The NBA is facing a lawsuit from investors due to its promotional ties with the now-defunct cryptocurrency exchange Voyager Digital Holdings Inc., which has resulted in financial damages amounting to $4.2 billion. The partnership involving Voyager and Mark Cuban, the previous Dallas Mavericks’ majority owner, has come under severe scrutiny, with accusations of negligence being leveled against the NBA.

According to Bloomberg reports, the legal action against the NBA follows a previous lawsuit against Mark Cuban for his endorsement of what is now considered a fraudulent and unregulated venture. Investors had charged Cuban with deceit over Voyager’s security assurances, alleging that his representations contributed to their financial losses. Cuban, however, has refuted these accusations as completely unfounded.

Furthermore, the Commodity Futures Trading Commission has taken legal action against Voyager’s co-founder Stephen Ehrlich, accusing him of deceptive practices in managing a digital asset trading and custody platform. Ehrlich, in response, has claimed that he is being made a “scapegoat” for others’ misconduct.

This lawsuit sheds light on a broader trend of NBA teams engaging in promotional activities with cryptocurrency entities, including the beleaguered FTX exchange, which faced collapse and fraud convictions for its founder, Sam Bankman-Fried.

These developments in the cryptocurrency space underscore the increasing legal and regulatory challenges faced by both industry players and their promotional partners. The outcome of the lawsuit against the NBA and its implications for future promotional activities with cryptocurrency entities will be closely watched by investors and industry observers alike.