Nike sues RTFKT for collapsed NFT project, seeking $5 million in damages
Sizzling Controversy: Nike Accused of Selling Unregistered Securities Through RTFKT NFTs
In a scorching turn of events, Nike is being sued by investors who claim the sportswear titan caused devastating losses by selling unregistered securities via RTFKT NFTs. The lawsuit alleges that Nike's shocking, sudden abandonment of the project could cost them over $5 million in damages. This bombshell acquisition took place in 2021, and the investors argue that Nike's move caused a massive drop in the value of Nike-branded NFTs, resulting in substantial financial losses.
Nike's Shady Dealings with NFTs Unveiled
According to court documents, Nike cruelly left the RTFKT project high and dry, leaving investors hanging with digital assets and no further backing. The investors claim that Nike leveraged its powerful brand and marketing prowess to sell NFTs as unregistered securities, then deserted the project without even a hint of warning. Court files reveal that Nike artfully used the NFT craze to spawn NFT sales in the crypto market, luring investors to buy these digital assets on the basis of mounting value.
However, once RTFKT shut down, marketing efforts abruptly ceased. Investors were left with rapidly depreciating digital assets rather than the promised exclusive rewards and lucrative resale opportunities. The complaint states:
"Nike NFTs relied heavily on Nike's success and marketing for their value. Investors snapped these digital assets up, expecting their value to escalate as the project picked up steam."
The lawsuit also highlights that completing tasks, snagging collection rewards, and reselling were big drivers for investors to purchase NFTs. Plaintiffs further charge that Nike NFTs are illegally securities under U.S. law, and Nike failed to register them with the Securities and Exchange Commission (SEC) or disclose risks. The plaintiffs contend:
"If we'd known Nike NFTs were unregistered securities or that Nike would scram, we'd never have bought them at these inflated prices."
As a consequence, plaintiffs are clamoring for damages and a jury trial, claiming Nike broke consumer protection laws in New York, California, Florida, and Oregon.
Technical hiccups on 24 Nisan stoked investor fury. A premature termination of the Cloudflare agreement hindered the viewing of Nike-linked NFT images.
RTFKT's tech guru, Samuel Cardillo, pinned this fiasco on Cloudflare's move to a free plan. Cardillo declared that they've made most of the images accessible again and have shifted NFT files to the decentralized storage platform Arweave to prevent similar happenings in the future.
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- Investors argue that Nike, by selling unregistered securities through RTFKT NFTs, exploited the NFT craze and lured investors with the promise of mounting value, only to abandon the project, leaving investors with digital assets that experienced substantial depreciation.
- The plaintiffs further maintain that Nike NFTs are illegally securities under U.S. law, as the company failed to register them with the Securities and Exchange Commission (SEC) or disclose pertinent risks prior to sale.
- In an attempt to circumvent future technical issues, RTFKT's tech guru, Samuel Cardillo, claims they have shifted NFT files to the decentralized storage platform Arweave and made most of the images accessible once again, following Cloudflare's move to a free plan.
- Plaintiffs in the lawsuit initiated against Nike in relation to the RTFKT NFTs are pursuing damages and demanding a jury trial, alleging that the sportswear giant violated consumer protection laws in four separate jurisdictions: New York, California, Florida, and Oregon.
