A dispute over NFTs marketed in connection with BIG3 basketball teams is moving into individual arbitration, according to Sakai LLP, the law firm representing purchasers who say they did not receive certain promised benefits.
The firm says the claims against BIG3 HoldCo LLC are being pursued as mass individual arbitrations, rather than through the proposed class-action route described in earlier reporting. That procedural change could require each purchaser to bring a separate claim. It does not, by itself, resolve the underlying allegations.
The dispute concerns BIG3’s 2022 NFT program. The three-on-three basketball league, co-founded by O’Shea Jackson Sr. (Ice Cube) and Jeff Kwatinetz, offered Fire NFTs at $25,000 and Gold NFTs at $5,000. In promotional material published at the time, BIG3 described voting opportunities, tickets, access to team personnel, and other benefits associated with the tokens.
One provision warrants particular attention. BIG3’s published ownership materials said Fire-tier holders would receive 40% of the net proceeds from a future sale of their team, but made that benefit expressly subject to regulatory approval. The extent and effect of that condition are among the issues that would need to be assessed against the relevant documents and facts.
Purchasers represented by Sakai LLP allege that BIG3 misrepresented ownership-related rights, including participation in team-sale proceeds, and that they were denied benefits after teams were sold. The firm identifies potential claims involving California securities laws, misrepresentation, concealment, and breach of contract, among other theories. None has been established in the arbitration matters.
BIG3 disputes the claims. In a July 7 report by Front Office Sports, a league representative said a wider collapse in the NFT market explained losses in token value and argued that the purchasers were bound by contractual arbitration provisions. The report described a proposed California class action and BIG3’s effort to compel arbitration.
The dispute has attracted additional attention because of a separate corporate transaction. On June 12, BIG3 and Graf Global Corp. announced a proposed business combination assigning the league a pre-money valuation of approximately $290 million. A September 29 securities filing shows Graf extended its deadline for completing a business combination to October 27, with further extensions permitted. The deal should not be confused with any existing NFT holder’s right to payment; no such entitlement follows merely from the announced valuation.
For purchasers, procedure now matters as much as publicity. Mass arbitration is a method of pursuing numerous individual claims, not a certified class action. Eligibility, filing requirements and potential remedies depend on the governing documents and each claimant’s circumstances.
Sakai LLP, led by attorney Joseph P. Sakai, says it is reviewing inquiries from people who bought or otherwise acquired BIG3 NFTs. The firm offers representation on a contingency-fee basis and states that clients owe no attorneys’ fees unless there is a recovery. Purchasers seeking information about the individual arbitration proceedings or their potential legal rights can contact Sakai LLP directly.
