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The chief lawyer of the Blockchain Association stated that "it would be absurd" for a United States court to rule that digital assets on private blockchains are securities, after a federal judge's decision to allow a lawsuit against Dapper Labs' NBA Top Shots NFTs to proceed. U.S. attorney Jake Chervinsky made the comment after federal judge Victor Marreo denied a motion to dismiss a 2021 lawsuit in which Dapper Labs was accused of selling nonfungible tokens (NFTs) as unregistered securities.
The Lawyer Doesn’t Think Any Decision Has Been Made On The NFTs
On Twitter, a number of lawyers, including Chervinsky, reiterated that the judge's denial of the motion does not indicate that a decision has been made regarding the lawsuit; rather, it only indicates that it was "facially plausible." [embed]https://twitter.com/jchervinsky/status/1628482406951923714?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1628482406951923714%7Ctwgr%5Edae432b2573d5a43ef77baaf023307a500c55c3e%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fcointelegraph.com%2Fnews%2Fit-would-be-absurd-for-a-us-court-to-rule-private-nfts-as-securities-lawyer[/embed] Judge let the case go past the motion to dismiss because the securities claims were at least "plausible," which is a very low bar and not a final decision. Jesse Hynes, a U.S. attorney, also commented on the motion in a post he made on Twitter. He said that motions to dismiss are "rarely ever successful" because the plaintiff only needs to present sufficient evidence for the case to move forward.
Judge Says Not All NFTs Constitute As Securities
Judge Marreo denied the motion to dismiss the lawsuit. He stated that the method by which Dapper Labs provides the Moments NFT possibly establishes a sufficient legal relationship between investors and themselves, meeting the Howey Test's requirements for an investment contract. However, Judge Marreo stated that not all NFTs will constitute securities and that each case will need to be evaluated on a case-by-case basis, so it is unlikely that this case's final ruling will set a precedent for NFTs.