Nike sued for $5 million over its shutdown of NFT platform RTFKT

Published on Monday, April 28, 2025 by Cointelegraph | Found on Glideslope.ai

Nike has been hit with a class-action lawsuit that accuses the sportswear giant of operating a rug pull for shuttering its non-fungible token (NFT) platform RTFKT in January. A group of RTFKT users led by Jagdeep Cheema claimed in the proposed class suit filed in a Brooklyn federal court on April 25 that they suffered “significant damages” as a result of Nike touting its sneaker-themed NFTs to gain investors, then shuttering the platform.The suit claimed the NFTs were unregistered securities, as Nike sold them without registering with the Securities and Exchange Commission. It accused the company of using “its iconic brand and marketing prowess to hype, promote, and prop up the unregistered securities that RTFKT sold.”“Because the Nike NFTs derived their value from the success of a given promoter and project — here, Nike and its marketing efforts — investors purchased this digital asset with the hope that its value would increase in the future as the project grows in popularity based on the Nike brand,” the lawsuit argued.The class suit claimed investors suffered damages due to Nike shutting its NFT platform. Source: CourtListenerThe lawsuit asks for $5 million in damages, claiming Nike broke consumer protection laws and violated various state unfair trade and competition laws.A US court hasn’t definitively ruled on whether NFTs are securities. Still, in an April 9 letter to the SEC, marketplace OpenSea urged the regulator to exclude NFTs from federal securities laws, arguing they don’t meet the legal definition of a security. 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.NFT market value dips In 2021, Nike acquired the NFT firm RTFKT Studios, which created virtual sneakers. 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, according to OpenSea. Nike NFTs have seen a sharp drop in value since they were first listed. Source: OpenSeaNike 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. Related: RTFKT’s CloneX avatars reappear after issue blacks out NFTsThe overall NFT market dropped sharply in the first quarter of 2025, with sales plunging 63% year-over-year, to $1.5 billion in total sales from January to March 2025, down from $4.1 billion during the same period in 2024.Nike did not immediately respond to a request for comment. Magazine: Financial nihilism in crypto is over — It’s time to dream big again