tl;dr
DraftKings has agreed to a $10 million settlement in a class action lawsuit alleging violation of Federal Securities Law through the sale of NFTs. The settlement will compensate those who transacted in DraftKings NFTs. The lawsuit, filed in 2023, claimed that DraftKings' NFTs were unregistered secur...
DraftKings has agreed to a $10 million settlement in a class action lawsuit alleging violation of Federal Securities Law through the sale of NFTs. The settlement will compensate those who transacted in DraftKings NFTs. The lawsuit, filed in 2023, claimed that DraftKings' NFTs were unregistered securities. The company's NFT fantasy sports offering, DraftKings Reignmakers, was shut down after a judge's denial of dismissal. The offering had facilitated over 10 million transactions and more than $280 million in trading volume. The settlement is pending final approval, and DraftKings Inc. shares are up 1.1% in the last 24 hours and more than 19% year to date.
The settlement, negotiated by both parties at an arm’s length, would see the company pay $10 million cash to a settlement fund, which will pay for legal fees, settlement costs, and compensation to each participating class member. The suit was filed by lead plaintiff Justin Dufoe on behalf of himself and others who purchased or acquired DraftKings NFTs, seeking damages based on the allegations that its NFTs were unregistered securities. The fantasy sports company previously attempted to get it dismissed but was denied by a U.S. District Court judge in Massachusetts, leading to the immediate shuttering of its NFT fantasy sports offering, DraftKings Reignmakers.
The company amassed more than $280 million in total trading volume for the product according to CryptoSlam, facilitating more than 10 million transactions on its marketplace in the process. Around the time of the product closure, users were offered the opportunity to relinquish their Reignmakers NFTs for cash or move them to a self-custody wallet. A final approval hearing for the settlement is expected to occur later this year. DraftKings Inc. shares (DKNG) trade on the Nasdaq Exchange and are up 1.1% in the last 24 hours and more than 19% year to date.