The Blockchain Association’s general counsel says it “would be absurd” for a US court to rule that digital assets on private blockchains are securities following a federal judge’s decision to allow a lawsuit against Dapper Labs’ NBA Top Shots NFT.
U.S. Attorney Jake Chervinsky made the comment after federal judge Victor Marreo 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 slew of lawyers on Twitter who reiterated that the judge’s denial of the motion did not mean the ruling was based on the lawsuit, only that it was “superficially plausible”.
“The referee didn’t decide anything. He let the case pass by a motion to dismiss because the securities claims were at least ‘plausible’, an extremely low bar, and not at all a final decision,” he explained.
“Apart from this dispute, it would be absurd if all valuable digital assets stored in centralized databases were securities.”
“This will turn every major video game developer, event ticketing platform, travel rewards program, etc. into an SEC-regulated public reporting company,” he explained.
This is not true.
The judge didn’t decide. He let the case pass by a motion to dismiss because the securities claims were at least “plausible,” an extremely low bar, and not at all a final decision.
Am I really supposed to say “basketball cards are not securities”??? https://t.co/W1yYVcW1Ki
— Jake Chervinsky (@jchervinsky) February 22, 2023
Another American lawyer, Jesse Hynes, also suspended in a Twitter post dated February 22, noting that motions to dismiss a case are “rarely successful” because the plaintiff only needs to provide enough evidence for the case to proceed.
“The judge ruled in Dapper that the plaintiff presented sufficient evidence that, IF ALL THE STATEMENTS ARE TRUE, there is a securities infringement.”
“Now we go to the discovery to find out what the real facts are. Once this is done, Dapper will most likely file a motion for summary judgment,” the lawyer added.
Meanwhile, another American lawyer, James Murphy, known as “MetaLawMan”, noted that claims that Dapper Labs released the NBA Top Shot Moments NFT on a private blockchain were a “fundamental” factor behind the court’s decision to dismiss the motion to dismiss . claim.
4/ The judge cited the fact that Top Shots is trading on a private issuer-operated blockchain as a key factor in his decision.@XRP trades on a public blockchain.
For this reason, Top Shot’s opinion can be considered positive for Ripple.
Not a legal opinion, just a tweet.
— MetaloMan (@MetaLawMan) February 22, 2023
This prompted MetaLawMan to speculate that this “could be considered positive” for Ripple in its own case against the U.S. Securities and Exchange Commission (SEC), since XRP is issued on a public blockchain.
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The class action lawsuit was filed in May 2021 by plaintiff Jiun Friel, who alleged that Dapper Labs was selling NFTs as non-registered securities.
Judge Marreau denied the motion to dismiss the lawsuit on February 22. He said that the particular scheme under which Dapper Labs is offering Moments NFT may create sufficient legal relationships between investors and themselves to meet the criteria for an investment contract under the Howey test.
However, it is unlikely that the final ruling in this case will set a precedent for digital assets or NFTs, as Judge Marreo said that not all NFTs will be securities and that each case will need to be assessed on a case-by-case basis.
Shortly after the layoff, the FLOW token issued by Dapper Labs fell 6.4% from $1.24 to $1.16 in 15 minutes. However, the FLOW token has since recovered to $1.29. according to at CoinGecko.
Credit : cointelegraph.com
