Key Insights
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Nike is facing a class action lawsuit after its NFT subsidiary, RTFKT, shut down in January.
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Investors allege that Nike leveraged its brand to promote and hype NFTs that were meant for secondary market trading.
BEAVERTON, OREGON (MarketsXplora) – Nike is facing a class action lawsuit seeking over $5 million in damages from investors who purchased Nike-themed non-fungible tokens (NFTs) linked to the company’s now-shuttered subsidiary, RTFKT.
In a complaint filed on Friday, a group of investors accused the athletic wear giant of orchestrating a rug pull scheme and selling unregistered securities. The lawsuit claims Nike leveraged its globally recognized brand and marketing strength to promote and sell NFTs through RTFKT, driving significant investor interest.
“Nike used its iconic brand and marketing prowess to hype, promote, and prop up the unregistered securities that RTFKT sold,” the plaintiffs alleged in the filing.
According to the complaint, the Nike NFTs were specifically designed for peer-to-peer trading on secondary markets, giving buyers the expectation of liquidity and ongoing value. However, the sudden shutdown of RTFKT in January caused the value of the NFTs to collapse, leaving investors with significant losses.
“Plaintiff and others would never have purchased the Nike NFTs at the prices they did, or at all, had they known that the Nike NFTs were unregistered securities or that Nike would cause the rug to be pulled out from under them,” the filing stated.
The lawsuit, filed in federal court, claims Nike violated consumer protection laws across multiple states, including New York, California, Florida, and Oregon, according to Reuters.
Nike has not yet issued a public comment regarding the lawsuit.