A Massachusetts judge has rejected DraftKings’ request to dismiss a class-action lawsuit filed by its NFT buyers. The lawsuit claims that the tokens are investment contracts, setting the stage for future court battles over whether NFTs are securities. DraftKings is a sports-themed NFT based on the Polygon blockchain.
Buyer Justin Dufoe first filed a lawsuit against DraftKings in March 2023 on behalf of other owners, saying the NFTs meet the requirements of the Howey test.
In this recent ruling, the court agreed that DraftKings’ NFTs involve the investment of funds, the pooling of assets into a common enterprise, the sharing of risks and profits, and a reasonable expectation of profits from DraftKings’ initiatives, and therefore it is reasonable to classify them as securities under the Howey test.
The court found that it is reasonable to say that the value of the NFTs depends on the success of the DraftKings market, noting that the value changes in sync with the interest of a particular market, which is an issue that has been resolved in previous cases examining NFTs. (CoinDesk)