Nike finds itself at the centre of a legal dispute after abruptly closing down its digital asset division, RTFKT, leaving thousands of NFT buyers facing steep financial losses.
The proposed class action was filed in the Brooklyn federal court by a group led by Australian resident Jagdeep Cheema, who claims that Nike’s sudden move in December 2024 wiped out demand for the digital collectibles, causing their value to collapse overnight.
The buyers allege that Nike misled them about the nature and stability of the NFTs sold through RTFKT, a company Nike had acquired in December 2021.
At the time of the purchase, Nike praised RTFKT for using "innovation to deliver next generation collectibles that merge culture and gaming."
However, by December 2024, Nike announced through the RTFKT X account that it would “wind down RTFKT operations” by the end of January 2025.
pic.twitter.com/ySShPa0I7r
— RTFKT (@RTFKT) December 2, 2024
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The plaintiffs argue that they would not have invested in the NFTs if they had known the assets were "unregistered securities" and that Nike would eventually "cause the rug to be pulled out from under them."
When Nike terminated RTFKT’s operations, the market for RTFKT NFTs collapsed almost instantly.
Buyers saw the value of their digital assets plummet, leading to severe financial losses.
The lawsuit seeks damages exceeding $5 million, citing alleged violations of consumer protection laws in New York, California, Florida, and Oregon.
Many buyers had initially believed that the NFTs would gain value over time, buoyed by Nike’s involvement.
Instead, the shutdown triggered a rapid loss in market confidence, leaving investors empty-handed.
A key point of contention in the lawsuit is whether Nike’s NFTs should be considered securities under U.S. law.
The plaintiffs argue that Nike failed to register the NFTs appropriately, depriving them of the necessary legal protections.
With the regulatory framework for NFTs still unclear, the case could contribute to the formation of future legal definitions around digital assets.
The broader uncertainty surrounding NFTs has already sparked a wave of litigation in the United States, as courts and regulators grapple with how to categorise these emerging technologies.
Nike, headquartered in Beaverton, Oregon, has yet to issue a public statement addressing the lawsuit.
Phillip Kim, the lawyer representing the plaintiffs, declined to comment on the ongoing proceedings.
Meanwhile, the Rosen Law Firm has taken steps to represent affected buyers, announcing in March 2025 that it had launched an investigation into the matter.
The firm, which focuses on protecting investor rights, is preparing the class action on a contingency basis, meaning legal fees will only apply if the case succeeds.
Despite the closure of RTFKT’s operations, Nike insisted that the spirit of innovation behind the brand would continue.
In its announcement, Nike stated that the creativity inspired by RTFKT would live on through "countless creators and projects."
Yet, for many investors and fans, the abrupt end to RTFKT’s activities felt like a betrayal.
Since the shutdown, RTFKT's remnants appear to be maintained by a single figure, Samuel Cardillo, who recently posted updates regarding the sudden disappearance and subsequent reappearance of CloneX NFT artworks.
Legal Fight Could Shape Future of NFTs and Digital Asset Regulations
Nike’s closure of RTFKT and the subsequent lawsuit could set important legal precedents for NFTs and digital asset regulation.
While Nike capitalised on the NFT hype, the company’s lack of long-term strategy raised questions about corporate responsibility in the space.
NFT projects, like RTFKT, should focus on building a dedicated community, not just chasing trends, while being aware of the risks involved.
On the other hand, NFT buyers must conduct thorough research and understand the volatility of the market, especially after the prevalence of rug-pull schemes.
Even with big names involved, projects can collapse, making due diligence essential.
AI-powered search tools like Perplexity are gaining popularity for their ability to provide quick, precise answers, reducing reliance on traditional search engines. However, concerns about accuracy and trust remain, as users must carefully verify AI-generated content.
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