Dapper Labs, the creator of the once-popular NBA Top Shot Moments NFT collection, has announced the settlement of a class-action lawsuit alleging violations of securities laws related to the sale of digital collectibles.

As per a court document provided by Dapper Labs, the company has agreed to settle the lawsuit for $4 million. The funds from the settlement will be allocated to a settlement fund accessible to qualifying claimants, as outlined in the document.

"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," Dapper Labs said in a statement.

Dapper Labs Settles NBA Top Shot Lawsuit for $4 Million

NBA Top Shot NFTs

Dapper Labs' successful settlement of the case presents a notable turn of events, particularly considering the prior ruling by the overseeing judge. Last year, the judge had determined that NBA Top Shot Moments NFTs met the criteria to be classified as securities, thereby permitting the Friel vs. Dapper Labs lawsuit to proceed.

The plaintiffs in the lawsuit alleged that Dapper Labs generated substantial profits, amounting to hundreds of millions of dollars, through the sale of unregistered securities.

Additionally, they accused the company of artificially inflating the market for its NFTs. Reports from The Verge also suggested that users faced difficulties withdrawing their funds for extended periods. Originally filed in 2021, the case was brought before the U.S. District Court for the Southern District of New York.

NBA Top Shot Moments NFTs

Positive Outcome

Dapper Labs CEO Roham Gharegozlou, who was a co-defendant in the lawsuit, expressed satisfaction with the outcome, stating, "We are pleased with the results of today’s settlement, which marks a significant step forward for Dapper Labs and the Flow community."

NBA Top Shot NFTs are minted on the Flow blockchain, developed by Dapper Labs. The company highlighted that since March 2022, four additional marketplaces have been authorized to display and sell NBA Top Shot Moments. This expansion aims to provide collectors with more options and opportunities to trade and enjoy their Moments, with full support from the NBA and the NBA Players Association.

NBA and the NBA Players Association IP

NBA Top Shot, Dapper Labs, and Flow Blockchain

• NBA Top Shot is a blockchain-based platform that allows users to buy, sell, and trade NBA highlight moments. It can be your favorite Steph Curry 3-pointer or a Lebron James fastbreak block. The platform was launched in 2019 by Dapper Labs with card-collecting gamification mechanics.
  
• Dapper Labs is a technology company known for developing the Flow blockchain, which is used to power NBA Top Shot and other blockchain-based applications.
• Flow, just like Ethereum, Polygon, or Solana is a blockchain but with a focus on helping build web3 apps designed for mainstream adoption through frictionless experience.

Global Collectibles Market

In 2023, the Global Collectibles Market reached an impressive valuation of $462 billion, and it continues to expand due to various influential factors. One major contributor to this growth is the widespread availability of online platforms, which has made it easier for collectors to engage in buying, selling, and exhibiting their treasures. Additionally, there's a significant emotional and nostalgic appeal associated with collectibles, appealing to a wider audience and driving demand.

Another factor driving the market forward is the adoption of blockchain technology, which has revolutionized the way authenticity and provenance are tracked. This technological innovation has helped alleviate concerns regarding counterfeit items, providing collectors with greater confidence in their purchases. Furthermore, the integration of collectibles into mainstream pop culture and media has heightened their visibility, drawing in new enthusiasts eager to participate in this vibrant market.

Global Collectibles Market

Final Thoughts 

The resolution of the class-action lawsuit against Dapper Labs and the subsequent developments surrounding NBA Top Shot Moments hold significant implications for web3 gaming. With blockchain technology and NFTs driving innovation in gaming, legal clarity and regulatory compliance are crucial. The settlement sheds light on how companies navigate gaming, blockchain, and securities laws.

Additionally, Dapper Labs' expansion of NBA Top Shot's marketplace ecosystem showcases the potential for further integration of blockchain in gaming, offering a more inclusive environment for collectors and gamers. These findings underscore the importance of trust, transparency, and innovation as web3 gaming continues to evolve.