Isabella García
Nike is now embroiled in a $5 million class action lawsuit after disgruntled buyers of its RTFKT-branded non-fungible tokens (NFTs) accused the company of misleading practices. The lawsuit, filed last Friday, argues that Nike promoted and sold NFTs that were, according to plaintiffs, unregistered securities.
Investors allege that Nike leveraged its powerful brand reputation to drive excitement and inflate the value of RTFKT’s NFTs. They emphasized that the NFTs were marketed to be traded freely on secondary markets, creating an appearance of long-term value and liquidity.
Collapse of RTFKT Leaves NFT Holders in Financial Loss
After Nike’s subsidiary RTFKT announced its shutdown in January, the market value of the associated NFTs collapsed dramatically. The plaintiffs argue that, had they known these digital assets were unregistered securities or that Nike would terminate the platform, they would not have invested.
The suit, which seeks more than $5 million in damages, accuses Nike of breaching consumer protection laws across multiple states, including New York, California, Florida, and Oregon, according to a report from Reuters.
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Background: Nike’s Acquisition and the RTFKT Shutdown
Nike initially acquired RTFKT, a digital collectible startup, at the end of 2021, aiming to expand its footprint in the NFT market. However, in December 2024, RTFKT announced it would cease operations by the end of January.
Adding to the controversy, some of RTFKT’s NFT images briefly vanished from the internet last week before being restored. Samuel Cardillo, RTFKT’s Chief Technology Officer, attributed the incident to technical errors involving their cloud service provider, Cloudflare.
