Well, folks, gather ’round, because we’ve got a doozy of a tale for you. A band of non-fungible token enthusiasts (the kind who thought they could retire on digital sneakers) have decided to sue Nike for a cool $5 million. The reason? A little thing called the “rug pull” – and no, it’s not the latest dance move.
According to a filing in the U.S. District Court for the Eastern District of New York, these disgruntled NFT holders claim Nike lured them in with shiny, sneaker-themed digital treasures, took their money and ran—leaving them holding a bunch of worthless pixels. You know, a classic bait-and-switch, but with more blockchain and less fish. They’re accusing Nike of promoting these NFTs, raking in cash from initial and secondary sales, then pulling the plug on their beloved RTFKT platform in January 2025.
The lawsuit, led by Jagdeep Cheema (an RTFKT holder who probably wishes he’d bought something that didn’t disappear into the digital ether), is asking for $5 million in damages. They also want a jury to hear their sob story and decide whether Nike should pay for their virtual misfortune. Oh, and did we mention that they claim Nike violated consumer protection laws and sold unregistered securities? Yeah, it’s that serious.
The plaintiffs argue that Nike’s NFTs were nothing more than glorified investment vehicles—following the Howey Test, which is basically the law’s way of saying “If you’re hoping for a profit from this thing, it’s probably a security.” They argue buyers were all in for a piece of the digital pie, expecting Nike’s ongoing hustle to turn their investments into a fortune.
“These NFTs should’ve been registered as securities,” the lawsuit says, because, well, the law doesn’t take kindly to unregistered get-rich-quick schemes. But, surprise surprise, Nike didn’t bother to register them. You know, typical big company stuff.
Now, let’s rewind a bit. In December 2021, Nike made a big splash by acquiring RTFKT right at the peak of NFT mania. It was a move that screamed, “Look at us, we’re hip and with the times!” And, for a while, RTFKT was the talk of the town, mixing fashion, gaming, and blockchain tech in a way that made crypto fans and sneakerheads alike drool.
They launched successful projects like CloneX and Cryptokicks, raking in millions of dollars. Early investors were promised a digital wonderland of gamified experiences, quests, and exclusive drops. I mean, who wouldn’t want to own a pair of sneakers that were, in theory, cooler than a cold drink on a hot day?
But as we all know, the NFT market isn’t exactly known for its stability. By 2023 and 2024, interest in RTFKT’s digital wares began to fizzle out like a soda left out in the sun.
In December 2024, Nike made the announcement that RTFKT would “wind down” after one final release—an event called the “Blade Drop.” But don’t worry, they said, it wasn’t a shutdown; it was just a “shift toward preserving RTFKT’s legacy.” Because, of course, nothing screams “preserving a legacy” like pulling the plug on everything.
The plaintiffs, however, are less than impressed. They argue that Nike’s sudden exit wiped out the value of their NFTs, which had once been worth a pretty penny. Remember those quests and rewards they were promised? Yeah, those evaporated faster than your last paycheck after a night out.
Once Nike pulled the rug, the marketplace dried up, the prices plummeted, and those shiny digital assets became as valuable as a pet rock. The lawsuit describes the situation as a textbook example of a “rug pull,” and frankly, it sounds like the kind of story that makes you think twice about jumping into the wild world of NFTs.
As the lawsuit states, “Predictably, prices plunged and did not recover. Investors – some of whom are cited in this complaint – and the crypto community at large lamented Nike’s brazen rug pull.” Well, folks, if it wasn’t a rug pull, it sure looked like one, and now Nike’s got a $5 million lawsuit on their hands. Guess it’s back to the drawing board for them.
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2025-04-28 09:35