Nike Faces $5 Million Lawsuit After Shutting Down RTFKT, Sparking NFT Market Chaos
Nike is facing a proposed class-action lawsuit worth over $5 million after abruptly shutting down its NFT-focused division, RTFKT. The lawsuit, filed in New York, claims severe financial losses for NFT buyers.
Lawsuit Claims Losses After Nike’s Sudden Shutdown of RTFKT
Nike is now facing a $5 million lawsuit following the sudden closure of its NFT and crypto division, RTFKT. The lawsuit, filed in the Eastern District of New York, alleges that Nike’s decision to shut down RTFKT led to the collapse of Nike-themed NFTs, resulting in significant financial losses for buyers.
According to the lawsuit, Australian resident Jagdeep Cheema is leading the case, claiming that the closure of RTFKT caused the value of NFTs to plummet almost overnight. The plaintiffs argue that Nike violated multiple consumer protection laws in New York, California, Florida, and Oregon.
Allegations of Deceptive Practices and Violations of Consumer Laws
The plaintiffs assert that they were misled by Nike and would not have purchased the NFTs if they had known the risks involved. They claim that the sudden closure of RTFKT, which Nike announced in December 2024, devalued their assets without any proper warning. According to the lawsuit, Nike’s actions caused a severe market collapse, leaving buyers with near-worthless NFTs and no recourse.
Nike has not responded to the allegations as of now. Furthermore, Phillip Kim, the attorney representing the plaintiffs, has also declined to comment on the case.
NFT Securities Debate Escalates
This lawsuit also brings to light a critical legal question: Should NFTs be classified as securities under U.S. law? This is a key issue that several lawsuits, including this one, are exploring as the crypto and NFT markets evolve. The plaintiffs allege that Nike sold NFTs without proper registration, which could exacerbate the legal debate over NFTs as securities.
RTFKT, pronounced artifact, was acquired by Nike in December 2021 as part of its digital expansion. Nike saw the acquisition as an opportunity to merge gaming, culture, and digital collectibles. However, Nike’s decision to shut down RTFKT in December 2024 came as a shock, and the plaintiffs claim it led to irreparable financial harm to the buyers who invested in the NFTs.
Seeking Over $5 Million in Damages
The plaintiffs are now seeking compensation exceeding $5 million for the financial harm caused by the abrupt shutdown of RTFKT. They also allege that Nike engaged in deceptive practices during the NFT sales process by failing to disclose critical risks and market volatility.
The case, Cheema v. Nike Inc., is registered as case number 25-02305 in the U.S. District Court for the Eastern District of New York.
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