In a proposed class action lawsuit filed in the federal court in Brooklyn, New York, purchasers led by Australian resident Jagdeep Cheema claim that Nike's abrupt closure of its RTFKT unit in December 2024 caused the market demand for their NFTs to evaporate.
The plaintiffs contend that they would not have purchased the NFTs at the prices they did, or potentially not at all, had they been aware that the tokens were unregistered securities and that Nike would "cause the rug to be pulled out from under them" by discontinuing the RTFKT venture.
Nike, headquartered in Beaverton, Oregon, has not yet issued an official response to requests for comment on the lawsuit. Phillip Kim, the lawyer representing the plaintiffs, also declined to provide any comments on the ongoing legal proceedings.
The legal classification of NFTs remains a contentious issue, and numerous legal battles have ensued to determine whether they qualify as securities under federal law.
Friday's lawsuit seeks unspecified damages exceeding $5 million, citing alleged violations of consumer protection laws in New York, California, Florida, and Oregon.
Nike acquired RTFKT, pronounced "artifact," in December 2021, touting the fashion brand as leveraging "cutting edge innovation to deliver next generation collectibles that merge culture and gaming."
The company announced the subsequent wind-down of RTFKT on December 2, 2024, stating that the innovative spirit RTFKT embodied would continue to influence the "countless creators and projects" it had inspired.
The case is titled Cheema v Nike Inc, U.S. District Court, Eastern District of New York, No. 25-02305. This legal action adds to the growing scrutiny surrounding the burgeoning NFT market and the responsibilities of companies venturing into this digital asset space.