Dapper Labs Reaches Settlement with Plaintiffs, Flow Blockchain Achieves Important Milestone

In 2021, the Flow Blockchain and NBA Top Shot developer Dapper Labs faced legal challenges due to issues related to NFT sales. After a lengthy litigation process, the case recently made significant progress: Dapper Labs has successfully reached a settlement agreement with the plaintiffs.

Dapper Labs co-founder and CEO stated: “We are satisfied with the settlement result, which marks an important step forward for the company and the Flow community. Legal clarity allows us to focus on our core mission of providing users with a better service experience, while also creating greater development opportunities for developers, partners, and entrepreneurs on the Flow blockchain.”

It is worth noting that this case confirms that Flow is a fully decentralized, permissionless public Blockchain that is not controlled by Dapper Labs. Flow will continue to focus on building an on-chain world where users own their own data, digital assets, and online identities, aimed at ensuring that digital communities can thrive in an open and decentralized environment. On the Flow Blockchain, creators can build content for the community without bearing the risks of platform dependence, helping people to easily and securely explore Web 3.

Legal Clarity Drives Dapper Labs’ Continuous Innovation

Dapper Labs is the creator of the Flow Blockchain, which is designed for the next generation of digital assets, applications, and games. The company is dedicated to making it easy and safe for everyone to access Web3, while fostering innovation and building a thriving digital community.

This settlement not only solidifies Dapper Labs’ commitment to innovation and decentralization in the digital collectibles space but also further indicates that the NBA Top Shot Moments it offers do not constitute securities under U.S. federal law. The enhancement of legal clarity paves the way for Dapper Labs’ continued growth and innovation.

In fact, during the litigation period, NBA Top Shot has still made significant progress. Since January 1, 2024, more than 27,000 independent collectors have purchased collectible packs or Moments 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 an average of over $1,000 per week has grown by 78%. In addition, the Fast Break game launched by Dapper Labs has received a warm response from the community, attracting thousands of active players to participate in NBA and WNBA game interactions every day. In April of this year, a 1-of-1 Moment of an NBA star was successfully sold for a high price of $145,000.

Other Key Points of the Settlement Agreement

1. Decentralization: The Flow Blockchain operates as a fully decentralized public blockchain, capable of continuing to function without the involvement of Dapper Labs, providing a robust and independent 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, receiving full support from the NBA and the Players Association, providing collectors with more trading opportunities.

3. User Experience Improvement: The payment and withdrawal system for NBA Top Shot Moments has been optimized, and users can now process withdrawals within 2-10 business days.

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

5. Flow Tokens and Ecosystem Growth: The remaining Flow tokens will be transferred to the Flow Foundation wallet, and Dapper Labs will relinquish control of the tokens to support the continued growth and decentralization of the Flow ecosystem.