As the crypto space continues to crash and burn, many lawsuits from unhappy investors that have likely lost thousands or even millions of dollars in the past few months are beginning to pile up. One of the most recent lawsuits to come to light is against Mark Cuban, a billionaire investor and crypto bull, and the basketball team he owns, the Dallas Mavericks.
Mark Cuban May Be Headed for Court
The team and Cuban are being sued for their promotion of Voyager Digital, a crypto firm that recently filed bankruptcy and went up in flames. Voyager is just one of several companies to file Chapter 11 bankruptcy as a means of protecting itself from crypto investors who are experiencing the heat from the many crashes that have occurred in recent weeks. Other companies to engage in similar protocols include crypto hedge fund Three Arrows Capital.
The class-action suit being brought against Cuban has been established through the hands of roughly 3.5 million investors, all of whom have lost as much as $5 billion through their investments in Voyager Digital. That company’s CEO Stephen Ehrlich was also named as a defendant in the lawsuit.
Shane Seppinni – founder of Seppinni LLP – is a lawyer that has been involved in several past crypto-based suits. He offered his thoughts on the situation in a recent discussion, claiming:
During the runup in crypto prices, many web3 companies, apparently including Voyager, pretended that existing laws and regulations did not apply to crypto. Even smart people like Mark Cuban got caught up in the hype, but now that crypto prices have crashed, it’s plain to see that centuries-old legal theories like fraud, breach of fiduciary duty, and civil conspiracy are as applicable to crypto as they are elsewhere.
Were the Investors Forced?
While this is not meant to serve as a defense of Cuban or anyone else named in the corresponding documents, it’s probably going to be hard to fully pursue something like this in court given that nobody forced the people filing the suit to invest in the company in question. It’s not like someone put a gun to their heads and said, “Invest or I’ll shoot.” The Dallas Mavericks and Mark Cuban likely had contracts with Voyager Digital, and those contracts set forth the promotional terms that all would be required to engage in.
From there, investors had the option to either put their money into Voyager Digital or avoid the firm altogether. At the end of the day, it was the investors that made their own choices, and if something didn’t go well, that’s part of the game. Crypto can be very up and down; it’s hard to predict what will happen in the space, which is why so many crypto heads tell traders to be wary.