Escaped a Disaster? Dapper Labs Previously Under SEC Investigation, Internal Data Reveals Case Closed

According to internal documents obtained by Fortune, NBA Top Shot developer Dapper Labs has been under investigation by the U.S. Securities and Exchange Commission (SEC) since September of last year.

SEC Investigation of Dapper Labs
An closing report signed by David Hirsch, the director of the SEC’s cryptocurrency and cybersecurity division, shows that the investigation into Dapper Labs, Inc. was terminated on September 29. The one-page report does not explain the reasons for the SEC’s investigation into Dapper Labs, its start date, or the reason for its closure.

An SEC spokesperson responded to this by stating that they would not comment on potential investigatory actions.

Dapper Labs’ Response
Dapper Labs stated to Fortune magazine, “We have never been contacted by the SEC and are unaware of this investigation. In any case, it appears to be closed.”

Dapper Labs’ Class Action Lawsuit and Layoffs
Dapper Labs faced a class action lawsuit in which the plaintiffs alleged that the NBA Top Shot Moments issued by the company were unregistered securities. However, this was dismissed by a federal judge in February of last year.

Additionally, Dapper Labs has undergone multiple rounds of layoffs during the bear market.

SEC vs. NFT
Following the collapse of FTX, the SEC has steadily sued a series of cryptocurrency companies, including TRON Foundation, Terraform Labs, Binance, Coinbase, Kraken, and most recently, Uniswap.

Regarding the NFT sector, the SEC previously imposed a $6 million fine on Impact Theory in September of last year and a $1 million fine on Stoner Cats two weeks later, along with the destruction of all its NFTs. This seems to indicate that the SEC’s regulatory focus has expanded to the NFT space.

Philip Moustakis, a securities lawyer at Seward & Kissel, stated to Fortune magazine, “The SEC’s decision to end its investigation into Dapper Labs may represent a recalibration of the SEC’s regulatory approach. This may come as a relief to market participants in the NFT space, but it doesn’t mean that all NFT projects are in the clear. Some NFTs may still constitute securities transactions.”

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