End of a short era
Less than three years after launching its NFT marketplace, DraftKings has suddenly closed it. The gambling operator is a defendant in a class-action lawsuit relating to tokens that were available through the platform, with the plaintiff claiming that it was offering unregistered securities.
the closure is due to “recent legal developments”
The announcement that the NFT Marketplace posted on its website on Tuesday mentioned that the closure is due to “recent legal developments.”
Anyone who still has tokens relating to the Reignmaker digital game can exchange them for cash compensation and DraftKings said it will provide regular updates to ensure that customers have access to the necessary support.
Bad timing
Despite the shutdown, DraftKings said that it was proud with what the marketplace had achieved in a short period of time, reflecting the company’s attitude to “innovate and disrupt” to try to provide the best products to its users.
DraftKings initially announced its intention to launch a marketplace for NFTs in July 2021, a time when the sector was going through a boom. It went live a couple of months later and rolled out the Reignmakers initiative in March 2022 which saw users collect different NFTs of athletes to gain entry into certain fantasy sports competitions.
The overall NFT market fell into decline just a few months later, leading to plummeting prices.
In front of the courts
Then the legal issues began to crop up, with Justin Dufour initially filing a lawsuit against the company and some of its senior executives in March 2023. He claimed that he lost $14,000 after buying NFTs through the marketplace.
DraftKings’ attempt to dismiss the case was unsuccessful
DraftKings’ attempt to dismiss the case was unsuccessful, with Judge Denise Casper saying earlier this month that the allegations have merit. She explained how the tokens initially appear to tick all the boxes to be categorized as a security because people invest money, the investment is a common enterprise, and it contains the expectation of profit that isn’t dependent on the individual investor.
The judge also pointed towards a podcast featuring well-known entrepreneur Gary Vaynerchuk and DraftKings Chief Transformation Officer Jason Robins in which they said that the NFTs were more than just collectibles or entertainment, that they also presented an opportunity to make money.