Courts

Crypto Fail: Dallas Mavs' Mark Cuban Sued Over Alleged 'Ponzi Scheme'

TechCrunch via WikiCommons
Mark Cuban, the billionaire owner of the Mavericks, is taking heat over cryptocurrency.
Mark Cuban has received tons of praise for his drug company’s efforts to deliver life-saving medications to those who need them at a fraction of the normal cost. But some are now accusing the Dallas Mavericks owner of essentially tricking them into falling for what they claim is a cryptocurrency “Ponzi scheme.”

In a class-action complaint filed last week, Cuban stands accused of duping "millions of Americans into investing — in many cases, their life savings — into the Deceptive Voyager Platform and purchasing … unregistered securities."

In addition to Cuban, the Dallas Mavericks and the CEO of the crypto lender Voyager Digital, which filed for bankruptcy last month, are also named as defendants.

“As a result, over 3.5 million Americans have now all but lost over 5 billion dollars in cryptocurrency assets,” the suit alleges. “This action seeks to hold [Voyager CEO Stephen] Ehrlich, Cuban, and his Dallas Mavericks responsible for paying them back.”

Some crypto lenders were wildly successful during the coronavirus pandemic, Reuters reported in July. Yet in recent weeks, the price of digital coins has sunk as many have rethought their crypto-investments amid rising inflation.

Plaintiffs in the Cuban suit are asking for a jury trial. They say Ehrlich and Cuban each “made a plethora of false and misleading public statements” in an attempt to persuade everyday investors to keep pumping money into the crypto platform.

“Importantly, although Cuban disclosed the partnership between Voyager and the Dallas Mavericks, he has never disclosed the nature, scope, and amount of compensation he has personally received in exchange for the promotion of the Deceptive Voyager Platform,” the suit states, adding that “a failure to disclose this information would be a violation of the anti-touting provisions of the federal securities laws.”

The complaint notes that celebrities like Kim Kardashian and boxer Floyd Mayweather have also faced legal trouble because they allegedly failed to properly divulge paid endorsements.

Cuban did not return the Observer’s request for comment by publication time.

The complaint against Cuban further notes that he had previously broadcast his support for Voyager, calling the platform “as close to risk-free as you’re gonna get in the crypto universe.” He publicized the fact that he put his own money into the platform, which allegedly worked to convince others to follow suit.

The billionaire also once talked crypto with then-Mavs player Jalen Brunson during a press conference. Cuban said first-time investors should be careful when spending their own money before further hyping Voyager.

In a Fortune interview earlier this summer, Cuban opened up about the crypto crash. “In stocks and crypto, you will see companies that were sustained by cheap, easy money — but didn’t have valid business prospects — will disappear,” he explained at the time. “Like [Warren] Buffett says, ‘When the tide goes out, you get to see who is swimming naked.'”