The suit occurs just months after Nike closed down its RTFKT NFT project in December 2024. In early April 2025, one of those lawsuits came crashing into Brooklyn, New York’s courtrooms. It alleges that due to Nike’s actions, the values of the RTFKT NFTs plummeted resulting in catastrophic financial harm to the investors. This legal challenge serves to underscore the growing pains and regulatory uncertainties with which NFTs are currently grappling. The NFTs’ mainstream moment has passed.
And it only took US investor Jagdeep Cheema to provide the spark for the blaze to spread. In one such lawsuit on behalf of investors against Nike, securities attorney Mr. Article continues after advertisement. Noting the obvious, they argue the value of RTFKT NFTs tanked overnight. In 2022 that average was 3.5 ETH or about $8,000, but the average dropped to only 0.009 ETH (around $16) as of 2025. The plaintiffs are seeking more than $5 million in damages. They claim that RTFKT NFTs no longer rendered properly once Nike powered off the servers that housed them.
NFT Market Oversaturation and Brand Retreat
Like all NFTs, the fall of RTFKT NFTs represents a larger crash across the entire NFT market. After a boom year in 2021, marked by astronomical trading volumes and celebrity endorsements, the market became oversaturated. Jumping forward one year, with very few NFT projects being truly unique, the creation of new NFT trades drained to remnant levels by 2024.
Nike is not the only company to retreat from the NFT space. Even titans like Starbucks have struggled, taking its Odyssey NFT program offline in March 2024, barely two years after launch. These retreats are emblematic of the overall struggle brands have had establishing themselves in the unpredictable and sometimes strictly speculative world of NFTs.
Accidental destruction, security flaws, and lagging tech caused a kind of damage consumers can’t easily forgive or forget. This inability to render RTFKT NFTs only highlights the precariousness of centralized NFT infrastructures. These problems point to a bigger need for more resilient and decentralized infrastructure that’s necessary if NFTs are to have long-term value.
Legal and Regulatory Challenges
Nike’s lawsuit highlights just how legally and regulatorily ambiguous the space is right now. That ambiguous security status has been driving more NFT litigation nationwide. Unfortunately for brands like Nike, there is a huge litigation risk as they begin to develop this new technology.
Nike’s lawsuit on the other side alleges that Nike’s sales of stock were not registered securities. This allegation, if proven true, could set a major precedent that collapses the entire NFT industry. If the plaintiffs prevail, it will create a valuable precedent for other lawsuits to come. This decision could lead to increased regulatory oversight of NFT initiatives.
The legal challenges, as well as the ongoing market correction, are not indicative of NFTs’ demise. Many industry experts agree that NFTs are still hugely valuable for creating new modalities of ownership and access in the digital space.
"The next wave of growth isn’t about chasing a trend—it’s about unlocking new types of ownership and access that feel native to the internet generation." - Alexander Salnikov, co-founder of Rarible
The Future of NFTs
Even in the face of adversity, many industry veterans are still bullish on the future of NFTs. A lot of people think NFTs are going to revolutionize every industry. That goes for art, collectibles, gaming, real estate, and beyond.
If NFTs are ever to see widespread adoption, there are a number of challenges that must be overcome. These factors are regulatory clarity, better security, and creation of more consumer-friendly platforms.
