Nike Accused of $5 Million Liability Due to Collapsed NFT Venture
In a shocking turn of events, Nike's acquisition of Web3 company RTFKT has landed the sportswear giant in hot water. Investors are suing Nike, claiming the company caused massive losses by selling unregistered securities in the form of RTFKT NFTs and abruptly abandoning the project. The lawsuit is demanding over $5 million in damages.
Unregistered Securities Allegation
According to court documents, Nike's move to cut off access to RTFKT-related digital assets is being viewed as a "rug pull." Investors believe Nike used their brand power and marketing savvy to sell NFTs as unregistered securities, only to abandond the project without warning. Court documents show that Nike leveraged the NFT craze in the crypto market to boost NFT sales, resulting in investors buying these assets based on expectations of increased value.
However, the closure of RTFKT left investors with depreciating digital assets instead of the anticipated profits and selling opportunities. The complaint states:
"Nike NFTs derives its value from Nike's success and marketing efforts. Investors bought these digital assets, expecting their value to increase as the project gained popularity."
The lawsuit additionally points out that the opportunity to complete tasks, obtain collection rewards, and resell were significant motivations for investors to buy NFTs. Plaintiffs argue that Nike NFTs are considered securities under U.S. law, and Nike failed to register them with the U.S. Securities and Exchange Commission (SEC) or disclose risks. Plaintiffs argue:
"If we had known that Nike NFTs were unregistered securities or that Nike would abandon the project, we would not have purchased them at these prices."
Consequently, plaintiffs are seeking damages and a jury trial, alleging that Nike violated consumer protection laws in New York, California, Florida, and Oregon.
Technical Glitch Magnifies Frustration
On April 24th, technical glitches added fuel to investors' frustration. Due to Cloudflare's plan change, Nike-linked NFT images could not be viewed as expected. Technical lead, Samuel Cardillo, attributed this interruption to Cloudflare's switch to a free plan. Cardillo stated that most images have been made accessible again, and to prevent future issues, they've migrated NFT files to Arweave's decentralized storage platform.
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Sources 1. Bloomberg Law 2. The Block 3. Decrypt 4. CoinDesk
Related Topics: Nike, RTFKT, NFT, Securities, Lawsuit, U.S. Securities and Exchange Commission (SEC), Consumer Protection Laws, Rug Pull, Digital Assets, Crypto Market.
- The lawsuit against Nike alleges that they sold unregistered securities in the form of RTFKT NFTs, which are considered securities under U.S. law, and failed to register them with the SEC or disclose risks to investors.
- Investors purchased Nike NFTs expecting their value to increase as the project gained popularity, however, Nike's abrupt abandonment of the project left them with depreciating digital assets.
- The complaint further states that Nike leveraged the NFT craze in the crypto market to boost NFT sales, and that the opportunity to complete tasks, obtain collection rewards, and resell were significant motivations for investors to buy NFTs.
- The plaintiffs are seeking damages and a jury trial, alleging that Nike violated consumer protection laws in New York, California, Florida, and Oregon.
- Technical glitches, such as the interruption caused by Cloudflare's switch to a free plan, have added to investors' frustration, and to prevent future issues, NFT files have been migrated to Arweave's decentralized storage platform.
