CEO Roham Gharegozlou of Dapper Labs’ $4 million settlement agreement to close a class-action lawsuit against the company restates that NBA Top Shot nonfungible tokens (NFTs) are not securities.

Settlement Details and Legal Standpoints

In a June 4 X post, Gharegozlou stated that a class group of investors claiming the company sold unregistered securities had reached a settlement agreement with the company.

Gharegozlou pointed out that the legal discovery of the class action revealed the NBA Top Shot Moments NFTs Dapper created were on “a decentralized public network,” meaning the tokens “are not securities in the same way trading cards are not securities.”

The June 3 settlement agreement submitted to a New York District Court reveals Dapper Labs is ready to pay the $4 million settlement sum should the plaintiffs—led by Jeeun Friel—agree to quit alleging the NFTs were securities.

Business Adjustments and Future Implications

Dapper also makes business changes to ensure the distribution of the Flow blockchain, depositing and transferring ownership of any remaining Flow (FLOW) tokens to the Flow Foundation. It also promised to implement an annual staff training course covering federal securities rules, which is obligatory by nature.

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District Judge Victor Marrero, who is handling the matter, still has to approve the deal.

“Beyond our win today, effective communication with legislators and regulators determines the direction of our industry and open digital systems,” Gharegozlou added. “Dapper Labs will keep interacting at all levels to help guarantee appropriate approaches to this new technology.”