An NBA Top shot user launched a lawsuit against Dapper Labs because reportedly, the company failed to let customers cash out on their NFTs in good time as we read more in our latest crypto news.
The class-action lawsuit claims that dapper Labs harmed the NBA Top Shot user by failing to let them cash out in a timely manner. A Virginia woman named Jeeun Frisell sued the makers of NBA top Shot which is an NFT marketplace that lets consumers own unique basketball highlights and according to Friel, NFTs were actually securities and Dapper Labs harmed her and other buyers by failing to register them with the US SEC. In a lawsuit filed yesterday, Friel asked a New York state court to declare that Dapper Labs and its CEO Roham Gharegozlou violated the securities law and pay her and others who bought the NFTs an unspecified amount of damages.
Goofy new lawsuit filed in state court claims that NBA Top Shots are unregistered securities.
— Palley (@stephendpalley) May 14, 2021
For those that haven’t heard of Top Shots, they have been around since last year but it took off this February when the company sold $2.6 million worth of the highlights in 30 minutes. Each one is unique because it is registered as such on Dapper Labs’ blockchain known as Flow. According to Friel, the company prevented customers from cashing out on their NFTs in order to hold on to their money and build up the hype around the To Shots:
“NBA Top Shot does offer these digital assets, known as Moments, to United States investors and in fact has sold over $500 million worth of them … By preventing investors from ‘cashing out,’ Defendants ensured that money stayed on the platform, propping up the market for Moments as well as the overall valuation of NBA Top Shot.”
While the issue of whether cryptos are securities sparked numerous lawsuits over the past few months, the issue is not clear-cut and it seems to be the first time that someone alleged that NFTs are also securities. The Top Shot Lawsuit seems to be far from a slam dunk as the veteran crypto lawyer Stephen Palley said that the case is goofy and almost certain to be thrown out of the court for a technical reason but also because it was quite idiotic to suggest that anything that could appreciate in value will be considered an investment contract which is security.
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— NBA Top Shot (@nbatopshot) May 11, 2021
He pointed out that buying himself a nice pair of shoes would technically be an investment in his feet but that this is not going to make them secure under the law. Palley acknowledged that Friel and others have a legitimate grievance if the allegations are true about Dapper Labs delaying the customers’ ability to sell their NFTs but added that is so, any legal case could be based on consumer protection laws rather than securities laws.
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