Nike is currently caught up in a $5 million class action suit after abruptly declaring that it would be closing down RTFKT, its digital collectibles business that was committed to NFTs (non-fungible tokens).
The suit launched Friday in the U.S. District Court in the Eastern District of New York speaks for the thousands of investors who say they’ve lost substantial amounts of money after Nike surprised the world on December 2024 that it would be shuttering RTFKT operations as of late January 2025.
Australian resident Jagdeep Cheema, the lead plaintiff in the case, alleges that Nike misled consumers and violated consumer protection laws across multiple states including New York, California, Florida, and Oregon. According to the lawsuit, many collectors purchased Nike-themed NFTs at premium prices without realizing the tokens might be considered unregistered securities or that Nike could terminate support for them with little warning.
“The company essentially pulled the rug out from under us,” said one investor who wished to remain anonymous. “We trusted Nike’s brand and reputation when investing in these digital assets, and now many of us are left with worthless tokens that don’t even display correctly anymore.”
From Bold Acquisition to Sudden Retreat
Nike acquired RTFKT (pronounced “artifact”) in December 2021 during the height of NFT enthusiasm, positioning the purchase as a strategic move to establish itself in the emerging digital collectibles market. RTFKT had already made a name for itself by creating digital sneakers and collaborating with renowned artists like Takashi Murakami on the popular Clone X collection.
Under Nike’s ownership, RTFKT continued developing projects that blended physical and digital experiences for its community. However, the December 2, 2024 announcement that Nike would discontinue RTFKT came as a shock to the community. While Nike stated that the “spirit” of RTFKT would live on through the creators and projects it inspired, it provided little concrete support for those who had invested heavily in its NFT collections.
“One day everything seemed fine, and the next we found out our investments might become worthless,” explained a Clone X holder who had purchased several NFTs. “Some collectors spent tens of thousands of dollars on these assets because they believed Nike was committed to this space long-term.”
Legal Uncertainties in the NFT Space
The suit reflects current regulatory uncertainty regarding NFTs. Perhaps most notably, among the issues the case raises is whether the digital assets are U.S. securities—a question still not well answered despite growing interest from the Securities and Exchange Commission (SEC).
Legal analysts say this case has the potential to establish significant precedents about how to treat digital assets under federal and state consumer protection statutes. The SEC has regulated some NFT projects more than others but to date has issued no general guidance, leaving investors and businesses uncertain about their status under the law.
Legal experts suggest this case could set important precedents for how digital assets are treated under federal and state consumer protection laws. The SEC has increased enforcement actions against some NFT projects but has yet to issue comprehensive guidance, leaving both companies and investors unsure about their legal standing.
“This case represents a critical moment for the NFT industry,” said Jane Reynolds, a technology law expert not involved in the litigation. “If the court finds that Nike had specific obligations to RTFKT NFT holders, it could reshape how major companies approach digital assets in the future.”
Nike’s Response and Industry Impact
Nike has not yet publicly responded to the lawsuit. The case, formally known as Cheema v. Nike Inc. (No. 25-02305), will likely take months to resolve.
Meanwhile, the value of RTFKT assets has reportedly plummeted, with flagship projects like Clone X seeing dramatic price drops on secondary markets. The shutdown has sent ripples through the broader NFT community, raising questions about the long-term viability of corporate-backed digital collectibles.
Industry analysts suggest the outcome of this case could influence whether other major brands continue exploring NFTs or approach the space with more caution. For consumers who have invested in digital collectibles, the lawsuit represents hope for establishing clearer standards around corporate responsibilities in the emerging digital asset landscape.
As one collector put it: “We’re not just fighting for compensation—we’re fighting for accountability in an industry that still operates like the Wild West.” The first hearing in the case is expected to be scheduled in the coming weeks.
