Nike Faces Class Action Over Alleged NFT “Rug Pull” in RTFKT Lawsuit
Nike Hit with Class Action Lawsuit Over Alleged Deceptive Practices in RTFKT NFT Collections
Nike, one of the world’s most recognizable brands, is now at the center of a proposed class-action lawsuit over its venture into the non-fungible token (NFT) space through its subsidiary RTFKT (pronounced “artifact”). Filed last week in the Eastern District of New York, the lawsuit accuses the apparel giant of engaging in deceptive and unlawful practices, including what plaintiffs describe as a “brazen rug pull.”
The suit was initiated by an RTFKT asset buyer in Australia, claiming Nike misled consumers by promoting and selling what the complaint argues were unregistered securities in the form of digital collectibles. It seeks to represent a broader class of investors who purchased RTFKT NFTs, alleging violations of multiple state laws including the New York Deceptive Acts and Practices Act, the California Unfair Competition Law, Florida’s and Oregon’s consumer protection statutes, and charges of unjust enrichment.
At the heart of the complaint is the assertion that Nike leveraged its brand credibility to promote RTFKT’s NFT collections, including the widely known CloneX avatars created in collaboration with artist Takashi Murakami. These digital assets reportedly generated millions in revenue—CloneX “Mintvials” alone earned over $80 million, according to third-party data dashboards.
However, trading activity for RTFKT NFTs saw a steep decline in 2023. By December 2024, Nike announced it would shut down RTFKT operations, just three years after acquiring the startup in late 2021. No public explanation for the closure was provided, fueling further frustration and suspicion among the NFT community and buyers.
In a bizarre twist, the day before the lawsuit was filed, the art assets for the CloneX collection temporarily vanished due to a Cloudflare hosting issue. RTFKT’s Head of Tech, Samuel Cardillo, clarified the disappearance was due to a technical error and not a lapse in payment. The artwork was later restored and migrated to Arweave, a decentralized storage platform, for what Cardillo described as “permanent storage.”
While Nike has not yet issued a formal response, and representatives from RTFKT either declined to comment or could not be reached, the lawsuit’s progression could signal broader legal scrutiny for NFT projects tied to major corporations. It also follows a growing trend of litigation in the crypto and NFT space, including ongoing legal proceedings related to Logan Paul’s controversial CryptoZoo project.
The current lawsuit does not list a specific figure for damages but indicates the dispute involves a minimum of $5 million.