Dapper Labs Settles NBA Top Shot Lawsuit for $4 Million

Dapper Labs has reached a settlement in a class-action lawsuit over allegations of selling unregistered securities in the form of NFTs, according to The Block.

The company agreed to resolve the claims by paying $4 million, which will be allocated to the plaintiffs’ settlement fund.

Dapper Labs described the settlement as confirmation that the NBA Top Shot Moments tokens are not securities. However, last year, a judge issued a contrary ruling, allowing the plaintiffs to continue the proceedings.

The case was initially filed in 2021 in New York.

The plaintiffs alleged that Dapper Labs earned hundreds of millions of dollars in profits by selling unregistered securities, artificially “supporting the market” for its NFTs. They also accused the company of preventing users from withdrawing their funds for “months.”

Roham Gharegozlou, founder and CEO of Dapper Labs, who was a co-defendant in the lawsuit, was exonerated as a result of the settlement. He described the settlement as a “significant step forward” for the firm and the Flow blockchain community.

The company noted that since March 2022, four “additional” marketplaces have added support for NBA Top Shot Moments tokens.

According to The Block Data, the weekly trading volume of the NFT collection peaked at $133.6 million in January 2021. Since then, the figure has significantly decreased, ranging from ~$350,000 to $510,000 in May.

In November 2023, Dapper Labs announced the launch of a mobile-focused NFT platform, Pinnacle, in collaboration with Disney, based on Flow.