The NFT Boom Is Attracting Brands Like Nike and Gucci—and Lawsuits Too – The Wall Street Journal


Nonfungible tokens have driven billions in sales as legal questions emerge around the digital assets

By Inti Pacheco and Charity L. Scott

Updated Feb. 10, 2022

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Nonfungible tokens are digital proofs of a purchase for goods like art, digital music and sneakers or access to services or clubs. The tokens are stored on blockchains, or decentralized computer networks, similar to cryptocurrencies.

Some artists say NFTs enable them to better control distribution and potential earnings from their work. Companies see a chance to make money from intellectual property without physical merchandise.

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NFT sales skyrocketed to about $25 billion last year, from $95 million in 2020. Tokens bought and sold through online platforms like OpenSea may derive value from their rarity or what investors think items underlying the tokens are worth.

Artist Kevin McCoy created in 2014 what’s widely considered to be the first NFT: a five-second animated loop of a color-changing octagon. Initially traded for $4 in a demo, a new token for “Quantum” sold at auction in 2021 for $1.47 million.

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The token hype surged last year as an investor paid $69 million at auction for an NFT of artwork created by Mike Winkelmann, known as Beeple. Celebrities have piled in too. Jay-Z’s Twitter avatar is the image associated with an NFT he bought.

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Brands are betting on NFTs. Adidas AG said it sold out of its first NFT collection, garnering more than $22 million. Nike Inc. acquired a NFT production studio. Gucci recently sold NFTs for about $4,200 each with a real-life ceramic sculpture.


NFTs can convey special privileges. Entrepreneur Gary Vaynerchuk promised access to future conferences and other perks for those holding NFTs from his collection. Over $181 million has been spent on VeeFriends since May, according to DappRadar.

VeeFriends/Gary Vaynerchuk

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Some NFT launches have struggled. Videogame maker Ubisoft Entertainment SA created a new NFT marketplace and gave away tokens to players. Still, interest has lagged. A company official said he expects gamers to eventually warm up to NFTs.


There are legal questions surrounding NFTs, including whether certain tokens violate copyright rules or what recourse buyers have if fraud is suspected. Some governments are exploring how to step up scrutiny of NFT transactions.

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Some NFT cases are being closely watched. Fashion house Hermès sued the creator of MetaBirkins NFTs, alleging the tokens violate its trademark. The artist, Mason Rothschild, has filed to dismiss the suit, saying he isn’t creating fake handbags.

Mason Rothschild

Nike sued StockX LLC alleging the online marketplace sold NFTs associated with its sneakers without permission. StockX said the suit lacked merit and defended its right to provide a “new and innovative approach to trading current culture products.”

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Cover photo credit: Christie’s via Associated Press

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