NBA Top Shot developer, Dapper Labs, has been accused and sued for the selling Non-Fungible Tokens (NFTs) as unregistered securities.
The documents filed at the United States Supreme Court on Wednesday revealed that the allegations are based on the personal knowledge of Jeeun Friel, the lead plaintiff.
The NBA Top Shot is a platform that is based on blockchain, allowing users to buy, sell and trade digital collectibles in the form of video highlights as Non-Fungible Tokens. As the demands for the products keep increasing, Dapper has been reported to have gathered new funds to the tune of $7.5 billion.
According to claims from the documents, the NBA Top Shots are regarded as securities because an increase in value is recorded as per the success of the project.
Plaintiff Seeking Rescissory Damages For Moments
The video highlights that Dapper uses virtual collectibles are referred to as Moments.
The documents filed at the court insist that the NFTs by Dapper are securities and that the platform should register itself to the United States Securities and Exchange Commission. Dapper, however, has failed to do this.
To ensure that funds stay on the platform to boost its value, the platform has been reported to have withheld investors from withdrawing their funds for months. This has led Plaintiff Jeeun to demand rescissory damages in regards to moments the platform has purchased since its launch in June 2020.
Rescissory damages are damages measured by the fair value of the stock at the time of judgment. The value of the accumulated damages is awarded to a plaintiff to restore the position wrongly occupied by the defendant through his illegal actions.
Dapper Labs didn’t immediately respond to the email seeking their comments on the case.
The company has however been given a 30 days ultimatum to respond to the allegations against it in the Supreme Court.