A former SEC official likens the Dallas Mavericks’ Voyager partnership to heroin.
John Reed Stark, the former head of internet enforcement at the United States Securities and Exchange Commission, has sided with angry crypto investors in a lawsuit against the National Basketball Association (NBA).
In a Feb. 8 X post, Stark criticized the NBA for approving a partnership between undefeated cryptocurrency exchange Voyager Digital and the Dallas Mavericks, which led to a class-action lawsuit from investors. The partnership between Voyager and the NBA team came to light in October 2021 after the crypto exchange made false claims about investor protection.
“[In my humble opinion]By partnering with Voyager, not only are the Mavs shamelessly exploiting their fans and players with shilling crypto FOMO and diamond hands, but the Mavs share responsibility for the damage Voyager caused to its investors,” Stark said. Think of it this way: If the Washington Wizards decided to partner with a heroin manufacturing company or a blood diamond mining company, the NBA would almost certainly step in and ban that arrangement. The same should be true for crypto-partnerships.
He added:
“It is not clear whether the NBA has any liability for the alleged Voyager fraud. But my guess is that the NBA should be held accountable for misconduct involving Voyager and other similar NBA teams.
NBA Accused of Crypto Fraud: It's About Time
Voyager's investors include the National Basketball Association (NBA) and the law firm McCarter & English in…
— John Reed Stark (@JohnReedStark) February 8, 2024
Voyager filed for Chapter 11 bankruptcy in July 2022, in the middle of the crypto market crash and eight months after the Mavericks partnership was announced. In October 2023, the United States Commodity Futures Trading Commission and the Federal Trade Commission (FTC) filed parallel charges against Voyager's former CEO, Stephen Ehrlich, alleging fraudulent statements.
The crypto exchange reached a $1.65 billion settlement with the FTC in November 2023. In addition to the civil class action lawsuit filed on Feb. 6, Stark has hinted that the NBA may face criminal charges for its role in misleading investors.
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The Voyager case continues at press time in the U.S. Bankruptcy Court for the Southern District of New York. In the year It proposed a restructuring plan to allow Voyager customers to recover 35.7 percent of their claims in cryptocurrency or cash from May 2023.
Stark worked as an enforcement attorney with the SEC and headed the Office of Internet Enforcement for 18 years. He is currently president of John Reed Stark Consulting.
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