Nike faces allegations of deceptive actions in class action lawsuit

A lawsuit filed in the Eastern District of New York against Nike by an RTFKT buyer in Australia accuses the sports apparel giant of engaging in deceptive practices, unfair competition, unjust enrichment, and unlawful trade practices through various NFT collections. The lawsuit alleges that Nike, through its acquisition of RTFKT in late 2021, executed a “brazen rug pull” by utilizing its well-known brand and marketing expertise to promote and sell what the filing describes as unregistered securities.

The filing, spanning 42 pages, argues that the digital assets sold by RTFKT across different NFT collections are securities under US law and, even if they are not legally classified as securities, the lawsuit contains five distinct counts that still warrant consideration. Additionally, the lawsuit contends that the alleged rug pull orchestrated by Nike qualifies as a deceptive act in its own right.

Nike is accused of violating various laws, including the New York Deceptive Acts and Practices Unlawful Act, the California Unfair Competition Law, the Florida Deceptive and Unfair Trade Practices Act, and the Oregon Unlawful Trade Practices Act. The lawsuit also claims that Nike engaged in “Unjust Enrichment” by benefitting financially from the funds of NFT buyers.

While the dispute is centered around a minimum of $5 million, the filing does not specify a specific amount of damages being sought. RTFKT, under Nike’s ownership, saw considerable success, with one dashboard indicating that the CloneX “Mintvials” alone generated over $80 million in revenue. However, by 2023, trading activity for RTFKT had significantly declined, leading to the company announcing its shutdown in December 2024, just three years post the Nike acquisition.

Following the lawsuit, RTFKT’s Head of Tech, Samuel Cardillo, chose not to provide a comment. Despite one of the RTFKT and Nike co-founders, Chris Le, departing in January 2025, another co-founder, Benoit Pagotto, still appears to be affiliated with both companies. In the days leading up to the lawsuit filing, the CloneX RTFKT NFT art encountered an issue with its Cloudflare hosting, causing the artwork’s temporary removal. However, the art was later reinstated after Cardillo clarified the problem as an error.

Cardillo also mentioned that the CloneX NFTs had transitioned to Arweave for long-term storage off Cloudflare. This lawsuit is not the first instance of legal action regarding an NFT “rug pull,” with an ongoing class-action lawsuit directed at Logan Paul’s CryptoZoo NFT game. If the case proceeds further, it may shed light on the potential repercussions of companies conducting business practices that are deemed deceptive or misleading in the NFT space.