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Nike faces $5 million lawsuit after Cloudflare outage temporarily wipes its NFT images

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What just happened? On the morning of April 24, thousands of digital images tied to Nike’s high-profile CloneX NFT collection disappeared from the internet, replaced by a stark message: “This content has been restricted. Using Cloudflare’s basic service in this manner is a violation of the Terms of Service.” For collectors, the sudden blackout was a jarring reminder that even blockchain-backed digital assets can be alarmingly fragile when their underlying infrastructure fails.

The disruption was not the result of a hack or a blockchain malfunction, but rather a mundane technical issue. The images for the CloneX NFTs – avatars created by RTFKT, a digital fashion studio Nike acquired in 2021 – were hosted off-chain on Cloudflare’s servers. When Cloudflare prematurely downgraded RTFKT’s account to a free plan before the contract’s scheduled end, the service restricted access to the images, citing a violation of its terms for high-bandwidth content.

As a result, more than 19,000 NFTs were rendered temporarily invisible on major marketplaces like OpenSea and Blur.

Samuel Cardillo, RTFKT’s head of technology and now its sole caretaker since Nike began winding down the subsidiary, explained the cause of the outage. “Somehow this morning Cloudflare decided to move to the Free plan [a] few days before the end of the contract which also triggered that bug in which Cloudflare refuses to stream images and videos.”

He emphasized that the issue was not unpaid bills, but a misalignment in the timing of the service downgrade.

The images eventually returned after Cloudflare resolved the issue, but the incident rattled collectors and exposed a critical vulnerability in the NFT ecosystem. While NFTs themselves are recorded on the blockchain, the images and media they represent often reside on centralized servers.

If those servers go offline or the hosting fees lapse, the visual content can vanish, leaving owners with little more than a token pointing to a broken link. “Nobody likes to see their content lost, especially due to a mistake made by a cloud provider, and especially when it’s 30,000 plus NFT images,” Phil Mataras, CEO of decentralized cloud network ar.io, told DL News. ar.io is now working with RTFKT to migrate files to more resilient storage.

The CloneX collection, launched in late 2021 in collaboration with Japanese artist Takashi Murakami, was once a symbol of the NFT boom. At its peak, the cheapest avatars sold for over $60,000, with rare pieces fetching upwards of a million dollars.

The project’s success prompted Nike to acquire RTFKT, betting big on the future of digital collectibles and the metaverse. But after a prolonged bear market and waning interest, Nike announced in December 2024 that it would sunset RTFKT, leaving Cardillo as the last person maintaining the project’s technical infrastructure.

As Cardillo worked to restore the images and migrate the collection to decentralized storage on Arweave, he acknowledged the anxiety among NFT holders. “I understand the panic,” he said. “It’s my duty to ensure that those people can be reassured, it’s part of my responsibility being in charge of all of this.” He added, “I, personally, wanted to decentralize the assets instead of moving them just to yet another centralized hosting which would be under someone else’s will.”

The fallout from the shutdown has extended beyond technical headaches. On April 25, a group of investors filed a class-action lawsuit against Nike in Brooklyn federal court, alleging that the company’s abrupt closure of RTFKT caused significant financial losses.

The plaintiffs, led by Australian resident Jagdeep Cheema, argue that Nike promoted the NFTs as valuable digital assets, only to “pull the rug out from under them” by abandoning the project. The complaint claims that the NFTs were unregistered securities and that Nike failed to disclose the risks.

The lawsuit seeks over $5 million in damages, citing violations of consumer protection laws in New York, California, Florida, and Oregon. It also highlights how the collapse of RTFKT erased not just the market value of the NFTs, which are now trading for a fraction of their peak prices, but also the ecosystem of rewards, quests, and exclusive access promised to buyers.

Nike has yet to comment publicly on the lawsuit or the technical mishap.





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