Nike Faces NFT Lawsuit from Disappointed Buyers – Coincu

Nike Inc. is being sued by a group of buyers who allege losses after the sudden shutdown of its RTFKT NFT division in December 2024, a class-action lawsuit was filed in New York.

The case highlights potential implications for corporate-backed NFTs and the ongoing legal questions surrounding their classification as securities. Concerns focus on the lack of support and misrepresentation.

Nike’s RTFKT Shutdown Sparks $5 Million Lawsuit

A lawsuit has been filed against Nike Inc., led by Australian investor Jagdeep Cheema, due to the sudden closure of Nike’s RTFKT division, which focused on NFTs and digital collectibles. The group alleges considerable losses after the abrupt shutdown in December 2024, highlighting the sudden end to support. They claim they were unaware they were purchasing what could be classified as unregistered securities. The lawsuit suggests consumer protection laws across multiple states might have been breached, demanding damages exceeding $5 million.

The reaction to this event has been substantial. Following the shutdown, the value of Nike-RTFKT NFTs has plummeted, leaving assets unsellable and prompting questions surrounding the nature of NFTs as securities. The lack of clarity from a regulatory perspective intensifies these challenges. There has been no formal statement from Nike or regulatory bodies addressing these concerns, leaving significant ambiguity in the market regarding similar corporate NFT projects, as many speculate on potential legal outcomes. The NFT community has voiced alarm via forums and social media, expressing worries over corporate-backed digital assets’ uncertainties.

“Buyers have complained that Nike pulled the plug on the project without warning. The NFTs have since cooled off. Some of the NFTs stopped correctly showing images, which compounded worries that the assets would no longer be supported.” — Jagdeep Cheema, Lead Plaintiff, NFT Investors

Industry Experts Weigh In On NFT Classification Risks

Did you know?
Legal disputes involving major brands like Nike and NFTs are uncommon, making this case significant in shaping future digital asset regulations.

Historical precedent shows few instances where established global brands have faced legal action over NFT-related issues, marking this as a rare occurrence. The case underscores the uneasy relationship between traditional companies and the volatile digital assets market. Trading volumes sharply decreased following RTFKT’s shutdown, with some assets experiencing technical display issues in digital wallets, leading to a loss of confidence and value. Critics argue that such actions reflect broader market dynamics where investor protections may be insufficient, underlining the uncertainty over regulatory definitions for NFTs.

The outcome of this lawsuit could impact both regulatory frameworks and the broader NFT market. Experts highlight the complexity surrounding NFTs’ legal status, positing that the ongoing debate may shape future national and international policies. Market analysts emphasize the importance of clear guidelines in the digital asset sphere to build trust among investors.