Crypto

Cuban faces questioning on promotion of bankrupt crypto lender

Cuban was deposed as part of a class-action lawsuit accusing him of promoting a “Ponzi scheme” in Voyager Digital.

DALLAS — Dallas Mavericks owner Mark Cuban will face questioning next month as part of depositions for a class-action lawsuit against the now-bankrupt cryptocurrency lender Voyager Digital, alleging the company was “an unregulated and unsustainable fraud.” 

The complaint filed alleges that Cuban and Voyager CEO and Co-Founder Stephen Ehrlich personally reached out to investors, both individually and through the Mavericks, to induce them to invest into the company. 

“Cuban and Ehrlich, as will be explained, went to great lengths to use their experience as investors to dupe millions of Americans into investing—in many cases, their life savings—into the Deceptive Voyager Platform and purchasing Voyager Earn Program Accounts (“EPAs”), which are unregistered securities,” the complaint reads. 

The suit alleges more than 3.5 million people have lost more than $5 billion in cryptocurrency assets as a result of the platform, with the suit intending to hold Ehrlich, Cuban and the Dallas Mavericks responsible for reimbursing them. 

Voyager was a multi-billion-dollar mobile application that placed cryptocurrency trade orders. The suit states it would target young, inexperienced investors new to cryptocurrency trading, promising interest payments on cryptocurrency holdings and that they would receive the best possible price on cryptocurrency trades. 

But the suit alleges that Voyagers’ statements and representations were false, misleading and violated several state and federal consumer statutes.

“The Deceptive Voyager Platform is based upon false pretenses, false representations, and is specifically designed to take advantage of investors that utilize mobile apps to make their investments, in an unfair, unsavory, and deceptive manner,” the complaint reads. “Simply put, Plaintiffs will prove that the Deceptive Voyager Platform is a house of cards, built on false promises and factually impossible representations that were specifically designed to take advantage of the cryptocurrency craze to the direct detriment of any ordinary investor.”

The suit goes onto allege that Voyager defendants never disclosed intentionally setting the pricing on their platform high enough that they collect exorbitant hidden commissions on every cryptocurrency trade, despite claiming to be “100% commission-free.”

Cuban was cited in the complaint as strongly supporting and touting his partnership with Voyager at a recent Dallas Mavericks press conference, where he described how he would help increase the scope and presence of Voyager. 

“To put it simply: there’s untapped potential in the future of digital currencies and it’s an attractive investment for novice investors who might only have $100 to start,” Cuban said at the time, according to court documents. “That’s where Voyager enters the picture.”

While Cuban has disclosed the partnership between Voyager and the Dallas Mavericks, the suit alleges he never disclosed the scope of the relationship and how much he has been paid personally for the promotion of Voyager, which the SEC has said a failure to disclose this information would be violating anti-touting provisions of federal securities laws. 

Cuban previously called Voyager “as close to risk free as you’re gonna get in the crypto universe,” the complaint states, and once staged a press conference with Ehrlich where New York Knick Jalen Brunson, a Maverick at the time, asked ““If this is my first time getting into crypto, what are some key things I need to know?”

“[T]he Deceptive Voyager Platform was a massive Ponzi scheme, and it relied on Cuban’s and the Dallas Maverick’s vocal support and Cuban’s monetary investment in order to continue to sustain itself until its implosion and Voyager’s subsequent bankruptcy,” the suit alleges.

Cuban requested his deposition be split into two sessions, but a judge denied his request, and his full deposition will be taken on Feb. 2. 

WFAA reached out to Cuban for comment and did not receive a response.

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