HomeBasketballLawsuit Alleges That NBA Top Shot “Deceptively Manipulated” Users

Lawsuit Alleges That NBA Top Shot “Deceptively Manipulated” Users

Lawsuit Alleges That NBA Top Shot “Deceptively Manipulated” Users

A new lawsuit alleges that the creators of digital collectable marketplace, “NBA Top Shot”, violated the Federal Securities Act of 1933 by deceptively manipulating buyers and preventing investors from withdrawing funds.

The Vancouver-based blockchain company, Dapper Labs, are accused of illegally selling unregistered securities in a complaint launched by Rosen Law Firm, on behalf of Jeeun Friel, with the potential for a class action lawsuit.

“NBA Top Shot” is a non-fungible token (NFT) marketplace where users can purchase virtual cards of single digital moments of NBA highlight clips with Top Shot hosting more than five million transactions.

Friel is asking for a jury trial and an award of “significant damages” towards her, and other allegedly manipulated buyers with the complaint stating that they lacked the “technical and financial sophistication necessary to have evaluated the risks associated with their investments in moments and were denied the information that would have been contained in [security registration materials].”

Dapper is also accused of devising a deceptive marketplace with the complaint stating that an owner of a moment (an NFT of an NBA highlight clip) “does not acquire any intellectual property rights or rights to the underlying NBA highlight” as well as exploiting investors by selling digital packs of moments with pricing based on scarcity.

Dapper is also accused of preventing investors from withdrawing funds for multiple months and resulted in boosting the NBA Top Shot market.

Dapper have not yet offered a statement but is assumed to deny any claims and wrongdoing.

NBA Top Shot’s terms of use asserts that upon agreement, users agree to give up rights to litigate claims in a court as well as being limited in arbitration.

The terms of use also states that “[users] hereby expressly give up [their right] to have a trial by jury” as well as giving up the right to participate as a member of a class action lawsuit.

NFTs have seen a massive surge in popularity and sales in 2021 with over 100,000 sales in the past month totalling USD$280 million (AUD$361 million) in sales, according to nonfungible.com.

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