A recent legal decision may offer some much-needed – though not much-liked – clarity on the regulatory landscape ahead for NFTs. cheyenneligon and camgthompson dig in:
The federal judge in New York overseeing a class-action lawsuit against Dapper Labs ruled Wednesday to deny the company’s motion to dismiss the suit,
, a 90-year-old method devised by the U.S. Supreme Court to determine whether certain transactions qualify as “investment contracts.”met each of the four prongs of the Howey Test. The fourth prong – that the profits expected from an investment must be derived from the efforts of others – was particularly important to Marrero’s analysis.
Anthony Sabino, a professor of law at St. John’s University, told CoinDesk that Marrero’s opinion that Dapper Labs’ NFTs meet the definition of securities “may not necessarily be precedential, but it shall be quite influential because it emanates from the Southern District [of New York], because it's from an eminent jurist and because it just makes a lot of sense.”
Motions to dismiss, Hynes explained, are common – and usually unsuccessful – attempts to stop lawsuits before they get to trial. Moish Peltz, a New York-based partner at Falcon Rappaport & Berkman whose practice focuses on cryptocurrencies and intellectual property, told CoinDesk that it was “ironic” that Dapper Labs’ decision to build on top of the Flow blockchain “in a specific attempt to create a better consumer experience was seized on by the Court.”
“Folks minting NFTs on public blockchains and using open marketplaces can breathe a little easier,” Goldman said. “The vast majority of NFT projects don’t share those key facts that troubled the court.” Because Dapper Labs’ controlled the marketplace where its NFTs were sold, Sabino argued, the role of investors was diminished.
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