Nike is being sued for over $5 million after closing its crypto division RTFKT, which left NFT buyers claiming significant losses. Led by Jagdeep Cheema, the lawsuit alleges buyers were misled about the nature of their purchases, arguing NFTs should be registered as securities. The case also raises broader questions about NFT classification under U.S. law.
Nike, the global sportswear giant, is currently facing a proposed class-action lawsuit following the abrupt shutdown of its crypto business unit, RTFKT. This move has left many NFT buyers claiming they’ve suffered considerable financial losses. The lawsuit, filed on Friday in the Eastern District of New York, is spearheaded by Jagdeep Cheema, an Australian resident.
The plaintiffs allege that Nike’s unexpected closure of RTFKT in December 2024 has resulted in collapses in the market for Nike-themed NFTs and other digital assets. They argue that buyers are now stuck with assets that saw significant value drops practically overnight. This abrupt transition has raised alarms among the NFT community, who feel blindsided by the decision.
In the complaint, buyers assert they wouldn’t have purchased the NFTs at inflated prices had they known those tokens were essentially unregistered securities. Furthermore, they claim Nike’s closing moves felt like a swift withdrawal of support, leaving them in a difficult position. This feels like unfair business practice, to say the least.
Nike, which has its headquarters near Portland, Oregon, has not provided any public comment regarding the lawsuit so far. Also, Phillip Kim, an attorney representing the plaintiffs, opted to remain silent on this matter. The plaintiffs are pushing for over $5 million in damages, alleging that Nike’s actions breached consumer protection laws in states like New York, California, Florida, and Oregon.
This legal case not only raises issues for Nike but also touches on the broader question of whether NFTs should indeed be classified as securities under U.S. law. This is a critical point as various lawsuits across the country delve into similar concerns amid the evolving landscape of both crypto and NFTs.
Nike had initially acquired RTFKT, pronounced “artifact,” in December 2021, heralding it as a frontrunner in the intersection of gaming, culture, and digital collectibles. However, on December 2, 2024, the company announced the end of RTFKT’s operations. While stating that RTFKT would no longer be active, Nike emphasized that its legacy would continue through its influence on creators and various projects.
The lawsuit is officially recognised as Cheema v. Nike Inc., filed in the U.S. District Court for the Eastern District of New York under case number 25-02305.
Also noteworthy is a situation involving a Binance user who mistakenly sent an NFT which was subsequently sold, highlighting the ongoing complexities of the digital asset marketplace.
