According to Odaily, court documents released on Monday reveal that Dapper Labs, the company behind NBA Top Shot and other NFT series, has reached a settlement with disgruntled customers over a years-long class-action lawsuit. The customers believed that Top Shot NFTs were illegally offered securities. As part of the settlement, Dapper Labs will pay the plaintiffs $4 million. These funds include compensation for the plaintiffs' claims and will cover legal costs. If the settlement is approved, the plaintiffs will relinquish any future rights to claim that Top Shot NFTs are securities.
Dapper Labs CEO Roham Gharegozlou stated that the settlement provides legal clarity and allows the Dapper Labs team to focus on its core mission of providing an unparalleled experience for its core users. In February of last year, a federal judge ruled that the lawsuit could proceed because NBA Top Shot NFTs 'might' meet the definition of securities issuance. The key to the judge's ruling was that NBA Top Shot NFTs exist on the Flow blockchain network, originally developed by Dapper. The judge considered Flow to be a 'private' blockchain, unlike Bitcoin or Ethereum networks, which are not controlled by any entity.
The company has always insisted that Flow is sufficiently decentralized and not under Dapper's control, as the network is maintained by the independent Flow Foundation. However, a Dapper co-founder added that the plaintiffs in the class-action lawsuit demanded the company make 'certain business changes' as conditions of the settlement. These demands have been accepted by Dapper, including the company transferring all its FLOW tokens to the Flow Foundation. Other demands, such as allowing third-party markets other than Dapper to trade NBA Top Shot NFTs and the company's requirement to process withdrawals more promptly, were resolved years ago.