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Nike is facing growing legal pressure from digital asset investors after abruptly shutting down its NFT venture, RTFKT Studios, which it acquired in 2021 during the height of the metaverse and digital collectibles boom. A newly filed class-action lawsuit, led by investor Jagdeep Cheema, is seeking over $5 million in damages, accusing Nike of promoting and selling unregistered securities through its NFTs and then abandoning the project, leaving holders with near-worthless assets.
The legal complaint argues that Nike capitalized on its brand power to inflate the perceived value of digital assets, only to back out of the project when NFT market enthusiasm waned—causing significant losses for its community of buyers and investors.
The Rise and Fall of RTFKT
Nike acquired RTFKT Studios in December 2021 as part of a bold push into the world of virtual fashion and blockchain-based collectibles. RTFKT (pronounced “artifact”) had already garnered attention for producing digital sneakers and 3D avatar wearables that could be traded or used in games and virtual worlds.
Nike’s move was widely seen as an endorsement of NFTs as a legitimate new frontier in fashion and brand engagement. At the time, the acquisition was celebrated within both the crypto and streetwear communities. The launch of CryptoKicks—Nike-branded, NFT-powered sneakers—followed soon after, attracting buyers who believed they were purchasing not just digital assets, but long-term participation in Nike’s evolving digital roadmap.
However, by late 2024, sentiment had changed. In December 2024, Nike announced it would wind down RTFKT’s operations, citing a “strategic realignment” of its digital priorities. For many NFT holders, the move felt sudden and final—stripping their tokens of utility and leaving them with few options.
The Lawsuit: Securities Claims and Consumer Protection
Filed on April 25, 2025, in the Eastern District of New York, the class-action lawsuit claims that Nike’s NFTs met the criteria of investment contracts under the Howey Test, and therefore constituted unregistered securities under U.S. law.
The plaintiffs allege that Nike:
- Marketed NFTs with the promise of future benefits, including participation in events, quests, and exclusive releases.
- Built hype around the project, using Nike’s global reputation to create an expectation of profit among investors.
- Failed to register the NFTs with the SEC, while treating them like speculative assets rather than digital art or collectibles.
The complaint states:
“Nike NFTs derived their value from the success of a given promoter and project — namely Nike and its marketing efforts. Buyers had a reasonable expectation of profit tied directly to Nike’s continued involvement.”
Additionally, the plaintiffs are invoking state-level consumer protection laws in New York, California, Florida, and Oregon, claiming that Nike engaged in deceptive trade practices and misled buyers about the long-term viability of the platform.
Investor Losses and Token Depreciation
The lawsuit highlights a dramatic collapse in value following RTFKT’s shutdown. For example:
- CryptoKicks NFTs, which initially sold for an average of 3.5 ETH (around $8,000) in April 2022, were trading at just 0.009 ETH (around $16) by April 2025.
- Some NFT holders had spent tens of thousands of dollars collecting rare items, with the expectation of future use, status, and resale opportunities.
When Nike pulled the plug on RTFKT, many of those use cases vanished overnight. The RTFKT ecosystem—which once included avatar customization, wearables, metaverse integrations, and in-person events—was no longer supported.
Investors argue that this sudden withdrawal effectively zeroed out the value of their holdings and constituted a form of consumer abandonment.
Legal Questions Looming Over NFTs
This case reignites a broader debate about the legal classification of NFTs. While some NFTs are clearly digital collectibles, others—particularly those tied to exclusive benefits, branded ecosystems, or financial expectations—may fall into regulatory gray areas.
The U.S. Securities and Exchange Commission (SEC) has yet to issue a definitive ruling on how NFTs should be regulated. However, similar lawsuits involving other platforms—such as NBA Top Shot and Yuga Labs (creator of Bored Ape Yacht Club)—have explored whether NFTs are securities when promoted with investment language or profit-driven roadmaps.
The plaintiffs in this case assert that the court does not need to classify the NFTs as securities to proceed. Instead, they focus on Nike’s failure to deliver on promised digital experiences and utility, presenting the case as a consumer protection issue rooted in misleading marketing.
Wider Implications for Brands Entering Web3
Nike’s legal battle is not just about NFTs—it’s a cautionary tale for corporations entering Web3. The case highlights the responsibilities that brands assume when offering blockchain-based assets to consumers.
While many companies jumped into NFTs in 2021–2022, only a few sustained long-term support for their digital initiatives. With legal pressure mounting, companies may now be forced to:
- Rethink how they market digital assets, especially when linked to rewards or access.
- Clarify token utility and expiration timelines to avoid misleading buyers.
- Ensure regulatory compliance, especially when building token economies or offering monetizable perks.
Should the lawsuit proceed, it could set a precedent for how courts handle future disputes between corporations and NFT holders—especially around project discontinuation, value loss, and expectations of ongoing engagement.
Nike’s Silence—and What Comes Next
As of now, Nike has not publicly responded to the lawsuit. It is unclear whether the company plans to issue refunds, relaunch any part of the RTFKT brand, or contest the suit in court.
In a December 2024 press release, Nike stated that RTFKT’s “legacy will continue through the creators and projects it inspired,” but provided no additional information on compensation or future support for NFT holders.
Meanwhile, attorneys for the plaintiffs have indicated they are considering expanding the case to a broader class of investors, which could increase the legal exposure and potential payout significantly if a court rules in their favor.
Conclusion
The class-action lawsuit against Nike is a pivotal moment in the intersection of corporate responsibility, digital ownership, and emerging technologies. Whether it results in financial compensation or not, the case will likely shape how brands approach NFTs in the future—raising new standards for transparency, accountability, and long-term value delivery in Web3 ecosystems.
For investors, it serves as a stark reminder: when buying into branded NFT projects, utility isn’t guaranteed—and neither is support.
This article reflects the opinions of the publisher based on available information at the time of writing. It is not intended to provide financial advice, and it does not necessarily represent the views of the news site or its affiliates. Readers are encouraged to conduct further research or consult with a financial advisor before making any investment decisions.
