NFTs
DraftKings closes NFT deal amid class action lawsuit
Quick summary:
- DraftKings is facing a class action lawsuit that claims its NFTs are securities.
- This comes amid the SEC’s increased crackdown on crypto assets that violate U.S. securities laws.
- Players in DraftKings’ Rainmakers fantasy sports game have received buyout offers, the email said.
DraftKings is exiting the non-fungible token (NFT) business, according to an email sent to customers Tuesday. The sports betting company said it is shutting down its NFT business effectively immediately, citing legal developments.
“After careful consideration, DraftKings has decided to discontinue Reignmakers and our NFT Marketplace, effective immediately, due to recent legal developments. This decision was not made lightly, and we believe it is the correct course of action,” the email read.
O announcement comes just weeks after a federal judge allowed a class action lawsuit against DraftKings to proceed based on a “plausible allegation” that DraftKings NFTs violated US securities laws.
The company entered the market during the NFT industry boom of 2021, with the vision that in ten years, the NFT business “could become huge.”
However, while some of the original players in the sector, such as Yuga Labs, have adapted to the changes in the industry amid the crypto winter of the past two years, many of the traditional brands have scaled back their activities.
DraftKings has been one of the few traditional players to remain active in the industry through its NFT-based fantasy sports game, Rainmakers.
But now, even that part of the business along with the company’s NFT marketplace is closing with Rainmakers players offering buyouts. On the other hand, NFT collectors will be allowed to access and transfer their assets.
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