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Nike’s dalliance with the world of non-fungible tokens (NFTs) has landed the Swoosh in court.
One customer who bought Nike NFTs filed a complaint in federal court Friday alleging the sneaker company engaged in deceptive and unfair business practices. The proposed class action suit claims Nike hurt investors when in December it shuttered the digital fashion and collectibles company RTFKT (pronounced “artifact”), which it had bought in late 2021.
“Because of [Nike’s] misleading practices…Nike NFTs are substantially worthless,” the complaint reads.
The customer suing is Jagdeep Cheema from Australia. The complaint was filed in the Eastern District of New York, and claims at least $5 million in damages.
The suit claims the Nike NFTs were never registered as securities with the federal Securities Exchange Commission, and that Nike misled customers by marketing and promoting the NFTs before closing the marketplace. “Plaintiff and others would never have purchased the Nike NFTs at the prices they did, or at all, had they known that the Nike NFTs were unregistered securities or that Nike would cause the rug to be pulled out from under them,” the filing says.
Nike isn’t the first sports entity in recent months to get tangled up in legal issues because of NFTs. The NFLPA went after DraftKings in court for closing its NFT marketplace, calling the sportsbook’s legal arguments “logically incoherent as well as factually wrong.” The two sides agreed they would settle in January. The next month, DraftKings agreed to a different $10 million settlement with a group of NFT customers who alleged violations of state and federal securities laws.
Representatives for Nike did not immediately respond to a request for comment. Attorneys for the customer declined to comment.
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