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Nike RTFKT Lawsuit: A Landmark Ruling on the Securities Nature of NFTs and Brand Liability
Nike RTFKT Lawsuit: A Milestone Event in the Web3 World
RTFKT is a company focused on digital fashion and technology, which was acquired by Nike in 2021. The company is known for launching NFT digital and physical sneakers featuring the iconic Swoosh logo. However, on December 3, 2024, RTFKT announced that it would gradually cease operations.
Since selling sneakers worth $10,000 on a certain NFT trading platform in 2021, RTFKT has rapidly established a vast network of NFTs and physical collectibles within the Ethereum ecosystem, during which it also collaborated with renowned artists.
At the end of 2024, the closure of RTFKT triggered a major legal dispute. A certain sports brand giant is facing a class action lawsuit worth $5 million, filed by holders of RTFKT NFTs. They accuse the brand of leveraging its influence and long-term vision to hype RTFKT NFTs, only to "quietly abandon" the project in the end, constituting what is referred to as a "soft rug pull."
This lawsuit has become one of the most 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 U.S. courts, which will profoundly affect the compliance boundaries of traditional enterprises in the Web3 industry.
Definition of "Soft Rug"
Cryptocurrency legal expert Carlo D'Angelo explains that a "soft rug pull" is not a violent sell-off, but rather a scenario where the project team intentionally or through gross negligence gradually deviates from the original development path, causing the NFT to gradually lose value.
The plaintiff (NFT holder) believes that the brand's promotion led users to reasonably expect the project would continue to develop, while the project's shutdown actually caused losses.
Possible defenses for the defendant may include:
Unregistered Securities Issues
The court will determine whether RTFKT NFTs are sold as "investment contracts" based on the "Howey test."
D'Angelo pointed out that although the SEC's current attitude towards cryptocurrency policy is relatively lenient, the court will make independent judgments based on precedent, rather than fully adhering to the SEC's views.
This means that the plaintiff may face challenges in proving that these NFTs are considered securities.
Consumer Misleading Controversy
The plaintiff adopted a dual strategy:
Even if it cannot win the "securities designation," this strategy may achieve some victory from the perspective of consumer protection.
The Impact of RTFKT Shutdown
The formal shutdown of the RTFKT brand is seen by the plaintiffs as key evidence of the brand abandoning the project and violating its promotion. NFT holders believe that their purchase of these digital assets is based on the "reasonable expectation" that the brand will continue to invest resources and support the ecosystem.
Impact on the Web3 World
D'Angelo predicts: The court may dismiss the "securities claims", but the plaintiffs may achieve partial victory in terms of "consumer rights".
Regardless of the outcome, this case serves as a warning to the brand.
Conclusion
This lawsuit is not just an ordinary legal dispute, but it will have far-reaching implications for the Web3 world:
In the future, every "first issue, then plan" NFT project may face more accountability risks.