Ex-SEC Official Criticizes Voyager and Dallas Mavericks Collaboration, Proposes NBA Prohibition on Cryptocurrency Sponsorships

On the previous day, a former SEC official criticized the NBA’s approval of a collaboration between the cryptocurrency exchange Voyager Digital and the Dallas Mavericks.

John Reed Stark, the former internet enforcement chief at the Securities and Exchange Commission, stated that the NBA should be accountable for any crypto-related misconduct involving its teams.

The NBA is Charged With Crypto Fraud: It’s About Time.

The aftermath of the crypto turmoil continues as investors in Voyager have filed a 108-page proposed class action against the National Basketball Association (NBA) and the law firm McCarter & English for their involvement in the… pic.twitter.com/c3qLqZDj58

— John Reed Stark (@JohnReedStark) February 8, 2024

Stark expressed his concerns on social media, asserting that the NBA should share responsibility for any misconduct linked to crypto activities by its teams. He made a pointed comparison, suggesting that if a team were to collaborate with entities engaged in illegal or unethical practices, the NBA would quickly take action. He contends that the same principles should apply to crypto partnerships.

“By partnering with Voyager, the Mavs not only shamelessly exploited their fans and players by promoting crypto FOMO and diamond hands, but the Mavs also share culpability for the devastation that Voyager inflicted on its investors,” Stark remarked. “Consider this: if the Washington Wizards chose to partner with a heroin production company or a blood diamond mining firm, the NBA would undoubtedly intervene and prevent that partnership. The same should apply to crypto collaborations.”

Voyager and the Dallas Mavericks Partnership

The alliance between the now-defunct Voyager and the Mavericks led to a class-action lawsuit from investors. The partnership, established in October 2021, was reportedly based on false assertions regarding investor protection.

Mark Cuban, owner of the Dallas Mavericks, is scheduled to be deposed next month.

“Whether the NBA holds any responsibility for the alleged Voyager fraud is still uncertain,” Stark added. “However, I believe that the NBA should be held accountable for Voyager-related and other similar alleged misconduct by NBA teams.”

NBA’s Role in Crypto Endorsements

In July 2022, Voyager filed for Chapter 11 bankruptcy following a downturn in the crypto market, roughly eight months after announcing its partnership with the Mavericks.

Later, in October 2023, both the United States Commodity Futures Trading Commission and the Federal Trade Commission (FTC) initiated simultaneous lawsuits against former Voyager CEO Stephen Ehrlich, accusing him of making 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 allow Voyager to return its remaining assets to consumers during the bankruptcy proceedings.

However, Ehrlich did not accept a settlement, and the FTC’s case against him will continue in federal court.

The NBA is also currently facing a proposed class-action lawsuit concerning 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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