BREAKING: NBA Top Shot Moments case moves forward | NFT CULTURE | Web3 Culture NFTs and Crypto Art

Judge rules that because FLOW is a private blockchain provided by Dapper Labs, Case can move forward.

The court’s decision was based on the fact that Dapper Labs maintained a private blockchain and limited the trading of Moments to the Flow blockchain only, which meant that purchasers had to rely on Dapper Labs’ management efforts to create and maintain value for Moments.

The ruling discusses a recent court case that examined whether NBA Top Shots “Moments” are a type of investment contract, which would make them a type of securities subject to certain rules. The court found that Top Shot’s Moments qualified as an investment contract and were therefore securities. This was because the value of Moments was dependent on the management efforts of Dapper Labs, the company that created and managed NBA Top Shot. The court’s decision was based on the fact that Dapper Labs maintained a private blockchain and limited the trading of Moments to the Flow blockchain only, which meant that purchasers had to rely on Dapper Labs’ management efforts to create and maintain value for Moments.

The case involves a lawsuit filed by a group of investors who purchased non-fungible tokens (NFTs) known as “NBA Top Shot Moments” from Dapper Labs, a blockchain company that created and manages the Flow blockchain. The investors alleged that the NFTs constitute securities under US federal law and that Dapper Labs violated securities laws by failing to register them with the Securities and Exchange Commission (SEC).

In the ruling, the court held that the investors had plausibly alleged that the NFTs constituted investment contracts and thus securities under the Howey test, a legal framework used to determine whether an investment contract exists. The court found that Dapper Labs had created a scheme in which investors were promised profits through the low selling prices of NFT packages and the marketing of significant profits from others through the sale of NFTs on Dapper Labs’ proprietary Marketplace. The court also found that the investors relied on Dapper Labs’ management efforts to cultivate the marketplace and maintain the Flow blockchain, since the NFTs would not exist without those efforts.

The court rejected Dapper Labs’ argument that the NFTs were not securities because buyers had control over their portfolios and could choose which NFTs to buy and when to trade them. The court found that Dapper Lab’s control of the private blockchain on which the NFTs’ value depends, as well as its restrictions on where the NFTs can be sold and how they can be used, distinguished the NFTs from physical basketball cards that can be freely alienated. to whom and over which platform the owner prefers.

The Court’s ruling is significant because it is one of the first legal decisions to address the question of whether NFTs constitute securities under US federal law. The ruling highlights the need for companies offering NFTs to carefully consider whether their offerings may be subject to securities laws and to take appropriate steps to comply with those laws.

Flow may have been the core that moves things forward.

Private blockchains are becoming more popular for businesses and organizations that want to streamline operations and maintain control over their data. However, there are potential securities risks associated with the use of private blockchains for the collection and issuance of tokens. Tokens issued on private blockchains can be considered securities, and if they are not registered with regulatory authorities, it can lead to legal consequences for the projects that issue them. It is important to remember that we are not legal experts and cannot provide legal advice. If you have questions or concerns about the legal implications of using private blockchains for your project, it is important to consult with an attorney who specializes in securities law.

It will be interesting to see what happens with other NFT projects that move to FLOW.

We will provide more information as it becomes available.