Following their decision to close RTFKT, Nike was hit with a $5 million class action lawsuit. Nike purchased the NFT platform RTFKT in 2021. On April 25, 2025, the case was filed in the Eastern District of New York. The lawsuit alleges that the sports wear company perpetrated a “rug pull” by suddenly abandoning the project after it had accepted money from investors.
Plaintiff leader Jagdeep Cheema, whose firm is The Rosen Law Firm, has alleged Nike of violating securities laws and various state consumer protection laws by offering and subsequently discarding RTFKT non-fungible tokens.
The lawsuit claims that on December 2, 2024, Nike said that it would “wind down RTFKT operations” by the end of January 2025. This caused Nike-related NFTs‘ prices to plummet. Investors were left with nearly worthless digital assets as a consequence.
Nike NFTs allegedly consist of unregistered securities
The lawsuit alleges that Nike NFTs are unregistered securities according to the Howey test. It argues that investors invested in a shared business in expectation of making profits mainly from Nike’s marketing efforts and not their own. The complaint specifically highlights Nike’s gamified ecosystem, which included limited-time “quests” and “forgings” that allowed NFT holders to earn physical Nike products.
“With the closing of RTFKT, the reason that so many had purchased the Nike NFTs – to complete Nike’s quests to access additional NFTs or physical Nike products, and/or to resell the Nike NFTs on the secondary market to others seeking the same – dried up overnight,” the lawsuit states.
The complaint describes several lucrative promotions that drove NFT values. This includes a May 2023 incident when NBA star LeBron James was photographed wearing special-edition Nike sneakers that could only be purchased by minting an Ethereum NFT.
Particularly contentious are the MNLTH loot boxes, described as one of the most valuable Nike NFT collections. These digital mystery boxes contained NFT versions of Nike sneakers with special characteristics or redemption codes for limited-edition physical footwear. The lawsuit argues these gamified elements were designed to drive trading and boost NFT values.
The aftermath of RTFKT’s closure announcement saw widespread outrage in the crypto community. The lawsuit quoted numerous social media responses describing Nike’s actions as a “rug pull.”
