U.S. Judge Allows Lawsuit vs NBA Top Shot NFTs

The creator of a marketplace for National Basketball Association Top Shot non-fungible tokens must face a lawsuit claiming that the tokens are securities, a U.S. judge ruled.

Photo Insert: The lawsuit said Dapper should have registered the NFTs as securities because their value was tied to the success of Dapper's blockchain.

US District Judge Victor Marrero in Manhattan rejected Dapper Labs Inc.'s bid to dismiss a proposed class action by purchasers of NBA Top Shot Moments, which are digital video clips of NBA game highlights, Jonathan Stempel reported for Reuters.

The lawsuit said Dapper should have registered the NFTs as securities because their value was tied to the success of Dapper's blockchain. It also said Dapper reaped hundreds of millions of dollars by preventing purchasers from "cashing out" for months on end.

In a 64-page decision that he said appeared to be the first of its kind, Marrero said the purchasers made "facially plausible" allegations that their NFTs were securities.

"In the most general terms, the court is asked to assess whether Moments are more like cardboard basketball cards, i.e., commodities, or more like crypto tokens," he wrote. "Here, it is a close call and the court's decision is narrow."

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