Dapper Labs reaches $4 million settlement in NBA Top Shot NFT class action lawsuit

Dapper Labs, the company behind NBA Top Shot and other NFT series, has settled years of class action lawsuits with disgruntled customers who believe Top Shot NFTs are illegally offered securities, according to court documents released on Monday. Dapper Labs CEO Roham Gharegozlou said that as part of the settlement, Dapper Labs will pay $4 million to the plaintiffs in the lawsuit. The funds include compensation for the plaintiffs' claims and will pay legal fees; if the settlement is approved, the plaintiffs will waive any future rights to claim that Top Shot NFTs are securities. Gharegozlou said: "The settlement provides legal clarity and enables the Dapper Labs team to focus on its core mission and provide an unparalleled experience for its core users." Last February, a federal judge ruled that the lawsuit could proceed because NBA Top Shot NFTs "may" meet the definition of a securities offering. The key to the judge's ruling is that NBA Top Shot NFTs exist on Flow, a blockchain network originally developed by Dapper. The judge considered Flow to be a "private" blockchain, unlike networks such as Bitcoin or Ethereum that are not controlled by any entity. The company has insisted in the past that Flow is decentralized enough and not controlled by Dapper because the network is maintained by the independent Flow Foundation. However, the Dapper co-founder added that the plaintiffs in the class action lawsuit asked the company to make "certain business changes" as a condition of the settlement. These demands have been accepted by Dapper, including that the company transfer all FLOW tokens it holds to the Flow Foundation. Other demands, such as allowing third-party markets outside of Dapper to trade NBA Top Shot NFTs and the company's request to process withdrawals more promptly, were resolved several years ago. (Decrypt)