A cohort of non-fungible token holders has filed a class-action lawsuit in opposition to Nike over the abrupt shutdown of its RTFKT platform.
In accordance with a submitting with the U.S. District Courtroom for the Jap District of New York, the plaintiffs declare Nike carried out a “rug pull” by selling sneaker-themed NFTs, pocketing earnings from preliminary and secondary gross sales, after which shutting down RTFKT in January 2025, leaving holders with steep losses and nugatory property.
The lawsuit, led by an RTFKT holder, Jagdeep Cheema, seeks $5 million in damages and requires a trial by jury to resolve the claims. It accuses Nike of violating client safety legal guidelines and promoting unregistered securities.
Plaintiffs argue that the Nike NFTs meet the factors for securities underneath the Howey Check, as consumers made an funding of cash in a typical enterprise with an expectation of earnings tied to Nike’s ongoing efforts.
“As this type of digital asset is properly classified as a security under relevant law, the issuers of this type of token are required to register them and file relevant statements with the authorities and comply with relevant securities laws. The Nike NFTs were never registered as such,” the lawsuit famous.
Nike acquired RTFKT in December 2021, throughout the peak of NFT mania, positioning the transfer as a part of its greater push into the digital world. On the time, RTFKT was praised for mixing style, gaming, and blockchain tech in ways in which captured big consideration throughout the crypto and sneaker communities.
The studio rapidly turned a standout identify, with tasks like CloneX and Cryptokicks producing thousands and thousands in gross sales. Early consumers have been promised a gamified expertise with quests, forging occasions, and unique drops that tied digital collectibles to real-world rewards.
Nevertheless, because the broader NFT market cooled all through 2023 and 2024, curiosity in RTFKT’s collections additionally began to fade.
In December 2024, Nike introduced RTFKT would wind down after one remaining launch, the “Blade Drop,” describing the transfer as a shift towards preserving RTFKT’s legacy reasonably than an outright shutdown.
The plaintiffs argue that Nike’s withdrawal crushed the worth of the NFTs, lots of which had as soon as traded for 1000’s of {dollars}, and worn out promised ecosystem options like quests, rewards, and unique entry to limited-edition merchandise.
Nike and RTFKT had additionally allegedly promoted the NFTs with guarantees of peer-to-peer buying and selling and an energetic ecosystem the place finishing challenges and forging sneakers would add actual worth.
After the shutdown, these options disappeared, the secondary market dried up, and NFT costs collapsed nearly in a single day.
“Predictably, prices plunged and did not recover. Investors – some of whom are cited in this complaint – and the crypto community at large lamented Nike’s brazen rug pull,” the lawsuit added.
