Throughout the three-year-long litigation, Dapper Labs maintained that its tokens, which depict moments from professional basketball games, were no more securities than trading cards. In a statement to social media site X, Dapper Labs CEO Roham Gharegozlou, who was also a named defendant, said the settlement affirmed that the tokens are not securities and their underlying network known as Flow is decentralized.
“These were the main allegations we wanted to prove, and continuing to litigate would have been a distraction from our core mission,” said Gharegozlou.
The purchasers, led by name plaintiffs Jeeun Friel, Gary Leuis, and John Austin, had argued that though NFTs aren’t broadly thought to be securities, Dapper had sold Top Shot Moments in a way that made them investment contracts. A February 2023 ruling on Dapper’s attempt to toss the case agreed with the buyers, finding that Dapper’s alleged control over the Flow network and its marketing of the NFTs as a way to turn a profit was enough to send the case to discovery.
