TLDR
- Nike faces a $5 million class-action lawsuit after shutting down its RTFKT NFT platform in January 2025
- Investors claim Nike executed a “rug pull” by using its brand to promote NFTs then abandoning the project
- The lawsuit alleges RTFKT NFTs were unregistered securities sold without SEC registration
- Nike’s Cryptokicks NFTs dropped from around $8,000 in April 2022 to approximately $16 by April 2025
- The overall NFT market has declined, with Q1 2025 sales down 63% year-over-year compared to 2024
A group of investors has filed a class-action lawsuit against Nike, seeking $5 million in damages after the sportswear giant shut down its RTFKT NFT platform in January 2025. The lawsuit, filed in New York’s Eastern District court on April 25, accuses Nike of conducting a “rug pull” by hyping up its NFT project only to later abandon it.
Nike acquired RTFKT Studios in 2021 during the height of NFT popularity. The company created digital sneakers and other virtual assets that were sold as non-fungible tokens. Holders of these Nike NFTs were told the tokens could be traded on secondary markets and used to complete challenges that could lead to rewards.
The plaintiffs, led by Jagdeep Cheema, claim they suffered “huge damages” when Nike announced via the RTFKT X account in December that it planned to “wind down RTFKT operations” by the end of January this year. Since then, the platform has reportedly been maintained by just one person, Samuel Cardillo.
CloneX and Animus collections are currently on their way to be decentralized to ArWeave thanks to @ardriveapp (thank you @BramasPaul for the amazing help!) and should be back online, for an infinite amount of time in few hours.
For the curious people, here is what happened:
— Samuel Cardillo (@CardilloSamuel) April 24, 2025
Value Collapse and Securities Claims
The lawsuit points to a massive drop in value for Nike’s crypto collectibles. When first listed in April 2022, the Cryptokicks NFT collection was trading for an average of 3.5 Ether, worth around $8,000 at the time. By April 21, 2025, these same tokens were trading for approximately 0.009 Ether, or roughly $16, according to data from OpenSea.
The plaintiffs claim they wouldn’t have purchased the NFTs if they had known they were “unregistered securities.” The lawsuit alleges that Nike sold these assets without registering with the Securities and Exchange Commission, which would be required if the tokens were classified as securities.
“Because the Nike NFTs derived their value from the success of a given promoter and project — here, Nike and its marketing efforts — investors purchased this digital asset with the hope that its value would increase in the future as the project grows in popularity based on the Nike brand,” the lawsuit states.
Legal Implications and Market Context
The lawsuit accuses Nike of violating consumer protection laws in New York, California, Florida, and Oregon, along with various state unfair trade and competition laws. It claims Nike used “its iconic brand and marketing prowess to hype, promote, and prop up the unregistered securities that RTFKT sold.”
No U.S. court has definitively ruled on whether NFTs are securities. On April 9, the NFT marketplace OpenSea urged the SEC to exclude NFTs from federal securities laws, arguing they don’t meet the legal definition of a security.
The class group clarified that the court doesn’t necessarily need to rule on the legal status of NFTs to address their complaint.
This case comes during a broader downturn in the NFT market. Total sales plunged 63% year-over-year to $1.5 billion in the first quarter of 2025, down from $4.1 billion during the same period in 2024.
Nike’s attempt to capitalize on NFT hype follows other major brands like Starbucks, which launched its Odyssey NFT program but also struggled to find success in the space.
The plaintiffs argue that Nike’s shutdown of RTFKT not only caused their investments to plummet in value but also eliminated their ability to participate in the challenges and quests, which they claim was a primary reason for purchasing the tokens in the first place.
Nike has not yet responded to requests for comment regarding the lawsuit. The case highlights the risks associated with corporate involvement in rapidly evolving digital asset markets, especially as regulatory frameworks continue to develop.
The lawsuit seeks unspecified damages exceeding $5 million for the alleged violations. As of publishing, RTFKT NFT collections continue to show low trading activity on secondary markets while the case moves through the legal system.
