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Cult & Rain, the Web3-based luxury fashion and sneaker company that was launched in January 2022 with hopes of changing how consumers interact with the metaverse, is shutting down operations.

Founder and CEO George Yang announced the news in a letter posted across the company’s social media accounts Wednesday. 

Hello CULT&RAIN community, please read the following post with an official message about the future of C&R from our founder and CEO, George Yang. 🙏❤️🙏 pic.twitter.com/Suhesmr1o0

— Cult & Rain (@cultandrain) December 6, 2023

“As you are aware, the volatility in the Web3 market beginning in the summer of 2022 adversely impacted the company’s financial position and sales,” Yang wrote. “Over the last year, [the] team and I reached out to numerous potential funding sources, including current investors about the possibility of further or new investment in the company.”

Yang said in the letter that he dreamed of relaunching “Cult & Rain 2.0” to the masses as a tech enabled fashion brand, but none of his conversations around funding materialized into a transaction, and now the company is “out of time.”

“As a result, with a heavy heart we have come to the most difficult decision that the only course of action is to shutdown the company,” Yang continued. “This is not the outcome that we anticipated when you joined the Cult & Rain family, and we share your disappointment. We would not have made it this far without all your love and support. I am sorry we fell short on building this brand together.”

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The founder added that building the Web3 start-up was “quite the roller coaster ride” and thanked his entire team and partners for their efforts over the past two years. “Everyone gave their hearts and souls to Cult & Rain, and I will forever be grateful,” Yang said. “I am proud of what we’ve built together.”

Cult & Rain launched in January 2022 at the height of the non-fungible token (NFT) and metaverse boom with the debut of a limited edition NFT collection tied to a redeemable luxury fashion sneaker.

Yang, a fashion veteran who held design positions at John Varvatos, Cerruti Paris and Theory, among others, was originally going to merge his love of sneakers with the idea of using blockchain technology to track sneaker ownership from factory to consumer.

In an interview with FN at the time, Yang described the company as the “first luxury fashion house born from crypto” and allowed him to further explore his love of sneakers.

“As an avid sneakerhead myself, I have amassed a large collection of sneakers over the years,” Yang told FN. “Before my most recent move from Paris to New York, my wife encouraged me to sell some pairs. When I went to resell them, I found out many pairs were fake. This sparked the idea of creating a shoe brand that could be tracked from the factory to consumer, with the option to transfer ownership when it comes time to resell the sneaker.”

But when Yang approached investors about the idea, they encouraged him to take the concept a step further into the metaverse by making NFTs along with actual pairs, essentially allowing Yang to self-fund the project without investor help. 

“While my wife was not happy with me using my savings to start Cult & Rain, it has always been my dream to create my own world class brand,” Yang said.

In May 2022, Yang doubled down on his company and the future of Web3 with the development of his own metaverse called “Cultr World.” 

Yang told FN at the time that the photo-realistic space would serve as Cult & Rain’s own social club for consumers, where users can interact with other members and attend events in the Cultr Lounge. 

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Users would also be able to purchase Cult & Rain product through its new Cultr Shop. The concept launched in November 2022.

In March, the company launched another new phygital collection “Drop 002” in partnership with Ltd.inc and digital wardrobe marketplace DressX. 

The project tied exclusive luxury physicals to digital assets that live on the blockchain and featured a range of 401 hoodies. According to the company’s social media accounts this was the last release from Cult & Rain.

The shuttering of Cult & Rain comes at a time when many fashion and retail companies have backed away from activating in Web3 spaces.

Once heralded as the “future of fashion,” the metaverse and all that it entails has experienced a huge drop off in recent months. This can largely be seen through the attendance numbers of the most recent Metaverse Fashion Week hosted by Decentraland in March. 

According to final numbers, attendance at the second annual event fell 76 percent to 26,000, down from 108,000 during the inaugural event in 2022.

This poor attendance came despite top brands including Dolce & Gabbana, Tommy Hilfiger and Adidas all sponsoring shows, a sign at the time that consumer interest in the tech was waning.

A slew of Web3-related litigation didn’t help, either. In August, a group of investors filed a lawsuit against Sotheby’s Holdings Inc. and others over a 2021 auction and promotion of Bored Ape Yacht Club NFTs following a collapse in prices for the celebrity-endorsed collectibles.

The four named plaintiffs in the class action lawsuit allege that the auction house “misleadingly promoted” the NFTs and colluded with creator Yuga Labs to artificially inflate their prices.

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Sotheby’s is among 30 defendants named in the lawsuit, with celebrities such as Justin Bieber and Paris Hilton also accused of promoting the NFT collection without disclosing their financial links to it.

More recently, late last month Portuguese soccer star Cristiano Ronaldo was hit with a class-action lawsuit seeking at least $1 billion in damages for his role in promoting NFTs issued by the beleaguered cryptocurrency exchange Binance to millions of his fans.