Bankruptcy

Mark Cuban Caught in Crypto Lender Voyager Bankruptcy

Mark Cuban is in trouble.

The billionaire entrepreneur has been facing a torrent of criticism for several days related to a partnership with a cryptography firm. Indeed, Cuban, an evangelist of the crypto industry in which he has invested, had signed an agreement last October linking his NBA team, the Dallas Mavericks, to the crypto lender Voyager Digital.

The contract, signed on October 28, is for five years and has a mission to promote cryptocurrencies by making coins more accessible through educational and digital programs.

$100 reward when opening an account

As part of the partnership, Voyager promised Dallas Mavericks fans a $100 reward to trade crypto on Voyager for a limited time if they deposited $100 and only traded $10. The offer had met with great success, so much so that Voyager had been forced to set up a waiting list.

“We’re going to find new ways to introduce Mavs fans to cryptocurrency and help them understand it,” Cuban said at the time during a press conference with Voyager CEO Steve Ehrlich. . “You know, there’s a lot of hype, there’s a lot of talk, but most people don’t understand the fundamentals behind this. We’re going to try to bring that level of education to our fans and to our common customers.”

The problem is that less than nine months later, Voyager Digital filed for bankruptcy. And for the moment difficult to know if its customers will recover their money. Indeed, the firm is one of the collateral victims of the crisis of confidence that has wiped out more than $2 trillion from the crypto market since hitting all-time highs in November.

Voyager is a cryptocurrency trading platform. The company also offers loans and staking services, which are a kind of reward for holding certain coins. It was its lending business that got it into trouble: Voyager appears to have loaned its clients’ funds to crypto hedge fund Three Arrows Capital, also known as 3AC. However, this fund defaulted last month on a $667 million loan granted to it by Voyager. Three Arrows Capital has been forced by a court in the British Virgin Islands to enter into liquidation. Faced with this disaster, Voyager suspended deposits, withdrawals and loyalty rewards on its platform.

“Customers with crypto in their account(s) will receive in exchange a combination of the crypto in their account(s), proceeds from the 3AC recovery, common stock of the newly reorganized company and Voyager tokens,” Ehrlich wrote on Twitter. July 6.

Traveling “is a good way to learn”

On October 28, shares of Voyager Digital closed at $14.21. In its last session this week before it was delisted at the company’s request, Voyager stock was trading at 25 cents per share.

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“You spend your money, so always be careful,” Cuban said at last October’s press conference when asked what you need to know before first investing in the crypto sector. “But the other thing, listen, there are investments, things like Shiba Inu and Dogecoin, they’re not investments. But Traveling…it’s a good way to learn and it’s something you can do on your smart phone. You can start getting into that and save your money and it’s just a once-in-a-lifetime opportunity.”

Shiba Inu and Dogecoin are two meme coins that were created as a joke.

Cuban’s words and this partnership are now coming back to haunt him as many retail investors claim to have invested in Voyager or to have gone through the platform for their first crypto investments after the partnership with the Dallas Mavericks. These investors are venting their anger on social media.

“So we’ve been ruggedized by @mcuban twice?” posted a Twitter user.

“@mcuban @costplusdrugs Don’t trust Cuban. I lost everything in his ‘partnership’ with Voyager,” another user complained. “He says he’s not in it for the money and only charges 10-15% after costs. It’s 9 figures out of every billion. He’s not someone who ‘isn’t there for the money!” I’m ruined thanks to him.”

“@mcuban I made sure to mention that you suggested I use @investvoyager for my crypto exchange. 👍” complained another user.

“@mcuban is full of mats 👀,” said another.

Cuban, who has a social media presence and has retweeted posts from users praising his efforts to cut drug costs, has yet to discuss Voyager’s bankruptcy.

A request for comment on Twitter from the Dallas Mavericks has so far gone unanswered.

“In stocks and crypto, you’ll see companies that were backed by cheap, easy money — but didn’t have good business prospects — are going to disappear,” Cuban said in an interview last month with Fortune. “As [Warren] Buffett says, “When the tide goes out, you can see who’s swimming naked.”