- Voyager Digital Holdings, a cryptocurrency exchange, filed for bankruptcy in July 2022 amid the crypto market downturn after relying heavily on the failed hedge fund Three Arrows Capital. This resulted in Voyager suspending customer withdrawals.
- Investors are suing the NBA for negligence in its 2021 marketing partnership with Voyager, alleging the deal lent legitimacy to Voyager and led to $4.2 billion in losses when Voyager collapsed.
- The lawsuit against the NBA extends litigation around billionaire Mark Cuban’s promotion of Voyager while owner of the Dallas Mavericks, examining legal responsibilities of major brands affiliating with crypto startups.
The National Basketball Association (NBA) is facing a lawsuit over its marketing partnership with the now-bankrupt cryptocurrency exchange Voyager Digital Holdings. Investors claim the Voyager collapse led to $4.2 billion in losses. The lawsuit alleges the NBA was negligent in agreeing to a promotional deal between Voyager and Mark Cuban, former owner of the Dallas Mavericks.
Voyager’s Downfall
Voyager filed for bankruptcy in July 2022 amid the broader crypto market downturn. The company had marketed itself as a safe and easy way for retail investors to buy and sell cryptocurrencies. However, Voyager relied heavily on investing customer deposits with hedge fund Three Arrows Capital, which itself collapsed. This resulted in Voyager suspending customer withdrawals.
The Lawsuit Against the NBA
The lawsuit accuses the NBA of failing to conduct proper due diligence before signing a five-year marketing deal with Voyager in 2021. The league promoted Voyager across its platforms through sponsorship deals. Investors argue this legitimized Voyager and encouraged people to invest through the platform. The lawsuit seeks to hold the NBA liable for losses incurred by Voyager customers.
Cuban’s Involvement
Billionaire Mark Cuban was an early investor in Voyager and publicly endorsed the platform. He also promoted Voyager during his ownership of the Dallas Mavericks. Cuban is facing a separate lawsuit over his role in Voyager’s rise and fall. The lawsuit against the NBA is an extension of the litigation around Cuban’s ties to Voyager.
Broader Implications
The Voyager collapse has damaged trust in cryptocurrencies among retail investors. It has also led to increased scrutiny of celebrity endorsements and partnerships between crypto companies and mainstream organizations like the NBA. The lawsuit against the NBA will test the legal responsibilities of established brands that lend their reputations to crypto startups.
