In a $5 million legal showdown that’s raising eyebrows in the crypto world, Nike finds itself accused of a classic “rug pull” with its RTFKT NFT project—think of it as promising a shiny new toy, then suddenly snatching it away.
Led by Australian resident Jagdeep Cheema, this proposed class action lawsuit, filed in Brooklyn federal court, claims Nike’s NFTs were unregistered securities.
Fundamentally, buyers thought they were investing in a metaverse goldmine, only to see it vanish like a digital mirage.
Buyers chased a metaverse goldmine, only to watch it vanish like a digital mirage.
The suit targets violations under New York, California, Florida, and Oregon laws, alleging Nike hid the project’s impermanence, leaving investors high and dry.
The drama kicked off when Nike acquired RTFKT in 2021 to enter the metaverse, raking in about $168 million from NFT sales at its peak.
But on December 2, 2024, Nike pulled the plug, citing “inspired projects” as the future—code for, “Sorry, folks, the party’s over.”
NFT values crashed faster than a hype train derailing, turning once-coveted collectibles into worthless pixels.
Plaintiffs argue this was no accident; Nike marketed these as savvy investments without the proper disclosures, like selling a sports car without mentioning the flat tires.
Legally, it’s a tangle of securities claims and consumer protection woes.
The case spotlights how NFTs—those blockchain-based digital assets—can double as risky bets, much like betting on a horse that’s already crossed the finish line. Smart contracts are essential in ensuring the integrity of NFT transactions, yet many investors were left unaware of the associated risks.
With damages topping $5 million, investors say they overpaid due to misleading hype.
This isn’t just Nike’s headache; it echoes broader crypto chaos, from SEC crackdowns to market crashes, pushing for clearer rules in this Wild West of Web3.
Nike’s silence so far is deafening, potentially eroding trust among crypto fans who once cheered their metaverse moves.
As the lawsuit unfolds, it could set precedents, urging brands to play fair in blockchain games or risk getting burned.
With the project slated for shutdown by end of January 2025, the fallout continues to grow.
In the end, this tussle reminds us that in the digital frontier, not every shiny promise delivers—sometimes, it’s just fool’s gold with a swoosh logo, and technical issues on April 24 further compounded the problems by causing NFT images to disappear temporarily.
