Federal Judge Rules NBA Top Shot Moments NFTs Are Securities

NBA Top Shot Moments NFTs meet the requirements to be considered a security, a federal judge said in a court filing on Wednesday,

The decision, made by Judge Victor Marrero, is a narrow one that only applies to NBA Top Shot Moments and not other NFTs, which will be assessed on a case-by-case basis.

The lawsuit alleges that Dapper Labs violated securities laws by selling the NFTs without proper registration and disclosure requirements. Marrero applied the Howey Test and recent case law around initial coin offerings to reach his decision, citing the company's control over Top Shots and specific tweets promoting the NFTs.

"Although the literal word ‘profit’ is not included in any of the tweets, the ‘rocket ship’ emoji, ‘stock chart’ emoji, and ‘money bags’ emoji objectively mean one thing: a financial return on investment,” Marrero wrote.

The ruling is not a final decision in the lawsuit, but it allows the case to move forward.