DraftKings’ NFT dispute and VSiN sale challenges

DraftKings’ NFT dispute and VSiN sale challenges

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DraftKings’ NFT dispute and VSiN sale challenges

DraftKings is dealing with a class action lawsuit over NFTs and may sell VSiN at a significant loss.

A US judge in Massachusetts recently refused DraftKings’ attempt to dismiss a class action lawsuit involving its non-fungible tokens (NFTs), and the operator may be considering selling off its failed VSiN media firm at a substantial loss.

An ongoing class action lawsuit, filed by buyer Justin Dufoe on behalf of other NFT owners, claims that DraftKings’ sports-themed NFTs, available on the Polygon blockchain, qualify as investment contracts. This classification could potentially classify them as securities under the Howey test, which is a legal standard used to establish whether certain transactions are investment contracts.

As to the court’s decision, DraftKings’ NFTs entailed a collective investment of funds towards a common enterprise that shared benefits and risks. The Howey test’s conditions for securities are met by the value of these NFTs, according to the court, which also observed that there seemed to be a direct correlation between the two.

In rendering its decision, the court concluded that DraftKings’ NFTs comprised a collective investment of funds into a joint venture with probabilities and rewards shared. In line with the requirements for securities under the Howey test, the court observed that the value of these NFTs seemed to be closely correlated with the success of the DraftKings Marketplace.

The outcome of this ruling will influence the course of a landmark legal dispute over whether NFTs qualify as securities, a classification that would have a big impact on regulations for DraftKings and other similar platforms. The operator’s technological investments could be seriously jeopardized if NFTs are redefined as securities, which might also lay groundwork for additional legal action against the operator.

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