BIG3 faces class action over NFT ownership promises

A proposed class action has been filed against BIG3 over its NFT ownership programme, alleging that buyers were denied rights and proceeds tied to team ownership.

The lawsuit was filed in Los Angeles Superior Court against BIG3 and related defendants as the basketball league pursues a business combination that values it at about USD $290 million.

Plaintiffs allege that the professional 3-on-3 basketball league, co-founded by O'Shea Jackson Sr., known as Ice Cube, and Jeff Kwatinetz, began selling NFTs in 2022 as a way for fans to become team owners and share in the league's growth.

According to the complaint, buyers paid as much as USD $25,000 for each NFT. In return, they say they were promised ownership-related rights, including voting authority over future team sales and a share of proceeds from those sales.

The filing alleges that BIG3 later sold several teams for about USD $10 million each. Plaintiffs say NFT holders did not receive the ownership rights or sale proceeds they had been led to expect.

Claims raised

The complaint alleges violations of California securities law, along with fraudulent misrepresentation, concealment, breach of contract, and unjust enrichment. The proposed class seeks damages, restitution, and declaratory relief on behalf of BIG3 NFT purchasers.

At the heart of the case is the league's use of digital tokens as a path to sports ownership. Plaintiffs argue that the NFTs were marketed not simply as collectibles, but as instruments that would confer meaningful governance rights, exclusive owner benefits, and an economic interest in future franchise transactions.

The lawsuit claims those representations were central to investors' decisions to buy into the programme. It also argues that purchasers relied on public statements about ownership rights and future financial participation when deciding whether to commit substantial sums.

Those allegations have not been proven in court. BIG3 has moved to compel the plaintiffs into private arbitration on an individual basis rather than as a class.

Ownership dispute

The case adds to broader scrutiny of how digital assets are sold when they carry features associated with investment products. It also highlights legal risks for sports groups that use blockchain-based offerings to raise money from fans while presenting those sales as a form of participation in team ownership.

According to the complaint, BIG3 described the NFT scheme as a new ownership model designed to widen access to professional sports ownership beyond institutional investors and wealthy individuals. Plaintiffs say that message was a core part of the sales pitch and created expectations that holders would continue to benefit as long as the league remained in operation.

Joseph Sakai, the lawyer representing the plaintiffs, said the dispute turns on whether those expectations were justified by what buyers were told at the time of sale.

"At its core, this case is about promises made to investors who are also the league's most loyal fans," said Joseph Sakai, attorney for the plaintiffs at Sakai A.P.C.

"Our clients invested substantial sums based on representations that they would receive meaningful ownership rights, including team management decisions, season tickets, and financial participation in future team sales. The League and Ice Cube promised these rights would last 'forever.' They barely lasted three years."

Sakai said the dispute also raises broader questions about how digital asset products are presented to consumers.

"This case also raises broader questions regarding how emerging technologies and digital assets are marketed to consumers," he said.

"Whether an investment opportunity is offered through traditional means or blockchain technology, companies should be held accountable for the representations they make to purchasers."

BIG3's push for individual arbitration could shape how the dispute proceeds if the court grants the request. If that happens, the plaintiffs may be required to pursue their claims separately rather than through a class action, narrowing the scope of the case even as questions over the NFT programme remain in focus.

The complaint alleges that purchasers suffered significant financial harm because the promised ownership model was not honoured after they invested substantial sums in the programme.