Sportswear giant Nike is reportedly facing a lawsuit following the closure of its non-fungible token (NFT) business.
In 2021, Nike purchased RTFKT Studios, a collectibles firm known for creating viral sneaker designs, memes and other fashionable digital collectibles as it ventured into the metaverse, but the company shut down the project in December.
Reuters reports that investors of Nike-themed NFTs and other crypto assets led by Australian resident Jagdeep Cheema filed a suit on Friday, claiming that they suffered significant losses as demand for their digital collectibles dropped following the announcement that RTFKT was winding down its operations.
The investors say that they would not have bought the NFTs had they known that the tokens were unregistered securities. To date, the legal status of NFTs is not yet settled, and several lawsuits involve questions on whether or not these assets should be considered as securities.
The suit also accuses Nike of orchestrating a “rug pull”, or the sudden abandonment of a project that leaves investors with worthless assets.
The plaintiffs are seeking more than $5 million in damages for the alleged violation of consumer laws in New York, California, Florida and Oregon.
Nike has not yet issued a statement regarding the lawsuit.
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