Companies that ventured into the weird, wacky (and now worthless) world of NFTs are now having to answer to disgruntled customers.
Driving the news: Nike is being sued for US$5 million by a group of people who bought the company’s NFTs. The lawsuit argues that the tokens have become essentially worthless since the shoe giant shuttered its virtual product business, RTFKT, last year.
- An NFT, or non-fungible token, is a digital asset — often an original work of virtual art — that’s kept on a blockchain, similar to cryptocurrencies.
Catch-up: Just a few years ago, big-name companies from Starbucks and Coca-Cola to high fashion labels like Louis Vuitton were pumping out their own branded NFTs. Nike even created an entire digital platform for people to buy, sell, and trade virtual shoes and gear.
- One of its digital sneakers sold for US$134,000 on RTFKT back in 2022 — but is now selling for just US$39.
Why it matters: About $17.6 billion traded hands on the NFT market during the original craze in 2021, but by mid-2023, about 95% of those NFTs had become worthless. Now, some of those 23 million buyers are pointing the finger at major companies for the collapse.
Big picture: Nike isn’t alone. Starbucks recently killed its own NFT line, while Dolce & Gabbana is currently facing a class-action lawsuit from buyers alleging that the company used its NFT project to defraud customers.—LA