Nike is facing a proposed class action lawsuit filed by purchasers of its Nike-themed non-fungible tokens (NFTs) and other cryptocurrency assets, who claim they suffered significant financial losses following the company’s abrupt closure of the business unit responsible for creating those assets. The lawsuit, filed on Friday in federal court in Brooklyn, New York, is led by Australian resident Jagdeep Cheema. Plaintiffs argue that the sudden shutdown of Nike’s RTFKT unit in December caused a collapse in demand for their NFTs, leaving them with devalued assets. They contend that they would not have purchased the NFTs at the prices they did—or at all—had they known the tokens were unregistered securities and that Nike would eventually “cause the rug to be pulled out from under them.”
Nike, headquartered in Beaverton, Oregon, has not yet responded to requests for comment regarding the lawsuit. The plaintiffs are seeking unspecified damages exceeding $5 million, citing alleged violations of consumer protection laws in New York, California, Florida, and Oregon. The complaint highlights ongoing legal uncertainty surrounding NFTs, with much debate in courts about whether these digital assets qualify as securities under federal law.
Nike acquired RTFKT, pronounced “artifact,” in December 2021, positioning the brand as a pioneer at the intersection of culture, gaming, and cutting-edge digital innovation. RTFKT specialized in producing next-generation digital collectibles, blending fashion and virtual experiences. However, Nike announced the completed winddown of RTFKT on December 2, 2024, stating that the spirit of innovation represented by RTFKT would continue through the numerous creators and projects it had inspired.
The lawsuit alleges that Nike’s marketing and sales practices misled consumers into believing they were purchasing valuable, supported digital assets, only to be left with significantly diminished investments after the business closure. The plaintiffs argue that Nike failed to adequately disclose critical information about the risks involved and the regulatory status of the NFTs at the time of sale.
The case is titled Cheema v. Nike Inc and is being heard in the U.S. District Court for the Eastern District of New York under case number 25-02305. The outcome could have broader implications for how companies market and manage NFT-related ventures and could contribute to shaping future legal interpretations regarding the classification of NFTs as securities.
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