Proposed Class Action Claims “Rug Pull” and Consumer Law Violations
Nike is facing a $5 million class-action lawsuit after shutting down its non-fungible token (NFT) platform RTFKT, with plaintiffs accusing the company of orchestrating a “rug pull” that left investors holding near-worthless digital assets.
The lawsuit, filed on April 25 in Brooklyn federal court by RTFKT users led by Jagdeep Cheema, claims Nike leveraged its iconic brand to promote and sell sneaker-themed NFTs, only to shutter the platform in January 2025, inflicting significant financial damage on token holders.
The suit argues that the NFTs were effectively unregistered securities, and that Nike violated consumer protection laws and various state unfair trade and competition laws by failing to register them with the U.S. Securities and Exchange Commission (SEC).
“Investors purchased this digital asset with the hope that its value would increase in the future as the project grew in popularity based on the Nike brand,” the complaint states.
Was RTFKT’s NFT Offering a Security?
While U.S. courts have not definitively ruled on whether NFTs qualify as securities, the lawsuit argues that the court does not need to settle that question to find that Nike misled consumers and breached fair competition laws.
In a related development earlier this month, OpenSea urged the SEC to exclude NFTs from securities regulation, arguing that most NFTs do not meet the legal definition of an investment contract.
The plaintiffs assert that Nike’s marketing efforts, combined with the NFTs’ dependency on the success of Nike’s brand, created the expectation of future profits — a key element in traditional securities analysis.
NFT Values Cratered After Platform Shutdown
Nike acquired RTFKT Studios in 2021, heralding the move as a bold entry into the virtual sneaker and metaverse space.
At launch, Nike’s crypto-themed NFTs were selling for an average of 3.5 Ether (ETH) — approximately $8,000 at the time — according to OpenSea. As of April 21, the same NFTs were trading for about 0.009 ETH, or roughly $16 — a 99.8% decline.
The class-action lawsuit claims that when Nike shut down RTFKT, it not only destroyed the secondary market value of the NFTs but also eliminated the opportunity for holders to participate in promised challenges and quests, which were marketed as core features of ownership.
“Prices plunged and did not recover,” the lawsuit states, accusing Nike of effectively abandoning its NFT community.
NFT Market Faces Broader Downturn
Nike’s legal troubles come amid a broader market contraction for NFTs. Sales volume dropped 63% year-over-year in the first quarter of 2025, falling to $1.5 billion from $4.1 billion during the same period in 2024.
The collapse of NFT values across the board has raised questions about the responsibilities of major brands entering the space — particularly when projects are shut down or left to languish.
Nike has not yet responded publicly to the lawsuit.
Final Thoughts: Accountability in the NFT Era
Nike’s shutdown of RTFKT has become a flashpoint for broader concerns around corporate responsibility in Web3. As more traditional brands experiment with NFTs and digital collectibles, clearer legal frameworks and greater transparency will be crucial to maintain consumer trust.
This case could set an important precedent for how courts view the obligations of corporations when they launch — and then abandon — blockchain-based projects. The Web3 community, investors, and legal observers will be watching closely.
