SEC quietly investigated and closed case against altcoin FLOW founder Dapper Labs in September

• Fortune obtained a document revealing the SEC investigated FLOW's Dapper Labs and closed the case in September.
• The document didn't reveal any reason for the investigation or its closure.
• Dapper Labs spokesperson says the company is unaware of the investigation.

Flow (FLOW) cryptocurrency received attention on Monday after Fortune obtained a document revealing the Securities & Exchange Commission (SEC) closed an investigation on its founding company, Dapper Labs, which is also responsible for developing NBA Top Shot and Crypto Kitties NFTs.

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FLOW's price stagnancy

FLOW has been trading in the red for the past month despite a general market rally that saw many altcoins recording impressive gains. The bearish price movement is owing to the declining sales Dapper Labs has been facing since 2022.

Dapper Labs, which burst into the limelight with the Crypto Kitties NFT game and a follow-up with the NBA Top Shot NFT trading marketplace, quickly garnered massive attention within the crypto market. It fueled the NFT frenzy of 2021, launching the FLOW token, and its NFT monthly sales skyrocketed to $226 million in February 2021, according to CryptoSlam.

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However, Dapper Labs' NFT sales plummeted following the crypto market crash of 2022.

SEC closes Dapper Labs investigation

In an internal document Fortune obtained, the SEC closed an investigation against Dapper Labs on September 29, 2023. Fortune said that the "Case Closing Report" was terminated by David Hirsch, SEC's head of Crypto Asset & Cyber Unit. The document didn't reveal reasons for the investigation, when it began or why the SEC closed it. A Dapper Labs spokesperson told Fortune that the company wasn't aware of the Investigation as the SEC never contacted them.

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Dapper Labs and its CEO Roham Gharegozlu had also faced legal action earlier when investors argued that the company's NBA Top Shot NFTs were securities and should have been registered with regulators. In February 2023, the judge presiding over the case refused to dismiss the suit, highlighting that the securities claim had merit.