Nike Sued Over Abrupt Shutdown of RTFKT NFT Platform

Nike is facing a proposed class action lawsuit after the abrupt closure of its RTFKT NFT platform, which has left many investors feeling deceived and financially harmed. The lawsuit claims that the company’s actions amounted to a "rug pull," leaving purchasers of Nike-themed NFTs with worthless assets.

Key Takeaways

• A class action lawsuit has been filed against Nike for shutting down its RTFKT NFT platform.

• Plaintiffs allege they were misled about the nature of the NFTs, claiming they are unregistered securities.

• The lawsuit seeks over $5 million in damages and highlights the uncertain legal status of NFTs.

Background of the Lawsuit

The lawsuit was initiated by Australian resident Jagdeep Cheema and a group of other purchasers in a Brooklyn federal court. They argue that the value of their RTFKT tokens was heavily reliant on Nike's promotional efforts. When Nike ceased support for the platform in December 2024, the demand for these NFTs plummeted, leaving investors with significant losses.

Nike acquired RTFKT in December 2021, aiming to leverage the brand's innovative approach to digital collectibles. The platform allowed users to purchase NFTs that could be redeemed for real-life sneakers, including exclusive designs like limited-edition Air Force 1s. However, the sudden wind-down of RTFKT operations has raised questions about the sustainability of such digital assets.

Allegations Against Nike

The plaintiffs allege that:

• They would not have purchased the NFTs at the prices they did if they had known the tokens were unregistered securities.

• Nike's actions constituted a deceptive practice, as they created a false expectation of ongoing support and value for the NFTs.

• The lawsuit seeks damages exceeding $5 million, citing violations of consumer protection laws across multiple states, including New York, California, Florida, and Oregon.

The Legal Landscape of NFTs

The legal status of NFTs remains a contentious issue, with ongoing debates about whether they should be classified as securities under federal law. The plaintiffs in this case are applying the Howey Test, a legal standard used to determine whether certain transactions qualify as investment contracts. They argue that Nike's promotion of RTFKT NFTs created a reasonable expectation of profit for investors.

Implications for the NFT Market

This lawsuit could have significant implications for the NFT market, particularly for companies venturing into this space. If the court rules in favor of the plaintiffs, it may set a precedent that could classify NFTs as securities, leading to stricter regulations and oversight.

As the case unfolds, it will be crucial to monitor how it impacts both consumer confidence in NFTs and the broader digital asset market. The outcome may influence how companies approach NFT projects in the future, potentially leading to more transparent practices and clearer legal frameworks.

Nike has yet to respond publicly to the lawsuit, and the legal proceedings are expected to draw attention from both the tech and legal communities as they navigate the complexities of digital assets and consumer rights.

Sources

• Nike Faces Potential Class Action Lawsuit for Shuttering RTFKT NFTs, WWD.

• Nike sued over closure of crypto business, Reuters.

• Nike is facing a lawsuit from people who bought its NFTs, The Verge.