Nike is facing a lawsuit from investors following the closure of its NFT business. The complainants, led by Jagdeep Cheema, claim significant losses from Nike-themed NFTs. They accuse the sportswear giant of ‘rug pulling’ and are seeking over $5 million in damages for alleged consumer law violations. The legal status of NFTs remains ambiguous, complicating the case.
Nike, the well-known sportswear company, is reportedly facing legal trouble. Following the abrupt closure of its non-fungible token (NFT) business, a group of investors has decided to sue. The company bought RTFKT Studios back in 2021, aiming to tap into the metaverse through collectible digital sneakers and fashion items. However, the shutdown of the project last December left investors disillusioned and concerned about their investments.
The investor group, led by Australian Jagdeep Cheema, filed the lawsuit on Friday. They allege that they incurred significant losses after demand for their Nike-themed NFTs plummeted when RTFKT announced its winding down phase. Key to their claim is the assertion that they would never have bought these NFTs had they known they were unregistered securities. This raises interesting legal issues since the classification of NFTs is still a contentious topic, with various lawsuits examining if these digital assets fall under securities regulations.
Additionally, Nike is accused of executing a “rug pull”—a term typically used in the crypto space to describe a sudden project abandonment that leaves investors with devalued or worthless assets. The investors are seeking damages exceeding $5 million, based on alleged violations of consumer laws across several states: New York, California, Florida, and Oregon. So far, Nike has remained silent about the lawsuit, and it’s unclear how the company plans to respond.
