A storm is brewing in the world of digital collectibles as Nike confronts a $5 million class-action lawsuit.
Investors accuse the sportswear giant of abruptly abandoning its NFT platform RTFKT, leaving them with plummeting assets and shattered trust. The case, filed in New York, highlights growing tensions between corporations and consumers in the volatile crypto market.
Nike Accused of “Rug Pull” Tactics
Led by Australian investor Jagdeep Cheema, plaintiffs claim Nike hyped its NFT project before suddenly shutting it down in December 2024. The lawsuit, filed April 25 in Brooklyn’s federal court, alleges Nike violated consumer protection laws in four states by selling “unregistered securities.” Buyers argue they were misled into purchasing NFTs tied to virtual sneakers and rewards, only to see their investments crash from thousands to mere dollars.
“Nike used its brand to prop up these assets, then pulled the rug out,” the complaint states. The platform’s closure erased opportunities for users to trade NFTs or participate in challenges, a key selling point.
Legal Battle Over NFTs as Securities
Central to the case is whether Nike’s NFTs qualify as securities under U.S. law. The plaintiffs argue the tokens value depended on Nike’s marketing efforts, making them investment contracts requiring SEC registration. However, regulators have yet to definitively classify NFTs, leaving courts to navigate uncharted territory.
The lawsuit avoids demanding a broad ruling on NFT’s legal status. Instead, it focuses on Nike’s alleged failure to disclose risks, including the platform’s fragility and speculative nature. This approach could sidestep prolonged debates while holding the company accountable for its promises.
NFT Market Collapse Compounds Losses
Nike’s RTFKT acquisition in 2021 initially sparked excitement, with Clone X NFTs selling for up to $30,000. By 2025, however, the market had crumbled. Average prices for Nike’s CryptoKicks NFTs plummeted from $8,000 in 2022 to $16 this April.
The broader NFT sector mirrored this decline, with 2025 first-quarter sales dropping 63% year-over-year to $1.5 billion. Analysts attribute the slump to fading hype and regulatory uncertainty. For RTFKT holders, Nike’s shutdown accelerated losses already fuelled by market trends.
Technical Failures Worsen Investor Anger
After RTFKT’s closure, users reported broken metadata and missing images for NFTs like Clone X avatars. Some saw Cloudflare error pages instead of digital art, sparking speculation that Nike stopped funding hosting services.
Though partial fixes emerged, the glitches amplified concerns about centralised platforms reliability. “If Nike won’t maintain these assets, what’s their long-term value?” asked one frustrated investor on social media.
Nike’s Silence
The company has not publicly addressed the lawsuit, a common tactic to avoid prejudicing litigation. Legal experts suggest Nike may challenge jurisdiction Cheema is Australian or argues market forces, not its actions, caused losses.
Another likely defence: classifying NFTs as collectibles, not securities. This distinction could shield Nike from SEC violations but wouldn’t negate consumer protection claims.
Broader Implications for Crypto Accountability
The case could reshape how brands engage with Web3. A ruling against Nike might force companies to guarantee NFT longevity or face penalties, deterring rushed market entries. Conversely, a Nike victory may embolden firms to treat digital assets as disposable experiments.
For now, investors await clarity. As one plaintiff lamented, “Nike promised innovation but delivered betrayal.” The outcome will test whether corporations can be held responsible when virtual ventures turn into real-world disasters.
