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
Michael Reed advises on public and private transactional, strategic, regulatory, compliance, corporate finance and disclosure matters. He represents publicly and privately held companies and private equity firms, with an emphasis on financial institutions, fintech companies and diversified companies.
Michael rejoins the firm after serving as Executive Vice President, Chief Risk Officer of WSFS Financial Corporation, where he oversaw all risk management functions including credit risk management, enterprise risk management, real estate services, asset recovery, legal, internal audit, loan review, and regulatory compliance. In addition, Michael was a leading member of WSFS Financial’s strategic development team and co-led a number of strategic initiatives including the acquisition and integration of Bryn Mawr Bank Corporation, a strategic partnership with Upstart and a $150 million senior debt public offering.
Michael has regularly represented public and privately held clients in all types of acquisitions, including stock-for-stock mergers, cash mergers, going private transactions, joint ventures, strategic alliances and stock and asset purchase and sale transactions. He also has represented underwriters and issuers in capital market transactions, including public and private offerings of debt, equity, and hybrid securities, and complex structured finance transactions.
Michael advises and represents boards of directors on a variety matters, including strategic transactions, corporate governance issues, and legal issues and fiduciary duties in the context of strategic transactions and corporate governance.
Michael is a frequent lecturer and author on a variety of topics including mergers and acquisitions, fiduciary duties, disclosure matters, corporate governance, and securities laws issues.