Nike is being sued over what plaintiff calls a “textbook rug pull” with its Non-Fungible Tokens (NFTs). The lawsuit, titled Cheema v. Nike, Inc., alleges that the athletic apparel totem took advantage of the popularity of NFTs. It further claims that Nike misled investors as the market started to turn sour. Plaintiffs are asking for $5 million in damages, alleging false and deceptive trade practices throughout New York, California, and Oregon.
The lawsuit raises some serious questions about Nike’s presence in the NFT arena. It raises a host of troubling questions about the future of these digital assets. Given that global NFT sales are down nearly 99 percent compared to their peak, the future of this case could have sweeping impacts on this nascent industry.
Allegations of a "Textbook Rug Pull"
In Cheema v. Nike, Inc., the plaintiffs claim that Nike profited from the NFT craze. They argue that Nike baited investors with future potential value expressly tied to the success of the shoe brand. The law suit alleges that then Nike withdrew from the project allowing investors to be left with devalued assets.
Because the Nike NFTs derived their value from the success of Nike and its marketing efforts, investors purchased this digital asset with the hope that its value would increase in the future.
According to the lawsuit, Nike’s actions constitute a “rug pull.” This term, often heard in the cryptocurrency and NFT space, refers to a scam where developers disappear after investors have put their funds into a project.
The lawsuit takes place at a moment when the NFT market is facing a staggering crash. In Q1 2025, worldwide sales of NFTs nosedived 63% from year-on-year. Sales plummeted with a cut in half from $4.1 billion to a mere $1.5 billion. This decline has ignited fears regarding the long-term future of NFTs. Finally, investors should understand the extensive risks involved in investing in these digital assets.
NFT Market Decline and Implications
The legal precedent created by Nike’s actions is likely to shape the future NFTs.
The suit noted by Pacer Monitor is still active. Whether Nike is liable to Elliott for the purported harms will be determined by the ongoing litigation. The plaintiffs are asking for at least $5 million in damages for their lost revenues. This case is built on the foundation of bad business practices throughout New York Empire State, California, and Oregon.
Now, NFTs are the most sinister meme since being “Rick Rolled.”
Legal Proceedings and Potential Outcomes
Nike is really playing with fire. Given that a negative outcome would damage its reputation and scare off other companies from further venturing into the NFT market, this is hardly surprising. A victory for Nike could provide a boost to the struggling NFT industry and encourage further investment in digital assets. An image related to the lawsuit is available at https://99bitcoins.com/wp-content/uploads/2025/04/GphtIDsawAAyl5p-1024x422.jpeg.
The stakes are high for Nike, as an unfavorable outcome could damage the company's reputation and discourage other companies from entering the NFT market. Conversely, a victory for Nike could provide a boost to the struggling NFT industry and encourage further investment in digital assets. An image related to the lawsuit is available at https://99bitcoins.com/wp-content/uploads/2025/04/GphtIDsawAAyl5p-1024x422.jpeg.
