Yesterday, a former SEC official targeted the NBA’s decision to greenlight a partnership between the cryptocurrency exchange Voyager Digital and the Dallas Mavericks.
The former internet enforcement chief for the Securities and Exchange Commission John Reed Stark said that the NBA should be held responsible for crypto-related misconduct by NBA teams.
The NBA is Charged With Crypto Fraud: It’s About Time.
The crypto carnage fallout continues as Voyager’s investors have just filed a 108-page proposed class action against the National Basketball Association (NBA) and the law firm McCarter & English for their roles in the… pic.twitter.com/c3qLqZDj58
— John Reed Stark (@JohnReedStark) February 8, 2024
Stark took to social media to voice his concerns. He argued that the NBA should bear some responsibility for any wrongdoing associated with crypto engagements by its teams. Stark drew a stark comparison, suggesting that if a team were to partner with organizations involved in illegal or unethical activities, the NBA would swiftly intervene. He believes the same standards should apply to crypto partnerships.
“By partnering with Voyager, the Mavs not only shamelessly exploited their fans and players by shilling crypto FOMO and diamond hands, but the Mavs also share culpability for the devastation that Voyager wreaked upon its investors,” Stark said. “Think of it this way: if the Washington Wizards decided to partner with a heroin manufacturing firm or a blood diamond mining company, the NBA would certainly step in and prohibit that arrangement. The same should go for crypto-partnerships.”
Voyager and the Dallas Mavericks Partnership
The partnership between the now-defunct Voyager and the Mavericks resulted in a class-action lawsuit from investors. The October 2021 partnership was formed when the crypto exchange allegedly made false claims regarding investor protection.
Dallas Mavericks owner Mark Cuban is set to be deposed next month.
“Whether the NBA bears any culpability for the alleged Voyager fraud remains unclear,” Stark continued. “But my take is that the NBA should be held responsible for Voyager-related and other similar kinds of alleged misconduct by NBA teams.”
NBA’s Role in Crypto Endorsements
In July 2022, Voyager submitted a Chapter 11 bankruptcy filing after a downturn in the crypto market decline, approximately eight months after announcing its partnership with the Mavericks.
Subsequently, in October 2023, both the United States Commodity Futures Trading Commission and the Federal Trade Commission (FTC) filed simultaneous lawsuits against former Voyager CEO Stephen Ehrlich, alleging fraudulent statements.
The crypto exchange reached a settlement with the Federal Trade Commission (FTC), agreeing to provide $1.65 billion in monetary relief, which will be suspended to permit Voyager to return its remaining assets to consumers in the bankruptcy proceedings.
Ehrlich did not agree to a settlement, however, and the FTC’s case against him will proceed in federal court.
The NBA also currently faces a proposed class-action lawsuit related to its marketing partnerships with Voyager.
The case involving Voyager is ongoing in the U.S. Bankruptcy Court for the Southern District of New York. A restructuring plan proposed in May 2023 aims for Voyager customers to initially recover 35.7% of their claims in either cryptocurrency or cash.
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