Nike Faces $5 Million Lawsuit Over Losses from Shuttered NFT Venture
Nike is facing a lawsuit from a group of investors who claim that the company’s abrupt closure of its digital collector’s piece, RTFKT, resulted in significant financial losses. The investors, led by Australian-based Jagdeep Cheema, allege that Nike’s decision to shut down RTFKT caused the market for its non-fungible tokens (NFTs) and associated cryptocurrency to collapse.
The lawsuit, filed in Brooklyn federal court, claims that Nike’s actions constituted a “pump and dump” scheme, where the company artificially inflated the value of its NFTs and then abandoned the project without warning. The investors argue that they would not have purchased the NFTs at the prices they did, or at all, if they had known that the tokens were not registered securities and that Nike could terminate the project without notice.
Nike’s digital ambitions, which included the acquisition of RTFKT in 2021, have hit a roadblock with the closure of the NFT venture. The company had promoted RTFKT as a next-generation innovation, and the NFTs had achieved significant sales, with some reaching as high as $168 million in revenue. However, the momentum faded, and Nike announced the shutdown of RTFKT on December 2, 2024.
Nike’s Alleged Failure to Disclose NFT Risks
The lawsuit alleges that Nike failed to disclose the regulatory risks associated with NFTs, including the fact that the legal classification of NFTs under US securities law is still unsettled. The investors claim that Nike’s failure to provide adequate disclosure led to their significant financial losses and that the company’s actions were in violation of consumer protection laws in New York, California, Florida, and Oregon.
The case raises broader questions about the approach to web3 ventures and the need for clearer regulations and disclosures in the digital assets market. As the legal examination of digital assets continues to intensify, companies like Nike must be aware of the potential risks and liabilities associated with NFTs and take steps to protect their investors.
Conclusion
In conclusion, Nike’s shutdown of its NFT venture, RTFKT, has resulted in a $5 million lawsuit from a group of investors who claim that the company’s actions led to significant financial losses. The case highlights the need for clearer regulations and disclosures in the digital assets market and serves as a reminder to companies to be aware of the potential risks and liabilities associated with NFTs. For more information, visit https://cryptonews.com/news/nike-faces-5m-lawsuit-over-losses-from-shuttered-nft-venture/
