Nike Hit with $5M Class Action Lawsuit After Shutting Down NFT Venture RTFKT

Nike is facing a proposed class action lawsuit demanding over $5 million in damages after it abruptly closed its NFT platform, RTFKT, earlier this year.

Filed on April 25 in the U.S. District Court for the Eastern District of New York, the lawsuit accuses the global sportswear brand of misleading investors who had purchased RTFKT's digital assets. Plaintiffs claim Nike "pulled the rug out" from under them after heavily promoting the platform.

The legal action follows Nike’s December 2024 announcement that it would "wind down" RTFKT operations by January 2025. Nike had originally acquired RTFKT in 2021 at the height of the NFT craze, aiming to expand its footprint into the digital collectibles space.

Led by lead plaintiff Jagdeep Cheema, the lawsuit alleges that investors suffered significant financial losses when Nike shuttered the platform. It further argues that the NFTs sold by RTFKT were, in fact, unregistered securities—a violation of U.S. securities laws.

According to the court filings, Nike allegedly leveraged its powerful brand image and marketing resources to aggressively promote these unregistered digital assets. The plaintiffs assert they would not have invested in the NFTs had they known the true regulatory status.

NFT Value Crash and Investor Fallout

RTFKT’s once-hyped NFT collections have seen a devastating collapse in value. When Nike launched its "CryptoKicks" NFTs on April 18, 2022, they were selling for an average of 3.5 Ether, approximately $8,000 at the time. Fast forward to April 21, 2025, and their value plummeted to about 0.009 Ether, or roughly $16, based on OpenSea marketplace data a staggering 99.8% loss.

The lawsuit claims that Nike’s decision to shut down RTFKT crushed the community, wiping out any chance for investors to recover their losses. It also notes that the closure stripped NFT holders of the opportunity to engage in platform-exclusive challenges and quests, key incentives that had originally attracted buyers.

This lawsuit comes amid a broader slump in the NFT market. In the first quarter of 2025 alone, global NFT sales dropped by 63% year-over-year, falling to $1.5 billion compared to $4.1 billion during the same period in 2024.

Ongoing Uncertainty and Legal Questions

Following the closure, RTFKT operations have reportedly been maintained by just one individual, Samuel Cardillo. Cardillo recently shared on social media that artwork from one of RTFKT’s flagship projects, CloneX, had mysteriously disappeared and then reappeared, raising further concerns within the community.

The class action seeks to hold Nike accountable under various consumer protection laws across multiple states, including New York, California, Florida, and Oregon. It also accuses the company of violating state laws against unfair trade practices.

While U.S. courts have yet to officially rule whether NFTs qualify as securities, the lawsuit suggests that a final determination isn't necessary for the court to move forward with the claims. Meanwhile, NFT marketplace OpenSea recently urged the SEC to exempt NFTs from traditional securities regulations, arguing that NFTs don't meet the legal definition of a security.

Nike has not yet publicly responded to the lawsuit. However, the case underscores the growing legal risks for brands entering the digital asset space, especially as the NFT market experiences continued volatility and declining investor confidence.

This lawsuit joins a wave of legal actions against NFT projects, as many digital ventures have collapsed or been abandoned amid the ongoing market downturn.