Nike, the renowned sportswear giant, is facing a class-action lawsuit over allegations of conducting a rug pull by closing its non-fungible token (NFT) platform RTFKT in January. The lawsuit, filed in a Brooklyn federal court on April 25 by a group of RTFKT users led by Jagdeep Cheema, claims that investors suffered "significant damages" after Nike promoted its sneaker-themed NFTs to attract investors, only to shut down the platform later.

The lawsuit argues that the NFTs sold by Nike were unregistered securities, as the company failed to register them with the Securities and Exchange Commission. It accuses Nike of leveraging its iconic brand and marketing prowess to hype and promote these unregistered securities. The lawsuit points out that investors purchased these digital assets with the expectation that their value would increase in the future based on Nike's brand and marketing efforts.

The class-action lawsuit seeks $5 million in damages, alleging that Nike violated consumer protection laws and various state unfair trade and competition laws. While the legal status of NFTs as securities is still unclear in the US, marketplace OpenSea recently urged the SEC to exclude NFTs from federal securities laws, arguing that they do not meet the legal definition of a security.

Nike acquired RTFKT Studios, a virtual sneaker NFT firm, in 2021. Holders of Nike NFTs were initially told that they could trade the tokens peer-to-peer on the secondary market and use them to complete challenges and quests for rewards. However, following the closure of RTFKT in January, the value of Nike NFTs plummeted, leaving investors at a loss and unable to participate in the promised activities.

The overall NFT market experienced a significant decline in the first quarter of 2025, with sales dropping by 63% year-over-year to $1.5 billion from January to March 2025. This marked a substantial decrease from the $4.1 billion in total sales recorded during the same period in 2024.

Nike has not yet responded to requests for comment regarding the lawsuit. The case highlights the complexities and risks associated with investing in NFTs and the importance of regulatory oversight in the rapidly evolving crypto space. As the legal battle between Nike and the disgruntled RTFKT users unfolds, it raises questions about the responsibilities of companies entering the NFT market and the need for transparency and accountability in the industry.

Source: https://cointelegraph.com/news/nike-class-suit-over-shutdown-nft-platform-rtfkt?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound