TLDR
- Nike is being sued for over $5 million by buyers of its RTFKT NFTs
- The lawsuit claims Nike performed a “rug pull” by shutting down RTFKT operations in January 2025
- Plaintiffs argue Nike NFTs were “unregistered securities” sold without SEC registration
- The value of Nike’s crypto kicks NFTs plummeted from around $8,000 in 2022 to roughly $16 by April 2025
- The class action alleges violations of consumer protection laws in New York, California, Florida, and Oregon
Nike is facing a proposed class action lawsuit seeking more than $5 million in damages after shutting down its NFT platform RTFKT earlier this year.
The lawsuit, filed in New York’s Eastern District court on April 25, accuses the sportswear giant of pulling the rug out from under investors who purchased its digital assets.
The legal challenge comes after Nike announced in December 2024 that it would “wind down RTFKT operations” by the end of January 2025. The company had acquired RTFKT in 2021 during the peak of NFT hype, attempting to capitalize on the growing market for digital collectibles.
Led by plaintiff Jagdeep Cheema, the group claims they suffered “major damages” when Nike closed the platform. The lawsuit argues that the NFTs were unregistered securities that Nike sold without proper registration with the Securities and Exchange Commission.
According to court documents, Nike used “its iconic brand and marketing prowess to hype, promote, and prop up the unregistered securities that RTFKT sold.” The plaintiffs state they wouldn’t have purchased the NFTs had they known they were unregistered securities.
Market Collapse and Value Loss
The value of Nike’s crypto kicks NFT collection has seen a dramatic decline since their initial release. When first listed on April 18, 2022, these digital assets were changing hands for an average of 3.5 Ether, equivalent to about $8,000 at the time.
By April 21, 2025, their value had crashed to approximately 0.009 Ether, or roughly $16 according to data from OpenSea. This represents a staggering 99.8% loss in value.
The lawsuit claims that Nike’s decision to shut down RTFKT “decimated investors” as “prices plunged and did not recover.” Furthermore, the closure eliminated the opportunity for NFT holders to participate in promised challenges and quests, which the plaintiffs argue was a primary reason for purchasing the tokens.
The case comes amid a broader downturn in the NFT market. Total sales in the first quarter of 2025 dropped 63% year-over-year, with $1.5 billion in sales from January to March 2025, down from $4.1 billion during the same period in 2024.
Since the shutdown announcement, RTFKT has apparently been maintained by a single individual named Samuel Cardillo. On Thursday, Cardillo was posting about the sudden disappearance and later reappearance of artwork for the CloneX NFTs project, one of RTFKT’s digital collections.
The proposed class action seeks damages for alleged violations of consumer protection laws in multiple states including New York, California, Florida, and Oregon. It also accuses Nike of violating various state unfair trade and competition laws.
While a US court has not yet definitively ruled on whether NFTs are securities, the lawsuit argues that the court doesn’t necessarily need to determine the legal status of NFTs to address the complaint. In contrast, NFT marketplace OpenSea recently urged the SEC in an April 9 letter to exclude NFTs from federal securities laws, arguing they don’t meet the legal definition of a security.
Nike has not yet responded to requests for comment on the lawsuit. The case highlights the ongoing legal uncertainties surrounding digital assets and the responsibilities of companies that create and market them.
The lawsuit is among a growing number of legal challenges related to NFTs as the market has cooled and many projects have lost value or been abandoned entirely.
