Investor Files Class Action Against Nike Over Unregistered NFT Securities
On Friday, April 25, 2025, Jagdeep Cheema filed a class action complaint in the US District Court for the Eastern District of New York against Nike, Inc., alleging that the company promoted unregistered securities through its non-fungible tokens (NFTs) and engaged in deceptive practices by abruptly ending the project, causing significant financial losses for investors.
The lawsuit, filed on behalf of other similarly situated investors, claims that Nike, through its subsidiary RTFKT, Inc., sold Nike-themed NFTs that were not registered as securities with the U.S. Securities and Exchange Commission (SEC). According to the complaint, these NFTs were marketed as digital collectibles that could be traded on secondary markets, with Nike earning transaction fees ranging from 5% to 10% on each resale. The NFTs were also part of a gamified ecosystem where holders could complete challenges to earn rewards, such as limited-edition physical Nike products, which drove demand and increased their value.
The complaint alleges that Nike acquired RTFKT in December 2021 to capitalize on the cryptocurrency market boom. RTFKT, a Delaware corporation, issued the Nike NFTs on the Ethereum blockchain, with notable releases like the “Nike Cryptokicks” in April 2022, where 20,000 NFTs of Nike’s Dunk Genesis shoes were sold, some fetching six-figure sums on platforms like OpenSea. By 2023, Nike had reportedly generated tens of millions in revenue from these NFTs, with secondary market trading exceeding $1 billion. The lawsuit claims Nike strategically limited NFT supply and timed releases to maintain high demand and encourage trading.
On December 2, 2024, RTFKT announced via its official Twitter account that it would wind down operations by January 2025, a move the lawsuit describes as a “rug pull” in the cryptocurrency industry, where promoters abandon a project after raising funds, leaving investors with worthless assets. Following the announcement, Nike NFT prices plummeted, and the complaint cites social media reactions from investors expressing shock and financial loss, with some calling it the “biggest soft rug in the industry.” The lawsuit argues that investors would not have purchased the NFTs at the prices paid, or at all, had they known Nike would terminate the project or that the NFTs were unregistered securities.
The complaint asserts that the Nike NFTs meet the criteria for securities under the Howey Test, which defines an investment contract as involving an investment of money in a common enterprise with an expectation of profits from the efforts of others. It claims investors relied on Nike’s promotional efforts, such as limited-edition drops and celebrity endorsements, to drive NFT value, making them securities that required SEC registration. The lawsuit also alleges that Nike’s actions violated state laws, including New York’s General Business Law § 349, California’s Unfair Competition Law, Florida’s Deceptive and Unfair Trade Practices Act, and Oregon’s Unlawful Trade Practices Act, by misleading consumers about the NFTs’ value and status. Additionally, it claims unjust enrichment, as Nike profited from funds obtained through deceptive practices.
Cheema seeks to represent a class of all individuals who purchased Nike NFTs and suffered damages, excluding Nike and its affiliates. The lawsuit requests class certification, a jury trial, and relief including damages, restitution, injunctive measures, and attorneys’ fees. It estimates the class includes thousands of investors, with damages to be determined at trial.
Please contact BlockTribune for access to a copy of this filing.
