New York: Nike is facing a proposed class action lawsuit filed by purchasers of Nike-branded non-fungible tokens (NFTs) and other cryptocurrency assets. The plaintiffs, led by Australian resident Jagdeep Cheema, allege that they suffered significant financial losses after Nike abruptly shut down the business behind these digital assets.
The lawsuit, filed on Friday in Brooklyn, New York federal court, claims that Nike’s December closure of its RTFKT unit led to a drastic drop in demand for their NFTs. The plaintiffs contend that they would not have purchased the tokens at the prices they did, or at all, had they known the NFTs were unregistered securities. They also argue that Nike’s decision effectively “pulled the rug out from under them.”
Nike, based in Beaverton, Oregon, has yet to respond to requests for comment on the matter. Phillip Kim, the attorney representing the plaintiffs, also declined to comment.
The legal status of NFTs remains uncertain, and ongoing litigation has revolved around whether they qualify as securities under federal law.
The lawsuit seeks damages in excess of $5 million, citing alleged violations of consumer protection laws in New York, California, Florida, and Oregon.
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Nike acquired RTFKT, pronounced “artifact”, in December 2021, promoting the fashion brand as a leader in “cutting edge innovation” to deliver next-generation collectibles blending culture and gaming. However, on December 2, 2024, Nike announced the completion of RTFKT’s winddown, while asserting that the innovation fostered by the brand would continue to influence “countless creators and projects.”
The case is identified as Cheema v. Nike Inc., U.S. District Court, Eastern District of New York, No. 25-02305.
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