Shark Tank star Mark Cuban, owner of the Dallas Mavericks, and Voyager Digital CEO Stephen Ehrlich are being sued for allegedly promoting Voyager Digital's crypto products, which the plaintiffs claim was "a massive Ponzi scheme" into which Cuban and Ehrlich duped "millions of Americans into investing."
The class action lawsuit, filed in the U.S. district court of the southern district of Florida, claims that Cuban and Ehrlich "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.
"As a result," the lawsuit maintains, "over 3.5 million Americans have now all but lost over $5 billion in cryptocurrency assets. This action seeks to hold Ehrlich, Cuban and his Dallas Mavericks responsible for paying them back."
The lawsuit continues, adding that during a Mavericks press conference team owner Cuban said he "strongly supported and touted the partnership between his company and the Voyager defendants."
According to The Dallas Morning News, Adam Moskowitz, the managing partner of the Miami-based Moskowitz Law Firm, said, "Cuban was going around doing a roadshow with Ehrlich saying that he did an investigation and that this was a safe investment. And we just couldn't figure out how could he 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."
Still, Cuban says that he personally invested in the platform.
The suit also states that Voyager, along with its executives, made false and deceptive deposit insurance claims to raise investor confidence in the product. But in July, the Federal Reserve and the Federal Deposit Insurance Corp. sent a joint letter advising Voyager to stop making such claims that "likely misled" customers.
Voyager again ran into trouble after lending money to a hedge fund to trade crypto on its platform. But after the crypto price crashed, the hedge fund couldn't pay back Voyager. By June, Three Arrows Capital defaulted on its Voyager loan that was worth roughly $670 million. Soon after, Voyager filed for bankruptcy.
"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.'"
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