Nike is facing a class-action lawsuit that accuses the company of misleading consumers and investors by shutting down its non-fungible token (NFT) platform, RTFKT, earlier this year. Filed on April 25, 2025, in a Brooklyn federal court, the proposed class action seeks $5 million in damages, alleging that Nike violated consumer protection laws and several state unfair trade and competition regulations.
Allegations of “Rug Pull” and Investor Losses
The lawsuit, led by a group of RTFKT users, claims that Nike’s closure of the platform in January 2025 amounted to a “rug pull,” a term typically used to describe situations where creators of digital assets suddenly abandon their projects, leaving investors with worthless assets. The plaintiffs argue that Nike promoted sneaker-themed NFTs under the RTFKT brand, gaining significant attention and investment, only to abruptly shutter the platform and leave users with devalued assets.
The suit also claims that the NFTs sold by RTFKT were unregistered securities, as Nike did not register the assets with the Securities and Exchange Commission (SEC). According to the plaintiffs, Nike leveraged its brand power and marketing expertise to promote these NFTs, which were bought by investors with the hope that their value would increase over time due to the Nike association.
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Seeking $5 Million in Damages
The class-action lawsuit demands $5 million in damages, alleging that Nike’s actions not only harmed consumers but also violated multiple state laws concerning unfair business practices and competition. While U.S. courts have not yet definitively ruled on whether NFTs qualify as securities, the lawsuit argues that the legal status of NFTs is not necessary to resolve the current case. Instead, the plaintiffs focus on the alleged unfair practices and losses caused by Nike’s actions.
In a related move, the NFT marketplace OpenSea had urged the SEC in a letter earlier this month to exclude NFTs from being classified as securities. OpenSea argued that NFTs, as digital assets, do not meet the legal criteria of securities, although this stance has yet to be definitively addressed by U.S. regulators.
RTFKT Acquisition and Declining NFT Market
Nike’s involvement in the NFT space began in 2021 when it acquired RTFKT Studios, a company specializing in virtual sneakers and digital collectibles. The lawsuit claims that RTFKT’s NFTs, promoted as tradeable assets that could unlock rewards through challenges and quests, were initially seen as valuable investments. At the time of their release in April 2022, Nike’s crypto kick NFTs were fetching as much as 3.5 Ether (around $8,000). However, as of April 2025, the same NFTs were trading for only about 0.009 Ether (roughly $16), a dramatic drop in value.
The complaint argues that Nike’s decision to shut down RTFKT resulted in significant financial losses for investors, as the price of the NFTs plummeted and the promised challenges and quests were no longer available. This, according to the plaintiffs, rendered the NFTs essentially worthless.
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The Broader NFT Market Struggles
The lawsuit also highlights the broader challenges facing the NFT market. In the first quarter of 2025, NFT sales fell sharply by 63%, dropping from $4.1 billion in the same period in 2024 to just $1.5 billion. This downturn mirrors the struggles that many investors have faced within the digital asset market, further complicating the legal and financial landscape for NFTs.
Nike has yet to respond to requests for comment regarding the lawsuit.
