A lawsuit filed Wednesday in the United States District Court for the Southern District of Florida accuses Dallas billionaire Mark Cuban of misleading investors through his promotion of cryptocurrency trading platform and brokerage Voyager Digital, which filed for bankruptcy in July.
The class-action suit compiled by the Moskowitz Law Firm based in Coral Gables, Fla., claims Cuban and the Dallas Mavericks were a vital outreach arm for the platform masterminded by Stephen Ehrlich, CEO and co-founder of Voyager Digital.Lawyers for the plaintiffs argue that Ehrlich’s company targeted small-time traders with tempting introductory rewards and ultimately fleeced more than three million investors of $5 billion in total funds.
The suit describes Voyager Digital as an “unregulated and unsustainable fraud, similar to other Ponzi schemes” that “specifically target[s] young and inexperienced investors.” It states Cuban and Ehrlich “personally reached out to investors, individually and through the Dallas Mavericks, to induce them to invest in the Deceptive Voyager Platform.”
In October 2021, Cuban’s Mavericks signed a five-year partnership with Voyager Digital offering $100 in cryptocurrency to Mavs fans who created an account using the promo code “MAVS100,” and then deposited $100 of their own money and executed a trade for cryptocurrency—a form of digital currency traded between users as payment for goods and services.To commemorate the deal, Cuban held a press conference with Ehrlich promoting the partnership and answering questions about the “official crypto partner of the Dallas Mavericks.”
“I gotta add, I am a [Voyager] customer and I’ve been a customer for several months now,” Cuban said during the press conference.”I like it: It’s easy, it’s cheap, it’s fast and the pricing is actually really good, so we find it as a perfect fit for our Mavs fans and reaching Mavs fans of all ages.”
In July, Voyager Digital filed for Chapter 11 in the U.S.Bankruptcy Court for the Southern District of New York.
Included in the lawsuit’s documents are remarks made by Ehrlich regarding his relationship with Cuban.”Mark [Cuban] is a tremendous advisor to me and we have a great relationship,” Ehrlich is quoted.
“He is a big believer in crypto.Sometimes the value someone brings is not what the public sees but where they give you guidance and help behind the scenes.”
Documents submitted by the company in its bankruptcy filing indicate Voyager Digital is looking to bring on partners and is “focused on running a clear and transparent marketing process.” In a July 6 press release the company stated it has “approximately $1.3 billion of crypto assets” on the platform and more than $350 million in users’ cash frozen in an FBO account held by the Metropolitan Commercial Bank in New York.
Voyager also lists “more than $650 million” in claims against Three Arrows Capital, a cryptocurrency hedge fund.
Plaintiffs in the class-action suit are pursuing charges for aiding and abetting fraud and aiding and abetting breach of fiduciary duty as well as civil conspiracy and unjust enrichment.Demanded relief listed in the lawsuit includes “awarding actual, direct and compensatory damages.”
A press inquiry to Digital Voyager returned an automated response directing all inquiries toward customer-related relief.Cuban, a longtime opponent of fielding public relations teams, did not return request for comment and has yet to comment publicly on the suit.
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