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DraftKings to pay $10M in NFT settlement

DraftKings to pay $10M in NFT settlement

GrafaGrafa2025/03/03 10:30
By:Mahathir Bayena

DraftKings has agreed to a $10 million settlement in a class-action lawsuit with buyers of its non-fungible tokens (NFTs).

The lawsuit alleged that DraftKings sold unregistered securities through its now-shuttered marketplace.

Judge Denise Casper of the Boston federal court granted preliminary approval of the settlement on February 28, 2025.

The settlement resolves claims from lead plaintiff Justin Dufoe and the class, with the $10 million split among class members.

Dufoe also intends to request $50,000 for his efforts in litigating the case, in addition to attorneys’ fees of up to one-third of the settlement fund and litigation expenses.

The lawsuit, initially filed in March 2023, claimed DraftKings' NFTs were investment contracts under U.S. law and were offered as unregistered securities.

The suit also named DraftKings co-founders Jason Robins and Matt Kalish, along with finance boss Jason Park.

Dufoe claimed to have lost $14,000 by selling DraftKings NFTs at a loss and holding NFTs that had lost value.

DraftKings moved to dismiss the suit in September 2023, arguing the NFTs weren't investment contracts under the Howey test.

However, Judge Casper rejected this motion in July, stating the NFTs could be considered securities.

Subsequently, DraftKings shut down its NFT marketplace, citing "recent legal developments."

The class settlement motion argued that the closure made "the NFTs worthless," and DraftKings "offered certain NFT investors a fraction of what they had invested in the NFTs."

The settlement discussions began after DraftKings shut down its marketplace, culminating in a mediation resulting in the $10 million settlement.

The plaintiffs described the settlement as "fair, reasonable, and adequate," resulting from "vigorous litigation and serious, arm’s-length negotiation."

The settlement will compensate individuals who bought, held, or sold DraftKings NFTs between August 11, 2021, and the date of the judgment.

The plaintiffs estimate "realistic and supportable damages" ranging from $18 million to $58 million, calling the settlement an "excellent recovery under the circumstances."

This settlement is the second NFT-related settlement for DraftKings this year.

In January, DraftKings settled with the National Football League Players Association (NFLPA) over the use of NFL player likenesses in NFTs.

The details of that settlement remain undisclosed, with a stay until March 28 to finalise the agreement.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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