Nike, a footwear and sportswear global giant, is facing a class action lawsuit after closing down its RTFKT web3 project. The recent lawsuit which was filed on April 25. 2025, claims that the closure of the non-fungible tokens (NFTs) project caused significant financial losses. 

Nike acquired RTFKT Studios back in December 2021 with an aim to leverage NFT assets, blockchain authentication, and augmented reality. However, the recent closure of the NFT project resulted in a dip in the value of the Nike-branded digital collectibles hence leaving investors in millions-worth of losses. 

Investors Accuse Nike of a NFT ‘Rug-pull’

According to recent reports, Nike. Inc has been sued by a team of investors, led by Australian Jagdeep Cheema, following the shut down of RTFKT, its NFT subsidiary. In a filing made to a Brooklyn-based federal court, the plaintiffs are claiming over $5 million in damages from Nike. 

The plaintiffs accuse Nike. Inc of selling unregistered securities in the form of NFTs before rug-pulling them. These investors cite that Nike violated the consumer protection laws in New York, Florida, Oregon and California upon closure of RTFKT. 

“Even if the court does not find that the Nike NFTs are unregistered securities, pulling the rug out from under the Nike NFTs constitutes a deceptive act,” a subtitle of one the sections of the court filing document read. The court filing also adds that “holders of the Nike NFTs felt that the decision [to close RTFKT abruptly] left them holding obsolete crypto assets whose value had suddenly evaporated.”

The plaintiffs also claim that if Nike had disclosed the risks associated with their branded NFT tokens, they would not have invested in them or would have invested a smaller amount of money. Rather, Nike used its established brand power and marketing expertise to promote their NFTs before abandoning the project. 

The NFT Market Takes Yet Another Hit

Nike acquired RTFKT as part of its strategy to deliver next-generation collectibles that merge culture and gaming to investors. However, with the NFT market taking a hit as the frenzy faded away, Nike decided to shut the project down. But, the abrupt RTFKT shutdown in December 2024 has since been a pain to investors as their NFT holding hit floor prices. 

Amidst the Nike $5 million lawsuit, the NFT market is also feeling the heat. This sector, which has been struggling lately with significant loss of interest from investors, is dipping even further. According to data by Coinmarketcap, the total NFT market cap has dipped from $417.46 billion recorded in May 2022 to just $1.60 billion in recent times. 

Furthermore, the lawsuit between Nike and its NFT investors paints a clear picture associated with NFTs. The sector also lacks clear regulatory framework to govern and protect investors from similar occurrences. How the lawsuit against Nike plays is crucial for the crypto market as it possesses the potential to influence future regulatory outlook of digital assets, including NFTs.