Nike vs RTFKT Legal Dispute: Impact on the Web3 World

In December 2024, a highly anticipated legal battle unfolded in the Web3 space. Sportswear giant Nike faced a $5 million class-action lawsuit from holders of the NFT brand RTFKT, which it had previously acquired. This case not only attracted widespread attention within the industry but could also become a landmark precedent as the first systematic examination of the nature of NFTs and brand liability by a U.S. court, potentially having a profound impact on the compliance boundaries of traditional enterprises within the Web3 sector.

RTFKT is a company focused on digital fashion and technology, acquired by Nike in 2021. During its operation, the company launched NFT digital and physical sneakers featuring Nike's iconic Swoosh pattern. However, on December 3, 2024, RTFKT suddenly announced that it would gradually cease operations, a decision that sparked strong dissatisfaction among holders.

The plaintiff accuses Nike of using its brand influence and long-term vision to hype the RTFKT NFT, only to ultimately "quietly abandon" the project, constituting what is referred to as a "soft rug pull." This behavior is not a violent sell-off, but rather a gradual deviation from the original development roadmap by the project team, accompanied by subjective intent or significant negligence, leading to the gradual loss of value of the originally promising NFTs.

The core issues in this case include:

1. Does the RTFKT NFT constitute an "unregistered security"?
2. Did Nike mislead consumers?
3. Does the shutdown of RTFKT become key evidence?

In terms of securities classification, the court will determine whether RTFKT NFTs are sold as an "investment contract" based on the "Howey test" standard. However, proving that these NFTs are securities is not an easy task.

In addition to the logic of securities law litigation, the plaintiff's team also adopted a "dual-path" strategy. On one hand, they accused Nike of failing to provide adequate disclosure when promoting NFTs, and on the other hand, they cited consumer protection laws from states such as New York and California, accusing Nike of failing to deliver on its promised "future usability and ongoing support."

The official shutdown of the RTFKT brand is seen by the plaintiffs as a key fact that Nike has abandoned the project and violated its promotion. NFT holders believe that their purchase of these digital assets was based on the "reasonable expectation" that Nike would continue to invest resources and support the ecosystem.

Regardless of the final outcome, this case will serve as a wake-up call for the brand owner:

• If the plaintiff wins the lawsuit, the actions of the company in the Web3 world will be scrutinized more strictly.
• When companies launch NFTs in the future, they may need to avoid making promises that are difficult to fulfill in the long term.
• The overall willingness of brands to invest in NFTs may decrease.

This case will have three far-reaching impacts on the Web3 world:

1. The judicial definition of whether NFTs constitute securities.
2. Should traditional brands be responsible for digital assets in the long term?
3. How enterprises balance innovation and legal risks in Web3.

In the future, every NFT project that follows the "issue first, plan later" model may face greater accountability. This case not only concerns Nike and RTFKT but will also impact the way traditional companies participate in the entire Web3 ecosystem and the boundaries of their responsibilities.