On Friday, Nike was hit with a lawsuit from a group of investors hurt by the shutdown of the company’s NFT platform RTFKT in January.
RTFKT was a virtual fashion and sneaker platform that was created in 2020 by co-founders Benoitt Pagoto, Steven Vasilev, and Chris Le. The platform was created to work with game engines to create NFTs and AR experiences.
Nike acquired the brand in December 2021. The shoe company then announced in December 2024 that it would be ceasing operations.
The proposed class action case was led by Jagdeep Cheema, who represents a community that claims it was lured by Nike’s sneaker-themed NFTs into a rug pull. The lawsuit was filed in a court in Brooklyn, New York.
The original court filing mainly contains the following accusations: Nike used its marketing prowess to give the NFTs that RFKRT sold undeserved hype. The NFTs in question are unregistered securities because Nike did not register them with the Securities and Exchange Commission, key information that would have stopped the plaintiffs from investing. Finally, Nike ultimately set its NFT investors up for a rug pull. The case lists that the damages from the fallout amount to $5 million.
The state of NFTs as to whether they can be classified as a security or not is still a matter that is not legally settled. NFT marketplace OpenSea has previously urged the SEC not to subject NFTs to federal securities laws, arguing that NFTs cannot be included in the legal definitions of a security.
The NFT market has been on a downward trend since the beginning of 2025.