Nike NFT Lawsuit: $5M in Damages for RTFKT Shutdown

Nike faces $5 million lawsuit over NFT platform shutdown

Nike is currently embroiled in a class-action lawsuit seeking $5 million in damages over the shutdown of its non-fungible token (NFT) platform RTFKT. The lawsuit alleges that Nike engaged in a rug pull by closing the platform in January, causing significant financial harm to users.

The lawsuit, filed by a group of RTFKT users led by Jagdeep Cheema, accuses Nike of promoting its sneaker-themed NFTs to attract investors and then abruptly shutting down the platform. The lawsuit claims that the NFTs sold by Nike were unregistered securities, as the company did not register with the Securities and Exchange Commission before selling them.

The suit argues that Nike used its brand and marketing power to hype up the NFTs and attract investors, who purchased the digital assets with the expectation that their value would increase in the future. The lawsuit alleges that investors suffered damages when Nike shut down the platform, causing the value of the NFTs to plummet.

NFT market value declines

In 2021, Nike acquired RTFKT Studios, a company known for creating virtual sneakers through NFTs. Holders of Nike's NFTs were told that the tokens could be traded peer-to-peer on the secondary market and used to complete challenges for rewards.

Initially, Nike's crypto kick NFT collection was fetching around 3.5 Ether (ETH), equivalent to approximately $8,000 when first listed in April 2022. However, the value of the NFTs dropped significantly to around 0.009 Ether, or roughly $16, by April 21, according to data from OpenSea.

Nike's decision to shut down RTFKT in January had a negative impact on the value of the NFTs, leading to a sharp decline in prices. The lawsuit alleges that investors were deprived of the opportunity to participate in challenges and quests, which was a key reason for purchasing the tokens.

Overall market decline

The broader NFT market experienced a significant decline in the first quarter of 2025, with sales dropping 63% year-over-year to $1.5 billion. This marked a substantial decrease from the $4.1 billion in sales recorded during the same period in 2024, signaling a downturn in the NFT market overall.

Nike has yet to respond to the allegations made in the lawsuit, and the outcome of the legal proceedings remains uncertain. As the case unfolds, the impact of Nike's actions on the NFT market and its investors will continue to be scrutinized.