- A group of investors have claimed that Mark Cuban and the Dallas Mavericks tricked them into investing in a “Ponzi scheme”, according to a lawsuit.
- The lawsuit claims that Voyager Digital, a crypto-trading platform, was “built on false promises.”
- The lawsuit claims that 3.5 million Americans lost more than $5 billion as a result.
A group of disgruntled investors have claimed in a new lawsuit that Mark Cuban and the Dallas Mavericks tricked them into investing money in what the lawsuit says was a “massive Ponzi scheme”.
The proposed class action claims that Voyager Digital CEO Stephen Erlich, along with Cuban and the Dallas Mavericks NBA team, which Cuba owns, “went to great lengths” to dupe millions of Americans into invest in the now bankrupt Voyager crypto-trading platform.
Voyager entered into a 5-year partnership with the Mavericks last year and once ran a promotion where fans would receive $100 in Bitcoin if they deposited $100 of their own money into the crypto trading app.
“I think by working together, we’re going to be at the forefront of innovation,” Cuban said of Voyager at the time.
The lawsuit claims that Cuban, Erlich and the Mavs’ promotion of the Voyager platform based on “false promises” collectively cost 3.5 million Americans more than $5 billion. The lawsuit seeks to hold them accountable for reimbursing those Americans.
However, this case is not guaranteed to go to court. A judge must first certify that the 12 named representatives in the lawsuit are representative of more than 3 million Americans, according to Jason Gottlieb, a partner at Morrison Cohen who specializes in cryptocurrency litigation.
At least one legal expert thinks the one class action lawsuit representing millions of Americans might not be suitable.
“American courts, particularly federal courts but also state courts, have become more skeptical over the years about the advisability of essentially allowing in one action … the representation of a very large number of people “said Deborah Hensler, a Stanford law professor. who specializes in class actions.
Voyager Digital officially filed for bankruptcy in early July. The company had been caught up in the recent cryptocurrency price crash, causing a contagion effect that led to the insolvency of several billion-dollar crypto companies.
The crypto broker is a publicly traded company and was listed on the Toronto Stock Exchange until last month when it voluntarily delisted. As a publicly traded company, it should have complied with certain financial disclosure requirements, like all public companies.
Mark Cuban, the Dallas Mavericks and Voyager Digital declined to provide Insider comment for this story.
The proposed class action lawsuit comes amid an increase in cryptocurrency-related lawsuits as investors burned by the losses seek to recover some of the money lost.
Gottlieb says he has seen an increase in crypto-related litigation over the past few months.
“Any company in the mainstream world that suffers big losses is likely to come to the attention of plaintiff’s attorneys, and crypto companies are no exception to that. Interestingly, it’s a bit of a situation of type ‘more money, more problems’,” he said.