• A federal judge ruled that under the Howey test, Dapper Lab’s NBA Top Shot Moments may qualify as a security.
• The ruling came in response to a class-action lawsuit that alleged the NFTs were unregistered securities.
• Judge Marreo stated that each scheme must be assessed on a case-by-case basis.
U.S Judge Ruling on Dapper Labs’ NBA Top Shot Moments
A U.S federal judge has ruled that under the Howey test, Dapper Lab’s NBA Top Shot Moments may qualify as a security.
Class Action Lawsuit against Dapper Labs
The ruling came in response to a class action lawsuit filed by plaintiff Jeeun Friel alleging that Dapper Labs sold NFTs as unregistered securities and intentionally prevented investors from withdrawing funds for “months on end” to inflate market value of the platform.
Howey Test Reviewed by Judge Marreo
Judge Victor Marreo reviewed the Howey test which determines whether or not an NFT qualifies as an investment contract subject to U.S Securities Laws.
Investment Contract Established Under Certain Schemes
Marreo concluded that when certain schemes are offered, it creates a legal relationship between investors and promoters to establish an investment contract and this is considered to be a security according to Howey.
Dapper Lab’s Response
In response to Judge Marreo’s decision, spokesperson of Dapper Labs told Cointelegraph: “Courts have repeatedly found that consumer goods – including art and collectibles like basketball cards – are not securities under federal law.” We are confident the same holds true.