Nike sued for $5 million after shutting down RTFKT NFT platform

RTFKT (pronounced "artifact") was a pioneering digital fashion brand specializing in virtual sneakers, NFTs (non-fungible tokens), and collectibles designed for the metaverse.

Founded in 2020 by Benoit Pagotto, Chris Le, and Steven Vasilev, RTFKT quickly gained attention for leveraging cutting-edge technologies-including blockchain authentication, game engines, and augmented reality-to create unique digital products and experiences.

Nike acquired RTFKT in December 2021 as part of its strategy to accelerate digital transformation and expand its presence in the metaverse and Web3 ecosystem.

The acquisition allowed Nike to tap into RTFKT’s expertise in digital collectibles and virtual fashion, positioning itself as a leader in the emerging digital goods market.

RTFKT helped Nike create “metaverse-ready” digital sneakers and collectibles, often sold as NFTs.

Collaborated with artists (such as FEWOCiOUS and Takashi Murakami) for high-profile NFT drops, including both virtual and physical sneakers.

Built digital avatars and experiences for use in virtual worlds and gaming platforms.

Helped Nike extend its iconic branding (like the Swoosh) into virtual environments and digital marketplaces.

Despite early success and a strong following among tech-savvy consumers, RTFKT struggled as the NFT and crypto markets cooled.

In December 2024, Nike announced it would shut down RTFKT in 2025, turning away from the virtual sneaker and digital fashion frontier.

RTFKT represented Nike’s boldest step into the digital and virtual goods space, but its closure signals both the volatility and evolving nature of the metaverse and NFT markets.

Nike is facing a $5 million lawsuit from a group of customers who say they lost money after the company abruptly closed its NFT business, RTFKT.

The lawsuit was filed on April 25, 2024, in a Brooklyn federal court, led by Australian resident Jagdeep Cheema.

The group claims that Nike promoted and sold sneaker-themed NFTs without properly registering them as securities. They argue that the NFTs’ value depended heavily on Nike’s brand and marketing, and when Nike shut RTFKT down in January 2025, the value of the NFTs collapsed.

According to the lawsuit, Nike buyers believed they could trade the NFTs and complete special challenges to win rewards. At launch in 2022, Nike’s NFTs sold for about $8,000 each. Now, they are worth around $16.

The plaintiffs say they wouldn’t have bought the NFTs if they knew the risks or that Nike could walk away from the project. They accuse Nike of violating consumer protection and competition laws in New York, California, Florida, and Oregon.

Nike, which bought RTFKT in 2021, has not commented on the lawsuit. The case is titled Cheema v. Nike Inc., filed in the Eastern District of New York.

Meanwhile, the broader NFT market is also struggling. NFT sales dropped 63% in early 2025 compared to the same time last year.