The class action suit from DraftKings buyers alleges that NFTs are investment contracts.
A U.S. judge in Massachusetts has denied a motion to dismiss a class action suit against DraftKings alleging its NFTs are securities.A U.S. Judge in Massachusetts has denied a move by DraftKings to dismiss a class action lawsuit brought on by buyers of its non-fungible tokens .
The suit alleges that the tokens are investment contracts, setting the stage for a future court battle on whether NFTs are securities. DraftKings offers sports-themed NFTs on its marketplace via the Polygon blockchain.
It is plausibly alleged that the NFTs' values were dependent on the success of the DraftKings Marketplace, the court found, noting that the value moves in tandem with interest in that specific marketplace, an issue that has been addressed in prior cases examining NFTs.to pay $4 million to settle a similar class action suit. It was reported earlier by Fortune that the SEC had once launched an investigation into Dapper Labs but closed it in September 2023.
However, the difference between Dapper Labs' NFTs and those offered by DraftKings is that Dapper uses its own proprietary blockchain called Flow, while DraftKings issues its tokens on Polygon.because its Flow blockchain created a dependency on Dapper’s managerial efforts and success, satisfying the Howey test criteria of a common enterprise and expectation of profit.in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin.
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