The National Basketball Association (NBA) is facing a lawsuit over its ties to failed cryptocurrency exchange Voyager Digital Holdings, with investors claiming losses totaling $4.2 billion.
The lawsuit alleges that the NBA's involvement in the marketing agreement between Voyager and Mark Cuban, the former owner of the NBA's Dallas Mavericks, was “grossly negligent,” as reported by Bloomberg.
The lawsuit follows an earlier one against Cuban, who supported the exchange, which investors labeled an “unregulated and unsustainable scam” after its collapse in 2022.
Notably, several NBA teams, including the Mavericks, had marketing agreements with crypto companies, including the now-defunct FTX exchange, whose founder was convicted of fraud.
The investors also named Voyager's attorney McCarter & English as a defendant, alleging that Voyager provided “fraudulent legal opinions” and participated in a conspiracy to promote a cryptocurrency exchange. McCarter & English maintained that it provided sound legal advice to its clients and vowed to vigorously defend itself.
NBA promotes Voyager's 'unregistered securities'
NBA General Counsel Rick Buchanan has not yet responded to a request for comment on the lawsuit. The lawsuit accuses the NBA of promoting Voyager's “unregistered securities” and holds it liable for damages.
FTX's collapse in 2022 sparked lawsuits against celebrities such as athletes Tom Brady and Stephen Curry, and comedian Larry David, who supported crypto investing. Several settlements have been reached involving celebrities like Kim Kardashian and NFL quarterback Trevor Lawrence.
Cuban's 2021 five-year partnership agreement with Voyager has come under scrutiny, including making its token the Mavericks' official cryptocurrency and placing Voyager ads in the team's arena. Mr. Cuban has previously faced charges of falsely reporting Voyager's safety, which he strongly denies. He sold a majority stake in the Mavericks in December 2022.
Voyager filed for Chapter 11 bankruptcy protection in 2022, and a court allowed it to liquidate its assets to repay customers. Investors allege that the NBA took significant risks by endorsing Voyager and FTX and using its global brand reputation to promote what are considered unregistered and illegal securities.
