Nike is still in the middle of a $5 million class action lawsuit. This comes on the heels of their decision to close the NFT subsidiary, RTFKT, at the end of December 2024. Australian Jagdeep Cheema is at the head of the class action. He alleges that the shutdown caused serious financial devaluation of the company’s NFTs, creating massive losses for the company’s investors. This legal challenge comes at a time of general decline for the NFT market, adding another layer of complexity to the growing crisis.

The NFTs at issue in the lawsuit were first put up for auction on OpenSea in April, 2022. As of that moment in time, those NFTs had an average sale price of 3.59 ETH, $6,483. But then after Nike closed RTFKT, the average price tanked to just 0.0099 ETH—17.87—from their height. This colossal fall marks a 99.72% decrease from the original listing price, obliterating the hopes of early investors.

Investors Allege Significant Financial Harm

Shareholders [plaintiffs] are hoping to either catch and hold investors’ attention through flashy marketing campaigns like the lawsuit against Nike. They ask for compensation for their losses from the RTFKT closure. Investors argue that Nike’s actions caused the most shocking drop in their NFT investments’ value. Nike, according to the plaintiffs, should be held liable for the financial losses suffered by investors in RTFKT NFTs. They think accountability is key when building the program.

The investors say it was clear from the overall collapse of the NFT market in Q1 2025. NFT sales dropped to just $1.5 billion, a total drop of 63.41% from yr. over yr. This broader market downturn further impacted the losses faced by RTFKT NFT holders.

Regulatory Ambiguity Surrounds NFTs

At the same time, the legal status of NFTs in the United States is shrouded in uncertainty. Current US law does not provide clear guidelines as to whether or not NFTs really can be considered either securities or commodities. The Howey Test is a legal framework that can be used to establish whether an asset is a security. Courts often use this test in applicable cases.

Even OpenSea, one of the largest NFT marketplaces, has tried to encourage the SEC to provide guidance. Second, they would like to know if NFTs need to be considered securities. The absence of regulatory clarity probably makes this sort of lawsuit against Nike more difficult.

The Future of NFTs and Legal Precedents

The suit against Nike would thus serve as precedent for future lawsuits that may use NFTs as the latest digital frontier of investor protection. The consequences of the case could have a massive influence on how NFTs are treated under US law. Perhaps most importantly, it could determine how they are classified — as securities or commodities. The ruling may affect what companies that launch and manage NFT projects need to do.