Mark Cuban is in trouble.
The billionaire entrepreneur has faced a barrage of criticism related to a partnership with a crypto company for several days. In fact, Cuban, an evangelist of the crypto industry in which he has invested, signed an agreement last October linking his NBA team, the Dallas Mavericks, with crypto lender Voyager Digital.
The contract, signed on October 28, has a term of five years and is tasked with promoting 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 for trading crypto on Voyager for a limited time if they deposited $100 and traded just $10. The offer was so successful that Voyager was forced to set up a waiting list.
“We will find new ways to introduce Mavs fans to cryptocurrency and help them understand it,” Cuban said during a press conference with Voyager CEO Steve Ehrlich at the time. “You know, there’s a lot of hype, there’s a lot of discussion, but most people don’t understand the basics behind it. We will try to bring that level of education to our fans and to our mutual customers.”
Trouble is, less than nine months later, Voyager Digital filed for bankruptcy. And right now, it’s difficult to know if its customers will get their money back. In fact, the company is one of the collateral victims of the crisis of confidence, having wiped out more than $2 trillion from the crypto market since hitting an all-time high in November.
Voyager is a cryptocurrency trading platform. The firm also offers lending and staking services, which are a form of reward for holding certain coins. It was its lending business that got it into trouble: Voyager appears to have lent its clients’ funds to crypto hedge fund Three Arrows Capital, also known as 3AC. However, that fund defaulted on a $667 million loan made to it by Voyager last month. Three Arrows Capital was forced into liquidation by a court in the British Virgin Islands. In the face of this disaster, Voyager suspended deposits, withdrawals, and loyalty rewards on its platform.
“Customers with crypto in their account(s) will receive in return a combination of crypto in their account(s), proceeds from 3AC recovery, common stock of the reorganized entity, and Voyager tokens,” Ehrlich wrote on Twitter July 6.
Voyager “is a good way to learn”
On October 28, shares of Voyager Digital closed at $14.21. At its last meeting this week before delisting at the company’s request, Voyager stock was trading at 25 cents a 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 investing in the crypto sector for the first time. “But the other thing, look, there are investments, things like Shiba Inu and Dogecoin, those aren’t investments. But Voyager… it’s a good way to learn and it’s something you can do on your smartphone. You can start committing to this and saving your money, and this is just a once-in-a-lifetime opportunity.”
Shiba Inu and Dogecoin are two meme coins created for fun.
Cuban’s words and this partnership haunt him now as many retail investors claim to have invested in Voyager or traversed the platform for their first investments in the crypto sector after partnering with the Dallas Mavericks. These investors are venting their anger on social media.
“So we got hit hard twice by @mcuban?” posted a Twitter user.
“@mcuban @costplusdrugs Don’t trust Cuban. I lost everything in his “partnership” with Voyager,” complained another user. “He says he’s not in it for the money and is only asking 10-15% after expenses. That’s nine-digit numbers for every billion. This isn’t someone who “isn’t in it for the money!” I’m ruined thanks to him.”
“@mcuban I made sure to mention that you suggested using @investvoyager for my crypto exchange. 👍,” another user complained.
“@mcuban is full of carpets 👀” said another.
Cuban, who has a social media presence and has retweeted messages from users praising his efforts to cut drug costs, has yet to speak out about Voyager’s bankruptcy.
A Twitter request for comment from the Dallas Mavericks has so far gone unanswered.
“In the stock and crypto space, you’re going to see companies that were backed by cheap, easy money — but didn’t have valid business prospects — are going to go away,” Cuban said in an interview with Fortune last month. “As [Warren] Buffett says, “When the tide is out, you can see who’s swimming naked.”