The National Basketball Association (NBA) finds itself embroiled in a lawsuit tied to its marketing links with the now-defunct crypto exchange Voyager Digital Holdings Inc.
Investors allege that the NBA’s negligence in endorsing a marketing deal between Voyager and Mark Cuban, former owner of the NBA’s Dallas Mavericks, led to a staggering $4.2 billion in losses.
NBA Faces Lawsuit for Promoting Voyager’s Unregistered Securities
The lawsuit, filed in Miami, claims that the NBA’s widespread promotion of Voyager’s unregistered securities makes the association liable for any resulting damages, calling it “an unregulated and unsustainable fraud.”
In addition to the NBA, the investors also named Voyager’s attorneys, McCarter & English, as defendants, accusing them of producing fraudulent legal opinions and participating in the alleged conspiracy to promote the crypto exchange.
The NBA’s affiliation with Voyager wasn’t an isolated incident. Several NBA teams had marketing deals with crypto firms, including the failed FTX exchange, whose founder Sam Bankman-Fried was convicted of fraud. The Commodity Futures Trading Commission (CFTC) has taken legal action against Voyager co-founder Stephen Ehrlich.
“fraudulently solicited participation in and operated a digital asset trading and custody platform,” claims the CFTC.
However, Ehrlich has stated that the move is simply to make him a “scapegoat for the bad actions of others.”
The legal quagmire deepened when the CFTC lodged a federal lawsuit against Ehrlich in New York. The CFTC accused him and Voyager of portraying the platform as a “safe haven” for digital assets, thereby misleading customers. CFTC Director of Enforcement Ian
“Ehrlich and Voyager lied to Voyager customers. Behind the scenes, they took shockingly reckless risks with their customers’ assets, leading to Voyager’s bankruptcy and huge customer losses” McGinley stated.
Voyager’s NBA Partnership: From Crypto Trailblazer to Legal Battleground
In 2021, Voyager had entered into a five-year exclusive partnership with the Dallas Mavericks. The move made it the team’s first cryptocurrency brokerage and international partner. The partnership aimed to make cryptocurrency more accessible through educational and community programs, global activations, and fan engagement promotions. However, the subsequent collapse of Voyager has cast a shadow over these initiatives.
Ehrlich, in response to the allegations, said, “Day in and day out, Voyager worked closely with the relevant regulators. These allegations appear to be one of those times where the referees are making new rules and calling foul after the game has ended. I look forward to being vindicated in court.”
The association of the NBA with Voyager underscores the inherent risks within the nascent crypto sector. It emphasizes the critical necessity for comprehensive regulatory frameworks to safeguard investor interests.
Read More: Top 12 Crypto Companies to Watch in 2024
In short, as the legal proceedings advance, the involvements of the NBA, Cuban, and Ehrlich will undergo meticulous examination. This scrutiny is set to illuminate the complex interplay between the realms of sports, finance, and the evolving cryptocurrency landscape, highlighting the imperative for vigilance and oversight.
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