John Reed Stark, former internet enforcement chief at the U.S. Securities and Exchange Commission (SEC), has aligned himself with disgruntled crypto investors in a lawsuit against the National Basketball Association (NBA).
In a post on Feb. 8, Stark condemned the NBA for endorsing a partnership between defunct crypto exchange Voyager Digital and the Dallas Mavericks. This collaboration, announced in October 2021, led to a class-action lawsuit from investors who claim Voyager made false assurances regarding investor protection.
Stark asserted that the Mavericks, by partnering with Voyager, exploited fans and players by promoting cryptocurrency hype and investment strategies. He drew a parallel between the partnership and hypothetical scenarios involving heroin or blood diamond companies, suggesting that the NBA should intervene to prevent such associations.
Stark suggested that the NBA bears responsibility for any alleged wrongdoing related to the Voyager partnership and similar instances involving NBA teams. He called for accountability, including potential criminal charges against the NBA for its purported role in misleading investors.
Voyager Digital filed for Chapter 11 bankruptcy in July 2022, following the Mavericks partnership. The company faced lawsuits from regulatory bodies, including the United States Commodity Futures Trading Commission and the Federal Trade Commission, for fraudulent practices.
Voyager settled with the FTC for $1.65 billion in November 2023, while legal proceedings in U.S. Bankruptcy Court for the Southern District of New York continued. The proposed restructuring plan aimed to provide initial recovery of 35.7% of claims to Voyager customers in cryptocurrency or cash.
With extensive experience at the SEC, including tenure as head of the Office of Internet Enforcement, Stark currently leads John Reed Stark Consulting.
Stark’s critique underscores the complexities of regulatory oversight in the cryptocurrency sphere and raises questions about the responsibility of both crypto firms and their partners in protecting investors’ interests.
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