A class-action lawsuit targets the National Basketball Association (NBA) for promoting the bankrupt cryptocurrency brokerage firm Voyager Digital, with investors alleging losses surpassing $4.2 billion.
The origins of the lawsuit can be traced back to a previous legal dispute in 2022 involving Mark Cuban, the former owner of the Dallas Mavericks, who was accused of misrepresenting Voyager and using his influence to lure investors.
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Cuban was sued after Voyager initiated bankruptcy due to unsuccessfully loaning money to the cryptocurrency hedge fund Three Arrows Capital (3AC).
The lawsuit, filed in a Miami district court on February 6, claims that the NBA knowingly took the risk of associating with cryptocurrency exchanges, such as Voyager Digital, FTX, or Coinbase, to receive “billions in promotional compensation”, therefore failing to fulfill its responsibility of acting as a gatekeeper when accepting such deals.
The class group calls such actions of the NBA "grossly negligent" and argues:
The NBA’s widespread promotion of Voyager’s unregistered securities renders it liable for any and all resulting damages.
Plaintiffs also state that Voyager's law firm, McCarter & English, allegedly provided a misleading "Legal Opinion" about the status of Voyager's token, thereby contributing to investor and partner concerns being downplayed.
As the legal proceedings unfold, both the NBA and McCarter & English have yet to issue public statements addressing the allegations.
This legal battle sparks concerns about financial responsibility and investor protection. As the lawsuit progresses, the NBA's role and response will be closely scrutinized.
It is not the first time that Voyager Digital has been in hot water. In 2023, the crypto lender was also publicly criticized by The United States Commodity Futures Trading Commission (CFTC).
