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Jay-Z and Damon Dash, co-founders of Roc-A-Fella Records, are in a legal fight involving non-fungible tokens (NFTs).
It is not the first of such cases in the U.S. There have been more than half a dozen suits citing ownership and regulation of NFTs since the start of 2020. The asset has grown over the past year. OpenSea, the biggest NFT marketplace, soared from $8 million to $1 billion in just six months.
The Lawsuit Filed Against Dash
In June, Roc-A-Fella sued Dash to prevent him from auctioning off Reasonable Doubt, Jay-Z’s debut album as an NFT. The reasoning is that, even though Dash holds a one-third stake in the company, it owns the album. Hence, he does not possess any legal right to make sales regarding the NFT.
According to Dash’s lawyer, the artist is just trying to give rights to future royalties he has rights to as a one-third owner of Roc-A-Fella. Artists have done this since long ago. The company does not understand what goes through the minting process. Further, they do not care or understand what Dash is trying to do, his lawyer concluded.
Roc-A-Fella’s lawyer, Alex Spiro, did not give his comments.
NFT Cases Are on the Rise
Pratin Vallabhaneni, a partner with White & Case in Washington, said that more cases involving NTFs are likely. They will mostly be on behalf of consumers who have no understanding of their rights for government protection.
Gary DeWaal, a financial markets and regulation attorney in New York, said the issue was the unclear guidance from authorities. There is, so far, no meaningful regulatory guidance that impacts the future development of the space. However, it is not just the NFTs; it is the whole crypto space. Folks have to figure out the area in their way.
Christopher A. Cole, a partner with Crowell & Moring LLP in Washington, thinks the lawsuit should be a lesson. It should warn buyers and sellers of NFTs. Both of them should have full details of what exactly is on the market. Hence, they need to be careful from the beginning when the NFT comes into the light.
Jay-Z and Dash Animosity
These two have been going back and forth with disputes over the management of Roc-A-Fella. The latest clash makes it quite evident.
Dash insists that he never claimed to sell his interest in the album. Also, he never minted an NFT showing an ownership stake in either the company or album. The suit is part of Jay-Z’s plan to prevent him from selling his company’s stake.
Roc-A-Fella has instead accused Dash of disrupting a board meeting with an “angry and unprofessional rant.” It also stated that his motive for selling the rights to the album is his lack of income.
Initially, the court blocked Dash from making any sales regarding the album until they resolved the lawsuit. In July, he began an action starting with a $10 million bid for his Roc-A-Fella share.