This week’s featured collector is Ayeetoeknee
Ayeetoeknee is a collector of Ethereum NFTs with a focus on sneakers. They also collect artwork by Ron English, a prolific counter-culture street artist. Browse Ayeetoeknee’s full collection at lazy.com/ayeetoeknee
A court case with major implications for the future of NFTs is now underway. The case could decide whether NFTs are securities that require regulation.
In May 2021, the creator of Top Shot was sued by an individual who argued that the NFTs of NBA moments were securities. Now, almost two years later, the case has entered the courtroom and one of the first rulings does not bode well.
A briefing from Skadden, Arps, Slate, Meagher & Flom LLP, a major multinational law firm, explains the situation:
Before the court was the question of whether Moments were investment contracts and therefore securities, which the court analyzed under the Howey test, which examines whether (i) there is an investment of money (ii) in a common enterprise (iii) with a reasonable expectation of profit derived solely by the promotional or managerial efforts of others.
Although the court has not made a decision on whether Top Shots are securities, the court did reject the motion to dismiss the case. This indicates that the court believes it is plausible that the NFTs are securities and, if the case continues, is willing to make a determination.
As an analysis from Blockworks points out: “It is unclear whether the case will proceed to trial or if a settlement may be reached.”
If the case does proceed to trial then there is the potential that a precedent could be set with wide-ranging implications for the NFT ecosystem. After all, if NFTs are securities then it would drastically limit the ability of artists to release them, marketplaces to sell them and individuals to collect them.
All eyes will be on the Top Shot case as it continues to move toward trial.
This week’s poll: Will the courts rule NFTs are securities?
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