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SEC Secretly Investigated NFT Developer Dapper Labs in 2023

In a clandestine move, the Securities and Exchange Commission (SEC) conducted a covert investigation into Dapper Labs in September of 2023, only to close the case three months later in December of the same year.

Fortune obtained a document known as a “Case Closing Report,” signed by David Hirsch, the head of the SEC’s Crypto Asset and Cyber Unit, on September 29, 2023. However, the report did not divulge the specific reasons for the SEC’s scrutiny of Dapper Labs, nor did it disclose when the investigation was initiated or the factors contributing to its termination. Dapper Labs, renowned for its NFT projects like NBA Top Shot and CryptoKitties, was the subject of the SEC’s undisclosed inquiry.

Although the details surrounding the SEC’s probe into Dapper Labs and the rationale behind closing the case remain undisclosed, it is evident that Dapper Labs was aware of the SEC’s investigation into its operations.

The conclusion of the investigation into Dapper Labs follows the SEC’s settlements with two other NFT ventures, Impact Theory and Stoner Cats. These settlements marked the Commission’s initial actions against the NFT market, with the SEC alleging that these entities engaged in offering and selling securities without appropriate registration, violating federal laws.

Meanwhile, Dapper Labs faces a distinct legal challenge in the form of a class-action lawsuit. The lawsuit contends that NBA Top Shot Moments, digital collectibles sold as NFTs by Dapper Labs, qualify as unregistered securities. In February 2023, a federal judge rejected the motion to dismiss the lawsuit, indicating that the claim that these NFTs are securities possesses legitimacy.

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