Voyager Investors Sue NBA Over Partnership With Failed Crypto Exchangebr>
A group of former Voyager Digital investors have filed a class action lawsuit against the National Basketball Association alleging the league is partly responsible for losses stemming from the collapse of the crypto exchange.
The proposed class action, filed in federal court in Miami earlier this month, says the NBA exhibited “gross negligence” through a promotional partnership between Voyager and the Dallas Mavericks basketball team. As part of the deal, Voyager became the Mavs’ official crypto broker and partner, with advertisements displayed in the team’s arena and endorsements from former owner Mark Cuban.
The investors argue the NBA pursued such crypto deals to make up for lost revenue during the pandemic, willfully ignoring risks to embrace billions in sponsorship money. But these promotions wrongly assured investors Voyager was safe, the suit says, when in reality the exchange’s offerings were unsustainable and unregulated.
Total claimed damages are said to top $4.2 billion, the amount investors lost when Voyager filed for bankruptcy protection in July after overexposed bets on now-collapsed hedge fund Three Arrows Capital helped trigger its downfall.
The suit also names Voyager’s law firm, McCarter & English, alleging it issued a bogus legal opinion labeling Voyager’s VGX token not a security despite lacking registration. Both the NBA and the law firm deny any wrongdoing and plan vigorous defenses against the action.
Similar lawsuits have also targeted Cuban and others like basketball star Steph Curry who pitched now-defunct FTX, with celebrities and sports brands more broadly finding themselves in legal fights over failed crypto ventures they once touted. As the fallout spreads from the FTX collapse, more such cases may emerge, given the huge losses suffered by retail investors.
Whether the NBA and others can ultimately be held responsible remains to be seen, but the actions indicate a growing backlash from individuals who feel misled about risks in the rapidly evolving crypto space by those seeking big sponsorship deals.
A copy of the original filing can be found here.