Court denies Dapper Labs' motion to dismiss lawsuit alleging NBA Top Shot NFTs are securities

A New York district court has denied Dapper Labs' motion to dismiss a class action suit alleging that its NFTs of video highlights, including NBA Top Shot, are unregistered securities rather than fan products.

United States District Court Judge Victor Marrero said Dapper Labs’ Top Shot platform met the requirements of security and that it must answer the plaintiffs’ allegations.

The plaintiffs are seeking damages against the blockchain specialist for encouraging consumers to spend despite the risk of financial loss.

They also argue that Dapper Labs harmed buyers by failing to register the digital collectibles with the Securities and Exchange Commission.

They added that the blockchain specialist had made hundreds of millions of dollars by propping up the market and the value of its Flow token, by preventing users from withdrawing money from their accounts.

Dapper Labs supposedly publicized high-value sales and did not prevent their users from referring to their purchases as investments.

NBA Top Shot lets basketball fans buy, trade, and collect basketball highlights in the form of NFTs. These collectibles are positioned as a digital version of traditional trading cards, which can increase in value depending on real-life events.

Dapper Labs argues that users receive the same utility as they would with trading cards or football stickers and that their value is purely incidental and not their reason for existence.