Nike Faces Legal Action Over Shutting Down Its NFT Venture RTFKT - InsideBitcoins' Report
Bitter Netizens Slap Nike with a $5m Lawsuit Over Shutdown of NFT Studio
In a striking turn of events, athletic gear giant Nike is facing a class action lawsuit following the dismantling of its digital asset incubation studio, RTFKT. Crypto investors, led by Australia's Jagdeep Cheema, allege they've suffered significant financial losses due to the abrupt closure of this NFT powerhouse.
Last week saw an uproar among NFT enthusiasts as they noticed a peculiar issue within the Clone X NFT collection — the absence of visible artwork. Nike blamed this on Cloudflare restricting access to the artwork, creating further chaos among investors.
Launched in 2020, RTFKT quickly gained recognition in the NFT market for its use of in-game engines, world-class design, and AR technology, producing unique digital assets. The Clone X NFT collection, featuring 20,000 limited edition NFTs, was a significant part of its popularity.
Records show that the CloneX NFT collection experienced staggering sales, with the rarest pieces trading upwards of 450 ETH in 2022. By the end of 2021, Nike had acquired RTFKT, a move that further boosted its presence in the Web3 scene. In 2021 alone, RTFKT sold over $3.1 million worth of NFT sneakers, besides the famous CloneX collection, and other collections like CryptoKicks.
Before bidding adieu to the NFT market in December 2024, RTFKT made over $5 million from selling non-fungible token collections and other crypto assets.
The plaintiffs, backed by attorney Phillip Kim, have petitioned the Brooklyn, New York, federal court for unspecified damages exceeding $5 million, citing alleged violations of consumer protection laws in New York, California, Florida, and Oregon. However, Nike remains unresponsive, leaving crypto and NFT communities on edge.
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Enrichment Data:
Overall: This $5 million class-action lawsuit against Nike revolves around allegations of deceptive marketing and securities law violations:
- Lawsuit Overview:
- Plaintiffs: Led by Jagdeep Cheema, a proposed class of RTFKT NFT purchasers[1][2].
- Damages: Seeking over $5 million for alleged violations of consumer protection laws in New York, California, Florida, and Oregon[2][4].
- Core Allegations:
- Unregistered Securities: Claims Nike marketed NFTs as investments without SEC registration, with their value tied to Nike’s brand and marketing efforts[1][4].
- "Rug Pull": Accuses Nike of abruptly shutting down RTFKT in January 2025, causing NFT prices to plunge and rendering quests/challenges (a primary purchase incentive) inaccessible[1][4].
- Current Status:
- Recent Filing: The suit was lodged in New York’s Eastern District Court on April 25, 2025[1][2].
- Nike’s Response: No public statement as of April 28, 2025; the company previously cited a "recalibration of priorities" when shutting down RTFKT[2][5].
- Regulatory Context: OpenSea recently urged the SEC to exclude NFTs from securities laws, but no rulings yet apply directly to this case[1][4].
- Key Details:
- Acquisition Backstory: Nike bought RTFKT in December 2021 to expand into digital fashion and metaverse projects[2][4].
- Market Impact: NFT sales across all platforms fell 63% year-over-year in Q1 2025[4], though the lawsuit ties losses directly to Nike’s actions.
- Legal Strategy: Plaintiffs argue the court need not classify NFTs as securities to address alleged consumer protection breaches[1][5].
- The lawsuit against Nike for alleged damages exceeding $5 million involves the closure of its digital asset incubation studio, RTFKT, which produced unique NFTs using in-game engines, world-class design, and AR technology.
- The plaintiffs, led by attorney Phillip Kim, allege that Nike violated consumer protection laws in New York, California, Florida, and Oregon by unregistered securities and a "rug pull," accused of causing NFT prices to plunge and rendering quests/challenges inaccessible.
- Records show that RTFKT, acquired by Nike in 2021, had made over $5 million from selling non-fungible token collections and other crypto assets before it left the NFT market in December 2024.
- In the broader context, the lawsuit over deceptive marketing and securities law violations has sent shockwaves through the NFT market, where sales across all platforms fell 63% year-over-year in Q1 2025.
