Stand By For A Key Decision On Whether NFTs Are Securities...
Jurisdiction | United States,Federal |
Law Firm | Frankfurt Kurnit Klein & Selz |
Subject Matter | Corporate/Commercial Law, Litigation, Mediation & Arbitration, Technology, Class Actions, Securities, Fin Tech |
Author | Mr Jeremy Goldman |
Published date | 17 January 2023 |
We promised to keep you posted on developments in Friel v. Dapper Labs, a case that could decide whether NFTs -- in particular, Dapper Labs' NBA Top Shot Moments -- are securities under U.S. law.
See Are NBA Top Shot Moments Securities? Legal Arguments Take Shape in Class Action Against Dapper Labs That Could Rock the World of NFTs
As of November 30, 2022, Dapper Labs' motion to dismiss the complaint had been fully briefed meaning that, at any moment, a federal district court in NY could issue a decision deciding the fate of NFTs! Here's the quick rundown:
On May 12, 2021, Jeeun Friel filed a putative class action lawsuit against Dapper Labs alleging that the company violated the Securities Act by selling "NBA Top Shot Moments," non-fungible tokens.
On August 31, 2022, Dapper Labs filed a motion to dismiss the complaint. Here's the gist of why Dapper Labs believes Moments are not securities:
Plaintiffs are trying to make a federal securities case over basketball cards. Basketball cards are not securities. Pokémon cards are not securities. Baseball cards are not securities. Common sense says so. The law says so. And, courts say so. Courts recognize that collectibles like art are not securities subject to the federal securities laws. Plaintiffs' Complaint should be dismissed with prejudice.
On October 31, 2022, Friel opposed the motion, arguing:
Moments are securities because of the many ways in which they are unlike traditional trading cards: They are crypto assets, alienable instantaneously, hyped up as investments, issued exclusively by Dapper Labs that can only be sold on the secondary marketplace that it controls and profits from. Not only does Dapper Labs retain a going interest in the price of...
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