False sense of security
DraftKings sees motion to dismiss NFT court case denied
Massachusetts court to hear class action arguing NFTs are a security.
In Loose change: Polymarket’s faux pas, Messi’s token hype.
Mt. Gox and German authorities’ Bitcoin sales roil the markets.
Crypto-gambling BC.Game faces Swedish ire.
And the lights all went out in Massachusetts.
Court blow
Denied: DraftKings has been dealt a blow by a Massachusetts court, which refused the company's motion to dismiss a class action that contends the NFTs the company sells via its Marketplace subsidiary represent securities.
The legal action is led by plaintiff Justin Dufoe, who claimed DraftKings’ NFTs constitute unregistered securities and that many of the investors who buy them “lack the technical and financial sophistication necessary to evaluate the risks associated with their investment.”
Dufoe said he and other customers purchased DraftKings NFTs at the company’s first public offering with the aim to “realize profits.”
The suit said this would be achieved via selling their NFTs on the secondary market platform that DraftKings owned and managed solely.
They were, therefore, “entirely dependent” on DraftKings’ efforts when they purchased the NFTs and later sold them on Marketplace.
Buyer beware: The legal action claimed DraftKings knew the NFTs they advertised and sold were securities under federal and state securities laws but failed to register them. The class action reads that “defendants reaped or will reap hundreds of millions of dollars in profits from their unregistered securities sales.”
DraftKings Marketplace is charged with violating the Securities Act of 1933, the Securities Exchange Act of 1934 and two Massachusetts general laws.
The plaintiff is seeking a jury trial and an award of rescissory damages and interest for himself and other class members.
Marketplace background
Catch the wave: DraftKings launched its Marketplace offering at the height of the mania around NFTs in the summer of 2021. The sports-betting and daily fantasy sports operator began offering “curated NFT drops” via a relationship with the Autograph platform.
DraftKings customers are able to buy, sell or trade via their existing player accounts.
Despite the boom-era timing, DraftKings insisted the move wasn’t jumping on a bandwagon. “DraftKings Marketplace will sit at the center of this technological and cultural phenomenon,” said the company’s co-founder and president Matt Kalish at the time.
Later that year, CEO Jason Robins said Marketplace was a good way for DraftKings to reach new customer segments.
NFIed: However, the last mention of the product came over two years ago when Robins said the company now had a “proprietary end-to-end in-house NFT factory.”
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Loose change
Alright Nostradamus: Punters on the Polymarket prediction market called it wrong over the weekend when the French election showed the left-leaning New Popular Front gaining the most seats, contrary to price heading up to the poll.
In the week before last Sunday’s second round of voting, Polymarket’s ‘Who will win the most seats’ market was suggesting the far right Rassemblement National would win the race at a canter.
But the opinion polls, the pundits and the prediction market punters were blindsided by the extent of tactical voting and the appeal of the left’s message.
Further reading: Financial institutions ready to make a bet on prediction markets.
Griid, lock: Bitcoin miner CleanSpark has bought mining infrastructure provider GRIID for $155m in an all-stock transaction. CleanSpark will assume all of GRIID’s debts, in return for a hosting agreement that allocates 20 megawatts of power to CleanSpark.
Getting Messi: Lionel Messi promoted Solana-based meme coin Water on his Instagram story on Monday, swiftly prompting a 350% rise in its price. Messi shared an image displaying the token's mascot – a cartoon glass of water – perched on his shoulder, with a link to the project’s Instagram page.
Market watch
Kraut rocks: Transfers related to potential Mt. Gox creditor payouts and separate moves by the German government to offload up to $75m worth of Bitcoin (see below) seized as a result of criminal cases via exchanges including Kraken, Coinbase and Bitstamp saw the price of BTC endure a wobbly week.
Bitcoin was down nearly 5% on the Mt. Gox news and once again swooned early on Monday, dragging Ether down with it. But both recovered ground, with Ether boosted by reports that ETF approval by the SEC could be just days away.
🎢 Volatile substances: Bitcoin and Ether’s up and down week
Annals of crypto gambling
BC.Game’s Swedish troubles
Rocket from the crypto: Crypto-based gambling operator BC.Game has landed itself in hot water in Sweden after the country’s gambling regulator initiated a regulatory action against the company. Spelinspektionen claimed the operator advertised that customers could deposit Swedish krona and used Swedish-facing affiliate marketing partners.
An entity called Small House, which is licensed in Curaçao, operates sites including hash.game, bc.fun, bc.casino, bcgame.im and bc.online.
Spelinspektionen said it was unable to prove Swedish consumers were prevented from registering and creating an account on the relevant website.
BC.Game is yet to respond to the allegations.
Fleet foxes: Staying with BC.Game, the Isle of Man-licensed entity has been named the front-of-shirt sponsor of newly promoted English Premier League side Leicester City, in a reported $40m a year, two-season deal.
The UK-facing entity works via a white label arrangement with TGP Europe, the same host for rival Stake.com’s UK-facing operations.
Bitblox interview
A bet on the Bit: After crash games, the team behind another Isle of Man-licensed entity, Bitblox, believe betting on movements in the price of Bitcoin will be the next big thing; with the promise of being able to get involved without knowing an awful lot about the intricacies of crypto.
“There are already plenty of slots on the market, or games that allow players to gamble with cryptocurrency,” said CEO Brandt Page.
“But we are the only games provider to offer crypto prediction games.”
Hands off: He suggested the concept behind the game is very easy to understand. “Players can guess whether the price of Bitcoin will go up or down over a period of either 20 or 60 seconds,” he added.
“Ultimately, we’re giving bettors the chance to understand crypto without having to touch it.”
He noted that early tests showed customers wanted the gameplay to be even quicker, so a Turbo option was added to the regular Up or Down game.
Page said LatAm was one particular target market. “Players have shown a preference for quick content, making our games well-suited to bettors across the region,” he added.
“Like many gambling companies, the Latin American market has certainly caught our attention.”
Saxon hoard
Seen this movie before: The German authorities have begun the process of auctioning off €2.5bn worth of Bitcoin that was taken when the police shut down the now-defunct film piracy site Movie2k in January.
It was the largest seizure of Bitcoin in Germany and the sale is thought to have contributed to a mini-slump in the price of the cryptocurrency late last week.
The main beneficiary of the sale will be the state of Saxony.
Power and the glory: According to Arkham Intelligence, about a fifth of what has been dubbed the ‘Saxon treasure’ has been moved since the middle of June. The website has reported the Bitcoin in question as being transferred to a slate of exchanges by the German federal criminal police office on behalf of the state government of Saxony.
The Saxony attorney-general’s office refused to confirm the sale of the Bitcoin.
It had previously said it was still weighing up what to do with the cryptocurrency.
Do it yourself: The move by the German government came in for some criticism, with Tron founder Justin Sun venting on X that he was willing to buy the Bitcoin directly to minimize market impact.
Events calendar
Jul 8-11: EthCC, Brussels
Aug 7: Robinhood Q2s
Aug 13-14: Blockchain Futurist Conference, Toronto
Sep 11-13: Permissionless II, Austin
Sep 25-26: European Blockchain Convention, Barcelona
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