Dapper Labs, the company behind NBA Top Shot, has agreed to a $4 million settlement in a class action lawsuit that alleged its NFTs were unregistered securities.
The lawsuit, which started in 2021, was brought by customers who argued that the NFTs should have been registered under securities laws.
The settlement, disclosed in court documents on Monday, includes payments to the plaintiffs and coverage of their legal fees. As part of the agreement, the plaintiffs will drop any future claims that NBA Top Shot NFTs are securities.
Source: Dapper LabsDecentralizing Dapper Labs’ NFT Ecosystem
Last February, a federal judge ruled that the case could proceed, noting that NBA Top Shot NFTs are hosted on Flow, a blockchain developed by Dapper Labs. The judge deemed Flow as a “private” blockchain, unlike more decentralized networks like Bitcoin or Ethereum.
In response to the lawsuit, Dapper Labs has made changes to decentralize its operations. As part of the settlement, the company had relinquished ownership of all $FLOW tokens meant for the Ecosystem Reserve to the independent Flow Foundation.
Dapper Labs had already addressed other demands, such as allowing third-party marketplaces to trade Top Shot NFTs.
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