The National Basketball Association (NBA) is currently embroiled in a lawsuit concerning its association with the defunct crypto exchange Voyager Digital Holdings, as investors claim losses totaling $4.2 billion.
According to Bloomberg, the lawsuit alleges that the NBA’s involvement in a marketing deal between Voyager and Mark Cuban, former owner of the NBA’s Dallas Mavericks, was “grossly negligent.”
This legal action follows previous lawsuits against Cuban for his endorsement of the exchange, which investors deemed “an unregulated and unsustainable fraud” after its collapse in 2022.
It’s worth noting that several NBA teams, including the Mavericks, had marketing agreements with crypto companies, such as the now-defunct FTX exchange, whose founder was convicted of fraud.
The investors have also named Voyager’s legal representatives, McCarter & English, as defendants, accusing them of providing “fraudulent legal opinions” and participating in a conspiracy to promote the crypto exchange. McCarter & English have pledged to vigorously defend themselves, asserting that they provided sound legal counsel to their clients.
NBA Promoted Voyager’s “Unregistered Securities”
As of now, the NBA’s General Counsel, Rick Buchannan, has not responded to requests for comment regarding the lawsuit. The suit accuses the NBA of endorsing Voyager’s “unregistered securities,” thus holding it accountable for resulting damages.
Following the collapse of FTX in 2022, lawsuits were initiated against celebrities, including sports figures Tom Brady and Steph Curry, as well as comedian Larry David, who endorsed crypto investments. Settlements have been reached in some cases, involving personalities like Kim Kardashian and NFL quarterback Trevor Lawrence.
Cuban’s five-year partnership agreement with Voyager in 2021, which designated its token as the official Mavericks cryptocurrency and featured Voyager ads in the team’s arena, is now under scrutiny. Cuban has faced allegations of misrepresenting the safety of Voyager, which he strongly denies. He divested his majority stake in the Mavericks in December 2022.
Voyager filed for Chapter 11 bankruptcy protection in 2022, with a court authorizing the liquidation of assets to reimburse customers. Investors allege that the NBA took significant risks by endorsing Voyager and FTX, leveraging its global brand reputation to promote what they consider unregistered and illegal securities.