Nike Faces Class Action Lawsuit Seeking $5M in Damages After Shutting Down Its NFT Platform RTFKT

Nike is facing a proposed class action lawsuit seeking more than $5 million in damages after shutting down its NFT platform RTFKT earlier this year.

Nike is facing a proposed class action lawsuit over the shutdown of its NFT platform RTFKT earlier this year, with investors seeking more than $5 million in damages.

The lawsuit, filed in New York’s Eastern District court on April 25, claims that the sportswear giant pulled the rug out from under investors who purchased its digital assets.

It follows an announcement by Nike in December that it would be “winding down RTFKT operations” by the end of January.

The startup was acquired by the sportswear giant in 2021 during the peak of NFT hype, as companies sought to capitalize on the growing market for digital collectibles.

However, the market has since crashed, and several hyped projects have been shut down or are now continuing without the initial teams who built them.

The lawsuit, brought by Jagdeep Cheema and others who purchased RTFKT NFTs, alleges that they suffered “major damages” when Nike closed the platform.

It claims the NFTs were unregistered securities which Nike sold without registering them with the Securities and Exchange Commission.

“During the relevant time period, RTFKT was selling its NFTs in an unregistered offering, in violation of Section 5 of the Securities Act,” the lawsuit alleges.

It adds that Nike used “its iconic brand and marketing prowess to hype, promote, and prop up the unregistered securities that RTFKT sold.”

The plaintiffs wouldn’t have purchased the NFTs had they known they were unregistered securities, the lawsuit claims.

It also adds that the value of Nike’s crypto kicks NFT collection has since crashed. When first listed on April 18, 2022, they were changing hands for an average of 3.5 Ether, which at the time was worth about $8,000.

But by April 21, 2025, they were trading at approximately 0.009 Ether, or roughly $16 according to data from OpenSea—a 99.8% loss.

The lawsuit claims that Nike’s decision to shut down RTFKT "decimated investors" as "prices plunged and did not recover."

It adds that the closure also deprived NFT holders of the opportunity to take part in promised challenges and quests, which the plaintiffs claim was a primary reason for purchasing the tokens.

The case comes amid a broader downturn in the NFT market.

Total sales in the first quarter of 2025 dropped 63% year-over-year, with $1.5 billion in sales from January to March 2025, down from $4.1 billion during the same period in 2024.

Since the shutdown announcement, RTFKT has apparently been maintained by a single individual named Samuel Cardillo. On Thursday, Cardillo was posting about the sudden disappearance and later reappearance of artwork for the CloneX NFTs project, one of RTFKT’s digital collections.

The proposed class action seeks damages for alleged violations of consumer protection laws in multiple states including New York, California, Florida and Oregon. It also accuses Nike of breaking various state unfair trade and competition laws.

The lawsuit also seeks to enjoin Nike from continuing to sell what it calls unregistered securities.

While a US court has yet to definitively rule on whether NFTs are securities, the lawsuit argues that the court doesn’t necessarily need to decide the legal status of NFTs to address the complaint.

In contrast, NFT marketplace OpenSea recently urged the SEC in an April 9 letter to exclude NFTs from federal securities laws, arguing they don’t meet the legal definition of a security.

According to the lawsuit, Nike has been notified of the suit but has yet to respond. A spokesperson for the company did not immediately return a request for comment.

The case is the latest in a growing series of legal challenges related to NFTs as the market has cooled and many projects have been abandoned or lost value.