KEY POINTS
- Plaintiffs said the NBA was 'grossly negligent' in approving crypto-related promotional deals
- The NBA is 'liable' for damages resulting from its 'widespread promotion' of Voyager's unregistered securities, as per the lawsuit
- The lawsuit also accused the NBA of negligence in approving the Miami Heat's FTX arena deal
The National Basketball Association (NBA) has been accused of being "grossly negligent" in relation to the NBA's marketing partnership with Voyager Digital, the defunct crypto lender that platform users said led to billions in losses.
In the complaint filed this week at the Miami Division of the U.S. District Court in Southern Florida, plaintiffs accused the NBA of gross negligence in its approval of the association's promotion and marketing campaigns, "especially with cryptocurrency."
Plaintiffs accused the NBA of gross negligence when it approved Voyager's promotional deal with the Dallas Mavericks. "The NBA's widespread promotion of Voyager's unregistered securities renders it liable for any and all resulting damages," the plaintiffs said.
The lawsuit states that Voyager's implosion resulted in "$4.2 billion dollars in damages."
Former Dallas Mavericks principal owner Mark Cuban was also sued in 2022 for hyping Voyager's products, even when he allegedly knew that the platform's Voyager Earn Program Accounts (EPAs) were "unregistered securities."
In the lawsuit targeting Cuban, plaintiffs said the sports mogul, along with Voyager CEO Stephen Ehrlich, "went to great lengths to use their experience as investors to dupe millions of Americans into investing – in many cases, their life savings – into" the "deceptive" crypto platform.
Voyager Digital filed for bankruptcy in July 2022 after it was exposed to defunct crypto hedge fund Three Arrows Capital (3AC). In October, an independent government agency regulating U.S. derivatives, the Commodity Futures Trading Commission (CFTC), filed a lawsuit against Ehrlich for fraud and registration failures.
At the time, the CFTC said Ehrlich operated "an unregistered commodity pool" and "falsely touted the Voyager platform as a 'safe haven' to earn high-yield returns."
Aside from the Voyager promotional deal, the NBA was also allegedly negligent in its decision to "deliberately" embrace the risks of collaborating with other cryptocurrency platforms and exchanges, such as the fallen FTX.
"Evidence now reveals that the NBA was not only grossly negligent with its review of the proposed Voyager/Mavericks Global partnership, but the NBA's decision to affirmatively approve FTX sponsoring the Miami Heat Arena, here in Miami, Florida was one of the most important steps, in the dramatic rise of cryptocurrency across the country, and across the globe," the lawsuit stated.
This week's lawsuit alleged that FTX insiders were "surprised" by "how quickly the NBA provided their affirmative approval required for the FTX Arena," which has now been renamed to the Miami Arena.
The Miami Heat quickly dropped its $135-million contract with FTX for arena naming rights after the exchange founded by disgraced crypto executive Sam Bankman-Fried imploded in 2022.
