The National Basketball Association (NBA) and Mark Cuban, the former owner of the Dallas Mavericks, are now facing a lawsuit over their promotional links with the now-defunct crypto exchange Voyager Digital Holdings Inc., as Bloomberg reports. This legal challenge comes on the heels of Voyager Digital Holdings Inc.’s catastrophic failure, which purportedly led to investor losses exceeding $4.2 billion.
Filed in Miami on Tuesday, the lawsuit accuses the NBA and Cuban of exhibiting “gross negligence” in their marketing partnership with Voyager. This action builds on a preceding lawsuit aimed directly at Cuban, where investors lambasted the exchange as “an unregulated and unsustainable fraud” in the aftermath of its 2022 demise.
Highlighting the broader involvement of NBA teams in crypto marketing deals, the plaintiffs point to associations with other troubled firms like FTX, whose collapse also made headlines after its founder, Sam Bankman-Fried, faced fraud convictions.
Central to the investors’ grievances is the allegation against McCarter & English, Voyager’s legal counsel, who were accused of issuing “fraudulent legal opinions” that seemingly endorsed the crypto exchange’s operations. The law firm, facing accusations of being complicit in a conspiracy to promote Voyager, has declared its intention to “vigorously defend” against these claims, maintaining that their advice was both “clear and competent.”
NBA And Cuban Allegedly Promoted “Unregistered Crypto Securities”
The thrust of the lawsuit alleges the NBA’s active promotion of Voyager’s unregistered securities implicates it in the resultant financial wreckage. This case, officially titled Garrison v. McCarter & English and The National Basketball Association, under case number 24-cv-20480 in the US District Court for the Southern District of Florida (Miami), delves into the complex web of endorsements and financial products that have blurred the lines between entertainment, sports, and investment.
The legal fallout from the FTX debacle in 2022 has triggered a domino effect, implicating celebrities and athletes who endorsed crypto investments, culminating in various settlements. Notably, Cuban’s 2021 partnership deal with Voyager, which saw the Mavericks officially adopt Voyager’s token and prominently feature the exchange’s advertising, has come under intense scrutiny.
Despite Cuban’s dismissal of the accusations as “utterly baseless,” the lawsuit seeks to leverage proceeds from his December sale of the Mavericks in satisfaction of the claims laid out by the investors.
Voyager’s journey to bankruptcy in 2022, culminating in a court-sanctioned liquidation of assets to repay a portion of the customers’ holdings, has cast a long shadow over the crypto industry’s engagement with high-profile endorsements. The lawsuit articulates a narrative of deliberate risk-taking by the NBA, accusing it of leveraging its esteemed global brand to market what is claimed to be “unregistered and illegal securities” to the public.
At the heart of the controversy is the legal opinion issued by McCarter & English regarding Voyager’s VGX token, which the lawsuit denounces as “bogus” for concluding the token was not an unregistered security.
At press time, the crypto market capitalization climbed to $1.661 trillion, exceeding the crucial 0.382 Fibonacci level, which has acted as a key resistance in recent weeks.
Featured image created with DALL·E, chart from TradingView.com
