Dapper Labs has made a temporary settlement agreement in the NBA Top Shot NFT lawsuit. The lawsuit was filed in 2021 after a group of investors sued Dapper Labs. They claimed that the NFT company and its CEO, Rohan Gharegozlou, broke federal securities laws.
The NFT company has been handling a 3-year-long case against a group of investors who claimed that their top product, NBA Top Shot, violated federal securities laws. The plaintiffs argued that NBA Top Shot NFT comprised securities offered illegally. Now, the defendant has filed a temporary settlement agreement to pay out $4 million to the plaintiff.
Also Read: Dapper Labs CEO Reveals Shocking Decision to Lay off 20% of Full-Time Staff.
According to the lawsuit, Dapper Labs made previous claims stating how its NFT collection would increase in value. Typically, it’s against federal laws for an issuer to incentivize investors by making such claims.
The NFT company was also accused of limiting investors from purchasing and selling the NBA Top Shot NFTs at some point. As of the time of the lawsuit, Dapper Labs reportedly stopped investors from cashing out on their NFTs. The NFT company also allegedly disallowed Moments to be traded on external NFT platforms, keeping all activities within its own marketplace.
Dapper Labs Files a $4 Million Settlement Fund
The NFT company behind NBA Top Shot Moments has finally agreed to make a settlement fund for the group of investors. The settlement filing comes with a set of conditions for both the plaintiff and the defendant. According to the court records, the group of investors will no longer claim NBA Top Shot NFTs are securities.
Just In : Dapper Labs agrees to $4 million settlement in class action securities lawsuit.#USA #Crypto pic.twitter.com/DBwBkSWDg5
— AltCoiners.live (@alt_coiners) June 4, 2024
The tentative agreement has yet to be actualized. The two parties came to the agreement without the intervention of regulators. Now, upon filing, Dapper Labs will have to wait for the regulator’s approval.
The settlement will take care of the legal fees and provide monetary relief to the investors. According to an executive of the NFT company, the agreed settlement will allow the company to remain laser-focused on its core mission of delivering unparalleled experiences for its core users.
Dapper Labs Implied NBA Top Shot Would Increase in Value
The lawsuit has been ongoing since 2021. The plaintiff claimed Dapper Labs issued Top Shot NFTs illegally. The NFT issuer reportedly broke federal laws by implying their NFTs would become more valuable over time as the blockchain becomes more popular.
Also Read: ARK Invest adjusts portfolio, sells Coinbase and Robinhood shares
The court ruling was in favor of the plaintiff. The court determined that the NBA Top Shot NFT may have met the requirements of a securities offering under U.S. law. The judge also determined that, in fact, Gharegozlou, the CEO of Dapper Labs, and some of its representatives have been quoted implying that Top Shot NFT collectibles would be more valuable over time.
Dapper Labs Insists Flow Blockchain is Decentralized
The NFT company has also strongly refuted concerns about the decentralization of its native blockchain. According to the top executives of Dapper Labs, the Flow blockchain is controlled by the community.
In this settlement case, the CEO, Gharegozlou, stressed that Flow is sufficiently decentralized and is maintained by the Flow Foundation and not Dapper Labs.
Cryptopolitan reporting by Collins J. Okoth
