A New York court still needs to approve the settlement.
Stay in the know on crypto by frequently visiting Crypto News Today
A group of investors sued Dapper Labs, a non-fungible token (NFT) company, and its CEO, Roham Gharegozlou, for allegedly breaking federal securities laws. The parties have now reached a tentative settlement agreement.
A nearly three-year-long legal battle would come to an end if District Court Judge Victor of the Southern District of New York (SDNY) approved the settlement.
CryptoCaster Quick Check:
The NBA Top Shot Moments, the main product of Dapper Labs, was accused by the class action plaintiffs in 2021 of being an unregistered security because, in their view, the NFTs’ value would rise as the project gained traction. In order to keep value locked on the platform, plaintiffs further asserted that Dapper Labs prohibited investors from cashing out for “months on end” and prohibited Moments from being purchased or sold on external NFT platforms at the time the lawsuit was filed.
Dapper Labs’ attorneys strongly refuted the idea that their NFTs were securities in later court documents, claiming instead that they were simply digital basketball cards.
In return for a $4 million settlement fund, the plaintiffs would not be permitted to assert that their NFTs are securities under the terms of the settlement agreement, which was submitted on Monday. Gharegozlou claims that the funds will cover settlement administrator expenses, legal fees, and payments to class members.
According to a company representative, Dapper Labs also consented to additional business adjustments in exchange for the settlement, such as the adoption of mandated employee training courses centered on “compliance with federal securities laws and ethical marketing practices” and faster withdrawal and payment processes.
Dapper Labs’ attorneys strongly refuted the idea that their NFTs were securities in later court documents, claiming instead that they were simply digital basketball cards.To further ensure the decentralization of the Flow ecosystem, Dapper Labs further committed to ceding all control over its remaining FLOW tokens to the Flow Foundation.
Gharegozlou told CoinDesk that the agreement was a “great start” towards greater legal clarity regarding whether the company’s NFTs can be classified as securities, despite the fact that the proposed settlement is between Dapper Labs and investors rather than regulators.
“In order to demonstrate that consumer NFTs are not financial products and, as such, should be regulated under well-established consumer protection regimes at the state level,” Gharegozlou stated, “we are continuing to push for more comprehensive regulatory clarity.” “This includes advocating for federal legislation that clarifies that NFTs for consumer products—like NBA Top Shot—are exempt from federal financial regulation.”
In return for a $4 million settlement fund, the plaintiffs would not be permitted to assert that their NFTs are securities under the terms of the settlement agreement, which was submitted on Monday. Gharegozlou claims that the funds will cover settlement administrator expenses, legal fees, and payments to class members.
According to a company representative, Dapper Labs also consented to additional business adjustments in exchange for the settlement, such as the adoption of mandated employee training courses centered on “compliance with federal securities laws and ethical marketing practices” and faster withdrawal and payment processes.
The business “is not aware of any regulator,” such as the Securities and Exchange Commission (SEC), asserting that Moments NFTs are securities, Gharegozlou continued. Fortune revealed in April that the SEC had previously opened an investigation into Dapper Labs, but it was closed in September 2023.
W
e hope you enjoyed this article. Before you move on, we invite you to consider supporting CryptoCaster’s journalism.
Billionaire owners like Elon Musk, Larry Fink (BlackRock), and Jamie Dimon (JP Morgan Chase) often have a strong influence on the hidden agendas surrounding the paradigm shift brought about by cryptocurrency and emerging Web3 technologies. CryptoCaster stands apart. We have no billionaire owner or shareholders to please. Our journalism is dedicated to serving the public interest in crypto development and institutional disruptions, not profit motives.
We avoid the pitfall of much U.S. and global media, which often resorts to false equivalence in the name of neutrality and retail consumer protection. While fairness and transparency guide everything we do, we recognize that there is a right and wrong stance in the fight against fiat global banking interests and the monetary reconstruction driven by the emerging crypto ecology.
When we report on issues like the FTX, Binance, and Ripple crises, we’re not afraid to name names and uncover the truth. As a crypto sentinel, we offer a fresh, outsider perspective on global monetary disruption—something often missing from the insular American and European media bubble.
CryptoCaster’s paywall-free journalism is accessible worldwide thanks to our unique reader-supported model. This is made possible by readers like you. Your support keeps us independent, free from outside influence, and accessible to everyone, regardless of their ability to pay for news and information.
We are grateful for the ongoing monetary support from our readers. If you haven’t yet considered supporting CryptoCaster, please consider contributing just once from $1 or more in Bitcoin (satoshi) or Ether, or even better, support us monthly with a bit more. Scroll further down this page to find CryptoCaster’s wallet addresses.
Thank you.
Kristin Steinbeck
Editor, CryptoCaster
Please Read Essential Disclaimer Information Here.
© 2024 Crypto Caster provides information. CryptoCaster.world does not provide investment advice. Do your research before taking a market position on the purchase of cryptocurrency and other asset classes. Past performance of any asset is not indicative of future results. All rights reserved.
Contribute to CryptoCaster℠ Via Metamask or favorite wallet. Send Coin/Token to Addresses Provided Below.
Thank you!
BTC – bc1qgdnd752esyl4jv6nhz3ypuzwa6wav9wuzaeg9g
ETH – 0x7D8D76E60bFF59c5295Aa1b39D651f6735D6413D
SOL – DLvdMu85dW6pZMhw2E4S3pp81qQQGpy5UcdTsFEFBu4b
LITECOIN – ltc1qxsgp5fykl0007hnwgl93zr9vngwd2jxwlddvqt
CRYPTOCASTER HEATMAP
