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ARTICLE · 28 APRIL 2023

What The Top Shot Moments Decision Means For NFTs

Hughes Hubbard & Reed LLP
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Earlier this year, in a 64-page decision, Judge Victor Marrero of the U.S. District Court for the Southern District of New York held that "Moments"—Dapper Labs' NBA Top Shot...

United StatesTechnology
Amina Hassan
Amina Hassan
Hilary McDonnell
Hilary McDonnell
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April 24, 2023 - Earlier this year, in a 64-page decision, Judge Victor Marrero of the U.S. District Court for the Southern District of New York held that "Moments"—Dapper Labs' NBA Top Shot non-fungible tokens—are plausibly securities under the U.S. Supreme Court's Howey test. This is the first U.S. court decision indicating that NFTs might constitute securities.

Although the court was careful to describe its decision as a "narrow" one at the motion-to-dismiss stage, it took a broad approach in applying the Howey test. The decision is likely to have far-reaching impact, including an uptick in securities-related NFT litigation.

Dapper Labs, Moments & the Marketplace

"Moments" are non-fungible tokens ("NFTs") linked to digital video clips of highlights from NBA basketball games. Dapper Labs "mints" or creates Moments. While Dapper Labs might create 1,000 copies of a memorable Lebron James dunk, each Moment is non-fungible because it gets assigned a

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