Nike has been slapped with a $5 million lawsuit. A class action of buyers says they were deceived while buying the firm’s non-fungible tokens (NFTs). According to the lawsuit, Nike’s decision to end support for its RTFKT platform has been disastrous to its NFT strategy. Consequently, their digital assets have lost considerable value. The plaintiffs allege that the closure immediately dried up demand for the NFTs, creating immense financial losses.
The class action, filed in Brooklyn, New York federal court, centers on the premise that Nike's actions directly caused the devaluation of the NFTs. The RTFKT platform was a huge factor in the utility and community aspect of these digital assets. The purchasers further claim that its closure ruined the NFTs’ value proposition.
RTFKT Shutdown and NFT Value Decline
RTFKT, a platform owned by Nike, declared its NFT operations winding down in December through X platform. The platform served as a main hub for Nike’s NFT ecosystem, cultivating a community and offering various utilities to NFT holders. The shutdown, which took place almost four months before the Lanham Act lawsuit was filed, had a definitive effect on the NFT space.
Internal data provided to Fortune shows a 10% drop in the dollar volume of RTFKT NFT sales after the closing. Sales figures are important, but that’s just part of it. A decline in USD sales means a massive decline in the average price of RTFKT NFTs as well. This suggests that investors are less willing to pay as much for the NFTs now that the platform is closed.
In January, RTFKT minted its first drop of the MNLTH X Blade Drop in partnership with the 3D-printing footwear manufacturer Zellerfeld. But this final act, sadly, was not enough to compensate for the platform’s sudden and devastating closure.
OpenSea and CloneX Issues
Today, RTFKT’s NFTs continue to trade on secondary NFT marketplaces such as OpenSea. There’s no denying that the platform has hit serious potholes along the way. Most recently, photos of CloneX NFTs on OpenSea disappeared overnight after Cloudflare downranked the account that was serving the accompanying files.
This recent case, while not directly connected to the Nike lawsuit, underscores the inherent volatility and risks based on the very structure of the NFT ecosystem. The value and availability of these digital assets are vulnerable to technical problems and platform-based interruptions.
The lawsuit brought against Nike, while extreme, highlights the increasing amount of attention being given to NFTs and the obligations of companies who navigate this new world. As the market continues to change, anticipate more legal challenges to come. This is particularly the case when companies take actions that undermine the value proposition or usefulness of their NFTs.
Legal Implications and the Future of Nike's NFTs
The current lawsuit against Nike highlights critical questions about possible legal obligations that all companies entering the NFT space may have. The plaintiffs are essentially arguing that Nike had a responsibility to maintain the RTFKT platform and support the value of the NFTs it sold. This is an argument that bears considerable weight for other companies looking into or already having invested in the NFT space.
The result of this case will likely create a major precedent for future lawsuits regarding use and ownership of non-fungible tokens. If Nike is held accountable, it will set a precedent that encourages other NFT owners to take legal action. They’ll shoot for the biggest bang—institutions they are certain have already diminished the value of their digital equity. This may result in more stringent regulation and monitoring of the NFT marketplace.
As of this writing, Nike has not filed a formal response to the lawsuit. Nevertheless, it will be interesting to see what the company will assert in defense of the allegations. This case will be of particular interest to the NFT community and the larger business community.
