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Dapper Labs Faces Hurdle in Class Action Against Top Shot NFT, Highlights Future of NFTs

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According to reports, lawyers said that Dapper Labs might not succeed in the class action against its Top Shot NFT, and other projects should be paid attention…

Dapper Labs Faces Hurdle in Class Action Against Top Shot NFT, Highlights Future of NFTs

According to reports, lawyers said that Dapper Labs might not succeed in the class action against its Top Shot NFT, and other projects should be paid attention to. Lawyers of Skadden, Arps, Slate, Meagher and Flom LLP in the United States said that the court decided last week to allow the class action accusing Top Shot moments of securities to continue to advance, which indicates how NFT might be treated in the future. There are two key factors in this case, namely Howey Test and Dapper Lab’s sole control over the Moments trading market.

Lawyer: Dapper Labs is difficult to win the Top Shot NFT class action case

Interpretation of the news:


Recently, lawyers from Skadden, Arps, Slate, Meagher and Flom LLP have expressed their opinion that Dapper Labs may not succeed in the class action against its Top Shot NFT, and other NFT projects should be watched closely. The US court approved last week the continuation of the class action accusing Top Shot moments of securities, demonstrating how NFTs might be treated in the future.

The significance of this case lies in two critical factors: the Howey Test and Dapper Lab’s control over the Moments trading market. The Howey Test is a standard that the US Securities and Exchange Commission (SEC) developed to determine if a transaction or investment qualifies as a security. The Howey Test consists of four elements, including (1) an investment of money, (2) in a common enterprise, (3) with an expectation of profits primarily from the efforts of others, and (4) where the investor doesn’t have the ability to control the outcome.

The court’s decision to allow the continuation of the class action implies that Top Shot moments might be evaluated as securities, given that they meet the Howey Test’s criteria. Dapper Labs’ exclusive control over the Moments trading market is the other critical factor in the case. According to the Securities Act of 1933, an asset’s classification as a security depends on the control and management of the asset’s promotion, sale, and pricing by a single party.

Understanding these factors and their implications is essential for the future of NFTs. NFTs have grown exponentially in popularity, with millions being sold every day, and the NFT market has a significant level of investment in it. However, without regulation, the NFT market may lead to fraud and losses for investors.

This class action against Dapper Labs serves as a bellwether for the industry’s need for regulations and standards. NFT creators and platforms must address the issue of securities and its legal ramifications. In this respect, the future of NFTs may rely on legal and regulatory frameworks to govern the sale and promotion of digital assets as securities.

The Dapper Labs case highlights that the NFT market must mature and adapt to establish trust with investors, and the SEC should establish optimal regulations to support a healthy and transparent NFT industry.

In summary, Dapper Labs’ class action against Top Shot NFT highlights the significance of the Howey Test and the role of exclusive control over NFTs trading markets in determining securities. It also emphasizes the importance of establishing legal and regulatory frameworks for the NFT market, which can support a transparent and healthy industry.

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