Crypto evangelist Mark Cuban is in trouble

Mark Cuban should have expected it.

Ever since crypto lender Voyager Digital filed for Chapter 11 bankruptcy, criticism of the billionaire and NBA Dallas Mavericks owner has been raining down on social media.

These detractors accuse him of promoting the platform and therefore hold him responsible for the losses they say they have suffered as we wrote on July 8. These reproaches are now reflected in a class action lawsuit against the successful entrepreneur.

These angry individual investors claim that Cuban and the Dallas Mavericks tricked them into investing in Voyager Digital, which went bankrupt and cost them some $5 billion in total, according to the complaint. The complaint is based on another complaint filed already in December against Voyager Digital.

The “deceptive” Voyager platform “was an unregulated and unsustainable fraud, similar to other Ponzi schemes,” the plaintiffs claim. “It was specifically alleged in detail in this complaint that defendants Mark Cuban and Stephen Ehrlich were key players who personally contacted investors, individually and through the Dallas Mavericks, to induce them to invest in the platform. misleading Voyager.”

Ehrlich is the CEO of Voyager Digital.

$5 billion in losses

“Cuban and Ehrlich, as we’ll explain, went to great lengths to use their experience as investors to trick millions of Americans into investing – in many cases, their life savings. life – in the deceptive Voyager platform and purchase Voyager Program Accounts (“EPAs”).”), which are unregistered securities,” the plaintiffs add.

“As a result, over 3.5 million Americans have now virtually lost over $5 billion in cryptocurrency assets.”

The plaintiffs, who say they want Cuban and Ehrlich to repay them, are primarily using the Shark Tank star’s statements when signing a partnership between the Dallas Mavericks and Voyager Digital against him.

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The Dallas Mavericks and Voyager Digital signed a five-year contract on October 28, with a mission to promote cryptocurrencies by making coins more accessible through educational and digital programs.

As part of the partnership, Voyager promised Dallas Mavericks fans a $100 reward to trade crypto on Voyager for a limited time if they deposited $100 and only traded $10. The offer had met with great success, so much so that Voyager had been forced to set up a waiting list.

“There is untapped potential in the future of digital currencies and it is an attractive investment for novice investors who might only have $100 to get started,” Cuban said at the time in a press conference. with Ehrlich. “That’s where Voyager comes in. In other words, it’s a way to get high returns while putting skin in the game and the Voyager platform makes the process easy and streamlined for fans of all ages.”

Future uncertainties

It is not certain that the complaint will lead to a trial because a judge must already certify that the 12 people put forward in the complaint are representative of the 3.5 million Americans who would have been impacted by the setbacks of Voyager Digital.

Voyager Digital filed for bankruptcy in July, becoming one of the victims of the confidence crisis that has wiped out more than $2 trillion from the cryptocurrency market since its all-time highs in November. Difficult to know if his customers will get their money back.

Voyager is a cryptocurrency trading platform. The company also offers loans and staking services, which are a kind of reward for holding certain coins. It was its lending business that got it into trouble: Voyager appears to have loaned its clients’ funds to crypto hedge fund Three Arrows Capital, also known as 3AC.

However, this hedge fund defaulted in June on a $667 million loan granted to it by Voyager. Three Arrows Capital has been forced by a court in the British Virgin Islands to go into liquidation. Faced with this disaster, Voyager suspended deposits, withdrawals and loyalty rewards on its platform.

A request for comment on Twitter from the Dallas Mavericks has so far gone unanswered.

“In stocks and crypto, you’ll see companies that were backed by cheap, easy money — but didn’t have good business prospects — will disappear,” Cuban said in a June interview with Fortune. . “As [Warren] Buffett says, “When the tide goes out, you can see who’s swimming naked.”

The complainants included this last statement in their complaint.

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