With the NFT market’s spectacular bust now leaving big brands that happily jumped feet first into the technology nursing bruised egos and deeper financial wounds. Nike has quickly become one of the biggest names in NFT space. Now it’s fighting a class-action lawsuit after announcing plans to close RTFKT, one of the top NFT projects it purchased. This legal challenge highlights the risks and uncertainties companies face as the NFT market navigates regulatory ambiguities and dwindling trading volumes.

Nike's NFT Venture Faces Legal Fallout

Nike’s entry into the NFT space with RTFKT was once a huge success story – until things stopped going their way. Ten months later, in December 2024, Nike decided to close down RTFKT, sparking a backlash from thousands of NFT holders.

This frustration came to a head in a class-action lawsuit against the New York City DOT, filed in Brooklyn, NY, in April 2025. The plaintiffs claim that Nike’s conduct in connection with RTFKT NFTs is in fact the sale of “unregistered securities.” They seek damages of more than $5 million. They point to the existential crisis marked by the recent fall in value of RTFKT NFTs, down from an average of 3.5 ETH ($8,000) in 2022 to just 0.009 ETH ($16) in 2025. The lawsuit further alleges that Nike intentionally created complicated technical challenges. For example, RTFKT NFTs no longer showed up when the company went offline by closing its servers.

NFT Market Downturn Exposes Weaknesses

The class-action lawsuit against Nike highlights the issues that have engulfed the NFT space as a whole. In 2021, the market grew at an explosive rate largely fueled by astronomical trading volume and high-profile endorsements from celebrities. Soon enough, it started bursting at the seams. By the end of 2024, trading volumes had plummeted, revealing the flaws behind many NFT projects. Then the NFT market got oversaturated by projects that didn’t bring any unique value.

Legal and regulatory uncertainty surrounding NFTs has been at the top of the list for reasons behind the decline. This uncertainty leaves brands such as Nike with considerable risks of litigation. This murky status of NFTs as securities continues to stoke legal fires all throughout the U.S. Effects of volatility The NFT market bursting illustrated the fragility of these centralized NFT markets.

Retreat Doesn't Signal Death of NFTs

Even the biggest brands – from Nike to Starbucks, have backtracked from their NFT endeavors, with Starbucks shutting down its Odyssey NFT program in March 2024, a mere two years after it was launched. All this doesn’t mean that NFTs are over. With all these recent downfalls, some industry specialists are still cautiously positive about the long-term future of NFTs.

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

There is a general consensus among industry experts that NFTs still have tremendous potential outside of this recent bubble, especially in digital art, collectibles, and gaming.