Dapper Labs’ $4 million settlement agreement to end a class-action lawsuit against the firm reaffirms NBA Top Shot nonfungible tokens (NFTs) are not securities, according to CEO Roham Gharegozlou.
In a June 4 X post, Gharegozlou shared that the company had reached a settlement agreement with a class group of investors who had alleged the firm sold unregistered securities.
Gharegozlou noted that the class group’s legal discovery found that the NBA Top Shot Moments NFTs that Dapper made were on “a decentralized public network,” which meant the tokens “are not securities in the same way trading cards are not securities.”
The June 3 settlement agreement filed in a New York District Court shows Dapper Labs is prepared to pay the $4 million settlement amount if the plaintiffs, led by Jeeun Friel, agreed to stop claiming the NFTs were securities.
It also sees Dapper make business changes to ensure the Flow blockchain is decentralized, including depositing and relinquishing control over any remaining Flow (FLOW) tokens it holds to the Flow Foundation.
It also pledged to enact a mandatory annual staff training program that covers federal securities laws.
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The settlement is yet to be approved by District Judge Victor Marrero, who is presiding over the case.
“Beyond our win today, the future of our industry and open digital systems relies on effective communication with policymakers and regulators,” Gharegozlou wrote. “Dapper Labs will continue to engage at all levels to help ensure sensible approaches to this new technology.”
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