Nike Faces Lawsuit From NFT Customers Claiming 'Digital Shoes' Are 'Unregistered Securities'

Nike is now facing a lawsuit that was filed last week by a group of customers who previously bought non-fungible tokens (NFTs) from the company that were released four years ago. This is because Nike recently shut down RTFKT, the virtual project which centered on their NFT ventures that began in 2021.

This has been the case with many NFT operations and offers all around the globe as the industry that was once generating millions in its operations and sales has since fallen significantly in the market.

Nike Faces Lawsuit From Its NFT Customers Due to 'Rug Pull'

According to a new report by Reuters, a group of former customers who bought NFTs from Nike are now suing the company for the abrupt shutdown of their digital token project. Nike announced earlier this year that their NFT program is closing down its operations come the end of January 2025, and many customers claim the company performed a "rug pull" against them.

The case was filed with New York's Eastern District, with the proposed class action asking for $5 million in unspecified damages, centering on the alleged violations made by the company in California, Florida, New York, and Oregon consumer protection laws.

It is known that Nike previously claimed massive opportunities for their NFT program under RTFKT, saying that they would be digital representations of their shoes that would also join EA Sports games as collectibles.

Customers Claim Nike's NFTs are 'Unregistered Securities'

The customers also alleged that Nike sold them "unregistered securities," and should they have known that this be the case, they would not have bought the digital tokens from the company.

Nike is one of the many companies that jumped in the NFT craze back in 2021, but the company did not achieve the massive fame unlike others.

NFTs: The Once-Thriving Digital Token Industry

Many have been part of the blockchain revolution, which popularized the decentralized industry in the market, and apart from cryptocurrency's rise, it also introduced NFTs to the world.

These collectible tokens were not bought by money or crypto at first, and this made them significantly famous and a must-have for collectors but then came its rise into a multi-million-dollar industry, which immediately saw a downfall.

In the mere two years since it was introduced in the market, NFTs saw their value nosedive in the industry, with many calling them already worthless in 2023, losing as much as 95% of their value.

Apart from decentralized firms offering NFTs as part of their sales, wallets, and more, there are also companies that have jumped into the world of non-fungible tokens for users to collect. This includes the likes of Starbucks with their Odyssey NFTs that the company shut down last year, as well as Nike, which acquired the NFT company RTFKT.

Investors who have spent hundreds of thousands to millions just for NFTs have since tried to recuperate their losses, with companies like Yuga Labs known for facing massive lawsuits for their previous operations.