Nike faces $5 million class action lawsuit over shutdown of NFT arm RTFKT

Nike is facing a class action lawsuit filed by buyers of Nike-themed non-fungible tokens seeking $5 million in damages after the company's NFT subsidiary, RTFKT, shut down in January.

In a lawsuit filed on Friday, a group of investors accused Nike of orchestrating a rug pull and alleged that the athletic wear giant sold unregistered securities. "Nike used its iconic brand and marketing prowess to hype, promote, and prop up the unregistered securities that RTFKT sold," said the plaintiff in the filing. The investors added that the Nike NFTs were designed to be traded, peer-to-peer, on the secondary market. 

However, with RTFKT's shutdown, the value of the NFTs plummeted. "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 said.

The lawsuit sought over $5 million in unspecified damages, claiming violations of consumer protection laws in New York, California, Florida and Oregon, according to Reuters.

RTFKT, an NFT startup Nike acquired in late 2021, announced in December that it would wind down operations by the end of January.

Last week, images of some of RTFKT's NFT artworks disappeared but later reappeared, with Samuel Cardillo, head of tech at RTFKT, attributing the issue to errors with its cloud service provider Cloudflare.