- DraftKings is closing its NFT marketplace, and Reignmakers game
- DraftKings is subject to a federal class action lawsuit claiming its NFTs are unregistered securities
DraftKings is closing its NFT marketplace and Reignmakers game due to recent legal developments.
What Legal Developments on DraftKings Means?
DraftKings is the creator of two NFT services, one of which is online betting and the other is the fantasy sports game Reignmakers.
On Tuesday, July 30, DraftKings announced the closure of both services, citing “recent legal developments” regarding NFT as the reason.
More specifically, DraftKings is facing a federal class action lawsuit alleging that the company’s NFTs are unregistered securities.
Responsible for the decision is a U.S. Treasury Department assessment that identified the risks associated with NFTs in May:
- Susceptibility to theft, fraud, and use in money laundering
- NFTs can be exploited because of vulnerabilities in cybersecurity, copyright and trademark protection
- Many NFT companies and platforms lack sufficient internal controls to prevent threats to market integrity
In the announcement, DraftKings expressed:
“This decision was not made lightly, and we believe it is the right course of action.”
Despite the immediate closure, customers can still access their NFTs and Reignmakers assets through the DraftKings platform’s My Portfolio page.
The company also offers compensation:
“Due to this update, we have decided to offer all holders of Reignmakers digital game pieces the opportunity to relinquish those game pieces to DraftKings in exchange for a cash payment (subject to certain conditions).
Conclusions
Regulations regarding NFT are less favorable than those for Bitcoin and some other cryptocurrencies, especially considering the surges they have shown during their popularity.
It may have created a bias in most decision-makers, but the technical potential of NFT exists, and many companies like Sony plan to incorporate it into their ecosystem, which you can read more about here.
Overall, it can be assumed that NFT is still waiting for its moment of mass adoption in areas where it does solve many technical problems.
However, the excessive popularity we saw a couple of years ago has distanced that moment. We will be watching closely for NFT’s second attempt at mass adaptation.
