On February 22, 2023, a federal judge in the Southern District of New York issued a first-of-its-kind order allowing a securities class action lawsuit to proceed against the issuer of non-fungible tokens (“NFTs”) on the grounds that the NFTs are securities for purposes of federal securities laws. Friel v. Dapper Labs, Inc. et. al., Case No. 1:21-cv-05837-VM (S.D.N.Y). NFTs are digital tokens, frequently associated with digital content, for which ownership of the tokens is recorded on a blockchain. The order was issued in the context of a lawsuit against Dapper Labs, the creator and issuer of NBA Top Shot “Moments.” Moments are digital video clips of NBA game highlights and their associated NFTs minted by Dapper Labs. Moments are offered and sold on Dapper Labs’ proprietary digital platform, validated on Dapper Labs’ private blockchain (the “Flow Blockchain”) and trade on a secondary marketplace controlled by Dapper Labs. The lawsuit claims that Moments are securities and Dapper Labs offered and sold those securities in violation of the registration requirements of the federal securities laws. Dapper Labs filed a motion to dismiss the lawsuit, and the court rejected the motion, concluding that Moments are securities.
Continue Reading A Closer Look: Federal Court Concludes that Certain NFTs May Be Securities: Preliminary Determination in Ongoing NBA Top Shot Litigation
Charlotte May
Charlotte May, co-chair of the Financial Services Group and Fintech Initiative, advises public and private companies on corporate transactions, securities compliance, capital markets matters, and corporate governance, with particular experience in the financial services, fintech, and gaming sectors.
Charlotte represents companies in a wide range of transactional matters, including primary and secondary registered offerings, private placements, exchange offers, tender offers, mergers and acquisitions, partnerships, joint ventures, strategic alliances, and other complex corporate transactions.
She also advises public companies on SEC reporting, disclosure, and compliance matters, including periodic reports, proxy statements, beneficial ownership reports, public company disclosures, securities law compliance, and stock exchange requirements. Charlotte regularly counsels boards of directors and management teams on corporate governance matters, including board and committee composition, governance policies and procedures, internal and disclosure controls, insider trading policies, and related issues.
Charlotte maintains an active pro bono and nonprofit practice. Her recent work includes advising World Central Kitchen on contracts supporting meal delivery in response to humanitarian, climate, and community crises; advising Humane Rescue Alliance in its acquisition of St. Hubert’s Animal Welfare Center; and counseling nonprofit organizations, including Kitty of Angels, Inc. and Medical Student Orthopedic Society, Inc., on formation and 501(c)(3) matters.
Charlotte also serves as General Counsel to the Global Gaming Women Educational Foundation, a nonprofit organization focused on expanding professional development opportunities for women in the gaming industry. She is also a board member of Kitty of Angels, Inc., a Los Angeles-based nonprofit organization that she helped form to provide funds and resources for homeless cats and kittens.
Charlotte is active in the American Bar Association’s M&A community. She serves as Vice-Chair of the ABA M&A Committee, Co-Chair of the Women in M&A Subcommittee, and Chair of the ABA M&A Market Trends Subcommittee Public Target Deal Points Study. She also served as a Study Leader for the ABA’s Deal Points Study on Carveout Transactions.
Before joining Covington, Charlotte served as a judicial extern to the Honorable Consuelo B. Marshall of the U.S. District Court for the Central District of California.