- A group of investors claimed Mark Cuban and the Dallas Mavericks duped them into investing in a "Ponzi scheme," according to a lawsuit.
- The suit claims Voyager Digital, a crypto trading platform, was "built on false promises."
- The lawsuit claims 3.5 million Americans have lost more than $5 billion as a result.
A group of disgruntled investors claimed in a new lawsuit that Mark Cuban and the Dallas Mavericks allegedly duped them into putting money into what the suit says is a "massive Ponzi scheme."
The proposed class action suit claims that Voyager Digital's CEO Stephen Erlich, along with Cuban and the Dallas Mavericks NBA team, which Cuban owns, "went to great lengths" to dupe millions of Americans into investing in Voyager's now-bankrupt crypto trading platform.
Voyager entered into a 5-year partnership with the Mavericks last year and once ran a promotion where fans would receive $100 in Bitcoin if they deposited $100 of their own money into the crypto trading app.
"I think working together, we're going to be at the forefront of innovation," Cuban said of Voyager at the time.
The lawsuit claims that Cuban, Erlich, and the Mavs' promotion of the Voyager platform built on "false promises" have resulted in 3.5 million Americans collectively losing more than $5 billion. The suit seeks to hold them responsible for paying those Americans back.
However, this case is not guaranteed to go to trial. A judge first has to certify that the 12 representatives named in the lawsuit are representative of more than 3 million Americans, according to Jason Gottlieb, a partner at Morrison Cohen who specializes in cryptocurrency litigation.
At least one legal expert thinks the one class action suit representing millions of Americans may not be suitable.
"US courts, particularly federal courts but also state courts, have gotten more skeptical over the years about the appropriateness of allowing essentially in a single action ... representation of a very large number of people," said Deborah Hensler, a Stanford Law professor who specializes in class action lawsuits.
Voyager Digital officially filed for bankruptcy in early July. The company had gotten caught up in the recent crash of cryptocurrency prices, resulting in a contagion effect that led to the insolvency of multiple billion-dollar crypto companies.
The crypto broker is a publicly traded company and was listed on the Toronto Stock Exchange until last month when it voluntarily delisted from the exchange. As a publicly traded company, it would have had to comply with certain financial disclosure requirements, as do all public companies.
Mark Cuban, the Dallas Mavericks, and Voyager Digital declined to provide a comment to Insider for this story.
The proposed class action suit comes amid a rise in cryptocurrency-related lawsuits as investors burned by losses seek to recoup some lost money.
Gottlieb says he has seen an uptick in crypto-related litigation in the past few months.
"Any regular-world company that suffers big losses may be likely to attract the attention of plaintiff's lawyers, and crypto companies are no exception to that. In an interesting way, it's a bit of a 'more money, more problems' type of situation," he said.