Nike is facing a lawsuit from a group of buyers of NFTs who said they lost hundreds of thousands of dollars when the sportswear giant closed its digital collectibles arm, RTFKT. The lawsuit was filed on Friday in Brooklyn, New York.
Lead plaintiff, Australian investor Jagdeep Cheema, claims Nike’s move to shut down RTFKT in December 2024 abruptly wiped out the NFTs’ value. The digital assets were made and sold under the brands Nike and RTFKT.
Buyers have complained that Nike pulled the plug on the project without warning. The NFTs have since cooled off. Some of the NFTs stopped correctly showing images, which compounded worries that the assets would no longer be supported.
The plaintiffs say in their legal filing that they would not have purchased any of the NFTs had they been aware they were unregistered securities. They also say they wouldn’t have invested if they had known Nike might cancel the project so quickly.
The group is seeking damages of at least $5 million. The lawsuit claims that Nike violated consumer protection laws in several U.S. states, including New York, California, Florida, and Oregon.
Based in Beaverton, Oregon, Nike has not yet commented on the lawsuit.
Lawsuit wants courts to define NFTs as securities
An even more fundamental legal inquiry for those in litigation is: Are NFTs securities? It’s a problem that United States regulators and courts are still wrestling with. It’s something that many investors are concerned about: what rights and protections are in place when they buy this asset.
The group claims in the suit that Nike sold the NFTs without registering them with financial agencies. That, they say, flies in the face of laws to protect investors.
The case is part of a rising wave of litigation involving NFTs and crypto assets. As digital collectibles caught on, firms rushing to cash in sometimes operate without clearly established rules or accountability. This case could set a precedent for addressing losses tied to NFTs.
Phillip Kim, the lawyer representing the plaintiffs, did not immediately return a request for additional comment about the case.
Users report glitches in RTFKT NFTs after shutdown
RTFKT, pronounced “artifact,” was once hailed as Nike’s big play in the future of fashion and gaming. The athletic giant bought the startup in December 2021, describing it as a bold move into the next generation of collectibles.
However, after the service shut down in December 2024, numerous users said they had experienced technical issues with their NFTs. For instance, the photos of the popular items in the clone nodes of the Clone X series were not shown. Instead, prospective purchasers received a “holding page” from Cloudflare — a provider of web services — indicating that the content had been removed.
This led to speculation that Nike had stopped paying for the servers or server platforms that hosted the NFT visuals. Some digital art has resurfaced online since then, but the episode prompted serious questions about a piece of digital art tied to a centralized service and its long-term value.
In December, Nike said the innovation that RTFKT brought will live on through the many creators and projects it inspired. But that promise rings hollow for many purchasers.
