Februar 23, 2023

NBA Top Shot NFTs Ruled ‚Plausibly‘ Securities in Court Suit

• Judge Victor Marrero has ruled that NBA Top Shot NFTs are likely securities in a case against Dapper Labs.
• The ruling cites the Howey Test, which is a Supreme Court ruling used to determine if a transaction constitutes an investment contract.
• Dapper Labs has asserted that Flow, its blockchain powering NBA Top Shot, is fully decentralized and controlled by the community.

Judge Rules That NBA Top Shot NFTs Are ‚Plausibly‘ Securities

United States District Court Judge Victor Marrero has ruled in a case against Dapper Labs that NFTs associated with NBA Top Shots are likely securities. On Feb. 22, Marrero denied Dapper’s request to dismiss the suit, stating that the NFTs offered on Dapper’s platform „plausibly“ satisfy the requirements of a security. In his ruling, Marrero cited the Howkey Test — a landmark Supreme Court Ruling to determine whether a transaction constitutes an investment contract, a type of security.

Howey Test Explained

The U.S. Supreme Court established the test in the case SEC v. W.J. Howey Co. in 1946. This test has four elements that must be met for a transaction to be considered an investment contract: 1) There is an investment of money; 2) The investment is in a common enterprise; 3) There is an expectation of profits from the investment; 4) The expected profits come from the efforts of a third party or promoter.

Dapper Labs Disputing Claims

„Courts have repeatedly found that consumer goods—including art and collectibles like basketball cards—are not securities under federal law,“ countered Dapper Labs in their statement released following this ruling.“We are confident the same holds true for moments and other collectibles, digital or otherwise, and look forward to vigorously defending our position in court as the case continues.“

Dapper Lab’s Intention For Flow Network

Although Dapper Labs created Flow blockchain to support NBA Top Shot and other initiatives, they intended it to be an open and permissionless network that has progressively decentralized its node operators into being controlled by community members instead of just them alone as developers/owners of said project/network/platform etc..


The judge’s ruling gives credibility to theory that networks powering Top Shot are more private than public – something which Dapper would likely refute . However , judge’s ruling suggests there is enough evidence to contradict this claim . This highlights how much control Dapper still holds over NBA Top Shot platform , including underlying intellectual property owned by NBA & NBPA .

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