Nike is in the midst of a $5 million class action lawsuit brought by unhappy buyers of its non-fungible tokens (NFTs). Yet the lawsuit goes on to claim that Nike’s hasty actions in shutting down the RTFKT platform voided huge swathes of properties, drastically plunging the market value of digital assets. Consequently, NFT holders realized massive financial losses. The plaintiffs allege they are therefore entitled to relief as a result of this drop in value.

The proposed class action, filed in Brooklyn, New York federal court, revolves around the closing of RTFKT, Nike’s NFT platform. That lawsuit argues that the platform’s shutdown led to a decrease in demand for NFTs. In December, RTFKT confirmed it was shutting down its NFT operations in an X platform thread. This ill-conceived decision has now resulted in costly legal action.

Nike’s RTFKT platform lasted for little more than two-and-a-half years before the plug was pulled. The purchasers of Nike's NFTs claim they suffered losses due to the platform's closure. The complaint against Nike was filed in federal court in Brooklyn, New York.

RTFKT's Rise and Fall

Partnerships The journey came to thrilling conclusion with the launch of the MNLTH X Blade Drop this past January. With 3D-printing footwear manufacturer Zellerfeld, this incredible collaboration was born. This would be the last major creative project from RTFKT before its fate was sealed and shuttered for good. Now, the plaintiffs claim that this adverse ruling caused NFT values to plummet.

As well, Nike’s RTFKT platform shut down almost four months prior to the lawsuit being filed. This unexpected decision sent huge waves throughout the entire period of the NFT market. According to the plaintiff’s suit, demand for NFTs dropped significantly after RTFKT’s platform shut down. In the suit, plaintiffs allege that demand for NFTs disappeared because Nike shut down its RTFKT digital footwear platform.

The MNLTH X Blade Drop was launched in collaboration with the Web3 footwear rabbit hole leading 3D-printing footwear manufacturer Zellerfeld. Digital fashion collective RTFKT tied up its vast creative web with that release this past January.

Market Impact and NFT Valuation

The suit comes at a time when the NFT market has enjoyed a meteoric rise and subsequent collapse. Sales info shows that NFT sales have more than halved, with the volume of sales down 10% as we write this. That means a huge drop in the average price for NFTs traded on the one hand vs volume on the other.

Nike’s loss against StockX offers a cautionary tale about the financial danger of piling into digital assets. Poor decisions by acquirers can result in billions of value lost. Purchasers of Nike’s NFTs allege that they are owed relief because the NFTs have lost value. RTFKT’s NFTs are currently at the center of a $5 million lawsuit.

The case illustrates the volatility, speculative nature of the NFT market. Word of caution though, some of these elements are really tied to factors like platform viability, market sentiment, etc that can greatly impact value.

Technical Glitches and Trust

Compounding the woes engulfing RTFKT, there have been reports of tech issues affecting the visibility of its NFTs. CloneX NFT images on OpenSea recently disappeared temporarily. This occurred after Cloudflare downgraded the account that served all the files.

Such incidents, while seemingly isolated, can erode trust and confidence in the stability and longevity of digital assets, further contributing to value fluctuations. RTFKT’s shuttering had a direct and immediate effect on the value of its NFTs.

"We think NFTs are here for the long term.” - Kash Dhanda