Nike Faces $5M Lawsuit Over RTFKT NFT Shutdown

Nike is currently facing a class action lawsuit exceeding $5 million after the sudden shutdown of its RTFKT NFT unit in December 2024. The lawsuit, filed in Brooklyn, New York, was brought forth by a group of NFT buyers led by Jagdeep Cheema from Australia. The plaintiffs allege that Nike misled them regarding the stability and potential value of the NFTs, leading to significant financial losses when the market value of these digital assets plummeted overnight.

RTFKT, acquired by Nike in December 2021, was known for its innovative use of emerging technology to create collectible digital assets, including Nike-themed non-fungible tokens. Many buyers anticipated that these NFTs would appreciate in value over time. However, the abrupt closure of RTFKT operations in December 2024 caught buyers off guard, resulting in a dramatic drop in market interest and value for the NFTs.

The lawsuit alleges that Nike failed to properly register the NFTs as securities, misleading buyers about the risks involved. The plaintiffs claim that had they been aware of the instability, they would not have purchased the NFTs. This legal action highlights the regulatory uncertainties surrounding NFTs, as current U.S. laws do not clearly define their status. The increasing number of lawsuits related to NFTs reflects the ongoing debate among courts and regulators about whether these digital assets should be classified as securities.

Nike has not yet issued an official statement regarding the lawsuit, and lawyer Phillip Kim declined to comment on the case. The court proceedings will determine Nike's defense strategy moving forward. The lawsuit, which accuses Nike of violating consumer protection laws in several states, seeks damages exceeding $5 million. The plaintiffs are seeking financial reimbursement for their losses.

Despite the shutdown, Nike has pledged to preserve the innovative principles of RTFKT. The company acknowledges that RTFKT was a source of innovation that inspired numerous creators and projects. However, the sudden closure has left many buyers feeling disregarded and has raised questions about the fairness of Nike's business decisions.

The Rosen Law Firm, which specializes in protecting investor rights, has initiated investigative procedures for the affected buyers. The firm is preparing a class action lawsuit to recover lost funds for NFT buyers, with legal fees contingent on the success of the lawsuit. This case underscores the risks associated with the rapidly evolving digital asset market, where new technologies offer growth opportunities but also create uncertainty for investors.

The legal challenges faced by Nike due to its decisions at RTFKT could set a precedent for how companies approach NFTs and digital assets in the future. This lawsuit may provide American courts with valuable insights into the legal status of NFTs, potentially clarifying regulatory uncertainties and guiding future business practices in the digital asset space.