One of the United States’ most prominent securities litigation practices has launched an investigation into potential violations of federal securities laws related to FLOW, the native cryptocurrency of the Flow blockchain network developed by Dapper Labs. Rosen Law Firm, which has secured some of the largest securities class action settlements in American legal history, is actively encouraging investors who sustained losses on FLOW tokens to contact the firm and explore their legal options ahead of any formal class action proceeding.
The investigation, flagged across multiple PRNewswire notices published in recent weeks, signals a deepening legal scrutiny of digital asset offerings that regulators and plaintiffs’ attorneys have increasingly argued may constitute unregistered securities under U.S. law. The firm has not yet specified a defined class period, but legal observers note that the pattern of investor outreach typically precedes a formal complaint filing within weeks or months.
Legal Pressure Mounts on Dapper Labs and the Flow Ecosystem
Flow blockchain was launched by Dapper Labs, the Canadian company best known for creating NBA Top Shot, a platform that generated hundreds of millions of dollars in non-fungible token sales during the 2020 and 2021 crypto boom. FLOW tokens were sold to retail and institutional investors as a key component of that ecosystem, with early private sales and public distributions raising substantial capital. The token reached an all-time high of approximately $46 in April 2021 before suffering a prolonged decline that has erased the vast majority of its peak value, leaving many retail investors with significant unrealized or realized losses.
Rosen Law Firm’s interest reflects a broader litigation strategy that has gained traction since the U.S. Securities and Exchange Commission began asserting that many cryptocurrency tokens sold to the public may meet the legal definition of securities under the so-called Howey Test — a standard derived from a 1946 Supreme Court ruling. If FLOW is deemed a security, its issuers could face liability for failing to register the offering and for any alleged material misstatements or omissions made to investors. A separate PRNewswire release from an earlier phase of the firm’s outreach underscored that the investigation has been ongoing for a sustained period, suggesting investigators have been accumulating evidence rather than acting impulsively on short-term price volatility.
Investor Rights and the Growing Wave of Crypto Class Actions
Rosen Law Firm has positioned itself at the forefront of cryptocurrency-related securities litigation, having previously pursued cases against issuers and exchanges across the digital asset sector. The firm emphasizes that there is no cost to investors for the initial inquiry and that any eventual class action would be prosecuted on a contingency basis, meaning attorneys collect fees only upon a successful recovery. This structure has historically lowered the barrier for retail investors — often the most exposed demographic in speculative token markets — to pursue legal remedies they might otherwise forgo due to cost concerns.
The sustained cadence of investor alerts, including notices detailed in additional PRNewswire filings, indicates that the firm is casting a wide net to identify a sufficient number of plaintiffs with meaningful losses to support a viable class. Under securities class action rules, a lead plaintiff is typically selected based on the size of financial losses suffered, and firms often run parallel outreach campaigns to locate the most qualified candidate. Investors who purchased FLOW tokens at elevated prices and held through the subsequent downturn are particularly encouraged to document their transaction history in preparation for potential litigation.
The regulatory and legal environment surrounding digital assets continues to evolve rapidly, with courts and federal agencies still debating the boundaries of securities law as applied to blockchain-based tokens. The outcome of this investigation, should it proceed to litigation, could carry implications well beyond the Flow ecosystem. For context on how shifting regulatory authority is reshaping financial oversight more broadly, see The Fiscalist’s earlier coverage of the independent agencies ruling and its downstream effects on enforcement posture across financial markets. Retail participants in speculative digital asset markets may also benefit from reviewing data on the persistent gap between investor expectations and actual market returns, a dynamic explored in our analysis of the return expectations gap facing non-institutional participants.