-branded “Top Shot” non-fungible tokens might be securities, a federal judge ruled Wednesday.
The ruling on a motion to dismiss comes a year and a half after a class-action lawsuit was filed against Dapper Labs and its CEO, Roham Gharegozlu, in New York. The lawsuit alleges Gharegozlu and Dapper Labs violated federal securities laws by offering a non-fungible token (NFT) collection – the NBA Top Shot Moments – without first registering with the U.S. Securities and Exchange Commission (SEC).
“The Court finds that Plaintiffs’ allegations render each consideration under Howey facially plausible and survive Defendants’ Motion to Dismiss the alleged violation of Sections 5 and 12 of the Securities Act,” ruled District Judge Victor Marrero, of the Southern District of New York. The Howey Test mentioned by the judge was created by the U.S. Supreme Court for determining whether certain transactions qualify as “investment contracts.”
Source: NBA-Branded ‘Top Shot Moments’ NFTs May Be Securities, Judge Rules in Dapper Labs Case