Nike sued over closure of crypto business

NEW YORK: Nike was sued on Friday by purchasers of Nike-themed non-fungible tokens (NFTs) and other cryptocurrency assets who said they suffered significant losses when the athletic wear company abruptly closed the business that created those assets.

In a proposed class action filed in Brooklyn, New York federal court, purchasers led by Australian resident Jagdeep Cheema said the sudden closure in December of Nike’s RTFKT unit caused demand for their NFTs to dry up.

They said they would never have bought the NFTs at the prices they did, or at all, had they known the tokens were unregistered securities, and that Nike would “cause the rug to be pulled out from under them.”

Nike, based in Beaverton, Oregon, did not immediately respond to requests for comment. Phillip Kim, a lawyer for the plaintiffs, declined to comment.

The legal status of NFTs is unsettled, and there has been much litigation over whether they are securities under federal law.

Friday’s lawsuit sought unspecified damages of more than $5 million for alleged violations of New York, California, Florida and Oregon consumer protection laws.

Nike bought RTFKT, pronounced “artifact,” in December 2021, saying the fashion brand was leveraging “cutting edge innovation to deliver next generation collectibles that merge culture and gaming.”

It announced RTFKT’s since-completed winddown on December 2, 2024, while projecting that the innovation RTFKT represented would live on through the “countless creators and projects” it inspired.

The case is Cheema v Nike Inc, U.S. District Court, Eastern District of New York, No. 25-02305.