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Dapper Labs Settles NBA Top Shot NFT Lawsuit for $4 Million

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Dapper Labs, the company behind NBA Top Shot, has settled a class action lawsuit with customers who claimed that Top Shot NFTs were illegally offered securities. The settlement includes a $4 million payout to plaintiffs and clarity that Top Shot NFTs are not securities moving forward. This settlement allows Dapper to focus on delivering experiences for its users without legal uncertainty.

A federal judge previously ruled that Top Shot NFTs could be considered securities, as they live on Dapper’s blockchain network, Flow. The judge also noted statements implying the collectibles would increase in value over time. Despite maintaining that Flow is decentralized, Dapper has agreed to certain business changes as part of the settlement, including relinquishing FLOW tokens and allowing third-party marketplaces to transact Top Shot NFTs.

The lawsuit, filed during the digital asset boom in 2021, was one of the first tests of the security status of NFTs. While many crypto assets have faced scrutiny from regulators, NFTs have largely avoided broad repudiation. The settlement with Dapper Labs provides legal clarity and allows the company to continue focusing on its core mission of providing unparalleled user experiences without the threat of future securities claims.

By settling the lawsuit, Dapper Labs has agreed to pay out $4 million to plaintiffs, covering monetary relief and legal fees. In exchange, plaintiffs will forfeit any future claims that Top Shot NFTs are securities. This settlement also includes certain business changes demanded by the plaintiffs, such as transferring FLOW tokens and allowing third-party marketplaces to transact Top Shot NFTs.

The lawsuit highlighted the debate over the status of NFTs as securities, with the judge noting the unique nature of Top Shot NFTs living on Dapper’s private blockchain, Flow. Despite the company’s assertions of decentralization, the settlement will bring about changes to how Dapper operates moving forward. The settlement allows the company to move past legal uncertainties and focus on delivering experiences for its users.

Overall, the settlement with Dapper Labs marks a significant development in the ongoing debate over the status of NFTs as securities. The agreement provides legal clarity for the company and allows them to focus on their core mission. While the lawsuit was a test for the NFT market during the digital asset boom, the settlement will bring about changes to how Dapper operates while ensuring that Top Shot NFTs are not considered securities in the future.

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