There are a lot of details in this lawsuit but it may not even get to court. Focusing on the Case for Moments as Securities However, Nifty Gateway does seem like a likely target for consideration by the SEC. NFT art platforms that do not fractionalize NFTs may well be in the clear based on the Howey Test. If you consider my argument below that Moments are securities, you'll see that same logic extends to Larva Labs' Meebits and many generative art projects that are dependent on a company's ongoing support to exist and rise in value. If this case and the subsequent media coverage, given it indirectly involves the NBA, pushes the SEC to action it will not be limited to NBA Top Shot alone. Her statements should be taken as fair warning especially if her proposal to institute a safe harbor provision that would give companies time to come into compliance with relevant rulings without penalty is not instated. Given that the SEC's past actions against cryptocurrency companies have focused on high profile companies with lots of money, Dapper Labs would be a choice target to begin regulatory action in the NFT space.Īs I pointed out in an NFT Entrepreneur website post on NFT legal issues, SEC Commissioner Hester Peirce discussed NFTs as potential securities. ![]() Regardless of the merits or outcome of this particular legal action, I believe this suit will alert the SEC to the possibility that NBA Top Shot's Moments are unregistered securities. You can join the class action and should also be able to keep up with progress of the lawsuit via The Rosen Law Firm's dedicated page which also links out to its social media accounts. Search the file system yourself by choosing "Search as Guest" in the left sidebar. Īdditional documents filed in the suit can be found here on the New York State Courts Electronic Filing site. The above information and all statements quoted from the lawsuit are taken from this document: INDEX NO. ![]() As a result of Defendants’ issuance, promotion, and sale of unregistered securities, Plaintiffs and the Class – many of whom are retail investors who lack the technical and financial sophistication necessary to have evaluated the risks associated with their investment in Moments, and were denied the information that would have been contained in the materials required for the registration of the Moments – have suffered significant damages in an amount to be proven at trial.” Here's the key claim made in the lawsuit: Friel is a resident of Virginia whose "allegations are based on personal knowledge as to herself and her own acts," so presumably she bought and traded NBA Top Shot Moments.Īpparently Friel also lost money in the process. filed the suit in New York, New York on behalf of Jeeun Friel. The lawsuit was filed and officially received May 13.
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