Nike is currently defending a class action lawsuit over its non-fungible tokens (NFTs), with class representatives claiming damages of more than $5 million. The complaint alleges the scheme violates consumer protection laws in all 50 states. The gist of the complaint is that Nike’s NFTs were, in fact, unregistered securities, resulting in economic injury for investors.

Jagdeep Cheema, a former resident of Australia, is spearheading a class action lawsuit against Nike. He argues that Nike’s NFT products infringe on consumer protection statutes in New York, California, Florida, and Oregon. The plaintiffs argue they were deceived as to the role, purpose, and risk of these digital assets.

The core of the complaint lies with the claim that Nike’s NFTs are, in fact, securities that should have been registered. Since they were not registered, investors were not properly warned about the risks that could occur. The suit further alleges that the plaintiffs would not have invested in Nike's NFTs had they been fully aware of the regulatory risks involved.

The lawsuit targets Nike's acquisition and subsequent plans regarding RTFKT, a company that facilitated the sale of Nike's NFTs. The plaintiffs allege that they were not informed that RTFKT would soon be closed. Indeed, they claim that this failure to provide information led them to decide to purchase the digital assets. They argue that this lack of transparency is in itself a form of misrepresentation or fraud.

The complaint alleges that Nike “pulled the rug out” from under investors by not disclosing information in a timely manner and being silent about unpleasant news. This raises serious questions about transparency. People are asking what these NFTs mean for the regulatory status of NFTs in general and the fate of RTFKT and its products.

The case raises interesting questions about the legal classification of NFTs and what obligations companies that issue these digital goods owe to purchasers. We know that the market for digital assets is changing quickly. Litigation of this nature can lay important groundwork for new precedents protecting consumers, promoting regulatory compliance, and ensuring climate accountability among corporations.