Dapper Labs, the company behind NBA Top Shot, has agreed to a $4 million settlement in a class action lawsuit that alleged the NFTs were unregistered securities.
The lawsuit, which began in 2021, was filed by customers who argued that the NFTs should have been registered under securities laws.
The settlement, announced in court documents 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 considered Flow a ‘private’ blockchain, as opposed to more decentralized networks such as Bitcoin or Ethereum.
In response to the lawsuit, Dapper Labs made changes to decentralize its operations. As part of the settlement, the company had transferred ownership of all $FLOW tokens intended for the Ecosystem Reserve to the independent Flow Foundation.
Dapper Labs had already met other demands, such as allowing third-party marketplaces to trade Top Shot NFTs.
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