Nike Faces $5M Lawsuit After RTFKT NFT Platform Shutdown Spurs Investor Outcry

Table of Contents

Nike is being sued for $5 million in a proposed class-action lawsuit filed in federal court in Brooklyn, accusing the sportswear giant of misleading investors and abruptly shuttering its NFT division, RTFKT, leaving digital asset holders with plummeting token values and broken promises.

Led by investor Jagdeep Cheema, the complaint alleges that Nike leveraged its powerful brand to promote and sell NFTs through RTFKT, treating them as unregistered securities. Plaintiffs argue that Nike engaged in a “rug pull” by closing the platform in January 2025, causing significant financial harm to investors.

Also read: Sell NFTs Successfully: Everything You Need To Know

According to the lawsuit, Nike heavily marketed its sneaker-themed NFTs, encouraging buyers with promises of future challenges, rewards, and exclusive perks. However, when RTFKT was closed, these benefits disappeared, and the NFTs’ value collapsed.

“Nike hyped, promoted, and propped up the unregistered securities that RTFKT sold by leveraging its iconic brand and marketing prowess,” the suit claims.

NFTs and Securities: A Legal Gray Area

The lawsuit does not hinge on whether NFTs are classified as securities, an issue still unresolved by the U.S. Securities and Exchange Commission (SEC). Instead, it focuses on alleged violations of state consumer protection and unfair competition laws.

The broader crypto community has been grappling with the regulatory status of NFTs. Earlier in April, leading marketplace OpenSea urged the SEC to exempt NFTs from securities laws, emphasizing their distinct usage compared to traditional financial instruments.

NFT Crash Mirrors RTFKT Fall

Founded in 2020, RTFKT quickly gained prominence in the Web3 space through high-profile collaborations before being acquired by Nike in late 2021. Following the acquisition, Nike launched successful digital sneaker drops, including the CryptoKicks collection, which initially sold for around $8,000 (3.5 ETH) per token in April 2022.

Also read: Exploring the Top NFT Marketplaces Today

By April 2025, however, those same NFTs were trading for approximately $16 (0.009 ETH) on OpenSea, reflecting the broader downturn in the NFT market.

Nike NFTs have seen a sharp drop in value (Source: OpenSea)

RTFKT’s shutdown not only contributed to the collapse in token value but also deprived holders of access to promised digital experiences and challenges, central aspects of the NFTs’ appeal.

Also read: The Alarming Truth About 2024 NFTs – 98% Are Dead: Report

This decline mirrors a larger trend, with NFT sales dropping 63% year-over-year to $1.5 billion in Q1 2025, down from $4.1 billion during the same period in 2024.

Author

Steven Walgenbach

Steven's passion for cryptocurrency and blockchain technology began in 2014, inspiring him to immerse himself in the field. He notably secured a top 5 world ranking in robotics. While he initially pursued a computer science degree at the University of Texas at Arlington, he chose to pause his studies after two semesters to take a more hands-on approach in advancing cryptocurrency technology. During this period, he actively worked on multiple patents related to cryptocurrency and blockchain. Additionally, Steven has explored various areas of the financial sector, including banking and financial markets, developing prototypes such as fully autonomous trading bots and intuitive interfaces that streamline blockchain integration, among other innovations.

View all posts