Nike faces class action lawsuit over NFT unit shutdown

Nike Inc is facing a proposed class action lawsuit in Brooklyn federal court, filed by purchasers of Nike-themed non-fungible tokens (NFTs) and other crypto assets who claim they suffered major losses when the athletic giant abruptly shut down its RTFKT unit. 

The plaintiffs, led by Australian resident Jagdeep Cheema, allege that Nike’s December 2024 closure of RTFKT caused demand for their NFTs to evaporate, resulting in steep financial harm, Reuters reported.

According to the complaint, the buyers say they would never have purchased the NFTs at the prices they did—if at all—had they known the tokens were allegedly unregistered securities and that Nike would "cause the rug to be pulled out from under them." 

The lawsuit seeks more than $5 million in damages for alleged violations of consumer protection laws in New York, California, Florida, and Oregon. Nike is based in Beaverton, Oregon.

NFTs, or non-fungible tokens, surged in popularity around 2021 and 2022 as digital collectibles tied to art, fashion, music, and gaming captured the attention of investors and speculators. 

Companies like Nike moved quickly into the space, hoping to capitalize on the boom. However, the NFT market has since cooled dramatically, with many assets losing most of their value as hype faded and regulatory scrutiny increased.

Nike acquired RTFKT (pronounced "artifact") in December 2021, touting the brand's blend of culture, gaming, and cutting-edge digital innovation. Despite the shutdown of RTFKT, Nike said the spirit of innovation the unit embodied would continue through the creators and projects it inspired. 

At its peak, RTFKT's NFTs—like digital sneakers and avatars—were among the most coveted assets in the crypto world, fetching prices that rivaled luxury physical goods.