DraftKings Shuts Down NFT Marketplace
DraftKings has announced the immediate closure of its NFT Marketplace, which launched three years ago.
Brief History of the Venture
The NFT Marketplace, introduced in 2021, operated on a Polygon-powered solution based on the Ethereum platform. In March 2022, DraftKings expanded its offerings with Reignmakers, attracting attention by partnering with DJ Steve Aoki to market the new initiative.
This recent decision affects both the general marketplace and the specific Reignmakers initiative, where users could compile NFTs of athletes to participate in fantasy sports contests.
Following the shutdown, DraftKings has stated that customers holding Reignmaker digital game pieces can return them for cash compensation.
Legal Context
The closure comes shortly after a Massachusetts District Court judge denied DraftKings’s motion to dismiss a class action lawsuit related to the NFT Marketplace.
Filed by Justin Dufoe in March 2023, the lawsuit alleges that the NFT tokens sold on the marketplace constituted unregistered securities.
Judge Denise J Casper, in her written dismissal, concluded that Dufoe’s claims have merit, referencing the Howey Test. This legal framework assesses if a transaction qualifies as an investment contract, considering factors such as the investment of money, involvement in a common enterprise, and the expectation of profit derived from the efforts of a promoter or third party.
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