Photo by Markus Spiske on Unsplash
The NBA Is Caught in a $4.2 Billion Crypto Scandal
February 9, 2024
In an escalating legal situation, the National Basketball Association (NBA) is currently facing litigation for its alleged role in endorsing Voyager Digital Holdings, a now-defunct cryptocurrency exchange business. The complainants have asserted that the NBA’s promotional activities resulted in significant investor losses, purportedly over $4.2 billion.
Central to the controversy is the marketing agreement that was executed between Voyager and the Dallas Mavericks, an NBA franchise. The NBA is implicated as a responsible party due to its approval of this arrangement, with the contention that it acted in a negligently indiscriminate manner. As a result, the litigants posit that the NBA should bear liability for all damages attributable to its promotion of Voyager’s unregistered securities.
Moreover, the lawsuit implicates McCarter & English, the law firm representing Voyager. The contention against the law firm is that it leveraged its professional reputation to provide assurance to investors about the legality and propriety of Voyager’s offerings.
In addition to the NBA and McCarter & English, Mark Cuban, former owner of the Dallas Mavericks, was previously subjected to a similar lawsuit in 2022. The litigants in that case alleged that Cuban made misleading representations about Voyager. Cuban refuted these claims.
In the background of these legal actions is Voyager’s financial insolvency. In July 2022, Voyager initiated bankruptcy proceedings, primarily due to ill-fated involvement with Three Arrows Capital, a failed cryptocurrency hedge fund. The legal and financial complications surrounding Voyager, and their resulting repercussions, constitute an emblematic instance of the inherent risks and volatility in the global cryptocurrency market.
The NBA’s endorsement, McCarter & English’s assurances, and Mark Cuban’s alleged misrepresentations are subjects of legal scrutiny due to the collapse of Voyager. The evolving circumstances underline the significance of exhaustive due diligence in financial engagements, particularly when dealing with ventures in the notoriously unpredictable cryptocurrency domain.
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