Nike Faces $5M Lawsuit Over NFT Losses After RTFKT Shutdown

Nike Inc. is facing a proposed class-action lawsuit filed by purchasers of its Nike-themed non-fungible tokens (NFTs) and related crypto assets. The lawsuit, filed in a Brooklyn federal court, alleges that Nike misled buyers about the security and value of its NFTs, leading to significant financial losses following the abrupt shutdown of Nike’s RTFKT unit in January. The plaintiffs, led by Jagdeep Cheema, argue that Nike’s NFTs constituted unregistered securities and that they would not have purchased them had they been aware of the regulatory risks or the planned closure of RTFKT.

The RTFKT unit, acquired by Nike in 2021, was marketed as a cutting-edge digital fashion brand blending gaming, culture, and innovation. However, Nike announced RTFKT’s winddown, stating that the innovation it fostered would continue through external creators and projects. Plaintiffs are seeking more than $5 million in damages for alleged violations of consumer protection laws in several states. The complaint accuses Nike of "pulling the rug out" from under NFT purchasers and failing to properly register the tokens as securities under US law.

The lawsuit claims that Nike capitalized on the crypto boom to drive NFT sales, with investors purchasing the NFTs in the hope that they would increase in value due to Nike's backing. The abrupt shutdown of RTFKT has caused significant losses to NFT investors, further complicating the regulatory landscape for digital assets. Nike did not immediately respond to a request for comment.

In its case against Nike, the class group said that the court doesn’t necessarily need to rule on the legal status of NFTs to address the complaint. The legal status of NFTs remains unsettled, with several lawsuits nationwide questioning whether digital collectibles should be regulated as securities. This case reignites the debate on the legal classification of NFTs and the responsibilities of companies that issue them.

According to the complaint, holders of the resulting Nike NFTs were told the tokens could be traded peer-to-peer on the secondary market and used to complete challenges and quests that could lead to rewards. Nike’s crypto kick NFT collection was changing hands for an average of 3.5 Ether (ETH), or around $8,000 when they were first listed on April 18, 2022, but were trading for around 0.009 Ether, or roughly $16 as of April 21. Nike shut down RTFKT in January, which the class suit claims decimated investors when “prices plunged and did not recover,” and also took away the chance to take part in the challenges and quests, which the group argued was a primary reason for purchasing the tokens.

Nike’s NFTs have seen a sharp drop in value since they were first listed. The overall NFT market dropped sharply in the first quarter of 2025, with sales plunging year-over-year. The lawsuit asks for $5 million in damages, claiming Nike broke consumer protection laws and violated various state unfair trade and competition laws. The class suit claimed investors suffered damages due to Nike shutting its NFT platform.