Cuban was ousted as part of a class-action lawsuit accusing him of promoting a “Ponzi scheme” at Voyager Digital.
DALLAS — Dallas Mavericks owner Mark Cuban will face questioning next month as part of depositions in a class-action lawsuit against now-bankrupt cryptocurrency lender Voyager Digital, alleging the company was “an unregulated and unsustainable fraud.”
The filed complaint 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 in the company.
“Cuban and Ehrlich, as will be explained, went to great lengths to use their experience as investors to trick millions of Americans into investing – in many cases, their savings – in Voyager’s deceptive platform and the purchase of Voyager Earn program accounts (“EPAs ”), which are unregistered securities,” the complaint reads.
The lawsuit alleges that more than 3.5 million people have lost more than $5 billion in cryptocurrency assets as a result of the platform, with the lawsuit purporting to hold Ehrlich, Cuban and the Dallas Mavericks accountable for reimbursing them.
Voyager was a multi-billion dollar mobile app that placed cryptocurrency trading requests. The lawsuit claims that it would target young and inexperienced investors new to cryptocurrency trading, promising interest payments on cryptocurrency holdings and that they would receive the best possible price in cryptocurrency trading.
But the suit alleges that Voyagers’ statements and representations were false, misleading and violated various state and federal consumer statutes.
“Voyager’s misleading platform is based on false pretenses, false representations and is specifically designed to take advantage of investors who use mobile applications to make their investments, in an unfair, unpleasant and misleading way,” reads the complaint. “Simply put, Plaintiffs will prove that the Voyager Misleading 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 lawsuit alleges that Voyager’s defendants never intentionally disclosed pricing on their platform high enough to collect exorbitant hidden commissions on each cryptocurrency trade, despite claiming to be “100% commission-free.”
Cuban was quoted 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 Voyager’s scope and presence.
“To put it simply: there is untapped potential in the future of digital currencies and it is an attractive investment for entry-level investors who may only have $100 to start with,” Cuban said at the time, according to court documents. “That’s where Voyager comes into play.”
Although Cuban disclosed the partnership between Voyager and the Dallas Mavericks, the lawsuit alleges that he never disclosed the scope of the relationship and how much he was personally paid for promoting Voyager, which the SEC said failure to disclose that information violated provisions anti-sale of federal securities laws.
Cuban previously called Voyager “about as close to risk free as you’re going to get in the crypto universe,” the complaint states, and he 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 cryptography, what are some important things I need to know?”
“[T]Voyager’s Deceptive Platform was a massive Ponzi scheme, and relied on the vocal support of Cuban and the Dallas Maverick and Cuban’s monetary investment to continue to sustain itself until its implosion and subsequent bankruptcy of Voyager,” the lawsuit alleges.
Cuban requested that his testimony be split into two sessions, but a judge denied his request, and his full statement will be given on February 2.
The WFAA reached out to Cuban for comment and did not receive a response.
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