• A US District Court Judge has allowed a lawsuit to move forward against NBA Top Shot NFT creator Dapper Labs, who is accused of failing to register the tokens with the Securities and Exchange Commission.
• The judge indicated that the tokens could be considered securities, based on the Howey Test.
• NBA Top Shot NFTs are one of the most popular trading-card-themed collections today, issued on Flow blockchain.
NFT Industry Faces Uncertainty
The popular NBA Top Shot NFT trading cards could be deemed securities for regulatory purposes in the US, after a judge allowed a lawsuit against Top Shot’s creator to move forward.
Lawsuit Allowed To Move Forward
US District Court Judge Victor Marrero has now let the lawsuit move forward by denying Dapper Labs’ request to dismiss the suit. According to Judge Marrero, the so-called Howey Test, often used to determine whether something is a security, indicates that the NBA Top Shot NFTs could indeed be securities.
Flow Blockchain Network?
The Top Shot NFT collection is issued on the Flow blockchain, a network that brands itself as an “eco-friendly,” open and permissionless network with more than 11,000 developers building on it. In his comments on the lawsuit, the judge referred to Flow as a “private” network. This suggests that the blockchain, in the judge’s eyes, is highly centralized, and assets issued on it are likely to be categorized as securities.
Dapper Labs Response
Not surprisingly, Dapper Labs rejects the notion that Flow is a centralized network and says on its website that less than one-third of the network’s consensus nodes are “run by a single entity.”
About NBA Top Shot NTFs
The NBA Top Shot NFT collection is one of