Nike, the world’s largest sportswear brand, is facing a $5 million proposed class-action lawsuit accusing the company of violating consumer protection laws and abandoning investors in its sneaker-themed NFTs.
The lawsuit, filed Friday in the U.S. District Court for the Eastern District of New York, alleges that Nike used its global brand power to promote NFT collectibles tied to digital studio RTFKT. The suit claims Nike executed a “soft rug pull” by winding down operations, leaving investors with devalued and illiquid assets.
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The plaintiffs argue that Nike’s sudden shutdown of RTFKT led to a collapse in demand for its NFTs.
They claim they would not have purchased the NFTs — or paid such high prices — had they known the tokens were unregistered securities and that Nike would eventually abandon the project, according to Reuters.
Nike has yet to respond to the allegations. Meanwhile, the legal status of NFTs remains unclear, with multiple lawsuits testing whether they should be classified under federal securities laws.
Nike’s Push into NFTs and the Metaverse
Nike acquired NFT studio RTFKT in December 2021. The deal, which included RTFKT’s digital sneakers and other products, allowed Nike to sell virtual footwear for online avatars. The acquisition was part of Nike’s strategy to expand its presence in the growing NFT and metaverse markets.
Although the terms of the acquisition were not disclosed, RTFKT, founded in 2020, raised an $8 million seed round led by Andreessen Horowitz, valuing the company at $33.3 million. The studio gained fame with projects like CloneX and MNLTH. RTFKT’s total revenue surpassed $49.8 million, with over $45 million generated from royalties on sales.
In early December 2024, Nike unexpectedly announced the closure of RTFKT after five years in the market. The reason for the shutdown has not been revealed.
However, the decision could have been influenced by the ongoing downturn in the NFT market, which has yet to fully recover from the boom of 2021-2022. Despite a brief recovery in November 2024, when sales reached $561.9 million, the prolonged slump is likely to have played a role in Nike’s move.
Why This Matters
As the legal status of NFTs remains uncertain, the Nike NFT lawsuit could serve as a test for how NFTs are treated under U.S. securities law, potentially creating a precedent for future regulations of non-fungible assets.
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