Benzinga - Investors have brought legal action against the National Basketball Association (NBA), claiming losses of $4.2 billion tied to their partnership with the now-collapsed Voyager Digital Holdings Inc.
What Happened: The lawsuit reported by Bloomberg, initiated Tuesday in Miami, accuses the NBA and Dallas Mavericks’ former owner Mark Cuban of “gross negligence” due to their marketing agreement with the crypto exchange.
This lawsuit follows a previous claim against Cuban, charging him with promoting what the investors have described as “an unregistered and unsustainable fraud” after Voyager’s downfall in 2022.
Several NBA teams had partnerships with cryptocurrency companies, including the defunct FTX exchange. Founders of both FTX and Voyager have faced legal repercussions, with FTX’s Sam Bankman-Fried convicted of fraud, and Voyager co-founder Stephen Ehrlich sued by the Commodity Futures Trading Commission (CFTC) for allegedly operating a fraudulent digital asset platform.
The investors’ suit further implicates the NBA for promoting “unregistered securities” linked to Voyager, leaving the association liable for the resultant damages.
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Why It Matters: In a separate lawsuit from 2022, investors claim Mark Cuban defrauded them by incorrectly declaring Voyager’s security. Cuban, however, sold his majority share in the Mavericks in December and labeled the allegations as baseless. The investors are now eyeing a portion of the proceeds from his $3.5 billion sale to fulfill their claims for compensations.
After declaring bankruptcy in 2022, Voyager received permission from a judge to start liquidating its assets, providing customers with some return on the cryptocurrencies frozen on their platform.
The suit alleges that the NBA aimed to take the helm in crypto promotions through their support for firms like Voyager and FTX, capitalizing on the league’s trust and global respect to market “unregistered and illegal securities.”
Price Action: Bitcoin (CRYPTO: BTC) was trading at $44,515, up 3.91% in the last 24 hours, according to Benzinga Pro.
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Courtesy of Gage Skidmore on Flickr
Disclosure: Benzinga CEO Jason Raznick is a member of the unsecured creditor committee in the Voyager Digital bankruptcy case.
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