Nike faces serious legal trouble as a group of NFT investors sues the company, accusing it of pulling a “rug pull” scheme after shutting down its RTFKT platform.
NFT Holders File Class Action After RTFKT Closure
A new class-action lawsuit filed in the U.S. District Court for the Eastern District of New York alleges that Nike misled non-fungible token (NFT) holders. According to the complaint, Nike promoted and profited from RTFKT’s sneaker-themed NFTs only to abruptly shut down the project in January 2025. The plaintiffs argue that this move resulted in substantial financial losses and rendered holders’ digital assets worthless.
Jagdeep Cheema, one of the lead plaintiffs and an RTFKT NFT holder, seeks $5 million in damages. The lawsuit demands a trial by jury and accuses Nike of violating consumer protection laws and selling unregistered securities.
Plaintiffs Say Nike NFTs Should Be Regarded as Securities
The complaint highlights that the NFTs tied to RTFKT meet the standard definition of securities under the Howey Test. Buyers invested money into a shared enterprise with a reasonable expectation of profits tied to Nike’s future efforts.
“As this type of digital asset qualifies as a security under applicable law, Nike was required to register the NFTs and comply with securities regulations. Nike never registered these NFTs,” the lawsuit stated.
Nike’s Ambitious Digital Push Turns Controversial
Nike acquired RTFKT Studios in December 2021, at the height of the NFT boom. The acquisition positioned Nike as a leader in the digital collectibles space, blending fashion, gaming, and blockchain technology. Projects like CloneX and Cryptokicks quickly captured public attention and generated millions of dollars in sales.
RTFKT promised early buyers a gamified ecosystem, complete with forging events, exclusive drops, and digital collectibles tied to real-world rewards. However, the excitement surrounding these initiatives began to fade as the broader NFT market cooled throughout 2023 and 2024.
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RTFKT Shutdown Triggers Investor Backlash
In December 2024, Nike announced that RTFKT would shut down after one final release, called the “Blade Drop.” Nike described the move as an effort to “preserve RTFKT’s legacy,” but many investors saw it as an abandonment of the project.
The plaintiffs argue that Nike’s decision devastated the value of the NFTs. Assets that once traded for thousands of dollars collapsed in value, and the promised features such as quests, forging events, and limited-edition product access disappeared.
Collapse of the RTFKT Ecosystem
The lawsuit also claims that Nike marketed the NFTs with assurances of peer-to-peer trading and continued ecosystem development. After the shutdown, trading volume dried up and NFT prices plummeted.
“Predictably, prices plunged and did not recover. Investors—and the broader crypto community—viewed Nike’s actions as a brazen rug pull,” the complaint added.
What’s Next for Nike?
As of now, Nike has not issued an official response to the lawsuit. Legal experts say this case could set a critical precedent for how traditional companies entering the NFT space are held accountable for their actions.
With damages sought at $5 million and accusations of securities law violations, the outcome could have ripple effects across the growing landscape of digital assets and corporate-backed NFT projects.
