Multimillionaire crypto investor Mark Cuban lost all his money when his deals with Voyager Digital collapsed in early July. Many said he should have expected it. After the company filed for bankruptcy, the billionaire owner was then inundated with online criticism.
On July 8, it was noted that his critics say they lost money because of his support for the site. As a result of these complaints, a class action lawsuit was filed against the successful businessman.
Unlike other crypto platforms like Bitcoin online casino, which have remained stable despite the crypto meltdown, Voyager Digital failed to do so and succumbed to market pressures.
Their complaint alleges that Cuban and the Dallas Mavericks tricked them into investing in Voyager Digital, which ultimately failed, losing investors a total of $5 billion. In this case, the complaint stems from a similar complaint filed in December, also against Voyager Digital.
The plaintiff said, “Cuban and Ehrlich have gone to great lengths to use their experience as investors to get millions of Americans to invest. In many cases, they invest their life savings into the fraudulent Voyager platform and purchase Voyager Earn Program Accounts (EPAs), which are unregistered securities. As a result, the 3.5 million Americans have lost over $5 billion in crypto assets.
Plaintiffs primarily rely on statements made by Cuban and Ehrlich during the signing of the partnership between the Dallas Mavericks and Voyager Digital to seek payment from them.
The case is unlikely to go to court as a court must first rule that the 12 plaintiffs in the lawsuit are representative of the 3.5 million Americans who would have been affected by the Voyager Digital outages.
During Voyager Digital’s five-hour Chapter 11 bankruptcy hearing earlier this month, Magnolia was the first user to testify.
To protect her identity, Magnolia only used her first name, but she claimed to have nearly $1 million on the platform. That includes $350,000 earmarked for her children’s college expenses. She stated that it took her 24 years to save enough money, and in the process she sacrificed time with her own children.
“I absolutely feel like we’re paying the ultimate price,” Magnolia said. “They abused our faith and stole our money because they couldn’t run the company efficiently.”
Magnolia was at a loss as to why Voyager continued to borrow rather than cut spending given the company’s deteriorating financial situation. She also inquired if CEO Stephen Ehrlich was still being paid and receiving a bonus.
More than a month after Voyager ceased trading and shortly thereafter filed for Chapter 11 bankruptcy, the company’s 3.5 million customers, including Magnolia, are still waiting for answers. Voyager, a once prominent lending platform, attracted retail investors by promising them returns of up to 10% per year on their tokens.
Hedge funds and crypto sites with high exposure to digital assets faced a liquidity crisis in 2022 as crypto prices plummeted. Many believe this is largely due to the Federal Reserve’s rate hikes and investor rotation away from the riskiest assets. Recourse to credit was a common problem for many of these companies, which in turn impacted larger companies and lenders like Voyager.
Although some successful crypto platforms like bitcoin online casino are holding their ground, many crypto industries have been in a tough spot since the crypto crash. Now, more crypto companies are filing for bankruptcy, which has left many people wondering if the digital asset can recover.