- Plaintiffs accuse Nike of promoting unregistered securities.
- NFTs linked to RTFKT fell from about $8,000 to $16 after the shutdown.
- The lawsuit underscores legal uncertainty about whether NFTs qualify as securities.
Nike is facing a proposed class-action lawsuit seeking $5 million, alleging the company misled investors by promoting non-fungible tokens (NFTs) tied to the RTFKT platform and then abruptly shutting that platform down.
Filed in Brooklyn federal court on April 25, the complaint alleges Nike orchestrated a “pull the rug” scheme by heavily marketing sneaker-themed NFTs, encouraging investment, and then closing the platform in January 2025.
The case highlights growing tension over how NFTs should be classified under securities law and arrives amid a sharp decline in NFT market values, with total sales down 63% year-over-year in the first quarter.
Nike accused of selling unregistered NFTs
The class-action group, led by Jagdeep Cheema, contends that Nike leveraged its branding and marketing power to promote NFTs that functioned as unregistered securities.
According to the complaint, Nike drove purchases by linking the NFTs’ value to ongoing promotional efforts the company would carry out, creating investor expectations that the tokens’ worth would rise in step with the brand’s success.
The lawsuit states investors suffered “substantial losses” after Nike shut down RTFKT, which destroyed the tokens’ value. It also alleges violations of state consumer protection and competition laws.
Plaintiffs seek $5 million in damages, citing violations tied to marketing what they say were unregistered securities and failing to protect investor interests after RTFKT’s closure.
The case particularly highlights the legal uncertainty surrounding NFTs.
U.S. courts have not definitively ruled on whether NFTs are securities. Major marketplace OpenSea argued in a letter to the Securities and Exchange Commission on April 9 that NFTs should not be regulated as securities.
Despite this broader debate, plaintiffs argue a court does not need to settle the general securities status of NFTs to decide whether Nike engaged in wrongful conduct in this instance.
Nike NFT values plunged after RTFKT shutdown
Nike acquired RTFKT Studios, a virtual sneaker and collectibles company, in 2021.
Following the acquisition, Nike released the “CryptoKick” NFT collection, which initially traded at an average of about 3.5 Ether—roughly $8,000—when listed on OpenSea on April 18, 2022.
However, after Nike closed RTFKT in January 2025, the average price of these NFTs collapsed.
By April 21, CryptoKick tokens were trading at approximately 0.009 Ether, or about $16.
The complaint asserts that this loss in value directly harmed investors who bought NFTs expecting to participate in future RTFKT challenges and quests—utility features prominently marketed as reasons to invest in the tokens.
Plaintiffs say the shutdown eliminated the promised utility that supported the NFTs’ value proposition, leaving investors without access to the previously promoted opportunities for rewards and engagement.
NFT market sales fell 63% in early 2025
The collapse in Nike’s NFT values coincided with a broader downturn across the NFT market.
Data show global NFT sales declined to $1.5 billion from January through March 2025, a 63% drop from $4.1 billion in the same quarter of 2024.
This contraction reflects growing investor skepticism about NFTs’ long-term value, especially projects closely tied to brand-driven hype.
Nike’s situation adds to a string of controversies that challenge assumptions about the sustainability of digital asset markets.
As debate continues over how NFTs should be regulated, lawsuits like this one could test new legal theories without waiting for a formal judicial determination on whether NFTs qualify as securities.