How it unfolded
The United States had gone 63-0 in Olympic basketball to that point. The USSR led for most of the second half, at one point by ten points. The US clawed back with late defensive pressure, and with three seconds left, Doug Collins made both free throws he'd won to give the US its first lead of the game, 50-49. The next three seconds became the most controversial sequence in Olympic history. Play was stopped during the USSR's first inbound attempt and the clock was reset to three seconds. On the second attempt, the final horn sounded and American players ran onto the court in celebration, but FIBA secretary general R. William Jones intervened at the scorer's table and awarded three seconds again. On the third attempt, Ivan Edeshko threw a long pass the length of the court, and Alexander Belov caught it between two American defenders and finished with a layup. 51-50. The US protested immediately, but FIBA's appeals jury rejected it 3-2. All twelve American players refused to attend the medal ceremony, and that silver medal remains unclaimed in a vault in Lausanne to this day.
Why it still matters
This is the most famous officiating controversy in Cold War-era sport, and the moment the United States' Olympic basketball monopoly was first broken. The loss forced a fundamental rethink of how the US national team was selected and prepared for international rules, and it's the distant origin of the decision, twenty years later, to send professional players. It's also the real starting point of the shift in international basketball's balance of power, proving for the first time that Soviet and Yugoslav-tradition programs could compete with the US on equal terms.