Nike Faces $5 Million Lawsuit Over NFT Sales
Nike is currently embroiled in a $5 million lawsuit initiated by a group of consumers who purchased its Nike-branded non-fungible tokens (NFTs). This legal action coincides with the recent closure of Nike’s RTFKT division, which is known for its digital collectibles, a move that took place in December 2024. The lawsuit emerges amid a significant downturn in NFT transaction volumes, which have recently dropped to historic lows, even as the wider cryptocurrency market shows signs of revival. Other notable brands and crypto firms, including Starbucks and DraftKings, have also shuttered their NFT projects, while X2Y2, once a leading NFT marketplace, has announced a shift towards cryptocurrency and artificial intelligence.
NFT Market Decline and Brand Withdrawals
The NFT market experienced a notable contraction of 24% in the first quarter of 2025, recording $1.5 billion in trading volume, as detailed in a report from DappRadar. Despite the decline in total sales by 10%, this indicates a significant drop in the average sale price of NFTs. The trading volume of $1.5 billion during this period starkly contrasts with the remarkable $5.7 billion recorded in the last week of January 2022, when the NFT sector was at its zenith, according to Token Terminal data. While the NFT trading volume saw a 24% decrease compared to the previous quarter, it did reflect some improvement when compared to the two quarters prior, largely due to a renewed optimism following President Trump’s election. Nevertheless, this positive outlook did not prevent Nike from proceeding with its plans to wind down RTFKT, which was confirmed through an announcement on Musk’s X platform. The final creative output from RTFKT was the MNLTH X Blade Drop, a collaboration with footwear manufacturer Zellerfeld. Recently, there was also a temporary disappearance of CloneX NFTs from the OpenSea marketplace, attributed to Cloudflare’s downgrade of the account that housed the files. The CloneX collection ranks among RTFKT’s most valuable, with a total sales volume of 470,434.88 ETH, as per CoinMarketCap.
Legal Action and Industry Trends
At the height of the NFT boom, Nike was recognized as the top mainstream brand, reportedly generating $185 million from NFT sales by June 2022. Fast forward two and a half years, and following the announcement of RTFKT’s closure, the company now finds itself facing a $5 million class-action lawsuit in a federal court in Brooklyn, New York. The lawsuit claims that the shutdown of RTFKT led to a sharp decline in demand for the NFTs that consumers had purchased, as reported by Reuters. Nike is not alone in its retreat from the NFT space; Starbucks officially terminated its NFT royalty program in March 2024, while Gamestop shut down its NFT marketplace just a month prior, citing ongoing regulatory challenges in the cryptocurrency sector. Additionally, X2Y2, which had been a major player in NFT transactions, has decided to close its NFT operations to pivot towards decentralized artificial intelligence, pointing to a staggering 90% decline in NFT transaction volumes from its peak.
Crypto-Native Companies Strengthen NFT Initiatives
Despite the exits of prominent brands from the NFT landscape, several crypto-native firms are doubling down on their commitments and refining their strategies. Recently, the Solana decentralized exchange platform Jupiter announced its acquisition of the digital collectibles platform DRiP Haus, which forms part of a larger initiative to transform Jupiter into a comprehensive “super app.” These Web3 super apps are designed to integrate various services, including token trading, NFTs, payment solutions, and cryptocurrency exchanges. “We don’t believe the narrative that NFTs are finished,” stated Kash Dhanda from Jupiter, expressing confidence in the long-term viability of NFTs. Projects like Pudgy Penguins and Doodles are leading the charge in this evolving landscape by expanding their focus into gaming and developing their own tokens. While profile picture (PFP) NFTs remain dominant, accounting for around 56% of sales according to DappRadar, their sales have been declining more rapidly compared to gaming NFTs, which are gaining traction in transaction activity. Last October, Pudgy Penguins unveiled plans for a AAA blockchain game titled “Pudgy Party,” set for release on iOS and Android in 2025, along with the introduction of the PENGU token, allocating 25.9% to the community of NFT holders. Similarly, in February, Doodles announced its initiative to launch a Solana-based token, DOOD, as part of a broader strategy that positions the brand as an entertainment entity focused on immersive storytelling, with plans to release the token on Coinbase’s Ethereum layer-2 blockchain, Base.
