DraftKings has agreed to settle a category motion lawsuit which alleged it violated Federal Securities Legislation when it bought NFTs on its market, in response to a Federal courtroom submitting on Wednesday.
The settlement, which was negotiated by each events “at an arm’s size,” would see the corporate pay $10 million money to a settlement fund which can pay for authorized charges, settlement prices, and compensation to every collaborating class member, outlined as “individuals or entities who bought, acquired, bought, disposed of, owned, held, used, or in any other case transacted in NFTs in a DraftKings account.”
The movement for preliminary approval highlighted the “inherent dangers and inevitable delays of continued litigation” and indicated that the settlement was “truthful, affordable, and in the most effective curiosity of the Settlement Class.”
The swimsuit was initially filed in 2023 by lead plaintiff Justin Dufoe on behalf of himself and others who bought or acquired DraftKings NFTs, in search of damages based mostly on the allegations that its NFTs had been unregistered securities.
The fantasy sports activities firm beforehand tried to get it dismissed however was denied by a U.S. District Court docket decide in Massachusetts, resulting in the rapid shuttering of its NFT fantasy sports activities providing, DraftKings Reignmakers.
Reignmakers provided customers the chance to enter fantasy sports activities contests much like the corporate’s every day fantasy sports activities choices, utilizing collectible NFTs on the Ethereum scaling blockchain Polygon to fill out lineups stuffed with gamers from the PGA Tour, UFC, and NFL.
The corporate amassed greater than $280 million in whole buying and selling quantity for the product in response to CryptoSlam, facilitating greater than 10 million transactions on its market within the course of.
Across the time of the product closure, customers had been provided the chance to relinquish their Reignmakers NFTs for money, or transfer them to a self-custody pockets. In accordance with a web page devoted to Reignmakers on the DraftKings web site, any participant who accepted a money cost for his or her recreation items had their NFTs burned if they didn’t transfer them to a self-custody pockets by Oct. 31, 2024.
“In keeping with our progressive spirit, we ventured into the NFT-based sports activities world with Reignmakers and achieved a lot in such a brief time frame,” the DK Workforce wrote on the web page.
A closing approval listening to for the settlement is anticipated to happen later this yr.
DraftKings Inc. shares (DKNG) commerce on the Nasdaq Alternate and are up 1.1% within the final 24 hours and greater than 19% yr to this point.
By James Rubin
