Nike is facing a class-action lawsuit filed in a New York federal court over the abrupt closure of its RTFKT division, which was responsible for creating Nike-themed NFTs and other crypto assets. The lawsuit, led by Australian resident Jagdeep Cheema, alleges that the sudden shutdown in December 2024 caused a sharp decline in demand for the NFTs, resulting in significant losses for buyers.
The plaintiffs claim that Nike:
- Sold Unregistered Securities: Nike promoted and sold NFTs without registering them properly with financial authorities, violating consumer protection laws in New York, California, Florida, and Oregon.
- Failed to Disclose Risks: Buyers argue that they would not have purchased the NFTs at the prices they did, or at all, had they known the tokens were unregistered securities and that Nike would unexpectedly exit the market.
- Pulled the Rug: The company allegedly "rugpulled" the community by closing RTFKT and cutting off demand for associated digital assets, causing the value of NFTs to plummet.
The lawsuit seeks damages exceeding $5 million, and the outcome could influence the future regulation of digital assets in the United States. This case also raises questions about whether NFTs should be treated as securities under U.S. law, a issue still not fully settled .
Key Details:
- Lawsuit Filing: The lawsuit was filed on April 25 in the U.S. District Court for the Eastern District of New York.
- Plaintiffs' Claims: The buyers claim that Nike's actions led to a collapse in the value of Nike-branded NFTs, wiping out millions in investments.
- Technical Issues: After the shutdown, technical issues prevented some Nike-linked NFT images from displaying properly, further amplifying investor frustrations .