Summary
- BIG3 NFT owners have initiated legal action against Ice Cube's basketball league, alleging unmet promises.
- Investors, who paid up to $25,000 for NFTs, anticipated revenue from team sales and other perks.
- The lawsuit seeks damages as BIG3 moves forward with plans to go public through a SPAC deal.
A group of NFT owners from Ice Cube’s BIG3 league, which features 3-on-3 professional basketball, has launched a class action lawsuit in California, claiming the league has failed to uphold its commitments as it gears up for a public offering.
This lawsuit, filed last July and highlighted by Front Office Sports, accuses the league of “deceptive, fraudulent, and illegal marketing” regarding its sale of unregistered securities through non-fungible tokens.
Joseph Sakai, the attorney representing the plaintiffs, stated, “At its core, this case is about promises made to investors who are also the league’s most loyal fans.”
Sakai elaborated that the plaintiffs invested significant amounts based on the expectation of receiving substantial ownership rights, including involvement in team management, season tickets, and a share in future team sales. “The league promised these rights would last ‘forever.’ They barely lasted three years,” he added.
The anticipated ownership rights were part of incentives from the 2022 launch of Ethereum-based NFTs, which were sold in two tiers: “Fire” for $25,000 and “Gold” for $5,000. NFT owners were also promised benefits such as VIP tickets and voting rights on team decisions.
Ice Cube had expressed excitement about this model, saying, “This is a great way for the fans to be owners. And so, it's a no-brainer for me. I'm all about changing the game and shifting the paradigm,” as reported by Decrypt.
However, NFT buyers claim that the promised ownership and associated benefits have not been delivered.
The lawsuit states, “Rather than honor its contractual promises to plaintiffs and other similarly situated investors who provided substantial capital to the league, BIG3 has relegated those individuals from team owners to common ticket holders,” suggesting that the league has denied plaintiffs their rights to participate and profit from team sales, which were promised in exchange for their investment in BIG3’s unregistered securities.
In 2024, BIG3 sold four teams to outside investors, raising approximately $40 million. The plaintiffs argue that a portion of these sales was attributable to NFT holders, who were among the league's initial private investors.
The lawsuit notes, “Two years before BIG3 announced its first sale of team rights to DCB Sports, BIG3 had sold ownership rights to hundreds of private investors, including plaintiffs, via non-fungible tokens.”
A spokesperson for BIG3 did not provide immediate comments to Decrypt but stated to Front Office Sports that “the plaintiffs are filing a public nuisance suit despite contractual obligations to resolve all such disputes through confidential arbitration.”
The plaintiffs are seeking damages, restitution, and declaratory relief, among other remedies. The plaintiff's attorney indicated that BIG3 has preferred to handle this matter through individual arbitration rather than as a class.
Recently, the league, which is currently in its ninth season, announced plans to go public via a merger with a special purpose acquisition company (SPAC), valuing it at approximately $290 million. The attorney for the plaintiffs anticipates amending the lawsuit in light of the SPAC developments, according to Front Office Sports.