It is absurd if digital assets recognized as securities in U. S.-Lawyer
2023.02.23 03:59
It is absurd if digital assets recognized as securities in U. S.-Lawyer
By Tiffany Smith
Budrigannews.com – Following a federal judge’s decision to allow a lawsuit against Dapper Labs’ NBA Top Shots NFTs to proceed, the chief legal officer of the Blockchain Association states that “it would be absurd” for a United States court to rule that digital assets on private blockchains are securities.
U.S. lawyer Jake Chervinsky offered the remark after government judge Victor Marreo denied a movement to excuse a 2021 claim that blamed Neat Labs for selling nonfungible tokens (NFTs) as unregistered protections.
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.”
“The judge did not make any decisions. He said that because the securities claims were at least “plausible,” which is a very low bar and not a final decision, he let the case go past a motion to dismiss.
It would be absurd if all valuable digital assets stored on centralized databases were securities, despite this dispute.
“This would transform every major developer of video games, platform for selling tickets to events, travel rewards program, etc. into an SEC-regulated public reporting company, he explained.
It is not true.
Nothing was decided by the judge. He let the case go past a motion to dismiss because the securities claims were at least “plausible,” which is a very low standard and not a final decision.
Do I really have to say “basketball cards are not securities”??? https://t.co/W1yYVcW1Ki
Jesse Hynes, a U.S. attorney, also commented on the motion in a post he made on Twitter on February 22. 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.
“The appointed authority managed in the Neat case that the offended party argued sufficient proof that In the event that Every one of the Claims ARE Valid, that there is a protections infringement.”
“Now we enter discovery to discover the actual facts. Dapper will most likely file a motion for summary judgment after that,” the attorney continued.
The allegations that Dapper Labs issued the NBA Top Shot Moments NFT on a privately-run blockchain were a “fundamental” factor in the court’s decision to reject the motion to dismiss, according to another US attorney known as “MetaLawMan,” James Murphy.
4/ In making his decision, the judge cited the fact that @XRP trades on a public blockchain while Top Shots trade on a private blockchain managed by the issuer.
As a result, the Top Shot opinion may be viewed as overwhelmingly favorable toward Ripple.
Because XRP is issued on a public blockchain, MetaLawMan suggested that this “could be considered a net positive” for Ripple in its own case against the U.S. Securities Exchange Commission (SEC).
Plaintiff Jeeun Friel claimed that Dapper Labs was selling NFTs as unregistered securities when he filed the class action lawsuit against the company in May 2021.
On February 22, 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.
The Dapper Labs-issued FLOW token dropped 6.4% in just 15 minutes from $1.24 to $1.16 following the dismissal. CoinGecko reports that the FLOW token has since recovered to $1.29.
