![]() Supreme Court since the 1970s as the “mother court” of federal securities laws. Sabino added that the Southern District of New York reports to the federal Second Circuit Court of Appeals, which he said has been acknowledged by the U.S. “They have their finger on the pulse of Wall Street. “The judges in the Southern District of New York are particularly adept at securities cases, for the reason that they are within walking distance of Wall Street itself,” Sabino said. John’s University, told CoinDesk that Marrero’s opinion that Dapper Labs’ NFTs meet the definition of securities “may not necessarily be precedential, but it shall be quite influential because it emanates from the Southern District, because it's from an eminent jurist and because it just makes a lot of sense.” Though Dapper Labs attempted to argue in its motion to dismiss that the NFTs were the digital equivalent of any other cardboard-based collectible, like Pokemon cards or baseball cards, Marrero fundamentally disagreed.Īnthony Sabino, a professor of law at St. “It follows that, if, hypothetically, Dapper Labs went out of business and shut down the Flow Blockchain, the value of all Moments would drop to zero.” “All that Moments purchasers own is, essentially, the line of code recorded on the Flow Blockchain,” Marrero wrote. The fourth prong – that the profits expected from an investment must be derived from the efforts of others – was particularly important to Marrero’s analysis.īecause Dapper Labs controls the Flow blockchain the NFT collection is built on as well as the marketplace where the NFTs are bought and sold, Marrero suggested that the financial viability of the project was dependent on Dapper Labs’ continued success. Marrero stated that the plaintiffs adequately argued that the Top Shot NFTs met each of the four prongs of the Howey Test. Supreme Court to determine whether certain transactions qualify as “investment contracts.” District Court Judge Victor Marrero of the Southern District of New York considered Dapper Labs’ NFT collection under the four prongs of the Howey test, a 90-year-old method devised by the U.S. Securities and Exchange Commission (SEC) was a violation of federal securities laws – are “plausible.” The federal judge in New York overseeing a class-action lawsuit against Dapper Labs ruled Wednesday to deny the company’s motion to dismiss the suit, writing that the plaintiffs’ claims that Dapper Labs’ NBA-branded Top Shot Moments NFTs are securities – and that selling them without first registering with the U.S. Join the most important conversation in crypto and web3! Secure your seat todayĪ recent legal decision may offer some much-needed – though not much-liked – clarity on the regulatory landscape ahead for non-fungible tokens ( NFT) that may define how centralized companies proceed in entering Web3.
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