NBA Top Shot, the popular platform that allows fans to buy, sell, and trade officially licensed NBA collectibles known as NFTs, is facing a lawsuit that claims its NFTs are unregistered securities. The lawsuit was filed by a group of investors in the Northern District of California against Dapper Labs, the creator of NBA Top Shot, alleging that the company violated securities laws by offering and selling unregistered securities in the form of NFTs.
The lawsuit alleges that the NFTs sold on the NBA Top Shot platform constitute investment contracts and should be considered securities. The plaintiffs claim that the NFTs are being marketed and sold as investments, with the promise of appreciation in value, and that the primary reason people buy them is the potential for profit rather than for their use or enjoyment.
The plaintiffs further allege that Dapper Labs failed to register the NFTs as securities with the U.S. Securities and Exchange Commission (SEC) and did not provide investors with the information necessary to make an informed investment decision, such as the risks associated with the investment.
The lawsuit seeks class action status, and the plaintiffs are asking for damages and an injunction prohibiting Dapper Labs from continuing to sell unregistered securities. Dapper Labs has not yet commented on the lawsuit.
This is not the first time that NFTs have been the subject of legal scrutiny. In December 2020, the SEC issued a statement warning that NFTs sold as investment contracts must comply with federal securities laws, and that the offer and sale of NFTs may be subject to registration requirements under federal securities laws. It remains to be seen how this lawsuit will play out, but it could have implications for the wider NFT market and the future of digital collectibles.