Nike accused of ‘brazen rug pull’ in class action lawsuit

The suit alleges RTFKT assets are securities and that Nike conducted a “scheme to mislead and deceive” with its short-lived crypto push

article-image

slvn_an/Shutterstock and Adobe modified by Blockworks

share

This is a segment from The Drop newsletter. To read full editions, subscribe.


An RTFKT buyer in Australia is suing Nike via a proposed class-action lawsuit, accusing the apparel giant of deceptive practices, unfair competition, unjust enrichment and unlawful trade practices with its numerous NFT collections.

The lawsuit, filed last week in the Eastern District of New York, alleges that Nike committed a “brazen rug pull” via its subsidiary RTFKT, pronounced “artifact,” which it acquired in late 2021. 

“Nike used its iconic brand and marketing prowess to hype, promote, and prop up the unregistered securities that RTFKT sold,” the filing viewed by Blockworks alleges.

The 42-page filing argues in detail that what RTFKT sold across a range of different NFT collections were actually securities under US law. But it also makes the overarching argument that even if a court finds those digital assets not to be securities, there are still five counts in the lawsuit to reckon with. It also argues that the rug pull it says occurred is a “deceptive act” in and of itself.

Nike is accused of violating the New York Deceptive Acts and Practices Unlawful Act, the California Unfair Competition Law, the Florida Deceptive and Unfair Trade Practices Act, and the Oregon Unlawful Trade Practices Act. 

It further alleges “Unjust Enrichment,” accusing Nike of further “enriching” itself with the NFT buyers’ funds.

The dispute is over a minimum of $5 million, but the filing does not specifically state a dollar amount of damages desired.  

Nike made piles of cash from RTFKT. One dashboard found that the CloneX “Mintvials” generated over $80 million in revenue alone.

RTFKT trading activity peaked in 2022, but it had substantially subsided by 2023. The CloneX avatars made with artist Takashi Murakami were the most successful collection by far.

RTFKT then announced it was shutting down in December 2024, just three years after Nike acquired it. No reason for the shutdown was provided.

RTFKT Head of Tech Samuel Cardillo declined to comment. Cardillo has publicly referred to himself as “the last man standing” at the Nike subsidiary.

Blockworks reached out to Nike as well as RTFKT cofounders Chris Le and Benoit Pagotto for comment. Le’s Linkedin shows that he left RTFKT and Nike in January 2025, but Pagotto’s profile still shows him as employed at Nike and RTFKT.

Last week, a day before the lawsuit was filed, the art for the CloneX RTFKT NFTs disappeared overnight due to an issue with its Cloudflare hosting plan. Cardillo later said the issue was due to an error, not an unpaid bill. The collection’s art was then subsequently restored. Cloudflare did not reply to Blockworks’ previous request for comment.

On Monday, Cardillo said the CloneX NFTs had migrated (off Cloudflare) to Arweave for “permanent storage.”

If this lawsuit progresses, it won’t be the only class-action suit about an NFT “rug pull.” The class-action lawsuit against Logan Paul’s CryptoZoo NFT game remains ongoing as well.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

REPORT_Template.png

Research

The Sonic blockchain is leveraging redesigned airdrop incentives and its FeeM program to propel DeFi activity and attract institutional capital, setting the stage for ecosystem growth. Within this environment, leading protocols Shadow Exchange and Silo are poised to asymmetrically benefit due to innovative features and favorable valuations, despite facing ecosystem dependency and competitive pressures. This positions them as compelling, potentially shorter-term, investment opportunities contingent on Sonic's sustained success.

article-image

Bitcoin needs a price, but its magic runs deeper

article-image

Circle had a pretty successful first day of trading, but what’s next for the stablecoin issuer?

article-image

Solana’s USDC caught a boost after being paired with the TRUMP memecoin

article-image

The stablecoin issuer’s successful first day of trading is likely to spur more crypto IPOs, industry watchers say

article-image

Job openings rallied and continuing claims stalled ahead of May’s employment report

article-image

A group of Twitch streamers battle for bitcoin. Will their chats help them?