Yesterday’s ruling by a US District Judge on Dapper Labs’ motion to dismiss a lawsuit alleging that NFT Top Shot NBA is an unregistered security may have a “net positive” effect on Ripple’s case against the US Securities and Exchange Commission. At least that’s what James “MetaLawMan” Murphy, a lawyer and strategic advisor, claims.
District Judge Victor Marrero stated in his ruling that Dapper Labs’ collection of NFTs appeared to meet the security requirements of the Howey test. Based on this, they denied Dapper Labs’ motion to dismiss.
NBA Top Shots was launched by Dapper Labs in 2021 and is one of the most successful NFT collections of all time. NFT buyers can collect video highlights from the National Basketball Association (NBA) released by the company.
In May 2021, Dapper Labs was sued by plaintiffs who claimed that the Top Shots collection was an unregistered security. By failing to register with the SEC, the company allegedly violated US securities laws, harming consumers.
What Are The Implications For Ripple?
Attorney James Murphy explained in a series of tweets that the Federal judge in New York ruled that the lawsuit “allegedly alleged” that the initial sale of Dapper Labs NBA Top Shot NFTs qualify as security under the Howey test.
However, he does not believe that this decision should have any impact on the analysis in Ripple vs. SEC. The first key difference is that the Top Shot decision is a decision on the motion to dismiss, while Ripple is at the summary judgment stage, where the judge considers the evidence presented by the parties.
In addition, Judge Marrero did not direct the sale of NFT Top Shot in the secondary market. Judge Marrero added that this decision does not apply to all NFTs, but each one must be evaluated on a case-by-case basis:
Not all NFTs offered or sold by any company will be securities.
A key factor in the decision, perhaps, is a strong argument for Ripple, according to Murphy:
The judge stated that Top Shots trading on a private blockchain managed by the issuer was a key factor in his decision. XRP trades on the public blockchain. Therefore, Top Shot’s opinion can be considered a net positive for Ripple. Not a legal opinion – just a tweet.
XRP community attorney John E. Deaton emphasized on Twitter that the judge’s decision is not final. The judge “only denied a rare motion” to dismiss, meaning the case will continue with the discovery phase.
“The judge could still determine that these NFTs are not securities or they could conclude that they are, or they could decide that a jury must decide the factual issues before the judge can rule. In the end, this case hasn’t even started!” Deaton said.
XRP is currently trading at $0.3942.
Featured image from Tingey Injury Law Firm / Unsplash, Chart from TradingView.com