DraftKings has closed down its Reignmakers and NFT marketplace due to "recent legal developments," a DraftKings spokesperson told the Action Network on Tuesday.
The news comes after a federal judge permitted a class action lawsuit to continue that alleged DraftKings' NFT business were unregistered securities.
Several companies of the ilk — like Commonwealth and NBA Top Shot — have faced similar regulatory pushback on allegations that the companies were selling unregistered securities.
Dapper Labs, which owns NBA Top Shot, was forced to pay $4 million as part of a class action lawsuit from disgruntled customers that alleged the company was illegally offering securities.
And Commonwealth (which takes investments from users for future winnings on horses and golfers) was forced to restructure its processes and refund investments as a result of comparable regulatory crackdowns.
DraftKings' Reignmakers allowed users to invest in digital, non-fungible tokens (NFTs) that were used to compete against other players in contests similar to traditional and daily fantasy football contests. Users could also speculate on the value of those NFTs.
The spokesperson said the company's NFTs and Reignmakers digital game pieces will remain accessible and transferable as they phase away from the business. DraftKings said on its website that it "intend[s] to allow for [an] exchange of cash payment (subject to certain conditions) beginning within a week after July 30, 2024."
All Reignmakers contests are shut down as of Tuesday.
