NFTs brought hype, money, and new legal questions. Many people bought digital assets without thinking twice. Platforms made trading fast and easy. One big player in this space was Dapper Labs.
Dapper Labs helped launch NBA Top Shot. It became one of the most popular NFT collections in the world. The idea looked simple. You buy a digital moment, hold it, trade it, or sell it later. But things changed when lawsuits began.
Courts started to ask tough questions. Are these NFTs just collectibles? Or are they unregistered securities? The law had no clear answers at first. Then came a class-action lawsuit.
The Dapper Development lawsuit made headlines. Buyers, collectors, and crypto users began to worry. This article explains what happened, what it means, and what every NFT buyer should understand.
Who Is Dapper Labs?
Dapper Labs is a tech company based in Canada. It builds blockchain products. Its most famous project is NBA Top Shot. The platform lets users buy and trade digital highlights from basketball games. These highlights are NFTs stored on the Flow blockchain.
NBA Top Shot became a hit in 2021. Thousands of users spent money on digital packs. Some moments sold for thousands of dollars. Dapper took a small cut from every sale. The system looked smooth on the surface.
But success also brought attention. Critics and regulators asked if these NFT sales followed the law. That’s where the problems began.
The Class Action Lawsuit
In 2021, a group of users filed a class action against Dapper Labs. The case was filed in New York. It claimed that NBA Top Shot Moments were unregistered securities.
The lawsuit said Dapper made profits from selling NFTs that should follow U.S. securities laws. The company failed to file the assets with the SEC as required for securities. Buyers were not warned about risks or legal rules. This, the lawsuit claimed, broke federal law.
Dapper Labs denied wrongdoing. The company said the NFTs were collectibles, not investments. It asked the court to dismiss the case. But the court allowed the lawsuit to move forward.
That decision shook the NFT world. If the court said NBA Top Shot Moments were securities, many other NFT projects could face the same risk.
Why the Court Let the Case Move Forward
The judge used a legal test called the Howey Test. This test helps decide if something is a security. It asks four things:
- Was there an investment of money?
- Was it in a common enterprise?
- Did buyers expect profit?
- Did that profit depend on the efforts of others?
The court said the lawsuit had enough evidence to meet these points-at least in the early stage. So the case could go on. This did not mean Dapper lost, but it showed the court took the claims seriously.
The $4 Million Settlement
In 2024, Dapper Labs chose to settle the lawsuit. The company agreed to pay $4 million to end the case. This money went to affected users who bought Top Shot Moments.
The settlement did not mean Dapper admitted guilt. It only meant the company wanted to close the case without more delays or costs. The court approved the deal, and payments followed.
This result sent a message to the crypto world. NFTs might face legal action if they look too much like investments. Companies must be careful. So must buyers.
A Second Lawsuit: Privacy and Tracking
Dapper Labs also faced another lawsuit. This time, it was about user privacy. The claim said Dapper and the NBA used hidden tracking tools, called pixels, on their websites. These tools collected user data without consent.
In 2025, Dapper and the NBA agreed to pay $7 million to settle that case. Like the first, they denied doing anything wrong. But the payout showed that legal risks go beyond money or tokens. User privacy matters too.
This lawsuit warned companies to follow strict data laws. It also reminded users to watch how platforms collect and use their information.
What This Means for NFT Buyers
NFT buyers must understand the rules behind the assets. Some NFTs may fall under securities law. That means they must be registered, and users must get clear warnings.
Buyers should also look at how the platform works. If a company controls prices, markets the tokens as investments, or makes promises of profit, that’s a red flag. Courts may treat those assets as securities.
NFT users should read terms, study risks, and follow news on lawsuits. Not all NFTs are the same. A digital card on one platform may be legal, while a similar card on another platform may not.
Lessons for the NFT Industry
The Dapper lawsuits changed the way many view NFTs. Companies now take legal advice before launching new products. Some moved away from U.S. buyers. Others shut down or changed their platforms.
These lawsuits also started bigger talks about how to regulate NFTs. Should all NFTs follow the same rules as stocks? Or do they need their own laws?
The SEC and courts have not given full answers yet. But one thing is clear-NFT projects must take legal risk seriously.
Conclusion
The Dapper Development lawsuit showed how fast NFT hype can turn into legal trouble. A court allowed claims that Top Shot NFTs might be securities. Dapper Labs chose to settle the case for $4 million. It also paid $7 million to end a privacy lawsuit.
These outcomes did not ruin the company. But they did change the landscape. NFT buyers and creators now move with more caution. The law has entered the crypto world, and it is not going away.
If you buy NFTs, learn the rules. Read the fine print. Watch the trends. A flashy token is not just a game anymore-it may carry legal weight.
Stay informed. Stay smart. And always ask questions before you buy.
Legal risks can surface in many areas of finance, not just NFTs. The recent Ashcroft Capital lawsuit shows how investors in real estate deals also face complex challenges.
Legal Disclaimer: This article is for informational purposes only. It does not offer legal advice or create an attorney-client relationship.