Dapper Labs reaches a settlement with the plaintiff, Flow Blockchain is confirmed as a decentralized public chain.

In 2021, a lawsuit against Flow Blockchain and NBA Top Shot developer Dapper Labs attracted industry attention. The plaintiff alleged that the company sold NFTs as unregistered securities, violating U.S. securities laws. After a lengthy legal process, Dapper Labs ultimately reached a settlement agreement with the plaintiff.

This settlement result is seen as an important milestone for Dapper Labs and the Flow community. Company executives stated that legal clarity will allow the team to focus on their core mission of providing users with a better service experience. At the same time, it also creates a freer innovation environment for developers and entrepreneurs in the Flow ecosystem.

It is worth noting that this case also confirms that Flow is a completely decentralized, permissionless public Blockchain that is not controlled by a single entity. Flow will continue to be committed to building a Blockchain world where users can fully control their own data, digital assets, and online identities. Its goal is to ensure that digital communities can thrive in an open, decentralized environment while providing creators with a creative space free from the risks of platform dependency.

Legal clarity promotes sustained innovation

As the creator of the Flow Blockchain, Dapper Labs has been committed to making it simple and safe for everyone to access Web3, and is working to drive innovation and build a thriving digital community.

This settlement not only solidifies the company's innovative position in the digital collectibles space but also further clarifies that NBA Top Shot Moments do not fall under the definition of securities as defined by U.S. federal law. This lays a solid foundation for Dapper Labs' future development and innovation.

Despite ongoing litigation, NBA Top Shot has still made significant progress. Data shows that since the beginning of 2024, over 27,000 independent collectors have purchased collectibles on the platform. Since November 2023, the user conversion rate has increased fivefold. From the fourth quarter of 2023 to the first quarter of 2024, the number of independent collectors spending over $1,000 per week on the platform has increased by 78%. Additionally, the Fast Break game launched by the company has also been well received by the community, attracting thousands of active players to participate in NBA and WNBA game interactions every day. In April of this year, a rare Wembanyama Moment was successfully sold for $145,000, drawing attention once again.

Key points of the settlement agreement

1. Decentralization: The Flow Blockchain is recognized as a fully decentralized public blockchain that can continue to operate without the participation of Dapper Labs, providing an independent and stable ecosystem for users and developers.

2. Market Expansion: Since March 17, 2022, four new markets have been authorized to display and sell NBA Top Shot Moments. This expansion has been supported by the NBA and the Players Association, providing collectors with more trading options.

3. User Experience Optimization: Through collaboration with payment service providers, the payment and withdrawal system of NBA Top Shot Moments has been improved, allowing users to process withdrawals within 2-10 business days.

4. Compliance and Educational Commitment: Dapper Labs has implemented mandatory annual training for all employees, focusing on U.S. federal securities laws and ethical marketing practices to ensure project transparency and legality, protecting community interests.

5. Flow Token Management: The remaining Flow tokens will be transferred to the foundation wallet, and Dapper Labs will relinquish control of the tokens to support the ongoing development of the ecosystem and the Decentralization process.