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Dapper Labs, the creator of NBA Top Shot and CryptoKitties, will face a lawsuit over selling unregistered securities.
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A class-action lawsuit was filed against Dapper Labs in 2021.
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Dapper Labs filed a motion to dismiss the lawsuit before trial, which was denied by U.S. District Judge Victor Marrero.
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NBA Top Shot allows users to buy digital cards that represent NBA "Moments."
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Each digital card is registered as a unique token on Dapper Labs' private blockchain called Flow.
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Marrero distinguishes NBA Top Shot's Moments from other types of NFTs.
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The Flow Blockchain uses "Proof of Stake" validation for scalability and practical use cases.
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Dapper Labs created a token, FLOW, for miners to stake and validate transactions.
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The value of digital collectibles can go up and down over time.
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The lawsuit has yet to take place and Moments shouldn't be considered securities until proven otherwise.