Nike RTFKT NFT Lawsuit: A Milestone Event in the Web3 Space

RTFKT is a digital fashion and technology company that was acquired by Nike in 2021. The company launched NFT digital and physical sneakers featuring the iconic Swoosh logo, but announced the closure of operations on December 3, 2024. Since entering the NFT market in 2021 by selling sneakers worth $10,000 on the platform, RTFKT has rapidly built a large Ethereum-based ecosystem of NFTs and physical collectibles, collaborating with well-known artists along the way.

At the end of 2024, a major sports brand giant is facing a class action lawsuit worth $5 million. The plaintiffs are the holders of the NFT brand it acquired, who claim that the company leveraged its brand influence and long-term vision to hype the NFT, only to ultimately "quietly abandon" the project, constituting what is referred to as a "soft carpet pull."

This lawsuit has become one of the most closely watched legal battles in the crypto world, potentially serving as an important precedent for the first systematic examination of the nature of NFTs and brand liability by a U.S. court, profoundly affecting the compliance boundaries of traditional enterprises in the Web3 industry.

Definition of "soft rug"

Experienced crypto lawyer Carlo D'Angelo stated that the key to such cases is that a "soft rug pull" is not a violent sell-off, but rather a gradual deviation from the original development roadmap by the project team, with subjective intent or significant negligence, causing the originally promising NFTs to gradually lose value.

The plaintiff (NFT holder) will argue that the company's branding has led users to reasonably expect the project to continue developing, and when the company ultimately shut down the project, it resulted in actual losses.

The defendant company may argue that:

• Its NFT is a "collectible" rather than a security;
• The company has no legal obligation to operate a commercially unsustainable project indefinitely.

Does it involve "unregistered securities"?

According to the current standards of determination under U.S. securities law (i.e., the "Howey test"), the court will determine whether these NFTs are sold as an "investment contract."

Carlo D'Angelo pointed out that although the U.S. Securities and Exchange Commission (SEC) is currently leaning towards a more lenient stance on cryptocurrency policy, the court will make independent judgments based on previous related cases rather than following the SEC's views.

This means that the plaintiff faces significant difficulty in proving that these NFTs are securities.

Did the company mislead consumers?

This case does not solely rely on the litigation logic of "securities law"; the plaintiff team also adopted a "dual-path" strategy:

• On one hand, it accuses the company of not making sufficient disclosures when promoting NFTs;
• On the other hand, citing consumer protection laws from states like New York and California, it accuses the company of failing to deliver on its promised "future availability and continuous support."

This strategy may still succeed in claiming compensation from a consumer protection perspective, even if it cannot win "securities recognition".

Has the project's shutdown become key evidence?

To some extent, yes. The official shutdown of the brand is seen by the plaintiff as a key fact of the company abandoning the project and violating its promotional claims. NFT holders believe that their purchase of these digital assets was based on the "reasonable expectation" that the company would continue to invest resources and support the ecosystem.

How will the case outcome affect the entire Web3 world?

Carlo D'Angelo predicts: The court may dismiss the "securities claims", but does not rule out that the plaintiffs may achieve partial victory on the "consumer rights" level.

No matter the outcome, this case serves as a warning to the brand side:

• If the plaintiff wins, the actions of the enterprise in the Web3 world will be scrutinized more strictly;
• When companies launch NFTs in the future, they should avoid making commitments such as "ongoing support" and "future features" that are difficult to fulfill in the long term;
• It may even lead to a decrease in the overall willingness of the brand to invest in NFTs.

Conclusion

This NFT case is not just an ordinary legal dispute; it will have the following three profound impacts on the Web3 world:

1. Whether NFT constitutes a judicial definition of securities;
2. Should traditional brands be responsible for digital assets in the long term;
3. How companies balance innovation and legal risks in Web3.

In the future, perhaps every "mint now, roadmap later" NFT project will face more accountability.