Nike Faces $5 Million Lawsuit Over RTFKT NFT Platform Closure

A class-action lawsuit has been filed against Nike, alleging a “rug pull” in connection with the January closure of its NFT platform, RTFKT. The lawsuit, spearheaded by Jagdeep Cheema, represents a group of RTFKT users who claim significant financial losses.

Filed in a Brooklyn federal court, the suit argues that Nike leveraged its brand to aggressively promote RTFKT’s sneaker-themed NFTs, creating investor interest without proper Securities and Exchange Commission (SEC) registration. The plaintiffs contend these NFTs were unregistered securities, leading to substantial damages upon the platform’s unexpected shutdown.

The lawsuit emphasizes Nike’s marketing efforts as a central factor in the NFTs’ value proposition, claiming investors anticipated future growth based on the strength of the Nike brand. It alleges that Nike violated consumer protection laws and various state unfair trade and competition laws.

The plaintiffs seek $5 million in damages. While the legal status of NFTs as securities remains unresolved, the lawsuit argues that such a determination isn’t necessary to address the alleged violations.

The complaint highlights the significant drop in Nike NFT value, from an average of 3.5 ETH ($8,000) at launch to approximately 0.009 ETH ($16) by April 21, 2025 (according to OpenSea). The sudden closure of RTFKT, the lawsuit asserts, exacerbated these losses and prevented users from participating in promised in-platform challenges and quests.

The lawsuit underscores the broader decline in the NFT market during the first quarter of 2025, experiencing a 63% year-over-year drop in sales. Nike has yet to publicly respond to the allegations.