DraftKings has agreed to pay $10 million to settle allegations of selling unregistered securities through its NFT platform. If the court approves the settlement, compensation will be available to users who traded NFTs on DraftKings between August 2021 and the final ruling date.
The lawsuit against DraftKings
The legal case began in March 2023 when plaintiffs accused DraftKings of violating federal and Massachusetts securities laws. They claimed that the company not only sold NFTs but also profited from resales by charging a 5% fee on every marketplace transaction.
In July 2024, U.S. District Judge Denise J. Casper denied DraftKings' motion to dismiss the case, allowing all claims to proceed.
Following this, DraftKings shut down its NFT platform, leaving many NFT holders without liquidity. Investors were dissatisfied with this outcome, as the company offered only partial compensation.
After months of negotiations with an independent mediator, a $10 million settlement agreement was reached. The funds will be used for user compensation, legal expenses, and attorney fees.
Dispute with NFLPA and a new $65M lawsuit
DraftKings' legal troubles are not over. The company also faces a lawsuit from the National Football League Players Association (NFLPA), which accuses DraftKings of failing to pay royalties for using player images in NFTs.
DraftKings and the NFLPA began their partnership in 2021 when the company launched the Reignmakers NFT collection for its fantasy sports platform. However, after a court ruling classified NFTs as securities, DraftKings halted royalty payments in 2023, citing legal risks.
In August 2024, the NFLPA filed a lawsuit seeking approximately $65 million in compensation.
After months of legal proceedings, the parties reached a preliminary settlement in January 2025 and requested a 60-day delay in court proceedings until March 28 to finalize the agreement.
NFT market adapts to new regulations
Following the peak hype in 2021, the NFT market has declined but is adjusting to new conditions.
- In 2024, total NFT sales reached $8.83 billion, just 1.1% higher than in 2023 but significantly below the record $23.7 billion in 2022.
- Ethereum and Bitcoin led the market with $3.1 billion in sales each, followed by Solana with $1.4 billion.
- December 2024 showed signs of recovery with $877 million in NFT sales, but volumes dropped again to $677.73 million in January 2025.
Regulatory uncertainty remains a major factor affecting the NFT industry.
In 2024, the U.S. Securities and Exchange Commission (SEC) investigated OpenSea and other platforms for securities law compliance. However, in February 2025, the SEC closed its investigation into OpenSea without filing charges.
This move, along with the dismissal of the case against Coinbase, suggests a possible softening of the SEC’s stance on crypto assets.
Read Also:
- Are NFTs Dead? Analyzing the Current State of the NFT Market
- DWF Ventures Highlights Current NFT Market Trends
- NFT Hype Fades? Sotheby’s to Accept BTC and ETH at Auction in Saudi Arabia
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