Happy New Year, Mark Cuban! A U.S. federal judge has dismissed a class-action lawsuit against Mark Cuban and the Dallas Mavericks related to their promotion of the now-bankrupt cryptocurrency lender, Voyager Digital. The lawsuit, initially filed in 2022, alleged that Cuban and the Mavericks misled investors by promoting Voyager, leading to substantial losses when the platform collapsed amidst the 2022 crypto downturn.
Judge Roy K. Altman of the U.S. District Court for the Southern District of Florida ruled that the plaintiffs failed to establish personal jurisdiction over Cuban and the Mavericks in Florida. The court determined that there was an insufficient legal connection between Florida and the alleged promotional activity to justify hearing the case in that jurisdiction. According to the ruling, the plaintiffs did not adequately demonstrate that Cuban deliberately targeted Floridians in his promotional activities. The judge stated that nationwide or online promotions do not automatically constitute purposeful targeting of Florida residents under the state's long-arm statute or constitutional due-process standards.
The lawsuit claimed that Cuban made false statements about Voyager at an October 2021 news conference, where he stated he had personally invested in the company. The Mavericks also offered promotions, such as $100 in free Bitcoin, to new users who met certain trading requirements. The plaintiffs argued that these promotions encouraged individuals to sign up and trade digital assets based on inaccurate assumptions about their safety. They further alleged that Voyager was promoting unregistered securities.
Cuban's legal team countered that he had no control over Voyager and that he had consistently warned people about the risks of investing in crypto. His lawyers stated that the lawsuit was based on various state securities laws and consumer fraud regulations. Steve Best, a partner at Brown Rudnick, emphasized that the plaintiffs have no recourse for refiling the case in the Southern District of Florida.
Voyager Digital filed for Chapter 11 bankruptcy in July 2022, holding approximately $1.3 billion in crypto assets. The company's collapse was part of a broader market downturn triggered by the Terra blockchain crash, which erased approximately $40 billion in market value. Terra founder Do Kwon received a 15-year prison sentence for fraud related to the collapse.
The dismissal of the lawsuit represents a notable legal victory for Cuban and the Dallas Mavericks. The court's decision was based on procedural grounds, specifically the lack of personal jurisdiction, and did not address the merits of the claims regarding liability or securities law violations. Judge Altman said that invoking conspiracy jurisdiction would make sense if the suit were against Voyager, but it was not. The plaintiffs retain the option to refile their claims in another jurisdiction. Similar claims against other celebrities, such as Rob Gronkowski, Victor Oladipo, and Landon Cassill, were previously settled for a combined $2.4 million. This ruling reflects a trend of stricter scrutiny in crypto-related litigation regarding jurisdiction and the accountability of public figures.
