In September 2023, the Securities and Exchange Commission (SEC) conducted a covert investigation into Dapper Labs, the developer behind notable NFT projects like NBA Top Shot and CryptoKitties. The investigation, revealed through a document obtained by Fortune called a “Case Closing Report,” was signed off by David Hirsch, head of the SEC’s Crypto Asset and Cyber Unit, on Sep. 29, 2023. However, the report did not provide details regarding the reasons for the SEC’s inquiry, its commencement date, or the factors leading to its closure.
Despite the lack of specifics, it’s evident that Dapper Labs was under scrutiny, as indicated by Fortune’s report. This comes amid the SEC’s recent settlements with other NFT ventures, including Impact Theory and Stoner Cats, for allegedly offering and selling securities without proper registration, which violated federal laws.
Furthermore, Dapper Labs is also facing legal challenges through a class action lawsuit alleging that its NBA Top Shot Moments, sold as NFTs, are unregistered securities. In February 2023, a federal judge refused to dismiss the lawsuit, indicating potential validity to the claim.
Overall, while the exact reasons for the SEC’s investigation into Dapper Labs remain undisclosed, it underscores the increasing regulatory scrutiny faced by players in the NFT market.”