The Blockchain Association’s chief legal officer says it “would be absurd” for a US court to rule that digital assets in a private blockchain are securities, following a federal judge’s decision to allow a lawsuit against Dapper Labs’ NBA Top Shots NFTs to play with.
US Attorney Jake Chervinsky made the comment after Federal Judge Victor Mario denied a motion to dismiss a 2021 lawsuit that accused Dapper Labs of selling non-fungible tokens (NFTs) as unregistered securities.
Chervinsky was among a group of lawyers on Twitter who reiterated that the judge’s rejection of the motion did not mean a ruling had been issued in the lawsuit, only that it was “acceptable on the face of it.”
The judge did not decide anything. He explained that he allowed the case to move forward after asking for a dismissal because the securities claims were at least “reasonable,” which is a very low mark and never a final judgment.”
Regardless of this contention, it would be absurd for all valuable digital assets stored in centralized databases to be securities.
“This would turn every major video game developer, event ticketing platform, travel rewards program, etc. into a public reporting company regulated by the Securities and Exchange Commission,” he explained.
this is not true.
The judge did not decide anything. He allowed the case to move forward after asking for a dismissal because the securities claims were at least “reasonable,” which is a very low mark and never a final ruling.
Do I really have to say “Basketball cards are not stock”??? https://t.co/W1yYVcW1Ki
– Jake Chervinsky (@jchervinsky) February 22, 2023
Another US Attorney, Jesse Hynes, too weighing 22 on Twitter, stating that motions to dismiss are “rarely ever successful” because the plaintiff only needs to provide enough evidence for the case to proceed.
“The judge in the Dapper case ruled that the plaintiff pledged sufficient evidence that, if all the allegations were true, there was a securities violation.”
“Now we go to discovery to find out the real facts. Once this is done, Dapper will likely apply for summary judgment.”
Meanwhile, another US attorney, James Murphy — better known as “MetaLawMan” — pointed out allegations that Dapper Labs released an NBA Top Shot Moments NFT on Privately run blockchain She was a “fundamental” factor behind the court’s decision to deny the motion to dismiss.
4/ The judge cited the fact that Top Shots trades on a private blockchain operated by the issuer as a key factor in his ruling.@tweet It trades on a public blockchain.
For this reason, Top Shot’s opinion can be considered as a net positive for Ripple.
Not a legal opinion – just a tweet.
– MetaLawMan (MetaLawMan) February 22, 2023
This has prompted MetaLawMan to suggest that this “could be considered positive.” Ripple in its own state against the United States Securities Commission (SEC), because XRP is being issued on a public blockchain.
Related: Dapper Labs suspends Russian accounts after new EU sanctions
The class action lawsuit was against Dapper Labs Filed in May 2021 by plaintiff Jeon Friel, who claimed that Dapper Labs was selling NFTs as unregistered securities.
Judge Marreo denied the motion to dismiss the lawsuit on February 22. He said the specific scheme through which Dapper Labs Moments NFT is being applied for probably creates a sufficient legal relationship between the investors and themselves, which meets the criteria for an investment contract under the Howey test.
However, it is unlikely that the final ruling of this case will set a precedent for NFTs, as Judge Marreo has said that not all NFTs will constitute securities and that each case will need to be evaluated on a case-by-case basis.
Soon after the dismissal, W.J FLOW code released by Dapper Labs It fell by 6.4% from $1.24 to $1.16 in 15 minutes. However, the FLOW token has since rebounded at $1.29, according to CoinGecko.
