Nike Faces $5M Lawsuit with Closure of RTFKT NFT Platform

• Nike faces a $5M lawsuit for closing its RTFKT NFT platform and ending rewards.  
• The lawsuit says Nike promoted NFTs as investments by using its famous brand strength.  
• Buyers were left with worthless NFTs with the sudden closure of RTFKT by Nike last year.

In a dramatic twist, Nike’s abrupt shutdown of its RTFKT NFT platform in January has triggered a $5 million class-action lawsuit filed in Brooklyn federal court. Led by Jagdeep Cheema, a group of RTFKT users claimed that they suffered “significant damages” with the sudden exit of the platform. Further, the lawsuit accused Nike of promoting sneaker-themed NFTs to attract buyers, only to abandon the project without a warning.

Besides the platform’s closure, the complaint alleged that Nike sold NFTs without registering with the Securities and Exchange Commission (SEC). By leveraging the brand power to hype, promote, and prop up the unregistered securities,” Nike allegedly misled investors. Consequently, the lawsuit charged the corporation with marketing NFTs as securities without proper regulatory compliance.

The plaintiffs argue Nike fueled NFT sales by leveraging its reputation during the cryptocurrency boom, making buyers expect rising values. However, when RTFKT was disbanded, the hopes collapsed as NFT values fell sharply, leaving investors with devalued assets band no promised benefits. 

Allegations of Marketing Unregistered Securities

According to the lawsuit, Nike promoted RTFKT NFTs by promising exclusive quests, limited-edition products, and lucrative secondary sales opportunities. Additionally, the plaintiffs emphasized that buyers were motivated by the expectation of future growth tied to Nike’s branding.

Further, teh complaint stated that as the Nike NFTs derived their value from the success of a given promoter and project, investors purchased the digital asset with the hope that its value would increase in the future, given the popularity of teh Nike brand. Moreover, the lawsuit argued that buyers relied on Nike’s promotional power, expecting that the brand’s involvement would raise NFT popularity and prices. However, the trust was broken with the sudden closure of the platform.

The Fallout From RTFKT’s Closure

Nike had acquired RTFKT in 2021, positioning it as an innovative leap into digital collectibles and blockchain-based ownership. By combining gaming, culture, and technology, RTFKT’s NFTs reportedly generated around $168 million in sales. With the financial success, Nike promoted the acquisition as part of its next-generation innovation strategy.

However, on December 2, 2024, the momentum of the platform declined as Nike announced it would wind down RTFKT, claiming the “innovative spirit will live on via artists and initiatives inspired by the brand.” The sudden announcement confused and financially impacted many NFT holders. 

Furthermore, the closure brought forth a broader legal debate: Should NFTs be classified as securities under U.S. law? This lawsuit arrives as Nasdaq pressures the SEC to implement clearer regulations. Notably, neither Nike nor Phillip Kim, the plaintiffs’ attorney, has issued a public statement regarding the lawsuit.

Related: NFT Crash Deepens: Whale Dumps Punk, $13M IRS Case Unfolds

Broader Implications for NFTs and Digital Assets

The Rosen Law Firm is now preparing a class action to help NFT buyers recover their losses. Besides individual grievances, the case highlights critical risks within the rapidly evolving digital asset market, and the outcome could establish key precedents for how companies handle NFTs and similar technologies in the future. At most, this lawsuit could help answer the most pressing question: Will mainstream brands be held accountable for how they manage digital assets, and will NFTs gain clear guidance on its legal status in the advancing digital economy?

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