- According to a lawsuit, a group of investors alleged that Mark Cuban and the Dallas Mavericks tricked them into investing in a “ponzi scheme.”
- The lawsuit claims Voyager Digital, a crypto trading platform, is “built on false promises.”
- The lawsuit alleges that 3.5 million Americans have lost more than $5 billion as a result.
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A group of disgruntled investors allege in a new lawsuit that Mark Cuban and the Dallas Mavericks allegedly tricked them into pouring money into what the lawsuit says was a “massive pyramid scheme.”
The proposed class-action lawsuit alleges that Voyager Digital CEO Stephen Erlich, along with Cuban and the NBA team the Dallas Mavericks, which Cuban owns, made “great efforts” to lure millions of Americans into the now-bankrupt crypto -Voyager trading platform to invest.
Voyager entered into a 5-year partnership with the Mavericks last year and once ran a promotion where fans received $100 in Bitcoin if they deposited $100 of their own funds into the crypto trading app.
“I think if we work together, we’ll be at the forefront of innovation,” Cuban said of Voyager at the time.
The lawsuit alleges that Cuban, Erlich and the Mavs’ promotion of the Voyager platform, built on “false promises,” caused 3.5 million Americans to collectively lose more than $5 billion. The lawsuit seeks to hold them responsible for repaying those Americans.
However, there is no guarantee that this case will go to court. A judge is the first to certify that the 12 representatives named in the lawsuit are representative of more than 3 million Americans, according to Jason Gottlieb, a partner at Morrison Cohen who specializes in cryptocurrency disputes.
At least one legal expert thinks the one class action lawsuit representing millions of Americans may not be appropriate.
“U.S. courts, particularly federal courts but also state courts, have become more skeptical over the years about the appropriateness of allowing essentially a single lawsuit … to represent a very large number of people,” said Deborah Hensler, a Stanford researcher -Legal professor who specializes in class action lawsuits.
Voyager Digital officially filed for bankruptcy in early July. The company was caught up in the recent crash in cryptocurrency prices, leading to a contagion effect that led to the bankruptcy of several multi-billion dollar crypto companies.
The crypto broker is a public company and was listed on the Toronto Stock Exchange until last month, when it voluntarily delisted. As a publicly traded company, like all publicly traded companies, it would have to comply with certain financial disclosure requirements.
Mark Cuban, the Dallas Mavericks and Voyager Digital declined to comment on this story insiders.
The proposed class action lawsuit comes amid a surge in cryptocurrency-related lawsuits as loss-scorched investors seek to recover lost funds.
Gottlieb says he has seen a surge in crypto-related litigation over the past few months.
“Any company in the regular world that suffers major losses can likely attract the attention of plaintiff’s attorneys, and crypto companies are no exception. In an interesting way, it’s kind of a more money, more problems situation,” he said.