Nike Faces $5M Lawsuit Over Abrupt NFT Closure

Nike, the renowned sportswear giant, is currently embroiled in a legal battle following the closure of its non-fungible token (NFT) business. The company had ventured into the metaverse in 2021 by acquiring RTFKT Studios, a firm known for creating popular digital collectibles. However, the project was abruptly shut down in December, leaving investors with significant losses.

Investors of Nike-themed NFTs and other crypto assets have filed a lawsuit, led by Australian resident Jagdeep Cheema. The plaintiffs allege that they suffered substantial financial setbacks due to the sudden drop in demand for their digital collectibles after the announcement of RTFKT's closure. They claim that had they known the tokens were unregistered securities, they would not have made the purchases. The legal status of NFTs remains a contentious issue, with ongoing debates about whether these assets should be classified as securities.

The lawsuit accuses Nike of conducting a "rug pull," a term used to describe the sudden abandonment of a project, leaving investors with worthless assets. The plaintiffs are seeking more than $5 million in damages for alleged violations of consumer laws in several U.S. states, including New York, California, Florida, and Oregon. Nike has not yet issued a statement regarding the lawsuit.

The closure of RTFKT Studios marks the end of Nike's foray into the metaverse, which had initially shown promise with the creation of viral sneaker designs, memes, and other digital collectibles. The abrupt shutdown has raised questions about the transparency and accountability of companies operating in the crypto space. This case underscores the risks associated with investing in digital assets and the urgent need for clearer regulations to protect investors from potential fraud and misconduct.