Dallas Mavericks owner Mark Cuban is now facing a new lawsuit accusing the billionaire Shark Tank investor of engaging in a massive Ponzi scheme.
Mark Cuban partnered with now bankrupt crypto platform Voyager Digital to allegedly dupe investors. According to the class action suit, which was filed in Southern Florida on behalf of millions of investors, 3.5 million Americans lost over $5 billion in cryptocurrency through the platform. The CEO of Voyager Digital, Stephen Ehrlich, was also named as a defendant in the suit, as well as Cuban’s basketball team, Dallas Mavericks. The Mavericks team was included because of their participation in promoting the allegedly fraudulent platform.
The plaintiffs in the suit against Cuban described Voyager Digital as “an unregulated and unsustainable fraud, similar to other Ponzi schemes.” They said that Cuban and Ehrlich personally reached out through the basketball team, convincing them of the authenticity of the investment. “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,” the lawsuit claimed.
Adam Moskowitz, the managing partner of Miami-based Moskowitz Law Firm, shared his firm heard hundreds of investors of the platform only invested in Voyager because Cuban was endorsing it. Because of this trust in a legitimate and renowned investor, the firm said that some individuals had lost hundreds of thousands of dollars.
“Hundreds have called and said, ‘The only reason I got into Voyager and crypto is Cuban. He’s the only person I’d respect enough to put my life savings in these accounts,’” Moskowitz said.
Voyager is alleged to be engaging in fraudulent activities because it claims to be commission-free, gaining an edge over competitors like Coinbase. Voyager sets its pricing high enough so it can take “exorbitant hidden commissions on every cryptocurrency trade.”
“Cuban was going around doing a roadshow with Ehrlich saying that he did an investigation and that this was a safe investment,” Moskowitz said. “And we just couldn’t figure out how he could say that. I mean, in a very quick minute, our experts are saying it’s a scam. So what’s going on here? Something was very strange.”
In July, Voyager Digital filed for Chapter 11 bankruptcy following a crash in crypto prices that instigated a liquidity crunch on the platform. The firm was one of the many companies affected after loaning some money to hedge fund Three Arrows Capital (3AC). In Voyager’s case, it lost over $600 million.
“It’s like a Ponzi scheme,” Moskowitz said. “When someone says, ‘I want my money back, they tell you, ‘Well, it was used to pay Peter, and now we have no money to pay you.’”
Earlier this year, Cuban revealed in a podcast show, The Problem With Jon Stewart, that 80% of his investments went to cryptocurrency, aside from his Shark Tank investments. Despite the crypto crash, he was still confident about the industry.
“I’m still bullish on crypto,” he said on the podcast. “Obviously, it’s way down right now. I took a hit. Everyone took a hit on crypto.”
