A new lawsuit claims Mark Cuban played a pivotal role in shilling now-defunct Voyager Digital’s unregistered securities, duping investors in a ‘Ponzi scheme’ that lost them billions.
Voyager was “as close to risk free as you’re gonna get in the crypto universe,” according to Cuban, who campaigned hard to drive traffic to the crypto lender’s platform. The billionaire’s own basketball team, the Dallas Mavericks, even offered $100 in bitcoin to those who download the app and deposit $100 of their own cash.
Only, Voyager went bankrupt in June. Investors want answers.
In a proposed securities class action filed on Wednesday, a host of plaintiffs say Voyager Digital chief Stephen Ehrlich and Cuban facilitated and furthered the firm’s “false and misleading promises of reaping large profits in the cryptocurrency market.”
It claims Voyager’s Earn Program Accounts, or EPAs, were unregistered securities the company continued to flog even after seven states banned its sale. Cuban and Ehrlich repeatedly made inflated and false statements about the safety associated with investing in Voyager in order to avoid bankruptcy, according to plaintiffs.
- Cuban persistently touted Voyager as safe, even admitting he had his own money invested.
- Cuban allegedly failed to disclose the nature or scope of compensation he and the Dallas Mavericks received for shilling the platform.
- In October, the Mavs and Voyager signed a five-year deal which included naming the basketball team’s Mavs Gaming Hub, the venue for their NBA 2K League team.
The lawsuit further accuses Ehrlich of inflating Voyager’s insurance status. He told investors their assets were “as safe as if they were in a bank” — leading the public to believe they were insured by the Federal Deposit Insurance Corp. (FDIC), just like a bank. When the FDIC and Federal Reserve board caught wind of the false claims, they ordered Voyager to stop making “false of misleading statements.”
Plaintiffs are pursuing charges for aiding and abetting fraud, aiding and abetting breach of fiduciary duty, civil conspiracy, unjust enrichment and violations of several state securities and business laws, and more.