The Dapper Labs Lawsuit That Quietly Settled for $9 Million — And What It Means for Every NFT You’ve Ever Bought

NBA Top Shot seemed to be the way of the future for sports fans at one point in 2021. Digital video clips of LeBron James dunks and Stephen Curry three-pointers, each packaged as a distinct NFT on Dapper Labs’ proprietary Flow blockchain, were being purchased by collectors for real money, sometimes thousands of dollars. The business had secured venture capital worth hundreds of millions of dollars. Officially, the NBA supported it. The coverage by the media was breathless. The legal issues that would ultimately result in two federal settlements were also subtly developing somewhere in there.

The two biggest class action lawsuits against Dapper Labs have now been settled. In the first case, Friel v. Dapper Labs, it was claimed that NBA Top Shot Moments were unregistered securities and that Dapper Labs had created something that functionally resembled a financial instrument without registering it as such by selling these digital collectibles on a closed, proprietary blockchain that it fully controlled and by limiting users’ ability to cash out their holdings. Everyone who bought or acquired Moments between June 15, 2020, and December 27, 2021 was covered by the $4 million settlement, which was reached in 2024 and handled by Media, Pennsylvania-based Strategic Claims Services. Based on the approximately 33 million Moments bought during the class period, the calculation comes out to about $0.08 per Moment after legal fees, or, as the settlement website states, about $0.12 per Moment before deductions.

Digital collectibles that used to sell for hundreds of dollars are now only worth eight cents each. That figure has an almost poetic quality, but not in a way that the NFT industry would want to promote. As defendants in these cases nearly always do, Dapper Labs denied any wrongdoing, and the settlement does not amount to a court ruling that Top Shot Moments were securities. However, it was noteworthy in and of itself that the case survived a motion to dismiss in 2023, with a federal judge permitting the securities allegations to proceed. Because it was the first time a federal court had permitted investors to contend that NFTs could satisfy the legal definition of an unregistered security, the Southern District of New York ruling attracted the attention of attorneys in the cryptocurrency sector. Prior to any additional decision on that fundamental issue, the case was resolved by the subsequent settlement.

Important Information: Dapper Labs, Inc. — Class Action Lawsuits & Settlements

Ohebshalom v. Dapper Labs, the second settlement, deals with a completely different type of complaint. This one relates to the Video Privacy Protection Act, a federal law passed in 1988 that was initially intended to stop video rental businesses from revealing the viewing habits of their patrons. In the digital age, the law has unexpectedly gained relevance. It is now the basis for a number of lawsuits against companies that use tracking pixels, which are tiny bits of code from Meta, Google, Microsoft, Twitter/X, Reddit, and TikTok, on websites where users watch or buy video content. According to the lawsuit, Dapper Labs did precisely this in NBA Top Shot, NFL All Day, UFC Strike, Disney Pinnacle, and La Liga Golazos, enabling third-party tracking systems to gather data about what viewers watched and purchased and send it to major advertising platforms without the users’ express consent.

Anyone who had an account on any of those platforms between June 15, 2020, and January 30, 2025 is covered by the $5 million settlement, which was granted preliminary court approval in December 2025. The payout is only $5 per person, and the April 15, 2026, claim deadline is quickly approaching. Dapper Labs has committed to eliminating tracking pixels from Meta, Google, Microsoft, Twitter/X, Reddit, and TikTok from its website pages moving forward as part of the resolution. Even though the financial compensation is small, that is a significant operational change.

Legal filings never fully convey the real-time texture of these payouts, but it is visible on Reddit’s r/ClassActionSettlement. Payments from the Top Shot settlement and the VPPA case arrived via Venmo and Strategic Claims Services, respectively. Users have been comparing notes on their settlement checks, with some reporting about $75 and others closer to $140 from the securities case. The Mastercard eDisbursement virtual card option charges a $4.95 monthly fee beginning in the thirteenth month, according to a thread. This is the kind of practical detail that never shows up in court documents but is crucial for those who receive small checks.

This is a much larger story than just Dapper Labs. Together, the two lawsuits raise two of the most important questions in the field of digital assets: when does a platform’s use of tracking technology turn into a legally actionable privacy violation, and when does a digital collectible become a financial instrument subject to securities regulation? Media companies, streaming services, and now NFT platforms have all been sued over the VPPA issue. The entire NFT market, which soared in 2021 and has since sharply declined, is plagued by the securities question. Since Dapper Labs settled before that, it is still unclear if any court in the future will provide a definitive ruling on the classification of NFT securities.

There is a sense that the NFT era is wrapping up its legal reckoning in the same quiet, document-heavy manner that it began: with massive initial noise followed by something far more subdued. This is evident when these two settlements land in the same news cycle. Real money is being sent to Top Shot collectors this week. Additionally, they represent a minor portion of the expenditures made by many of those collectors and a footnote in what was once referred to as a revolution in digital ownership.