Updated February 8th, 2024 at 13:13 IST
NBA faces class-action lawsuit over alleged losses tied to Voyager Digital
Plaintiffs allege that the NBA accepted billions in compensation amid challenges such as diminished arena attendance and television revenue losses in Covid-19.
NBA in radar: The National Basketball Association (NBA) is being named in a proposed class-action lawsuit concerning its marketing agreements with now-defunct cryptocurrency lender Voyager Digital. Users of the platform claim to have suffered losses exceeding $4.2 billion, attributing their financial woes to the NBA's purported negligence in approving Voyager's promotional deal with the Dallas Mavericks.
Filed in a Miami District Court on February 6, the over 100-page lawsuit alleges that the NBA, in its role as a gatekeeper, failed in its duty by endorsing Voyager's marketing attempts. The plaintiffs assert that the NBA's promotion of Voyager's unregistered securities renders it liable for any resulting damages.
Moreover, the lawsuit contends that the NBA knowingly assumed the risks associated with collaborating with cryptocurrency exchanges like Voyager, Coinbase, and FTX. The plaintiffs allege that the NBA accepted billions in promotional compensation amid challenges such as diminished arena attendance and television revenue losses stemming from the COVID-19 pandemic.
The suit also implicates Voyager's law firm, McCarter & English, accusing it of providing a misleading "Legal Opinion" to assuage concerns about the legality of Voyager's token offerings. The plaintiffs argue that McCarter & English leveraged its credibility to foster trust in Voyager's operations, which ultimately proved detrimental to investors.
This legal action follows a previous lawsuit against former Dallas Mavericks owner Mark Cuban, which alleged misrepresentation in promoting Voyager. The discovery process in that case led the class group to expand its litigation to include the NBA and McCarter & English.
Voyager, which ceased withdrawals in July 2022 and subsequently filed for bankruptcy due to exposure to the defunct crypto hedge fund Three Arrows Capital, is at the centre of multiple legal disputes involving celebrities, sports entities, and individuals who endorsed cryptocurrency firms. These include high-profile figures such as Mercedes' F1 Team, Major League Baseball (MLB), Tom Brady, Steph Curry, Shaquille O'Neal, and Larry David.
Published February 8th, 2024 at 13:13 IST