In a significant development, Dapper Labs, the creator of the NBA Top Shot Moments NFT collection, has agreed to a $4 million settlement in a class-action lawsuit.
What Happened: The settlement fund will be available to eligible claimants, according to court documents provided by Dapper Labs, The Block reported.
The lawsuit, originally filed in the U.S. District Court for the Southern District of New York in 2021, accused Dapper Labs of making significant profits by selling unregistered securities and artificially supporting the market for its NFTs.
“The settlement in the Friel vs. Dapper Labs case further asserts Dapper Labs' conviction that NBA Top Shot Moments are not securities under federal law,” the company stated. This statement comes as a surprise, as the judge overseeing the case last year found that NBA Top Shot Moments NFTs met the requirements to be considered a security.
Dapper Labs’s co-founder and CEO Roham Gharegozlou, a co-defendant in the lawsuit, expressed satisfaction with the settlement. “We are pleased with the results of today's settlement, which marks a significant step forward for Dapper Labs and the Flow community,” he said.
Why It Matters: This lawsuit settlement was a silver lining amid increasing scrutiny and calls for tighter regulations of NFTs in the U.S.
Last month, the U.S. Treasury Department warned that NFTs are highly susceptible to fraud and scams and advocated for tighter enforcement of existing laws in the sector.
Legendary footballer Cristiano Ronaldo is also facing a $1 billion class-action lawsuit for promoting his brand of NFTs on Binance. The lawsuit states that Ronaldo significantly promoted investments in unregistered securities.
NBA Top Shot, released in 2020, is a collaboration between the NBA and Dapper Labs. NBA luminaries Michael Jordan, Kevin Durant, and Klay Thompson are among the prominent investors. Sales volume for the NFT collection rose 12% over the last 24 hours, according to CryptoSlam.
Photo Courtesy: T. Schneider on Shutterstock.com
Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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