Nike is facing a proposed $5 million class-action lawsuit, accused of violating consumer protection laws and multiple state unfair trade and competition statutes. The complaint centers around the sudden shutdown of its non-fungible token (NFT) platform, RTFKT, earlier this year.
RTFKT Users Claim “Rug Pull” After NFT Platform Closure
Filed on April 25 in Brooklyn federal court, the lawsuit led by Jagdeep Cheema alleges that Nike conducted a “rug pull” by shuttering RTFKT after promoting its sneaker-themed NFTs to investors. According to the plaintiffs, Nike used its brand power to hype unregistered securities, leaving NFT holders with “significant damages.”
The lawsuit argues that Nike sold NFTs without registering them with the Securities and Exchange Commission (SEC), claiming the NFTs’ value depended entirely on Nike’s promotional efforts. Buyers, it says, purchased the digital assets expecting their value to rise based on Nike’s reputation.
Is an NFT a Security? The Court Might Not Need to Decide
While U.S. courts have not yet made a definitive ruling on whether NFTs are considered securities, OpenSea recently urged the SEC to exclude NFTs from securities regulations, arguing they don’t meet the legal standard.
However, the plaintiffs assert that the court doesn’t need to settle the NFT security debate to address Nike’s alleged violations of consumer protection and competition laws.
NFT Market Crash and Investor Losses
Nike acquired RTFKT Studios in 2021 to create virtual sneakers and other digital collectibles. At launch in April 2022, Nike’s “CryptoKicks” NFT collection traded for an average of 3.5 Ether (around $8,000 at the time). By April 2025, their value plummeted to roughly 0.009 Ether, about $16, according to OpenSea data.
The shutdown of RTFKT in January not only slashed the NFTs’ value but also ended access to promised features like peer-to-peer trading, challenges, and quests. The class-action suit claims that these activities were a primary incentive for purchasing the NFTs.
The broader NFT market also struggled, with total sales falling 63% year-over-year in Q1 2025 — dropping from $4.1 billion to $1.5 billion compared to the same period in 2024.
Nike Yet to Respond
As of now, Nike has not issued a public response regarding the lawsuit or the allegations.
