Michaela
A group of investors has filed a class action lawsuit against Nike, claiming that the athletic wear company caused significant financial losses by shutting down its Web3-focused subsidiary, RTFKT, and eliminating millions of dollars in investments.
Court documents reveal that Nike allegedly “rug pulled” the community by shutting down RTFKT, severing demand for its associated digital assets. The plaintiffs argue that Nike leveraged its brand strength and marketing expertise to promote what they describe as unregistered securities, only to abruptly abandon the project.
The lawsuit also claims that Nike took advantage of the cryptocurrency surge to boost sales of non-fungible tokens (NFTs), leading investors to buy with the expectation that their value would rise due to the company’s marketing strategy.
Once Nike decided to shut down RTFKT, the incentives disappeared, leaving buyers who expected profitable resales and exclusive rewards with assets that quickly lost value.
“Because The Nike NFTs derived their value from the success of a given promoter and project – here, Nike and its marketing efforts – investors purchased this digital asset with the hope that its value would increase in the future as the project grows in popularity based on the Nike brand,” the lawsuit stated.
Furthermore, the plaintiffs argue that Nike’s NFTs qualify as securities under federal law. They further claim the company neglected to register these digital assets with the U.S. Securities and Exchange Commission (SEC) and neglected to disclose the risks involved.
Investors assert that had they been informed of the risks beforehand, they would have refrained from purchasing the digital assets at inflated prices.
The plaintiffs are requesting damages over $5 million, citing violations of consumer protection laws in New York, Oregon, Florida, and California, and are demanding a jury trial.
“As a result of Nike’s promotion of the unregistered securities and also its rug pull, Plaintiff and the Class – many of whom are retail investors who lack the technical and financial sophistication necessary to have evaluated the risks associated with their investment in The Nike NFTs and were denied the information that would have been contained in the materials required for the registration of The Nike NFTs – have suffered significant damages in an amount to be proven at trial,” the filing stated.
In December 2024, Nike revealed plans to wind down RTFKT’s operations but emphasized its commitment to preserving the brand’s legacy. The company announced the launch of a new website dedicated to highlighting RTFKT’s past projects.
RTFKT made a splash by introducing the first-ever digital sneakers, which were later produced as physical items, blending the realms of virtual collectibles with real-world fashion.
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Michaela has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
