Judgment against Dapper Lab, headwind for private blockchain[Column]| coindesk JAPAN | Coindesk Japan

In a 64-page notice from Justice Victor Marrero of the U.S. District Court for the South District of New York, liberated on 22 February, Howey test: an investment is it a title? He included a case that will be famous in the future as an example of applying the yes or no test.

‘NBA Top Shot’ is an investment deal

As Dapper Labs and its CEO reject motions to dismiss unregistered securities sales charges against them, the court offered a lesson. If you are going to market NFT using your own blockchain and private market, it would be wise to hire a good compliance attorney ahead of time.

Justice Marrero dismissed the motion to dismiss and granted leave to the class action against Dapper Laboratories to proceed with this matter, that the Court has also accepted as a first case whether an NFT is an investment contract in light of the famous test howie. .

Related article: Judgment that the popular NFT “NBA Top Shot” may be classified as securities

Related Story: Ruling that the popular NBA Top Shot can be categorized as a title.

The court found that the popular collection of dapperlab nft, nba top shots, is an investment agreement offered to the public with profit perspective. This, together with the fact that NFT's financial success is linked to the success of dapperlab's own platform, met two of the howie requirements. The howie test is a four-factor test used by the United States Supreme Court to determine whether certain assets fall within the jurisdiction of the U.S. Securities and Securities Commission (sec).

The Howie test is a four-factor test used by the United States Supreme Court to determine whether certain property is within the jurisdiction of the U.S. Securities and Exchange Commission (SEC).

Judge Marrero began his opinion by defining an “investment contract” as “a contract, transaction, or program under which a person invests (his) assets in a joint venture” that yields “profit solely from the efforts of the entrepreneur.” started.

And nft is defined as "a digital asset the authenticity and ownership of which can be stored in the blockchain". And NFT is defined as "a digital asset the authenticity and ownership of which can be registered on the blockchain".

Justice Marrero said, "Moments (NBA Top Shot NFTs) are digital videos of NBA game highlights, including amazing dunks and game-changing shots."

“The economic realities and technical implications between the FLOW token, the Flow blockchain and Moment are consistent with plaintiffs’ allegations and support the court’s ruling.”

Judge Marrero ruled that “the company’s efforts to develop and maintain an ecosystem for trading satisfactorily meet the third requirement of the Howie Test.”

Positioning of Private Blockchain

Furthermore, “Dapper Labs’ implied promise to maintain the flow blockchain and support transactions on the marketplace drove Moment’s value.” forms the basis of the

Judge Marrero raised concerns that DapperLab had restricted Moment trading to only the Flow blockchain, which was developed by DapperLab as a faster and cheaper alternative to the Ethereum blockchain.

This point raises questions about profits and transaction fees, but on a technical level it is “making the blockchain private” and Moment’s “purchasers rely on DapperLab’s knowledge, operational commitment and success.” had to rely on the continuation and survival of the Judge Marrero agreed with the plaintiffs and ruled that the case was completely different from “public blockchains such as Bitcoin.”

future concern

This raises questions regarding profits and transaction costs. This item raises issues regarding profits and transaction costs, but technically it is "to make the blockchain private" and the "buyers of the moment count on the knowledge of dapperlab, Operational commitment and success.” had to rely on the continuation and survival of the judge marrero agreed with the plaintiffs and ruled that the case was completely different from “public blockchains such as bitcoin." future concerning judge marrero has made the right decision about dapper laboratories. However, going forward, courts could make the wrong decision in a way that would be detrimental to projects that used to sell nfts using layer 2 platforms built on public blockchains and platforms that didn’t rely on the native token ecosystem. Have an inherent character.

It's obviously overreacting. For example, unique items that are typically sold individually, such as artwork, would not readily be consistent with this decision.

There are also concerns about creators joining companies such as dapperlab to promote and sell their products. NL creators who partner with businesses like DapperLab to promote and sell their products also raise concerns.

Difference from Art NFT

Art NFTs and Moments also have another difference. This is because the “inherent work of art” sold in the case did not have a “causal relationship with the seller.”Justice Marrero answered that the precedent to which DapperLab was referring did not apply to that question. Art nfts are still intrinsically valuable points.

Artistically oriented ETFs are always intrinsically valuable points.

In its request for rejection, DapperLab submitted that Moment should not be considered an investment contract on the basis of its intrinsic value. It was not accepted by Justice Marrero, Noting that the regulations of dapperlab have declared more than once that time "has no inherent or intrinsic value." in passing, Mail application kik has raised millions of dollars by offering initial coins (ico), However, the chips were subsequently determined to be securities. He was also found to have sold something that did not have intrinsic value.

"unlike real estate, (kin) tokens have no intrinsic value and are not profitable without a demand generating ecosystem," the court noted. Surely there are reasons why platforms built on private blockchain should be treated differently from platforms built on public blockchain.

This is likely why the voice, the company in the NFT market, recently switched to a public blockchain. Platforms that use native chips, as rarible with his rari token, may also need strategy as a result of the court decision.

Private blockchain companies specializing in NFT, such as wax, may also need to review their systems for compensating developers. .

And the NFTs sold using such platforms and least likely to be judged as investment deals would be the art NFTs that are the foundation of the emerging digital art movement.

Mr. Paul Paray: One of the founders of LLC (Limited Liability Company) ArtSwap in New Jersey, USA.

|Translation and editing: Akiko Yamaguchi, Takayuki Masuda

| Image: Markus Spiske/Unsplash (edited by CoinDesk)

|It's the future, though, The most secure approach for DTV creators is to build partnerships with companies that have built their platforms from the ground up using public blockchain, with no native platform tokens and no direct way to control the value of their ETFs.