NFT producer claims that basketball cards are not securities in an effort to end legal action. Dapper Labs, the company behind NFT, asked a federal court in Manhattan to dismiss a lawsuit alleging that its NBA Top Shot Moments are securities because the plaintiffs “cannot construct a federal securities case over basketball cards.”
NBA Top Shot is a blockchain-based digital collectibles marketplace that lets users purchase, sell, and exchange moments — video highlights — as NFTs. This year, the product’s demand skyrocketed, and according to reports, Dapper is seeking more capital at a $7.5 billion valuation.
The National Basketball Association designed the blockchain-based basketball player video clips as collectibles, and they don’t have any of the characteristics of securities. On Wednesday, Dapper Labs submitted a motion to dismiss the case.
“Basketball trading cards aren’t investments. Pokédex cards are not investments. Securities are not baseball cards. Because it makes sense. The law demands it. And courts rule as such, “The business stated.
In addition, the corporation made an accusation against them, according to papers submitted on Wednesday to the Supreme Court of New York, based on “personal knowledge” of the primary plaintiff, Jeeun Friel.
NBA Top Shot moments, according to the agreements, are securities because their value rises as the enterprise succeeds. According to the plaintiff, dapper Labs is accused of failing to register Dapper with the U.S. Securities and Exchanges Commission.
After the increase in initial coin offerings, investors began bringing legal claims, claiming that some digital assets were unregistered securities that broke American law. Other cases are still pending, while others have been dismissed.
In May 2021, purchasers of Moments filed a lawsuit against Dapper Labs and its CEO, Roham Gharegozlou, alleging that the NFTs were securities because their value was dependent on the success of the blockchain they were housed on.
In their motion, Dapper Labs claimed that the NFTs are separate collectibles rather than components of a bigger business, like securities. The business is alleged to have leveraged its ownership over NBA Top Shot to keep investors’ money on the platform for “months on end” and thereby “propping up” its worth.
The plaintiff is asking for rescissory damages in relation to moments bought since the platform’s introduction in June 2020 as a result.
The summons contains a 30-day response period for Dapper Labs. An email asking for comment was not immediately answered by the business.
One of the first NFT products to gain traction as the market grew last year was NBA Top Shot, with monthly revenues exceeding $232 million in February 2021.