DraftKings’substantial investment in the NFT space has sparked controversy. Prices have plummeted and users are less interested. A class action lawsuit is also pending against DraftKings for allegedly marketing NFTs as securities, without proper registration. DraftKings will continue to promote and partner with NFT-based NFTs as long as the marketplace is active.
The Plaintiff Believed That Profits Were Guaranteed
In 2021, the US’s largest operator entered NFT space to capitalize on the new trend and increase player engagement. DraftKings has steadily grown its ecosystem by partnering with different leagues and expanding the offerings. The operator’s ambitions have been stifled by a sharp decline in interest and falling NFT prices. This has even led to legal problems.
DraftKings is being sued in a new class action. The lawsuit claims that DraftKings misled investors about the long-term value of their NFTs. Justin Dufoe, an Illinois resident claims that he has lost more than $14,000 after his NFTs dramatically declined in value. Due to the marketing of NFTs as securities, the plaintiff believed he would make surefire profits trading them.
The defendants had knowledge of facts that indicated that the NFTs they sold and promoted were securities under federal and state securities laws. However, they failed to register their NFTs in securities registrations.
Justin Dufoe v. DraftKings, Inc.
Dufoe claimed that the value of his purchase depended on DraftKings management efforts during the purchase as well as their closed secondary market. All investors who bought DraftKings NFTs on or after August 11, 2021 are included in the proposed lawsuit. These cases, regardless of the final verdict by the court, threaten to undermine trust in NFTs and depreciate even further.
DraftKings NFT Marketplace is Here to Stay
NFTs were not spared by FTX’s implosion, which sent their prices plummeting. The situation was not improved by the waning interest in the technology and the numerous high-profile scandals in which hackers stole NFTs owned celebrities did not help. Despite these negative pressures, it appears that the market has reached equilibrium with the number transactions steadily increasing in the first month of 2023.
NFTs are novelty items that can be used for speculation and not a way to make real money. Their accessibility allows for new users to be attracted and keeps them interested for as long as they can. Companies like DraftKings that have established secondary markets reap the rewards of resale and commissions.