CryptoPotato
CryptoPotato
  • Crypto News
  • Margin Trading
  • Guides
    • Bitcoin & Crypto Guides 101
    • Bitcoin For Beginners
    • Editorials
  • DeFi & NFT
  • Buy
  • Language
    • Spanish
    • Turkish
    • German
    • Bulgarian
  • Crypto News
  • Bitcoin For Beginners
  • Cryptocurrency Guides 101
  • Editorials
  • Bitcoin & Crypto Margin Trading
  • DeFi & NFT News
  • Bitcoin Price Analysis
  • Ethereum (ETH) Price Analysis
  • Ripple (XRP) Price Analysis
  • Market Updates
  • Interviews
  • Buy Bitcoin with Card
  • CryptoPotato Spanish
  • CryptoPotato Turkey
  • CryptoPotato Germany
  • CryptoPotato Bulgaria
  • Market Updates
  • BTC Analysis
  • ETH Analysis
  • XRP Analysis
  • Interviews
CryptoPotato
CryptoPotato
  • Crypto News
  • Margin Trading
  • Guides
    • Bitcoin & Crypto Guides 101
    • Bitcoin For Beginners
    • Editorials
  • DeFi & NFT
  • Buy
  • Language
    • Spanish
    • Turkish
    • German
    • Bulgarian
  • Crypto News
  • Bitcoin For Beginners
  • Cryptocurrency Guides 101
  • Editorials
  • Bitcoin & Crypto Margin Trading
  • DeFi & NFT News
  • Bitcoin Price Analysis
  • Ethereum (ETH) Price Analysis
  • Ripple (XRP) Price Analysis
  • Market Updates
  • Interviews
  • Buy Bitcoin with Card
  • CryptoPotato Spanish
  • CryptoPotato Turkey
  • CryptoPotato Germany
  • CryptoPotato Bulgaria
Home » Crypto News » NBA Top Shots NFTs Might Be Securities, Rules Federal Judge in Dapper Lawsuit

NBA Top Shots NFTs Might Be Securities, Rules Federal Judge in Dapper Lawsuit

Author: Andrew Throuvalas

Last Updated Feb 23, 2023 @ 14:44

Dapper’s basketball-focused digital collectibles may plausibly pass the Howey Test, per a new ruling. 

Getting your audio player ready...

Dapper Labs will be forced to face a lawsuit from plaintiffs Gary Leuis and John Austin alleging that the NFT Top Shot NFT Moments on its platform are unregistered securities, following a judge’s refusal to dismiss the case on Wednesday.

United States District Court Judge Victor Marrero ruled that such NFTs may plausibly qualify as securities under the Howey Test. 

Are NFTs Securities?

Per Marreno’s ruling, part of what makes the plaintiffs’ allegations “facially plausible” is that the NFTs in question circulate on the Flow blockchain – a private network developed and maintained by Dapper. Without Dapper’s efforts, such NFTs would theoretically have no value, ticking the final prong of the Howey Test requiring another party’s efforts to uphold an investment’s value.

“The economic realities and technological interplay between FLOW, the Flow blockchain, and Moments, as alleged by Plaintiffs, are what supports the Court’s conclusions,” read the filing. 

The Howey Test is a legal standard used since the 1930s for determining what assets constitute securities. It is often invoked by the SEC today when making rulings pertaining to cryptocurrencies and NFTs, of which the agency’s chairman – Gary Gensler – believes a vast majority are securities. 

Howey requires that an investment be made in a common enterprise, with an expectation of profits based on the efforts of others. The first prong of the test is undoubtedly met given that much money has been spent purchasing Moments NFTs from Dapper, and is disputed by neither the company nor the plaintiffs.

Conversely, Dapper’s motion to dismiss argued there is no “common enterprise” as the fortunes of each NFT investor have no bearing on other investors, nor the efforts of a central promoter. However, the court determined that the plaintiffs adequately alleged that “purchasers’ fortunes were tied to the overall success of Dapper Labs.”

The court also agreed that Moments purchases were objectively led to expect profits by Dapper. This includes Tweets from the @NBATopShot account promoting record-breaking NFT sales with “stock chart” and “money bags” emojis attached. 

No Final Ruling Yet

Though the judge sided with the plaintiffs in its filing, its case against Dapper is far from over. The order only denied Dapper’s motion to dismiss but is not a final ruling on the case’s merits.

NBA Top Shots are NFTs containing moments from NBA history stored in a video clip and are often likened to digital trading cards.

“Courts have repeatedly found that consumer goods – including art and collectibles like basketball cards – are not securities under federal law,” said spokesperson Stephanie Martin said in a statement, according to Bloomberg. 

SPECIAL OFFER (Sponsored)
Binance Free $600 (CryptoPotato Exclusive): Use this link to register a new account and receive $600 exclusive welcome offer on Binance (full details).

LIMITED OFFER for CryptoPotato readers at Bybit: Use this link to register and open a $500 FREE position on any coin!

Tags: NFT SEC
Enjoy reading? Share with your friends
Facebook Twitter LinkedIn Telegram

About The Author

Andrew Throuvalas
More posts by this author

Andrew is a content writer with a passion for Bitcoin. He became familiar with Bitcoin back in 2013, but began diligently studying the blockchain technology and its economic implications in 2017. Ever since, he’s believed in the network’s power to replace the current global monetary system, and provide financial freedom to billions worldwide.
Contact: Medium | LinkedIn | Twitter

Join Our Community

FacebookX YouTubeTelegram


Editorials
5 Best Meme Coin Presales to Watch in May 2025

5 Best Meme Coin Presales to Watch in May 2025

Toobit Review 2025: Is Toobit a Safe Crypto Exchange?

Toobit Review 2025: Is Toobit a Safe Crypto Exchange?

Hyperliquid Bridge: How to Bridge USDC to Hyperliquid

Hyperliquid Bridge: How to Bridge USDC to Hyperliquid

11 Best Crypto Presales to Consider in May 2025

11 Best Crypto Presales to Consider in May 2025

Need for Speed – Only Ultra-Fast Blockchains Will Win the Adoption Race (Opinion)

Need for Speed – Only Ultra-Fast Blockchains Will Win the Adoption Race (Opinion)

The 5 Best Bitcoin Mining Pools in 2025: Complete Guide

The 5 Best Bitcoin Mining Pools in 2025: Complete Guide

The 5 Best Crypto Staking Platforms in 2025: Everything You Need to Know

The 5 Best Crypto Staking Platforms in 2025: Everything You Need to Know

Join Our Newsletter
Become a CryptoPotato VIP
One Weekly Email Can Change Your Crypto Life.
Sign-up FREE to receive our extended weekly market update and coin analysis report
We NEVER send spam. You can unsubscribe at any time.
Invalid email address
Thanks for subscribing!
Footer Logo
About
Advertise on CryptoPotato
About Us | Contact Us | Careers
Editorial Policy
Terms of service | Privacy Policy | GDPR
More Sections
IEO List | Evaluations
Airdrops
Scholarship
Disclaimer
Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. Full disclaimer
© Copyright CryptoPotato 2016 - 2025
Scroll to top
One Daily Email Can Change Your Crypto Life.

Sign-up FREE to receive our extended daily market update and coin analysis report

We never send SPAM. You can unsubscribe at any moment
Invalid email address
Thanks for subscribing!