Securities class action filed v. DraftKings, adding to mounting cases + risk for NFTs and NFT marketplaces

nftjedi

3 years ago

Yesterday, a proposed class action was filed in the District of Massachusetts against DraftKings for its sport-related NFTs sold on its DraftKings marketplace. You can download the complaint in DraftKings by clicking here.
The case adds to the mounting securities litigation over NFTs, platform tokens and staking, and cryptocurrency. Although there hasn’t been a final decision in any of these cases, the signs are ominous.
Of course, Congress can always step in and exempt at least some NFTs from securities regulation. But until it does, the courts will have to resolve whether NFTs and platform tokens are securities.
The Howey test applies. Under that test, the court examines the following three-step test:

We’ll have to wait and see if Blur’s planned airdrop of $300M worth of tokens in Season 3 continues as planned.
The SEC is already on record in classifying FTT–the token used by FTX–as securities. See here.
As usual, nothing on this website constitutes legal advice.