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.
William Mastrianna advises clients on corporate and securities matters, capital markets transactions, corporate governance considerations and public company disclosure and compliance obligations.
Prior to joining Covington, Mr. Mastrianna served as an attorney-adviser for over five years in the U.S. Securities and Exchange Commission’s Division of Corporation Finance. While at the SEC, he was responsible for reviewing and analyzing a wide range of transactional and securities compliance matters relating to IPOs, offerings of equity and debt securities, M&A transactions, proxy solicitations, and periodic and current reporting. Mr. Mastrianna served as both an examiner and reviewer on the Rule 14a-8 Shareholder Proposal Taskforce in the Division’s Office of Chief Counsel. While on the taskforce, he was responsible for evaluating and recommending the disposition of no-action requests seeking to exclude shareholder proposals.
While at the SEC, Mr. Mastrianna was seconded to the U.S. Department of the Treasury to serve as a senior policy advisor to the Deputy Assistant Secretary for Capital Markets.