Nike Faces Legal Heat for Alleged NFT "Rug Pull"
Nike is under fire after a $5 million class-action lawsuit accused the sportswear giant of abandoning its RTFKT NFT platform, leaving investors with worthless digital assets. The lawsuit, filed in a Brooklyn federal court on April 25, alleges that Nike violated consumer protection laws and unfair trade practices by hyping its NFT project before abruptly shutting it down in January. Led by investor Jagdeep Cheema, the plaintiffs argue that Nike leveraged its iconic brand power to promote unregistered securities—referring to the sneaker-themed NFTs issued through RTFKT. The complaint claims buyers were misled into believing these NFTs would gain value as Nike expanded the project.
Source: CourtListener
Are NFTs Securities? The Debate Continues
A key point in the case is whether NFTs qualify as securities. While U.S. courts haven’t definitively ruled on this, the lawsuit claims that Nike’s actions fall under existing securities laws. Interestingly, the plaintiffs argue that the court doesn’t even need to resolve the NFT security debate to address Nike’s alleged misconduct. Earlier this month, OpenSea urged the SEC to exclude NFTs from federal securities laws, highlighting the ongoing regulatory uncertainty around digital collectibles.
From $8,000 to $16: The NFT Value Collapse
Nike acquired RTFKT Studios in 2021, riding the NFT wave with promises of exclusive digital sneakers, challenges, and rewards for holders. At launch in April 2022, Nike’s NFTs were trading for an average of 3.5 ETH (around $8,000). Fast forward to April 2025, and those same tokens are now worth just 0.009 ETH—a mere $16, according to OpenSea data. When Nike shut down RTFKT in January, prices tanked, and investors lost access to the ecosystem's gamified features, which the lawsuit claims was a core incentive for purchasing the NFTs.
This NFT project made $168M
— StarPlatinum (@StarPlatinumSOL) April 24, 2025
Nike bought it
Elon Musk and Kanye West wore their shoes
Now the collection is gone
And so are the founders
The rise, fall, rug of RTFKT and Clone-X🧵
(1/9) pic.twitter.com/aLnaz4kGAf
This NFT project made $168M
— StarPlatinum (@StarPlatinumSOL) April 24, 2025
Nike bought it
Elon Musk and Kanye West wore their shoes
Now the collection is gone
And so are the founders
The rise, fall, rug of RTFKT and Clone-X🧵
(1/9) pic.twitter.com/aLnaz4kGAf
NFT Market Slump Adds Fuel to the Fire
The lawsuit comes amid a brutal downturn in the NFT market. Sales plunged 63% year-over-year in Q1 2025, falling from $4.1 billion to just $1.5 billion. This broader market crash has only worsened the losses for RTFKT investors. Nike has yet to comment on the lawsuit, but the case could set a precedent for how courts handle corporate responsibility in NFT projects.
