Nike, one of the world’s most recognized sportswear brands, is facing legal trouble after abruptly shutting down its NFT-focused metaverse division. A group of crypto investors, led by Australian resident Jagdeep Cheema, has filed a lawsuit claiming they suffered heavy financial losses due to Nike’s unexpected withdrawal from the digital collectibles space.

The NFT Venture That Ended Abruptly

Back in 2021, Nike made headlines when it acquired RTFKT Studios, a fast-rising Web3 company known for its cutting-edge digital sneakers, and popular non-fungible tokens (NFTs). At the time, the move was seen as a major step for Nike into the growing metaverse economy, signaling that the company intended to be a key player in virtual fashion and digital ownership.

However, by December 2024, Nike pulled the plug on the project. The decision stunned both fans and investors who had bought Nike-themed NFTs with the expectation of long-term value and ecosystem development.

According to a report from Reuters, the closure of RTFKT triggered a sharp drop in demand and value for Nike-branded NFTs. Many collectors and crypto investors were left holding digital assets that quickly became illiquid or, in some cases, deemed worthless on the open market.

Investors Allege Deceptive Practices

The newly filed lawsuit claims that Nike misled investors about the longevity and stability of its NFT venture. Plaintiffs allege that they would not have purchased the digital collectibles had they known that the tokens were unregistered securities or that the project could be discontinued without warning.

The suit goes further by accusing Nike of committing a “rug pull”—a term used in crypto circles to describe a scenario where a project is suddenly abandoned by its creators, leaving investors with assets of little to no value.

This kind of accusation, especially when leveled at a corporate giant like Nike, is rare and could set a significant legal precedent if the case moves forward. The investors are seeking over $5 million in damages, citing violations of consumer protection laws in New York, California, Florida, and Oregon.

Legal Questions Around NFTs

The lawsuit also brings renewed focus to an ongoing legal gray area: whether NFTs should be classified as securities under U.S. law. This question remains unsettled, with several active court cases exploring similar themes. Regulatory bodies like the U.S. Securities and Exchange Commission (SEC) have yet to make definitive rulings on how most NFTs should be treated.

If a court determines that the Nike-themed NFTs were indeed unregistered securities, it could open the door for broader regulatory action—not just against Nike, but against other brands and platforms in the NFT space as well.

Silence from Nike So Far

As of now, Nike has not issued a public statement in response to the lawsuit. The company has also remained quiet on the reasons behind the sudden shutdown of RTFKT and its broader exit from the NFT and metaverse sectors.

Industry observers suggest that Nike may have misjudged the long-term appeal or sustainability of the NFT market, especially as trading volumes and interest in digital collectibles have declined significantly from their 2021 highs.

The Bigger Picture: Corporate Accountability in Web3

Nike’s legal troubles come at a time when traditional brands are being held to higher standards as they enter the crypto and Web3 ecosystems. While many companies have experimented with NFTs and metaverse platforms, few have provided clear roadmaps, risk disclosures, or long-term support for their digital offerings.

The lawsuit may serve as a cautionary tale for other corporations exploring Web3. It underscores the need for transparency, legal compliance, and sustained engagement with digital communities—especially when real money is involved.

For investors, the case raises difficult questions about the risks of investing in NFTs tied to corporate brands. Without regulatory clarity or enforceable protections, collectors are often left vulnerable when companies change direction or abandon Web3 projects.

Conclusion

Nike’s sudden exit from the NFT space has triggered a high-stakes legal battle that could shape how corporate-backed digital assets are treated moving forward. With more than $5 million in damages on the line and broader implications for NFT regulation, this case is likely to be closely watched by both the crypto community and legal experts alike. Whether Nike will face consequences for its decision—or whether this lawsuit will set a precedent for future NFT-related litigation—remains to be seen.