The ruling by a 👨⚖️ that found 🏀 Top Shot NFTs may be 📈 securities follows areas like libel, in which 👩⚖️s have said 🗣ing 💩 about a 👨💼 who gets 🤯 or 😢 can cost you 💰.
In refusing to throw out a class action lawsuit arguing that NBA Top Shot NFTs may be securities, a federal judge has ruled that emojis can be financial advice.
Other courts have ruled that emojis, along with GIFs, JPEGs, memes, pictures and "other wordless methods" of communication can be used in libel, harassment and criminal trials. And while this case was about emojis, there have already been rulings that the artwork in NFTs can be a form of speech as well.
In his Feb. 22 ruling, Federal District Judge Victor Marrero found that tweets made by the producer of the Top Shot Moments NFTs holding basketball highlight reel clips were marketing materials that objectively led purchasers to expect profits.
That was part of a broader ruling about whether non-fungible tokens could meet the four-part definition of a security, one of which is that the purchaser invests with the expectation of a profit.
Looking at a series of tweets made by Dapper Labs about its Top Shot NFTs, Judge Marrero pointed out that each one "promotes a recent sale or statistics of recent sales of Moments on the Marketplace." He said:
"And although the literal word 'profit' is not included in any of the tweets, the 'rocket ship' emoji, 'stock chart' emoji, and 'money bags' emoji objectively mean one thing: A financial return on investment."
Pointing to the tweet in question, which Judge Marrero reproduced in his ruling, former Securities and Exchange Commission (SEC) Branch Chief Lisa Braganca said:
"Users of these emojis are hereby warned of the legal consequences of their use."
Determining Intent
One key is determining the intent of wordless communications, attorney Heather King wrote in the American Bar Association's January 2022 Law Practice magazine.
For that, context is vital as it helps courts and other regulators determine intent, she wrote, noting a defamation lawsuit in which the use of a "sticking out the tongue" emoji was found to be a joke, and another in which use of a rat emoticon was determined to represent an accusation of being a snitch in a harassment case.
That's why Judge Marrero didn't buy the argument that the Dapper Labs emoji tweets "merely provide accurate facts regarding recent sales, and do not reference any gains or losses."
Pointing to the sales structure of the packs of unknown Moments NFTs — which are similar to how cardboard basketball cards are sold — he noted that "Dapper Labs markets Moments based on scarcity, offering common, rare, legendary, and other premium packs," with prices rising with the rarity of the packs. He added:
"Taken together with the Tweets promoting record high sales, exponentially higher than the price of Moments in a pack, makes plausible that Dapper Labs objectively led purchasers to expect that they would realize the same gains."
NFT Expression
A similar point was made in the recent trademark infringement case over an artist's sale of "MetaBirkin" NFTs, based on Hermès' five-figure Birkin handbags.
Ruling that the "MetaBirkins were digital images capable of constituting a form of artistic expression, the court held that the images were entitled to First Amendment protection," the National Law Review noted.
However, a jury found that the images were commercial — trying to play off the Birkin brand — rather than artistic based on the way they were sold and other comments made by their creator.
