Ice Cube’s Big3 basketball league is going public to let fans invest in the business. But it has previously been accused of backing away from a promise that NFT buyers would own stakes in teams and share in the upside of franchise sales.
The proposed class action, filed last summer in California state court by Lou and Sally Sheward, has not been previously reported. It asserts 12 causes of action, including fraudulent concealment and breach of contract, and claims the league misrepresented the rights that buyers of Big3 team-specific NFTs would receive.
The allegations take on new significance because Big3 last month announced a special purpose acquisition company merger that values the league at $290 million. Once that deal closes, Big3 will be publicly traded, meaning it is once again inviting fans and investors to buy into the league.
A Big3 representative tells Front Office Sports the lawsuit is nothing but sour grapes, saying in a statement that “Sheward and the other plaintiffs represent holders of an asset class—namely NFTs—which lost all value due to the overall market collapse.”
“The plaintiffs are filing a public nuisance suit despite contractual obligations to resolve all such disputes through confidential arbitration,” the statement says. “This is a classic nuisance suit for an asset class that has lost all value, brought in an effort to extort the BIG3.”
In April 2022, Big3 announced it would introduce “decentralized team ownership” by offering a set amount of NFTs, or non-fungible tokens. Two tiers were offered: Fans could buy a gold-level NFT for $5,000 each, or a fire-level NFT for $25,000 each. Both tiers included voting rights toward team actions, VIP tickets to games, and more, while fire NFTs also provided buyers with benefits like the right to a percentage of future team sales. (NFTs are digital assets that act as a certificate of ownership.)
Big3 initially treated the NFTs as genuine ownership interests before gradually stripping away promised benefits, and the league ultimately sold four franchises to outside investors for a total of roughly $40 million without distributing any proceeds to fire NFT holders, the lawsuit says.
According to the suit, Big3 avoided those obligations by rebranding the teams as new “expansion” franchises while placing the original teams on “hiatus.” The four rebranded teams are the LA Riot, the Detroit Amps, the Houston Rig Hands, and Miami 305. According to the lawsuit, the Riot were previously the Enemies, the Amps were the Ghost Ballers, the Rig Hands were previously Bivouac, and Miami 305 was previously 3’s Company. Each of the four rebranded teams retained at least one player from its predecessor, despite the original franchises being placed on hiatus, the complaint says.
Joseph Sakai, the attorney leading the lawsuit, tells FOS his clients are Big3 fans who aren’t aiming to take down or extort the league.
“The named plaintiffs and all other NFT owners who I’ve spoken with, they didn’t come to me with pitchforks out, ready to undress the league,” Sakai says. “They are fans of the league who bought in because they enjoyed being part of it. But there were supposed to be benefits they were receiving with regard to the pretty substantial investment people had made.”
Sakai says NFT holders were particularly stunned when Big3 announced the franchise sales without providing them a share of the proceeds. “They felt like they were being left out or forgotten.”
Big3 has moved to compel arbitration, with a hearing scheduled for Aug. 24. The league argues NFT owners must pursue claims individually rather than as a class or even through coordinated arbitration. Sakai anticipates the class will include at least several hundred people.
Regardless of that hearing’s outcome, Sakai expects to file an amendment to the complaint that will reference the newly announced special purpose acquisition company merger, although the focus will mostly stay on the NFTs.
“I can’t say we currently would have an independent cause of action related to the SPAC deal,” Sakai tells FOS. “But there’s obvious overlap in the way it’s being pushed and marketed.”
NFT Fallout
Despite a dramatic dip in the market for NFTs amid a larger crypto crash in the back half of 2022, Big3 remained bullish on its plan as of that May. But it is not nearly the first sports-related entity to face fallout tied to a big NFT push.
A class action against NBA Top Shot parent Dapper Labs settled in 2024 for $4 million. That same year, Shaquille O’Neal agreed to pay $11 million to settle a suit over allegations he promoted but then fled an NFT project, Astrals, which caused its value to drop dramatically.
This January, DraftKings cofounder Matt Kalish and DJ Steve Aoki were accused of misleading consumers by failing to disclose they were paid to promote NFTs from a now-bankrupt company.
In April of this year, a Texas jewelry company reached a deal to end a lawsuit that claimed Magic Johnson was part of a scheme that included a $250,000 investment in “MagicVerse,” an NFT project that never materialized.
