The U.S. National Basketball Association has been hit with a class action lawsuit relating to a marketing deal it had with defunct crypto exchange Voyager Digital.
Investors claim the deal led to total losses of around $4.2 billion when the company collapsed during the crypto contagions of 2022.
The lawsuit alleges the NBA was “grossly negligent” in agreeing to a marketing deal between Voyager and Mark Cuban’s Dallas Mavericks.
Moreover, several NBA teams had deals to promote crypto companies like Voyager and FTX, which also failed.
Unregistered Securities Promotion
This latest lawsuit was filed in Miami on Feb. 6, claiming that the NBA promoted Voyager’s “unregistered securities,” making it liable for damages.
“The NBA carefully and deliberately decided to embrace the risks associated with cryptocurrency exchanges such as Voyager, FTX, and Coinbase, and go all in,”
“This decision, fraught with risk, involved promoting and selling billions of dollars in unregistered and illegal securities to the public by leveraging the global reputation and trust in the NBA brand,” it added.
Moreover, investors had previously sued Cuban for promoting the exchange, which they called “an unregulated and unsustainable fraud,” according to Bloomberg.
Voyager’s law firm, McCarter & English, was also sued for allegedly producing “fraudulent legal opinions” backing Voyager; however, the latter denies the allegations and intends to defend itself.
There are eight claims in total in the suit. It alleges the NBA deal allowed Voyager to leverage the league’s reputation to promote and sell illegal crypto securities.
It also accuses Voyager’s lawyers of lending credibility by saying the firm’s VGX token was not an unregistered security. However, crypto assets have yet to be officially classified in the United States.
The plaintiffs also aim to recover damages from the proceeds of Cuban’s recent $3.5 billion sale of the Mavericks.
Additionally, the Commodity Futures Trading Commission sued Voyager co-founder Stephen Ehrlich, claiming he “fraudulently solicited participation in and operated a digital asset trading and custody platform.”
Flood of Crypto Lawsuits
Mark Cuban signed a five-year partnership deal with Voyager in 2021. He made its token the official Mavericks cryptocurrency and displayed Voyager ads during the 2021-2022 season.
Moreover, the NBA’s Miami Heat had a similar deal with FTX, naming their arena after the crypto exchange.
The collapse of FTX in late 2022 sparked a flurry of lawsuits against celebrities and athletes who endorsed investing via crypto exchanges and companies. These include sports stars Tom Brady, Steph Curry, and Trevor Lawrence.
Source: cryptopotato.com
