The lawyers of Voyager Digital, currently undergoing bankruptcy proceedings, have asked the bankruptcy court to halt a lawsuit filed by investors against the company’s founder and CEO, Stephen Ehrlich, and Dallas Mavericks’ owner, Mark Cuban.
As per the report, the argument presented by the lawyers is that both Ehrlich and Cuban are tied to a similar lawsuit filed by the same group of plaintiffs against Voyager itself. It is important to note that lawsuits against companies in bankruptcy are automatically stayed, meaning filing for bankruptcy stops many legal actions in their tracks, including debt-collection lawsuits.
However, this doesn’t apply to third parties, including company executives. Nonetheless, bankruptcy judges can come to an agreement to extend the temporary protection to others involved with the firm.
Allegations Against Mark Cuban
The latest development comes two weeks after a class action lawsuit was filed in the US district court of the southern district of Florida against Cuban, the Dallas Mavericks, as well the CEO of Voyager Digital, Steven Ehrlich.
The 12 lead plaintiffs accused Cuban of targeting “young and inexperienced fans” into putting a considerable amount of their savings into Voyager Digital by promoting the company on several occasions and going “great lengths to use their experience as investors to dupe millions of Americans.”
They claimed that the Shark Tank star misrepresented to the plaintiffs in terms of undisclosed commissions on crypto trades made on Voyager. The lender’s Federal Reserve and Federal Deposit Insurance Corporation (FDIC) insured status is also been disputed as per court filings.
Cuban is also accused of speaking at a Dallas Mavericks press conference, where he allegedly appeared to strongly support and endorse the partnership between his company and the Voyager defendants.
The plaintiffs further went on to highlight the billionaire entrepreneur “proudly described how he would personally help significantly increase scope and presence of the Deceptive Voyager Platform for those with limited funds and experience.”
Voyager Digital filed for bankruptcy in July, where it cited “prolonged volatility and contagion in the crypto markets” as well as the default of 3AC on a loan from the company’s subsidiary.
The Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board recently ordered the crypto lender to quit making false and misleading statements regarding its FDIC deposit insurance status across its social media accounts, mobile app, and websites.