Dapper Labs Investigation Targeted by SEC Since 2023 But Now Over

Key Points:

• The SEC concluded Dapper Labs investigation, known for NBA Top Shot and CryptoKitties, ended without disclosing reasons or dates.
• Dapper Labs faces a class action lawsuit over its NBA Top Shot Moments, alleging unregistered securities, amid a volatile NFT market.
• Despite layoffs and market fluctuations, Dapper Labs continues operations and partnerships with sports leagues.

The US Securities and Exchange Commission (SEC) has concluded an investigation into Dapper Labs, the prominent non-fungible token (NFT) company behind NBA Top Shot and CryptoKitties.

SEC Concludes Dapper Labs Investigation

The Dapper Labs investigation revealed in an internal SEC document obtained by Fortune, was terminated by David Hirsch, the regulator’s crypto and cyber unit chief, on September 29.

The one-page “Case Closing Report” did not disclose the reasons behind the Dapper Labs investigation, its commencement date, or the rationale for closing it. This development follows the SEC’s settlements with Impact Theory and Stoner Cats in August and mid-September, respectively, marking the agency’s initial actions against the NFT industry. The SEC alleged that both projects offered unregistered securities, violating federal law.

Dapper Labs, which has amassed over $600 million since its inception in 2018, is also embroiled in a class action lawsuit alleging that NBA Top Shot Moments, its NFTs, are unregistered securities. While the company claims it was unaware of the SEC investigation, it acknowledges the case’s closure.

CEO Gharegozlou Leads Resilient Strategy

Founded by Roham Gharegozlou in late 2017, Dapper Labs gained fame with CryptoKitties, a blockchain-based game. Its subsequent venture, NBA Top Shot, soared in popularity, generating over $226 million in monthly sales by February 2021. However, the NFT market crashed in 2022, leading Dapper Labs to downsize its workforce and undergo successive layoffs.

Despite the setbacks, Dapper Labs continues its operations with slightly fewer than 180 employees, focusing on partnerships with sports leagues like the NFL and LaLiga.