American athletic footwear and apparel corporation Nike is facing a class action lawsuit from owners of non-fungible tokens (NFTs) issued by its RTKFT digital fashion subsidiary, alleging their assets have become worthless following the company's decision to shut down its Web 3.0 operations last year.
RTKFT announced it would halt Web 3.0 activities by January 2025. The lawsuit claims demand for RTFKT collectibles collapsed after the announcement.
Plaintiffs argue they would not have bought the NFTs if they had known they were "unregistered securities." The lawsuit seeks over US$5 million in damages.
Founded in 2020, RTKFT offered digital shoes and collectibles for use in the metaverse, which could be used across various avatars and applications. Nike acquired the company during the Web 3.0 boom, aiming to tap into RTKFT's user base and expertise in game development, blockchain, and augmented reality (AR) to engage customers in digital spaces.
While NFTs were marketed as digital collectibles, many buyers saw them as investments. Since the market peaked in early 2022, NFT sales have plummeted, with reports suggesting as much as 95% of NFTs may now be worthless.
The decline in demand, coupled with growing regulatory scrutiny, has led many companies to retreat from the sector. OneFootball, DraftKings, and Candy Digital have all scaled back or exited Web 3.0 operations, further fueling skepticism about the metaverse's original vision.
Nike's decision to cease its Web 3.0 efforts underscores the challenges facing the industry, as the legal status of NFTs remains uncertain in the U.S. The class action was filed in Brooklyn, New York, signaling potential legal fallout in the evolving space.
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