American sports goods giant Nike is facing a $5 million class action lawsuit due to the closure of its NFT brand RTFKT.
According to a lawsuit filed on April 25, a group of investors who purchased Nike-themed NFTs accused Nike of orchestrating a 'rug pull' and illegally selling unregistered securities. The plaintiffs stated in the documents:
Nike leveraged its brand recognition and marketing capabilities to aggressively promote and sell unregistered securities issued by RTFKT.
Investors pointed out that these Nike NFTs were originally capable of being freely traded in the secondary market. However, with RTFKT announcing its shutdown, the value of the NFTs plummeted. The lawsuit emphasizes:
If they had known that these Nike NFTs were unregistered securities, or that Nike would withdraw midway, the plaintiffs and other buyers would never have purchased them at the initial price, and may not have purchased these NFTs at all.
According to reports from Reuters, this class action lawsuit accuses Nike of violating consumer protection laws in New York, California, Florida, and Oregon, and seeks more than $5 million in damages.
RTFKT is an NFT startup acquired by Nike at the end of 2021, but as the NFT craze waned, it announced in December last year that it would fully shut down by the end of January this year.
To make matters worse, it was reported last week that some images of RTFKT's NFT artworks mysteriously disappeared, causing market unease. Although these images were later restored, RTFKT's CTO Samuel Cardillo explained that the incident was due to a technical issue with the cloud service provider Cloudflare, yet it still left the market deeply concerned about asset security.
This article is republished with permission from: (Block Business)
'Nike pay up! Its NFT brand RTFKT is shutting down and facing a lawsuit, investors want to recover $5 million.' This article was first published in 'Crypto City'.