- NBA faces $4.2B lawsuit over marketing ties to failed crypto exchange Voyager
- Allegations of negligence and fraudulent endorsements against NBA and law firm
- Lawsuit highlights risks of crypto partnerships and impact on celebrities
The National Basketball Association (NBA) is facing a significant legal challenge as it has been hit with a lawsuit over its marketing ties to the now-failed crypto exchange, Voyager Digital Holdings Inc. Investors claim that these marketing links led to substantial losses totaling $4.2 billion. The lawsuit alleges that the NBA, along with its attorneys at McCarter & English, were “grossly negligent” in their agreement to a marketing deal between Voyager and Mark Cuban, the former owner of the NBA’s Dallas Mavericks. The investors had previously sued Cuban for promoting the exchange, which they characterized as “A fraudulent scheme lacking regulation and long-term viability” following its collapse in 2022.
Marketing Deals with Crypto Firms
The lawsuit highlights that several NBA teams, including the Dallas Mavericks, had marketing agreements with crypto firms, such as the failed FTX exchange. It is worth noting that FTX’s founder, Sam Bankman-Fried, was convicted of fraud. Additionally, the Commodity Futures Trading Commission has filed a lawsuit against Voyager co-founder Stephen Ehrlich, accusing him of fraudulently soliciting participation in and operating a digital asset trading and custody platform. However, Ehrlich has countered these allegations, claiming that he is being used as a “scapegoat for the bad actions of others.”
Allegations Against the NBA and McCarter & English
According to the investors’ claims, the NBA’s extensive promotion of Voyager’s unregistered securities makes it liable for any resulting damages. The lawsuit further alleges that McCarter & English “Issued deceptive legal opinions” and actively participated in a conspiracy to endorse the crypto exchange. The investors argue that McCarter & English, as a respected law firm, crossed a line by lending its credibility to Voyager through the issuance of a “bogus legal opinion” declaring Voyager’s VGX token as not an unregistered security.
In response to the lawsuit, McCarter & English released a statement asserting its intention to vigorously defend the firm, emphasizing that it provided clear and competent advice to its clients. Rick Buchannan, the NBA’s general counsel, has yet to comment on the suit.
Impact on Celebrities and Settlements
The collapse of the FTX exchange in 2022 triggered legal action against celebrities who had endorsed investing in the crypto market. Prominent sports figures such as Tom Brady and Steph Curry, as well as comedian Larry David, faced lawsuits. Some of these cases have been settled, including those involving Kim Kardashian and National Football League quarterback Trevor Lawrence.
Mark Cuban’s Involvement and Lawsuits
Mark Cuban, the former owner of the Dallas Mavericks, signed a five-year partnership deal with Voyager in 2021, making its token the official Mavericks cryptocurrency. As part of the deal, Voyager ads were displayed in the American Airlines Center in Dallas for the 2021-2022 season. The NBA’s Miami Heat had a similar arrangement with the FTX exchange, even naming their arena after the crypto platform.
Separate from this lawsuit, investors previously accused Mark Cuban of defrauding them by misrepresenting the safety of Voyager. Cuban, however, has vehemently denied these allegations, describing them as “utterly baseless.” In December, Cuban sold his majority stake in the Mavericks for $3.5 billion to the Adelson and Dumont families, who operate Las Vegas Sands Corp. The investors are now targeting the proceeds from the sale to satisfy their damage demands.
Voyager’s Chapter 11 Filing and Liquidation
Voyager filed for Chapter 11 bankruptcy protection in 2022, and a judge authorized the company to liquidate its assets to repay customers a portion of their held crypto. This move was intended to provide some relief to investors who had suffered losses due to the collapse of the exchange.
NBA’s Role and Allegations of Risky Promotions
The investors who filed the lawsuit against the NBA argue that the association sought to take the lead in crypto promotions by backing both Voyager and FTX. They contend that this decision, which involved promoting and selling billions of dollars in unregistered and illegal securities to the public, leveraged the global reputation and trust in the NBA brand. The investors assert that the NBA’s widespread promotion of Voyager’s unregistered securities renders it liable for any resulting damages.
The lawsuit against the NBA over its marketing links to Voyager Digital Holdings Inc. underscores the potential risks associated with crypto endorsements and marketing partnerships. The investors claim that the NBA, along with its attorneys at McCarter & English, acted negligently in their association with Voyager, resulting in significant financial losses. As the legal proceedings unfold, the case will shed light on the responsibilities and liabilities of organizations and individuals involved in promoting cryptocurrency ventures.
The information provided in this article is for informational purposes only and should not be considered financial advice. The article does not offer sufficient information to make investment decisions, nor does it constitute an offer, recommendation, or solicitation to buy or sell any financial instrument. The content is opinion of the author and does not reflect any view or suggestion or any kind of advise from CryptoNewsBytes.com. The author declares he does not hold any of the above mentioned tokens or received any incentive from any company.