Nike Hit With $5M Lawsuit Over Alleged NFT Rug Pull at RTFKT

In a bid to capitalize on the crypto bull market, Nike acquired RTFKT Inc. in late 2021 to offer NFTs. The Nike-themed non-fungible tokens (NFTs) were designed to be traded peer-to-peer on the secondary market.

However, Nike, the global sportswear giant, now faces a $5 million class-action lawsuit filed in the U.S. District Court for the Eastern District of New York on account of brazenly causing a soft rug pull on the NFTs.

Nike got sued for $5M. They built a community and made them hopeless.

What really happened with RTFKT.

In 2020, RTFKT exploded onto the scene with a bold vision: blending digital fashion, gaming, and NFTs into a new kind of culture.

Virtual sneakers sold for as much as… pic.twitter.com/4IA7gAqNeY

— diana10ka🫵 👟 (@diana10ka) April 28, 2025

The suit, which is led by Australian resident Jagdeep Cheema, accuses Nike of misleading consumers who purchased non-fungible tokens (NFTs) and other cryptocurrency assets through its promoted digital asset subsidiary, RTFKT.

The plaintiffs claim that they were unaware that these NFTs were unregistered securities and added that Nike’s abrupt shutdown of RTFKT in December 2024 caused significant financial losses because of the drop in demand for the NFTs.

Furthermore, the investors stated that Nike fraudulently used its brand and marketing efforts to promote and hype the NFTs and other crypto assets, which made many people invest in the unregistered securities that RTFKT sold.

As a result of Nike’s promotion of the unregistered securities and also its alleged rug pull, the Plaintiff and the Class – many of whom are retail investors with little or no knowledge about the risks associated with the Nike NFTs have suffered damages in an amount to be proven at trial.

Consequently, the investors now seek over $5 million in damages for violations of consumer protection laws in New York, California, Florida, and Oregon.

Nevertheless, Nike has yet to respond to the legal complaint.

Nike RTFKT Closes Operation as the NFT Markets wanes

Moreover, news had it that the closure of Nike’s RTFKT may be a result of declining interest in NFTs. RTFKT was shut down after four years of delivering virtual sneakers, avatars, and collectible tokens.

While on the verge of ceasing to operate RTFKT, Nike dropped the MNLTH X Blade collection which was designed in collaboration with 3D printing company Zellerfeld.

pic.twitter.com/ySShPa0I7r

— RTFKT (@RTFKT) December 2, 2024

Nike’s Web3 services winded down by the end of January 2025. Since Nike’s NFTs have plummeted, they are yet to find their way back to the top.

Additionally, this case, Cheema v. Nike Inc., raises questions about the complexities and legal uncertainties surrounding NFTs, especially concerning their classification as securities and the obligations of companies issuing them.

Rug Pull Losses Surged in 2025 by 6500%

According to DappRadar, the rug pull incidents in crypto dropped 66% in early 2025, but total losses surged to nearly $6 billion, a 6,500% increase from last year.

🕵️‍♂️ Rugpulls in 2025 are fewer, but far more costly. The Mantra Network case alone accounts for 92% of the $6B lost so far this year.

Is the risk landscape evolving or just more deceptive?
Dive into the data and red flags 👇https://t.co/hQyf2OfbGj

— DappRadar (@DappRadar) April 16, 2025

The collapse of Mantra’s OM token alone accounted for 92% of these losses, which wiped out over $5 billion in market cap.

🚨 JUST IN: MANTRA'S $OM TOKEN PLUNGES 90% IN ONE HOUR, TEAM BLAMES CEX LIQUIDATIONS WHILE EXCHANGES CITE INSIDER DUMPING pic.twitter.com/SMKLNNQJUK

— Coinwaft (@coinwaft) April 14, 2025

While there were only seven rug pulls reported in 2025 compared to 21 in 2024, the scams have become more sophisticated and devastating.