Former SEC Enforcement Chief Backs Crypto Investors in Lawsuit Against NBA
Summary:
Former enforcement chief for the U.S. Securities and Exchange Commission, John Reed Stark, supports crypto investors in a lawsuit against NBA for endorsing a partnership with the collapsed cryptocurrency exchange Voyager Digital and the Dallas Mavericks. The collaboration resulted in a group lawsuit due to alleged false claims about investor security. Stark suggests the NBA should face legal charges for deceptively misleading investors in addition to an ongoing civil lawsuit. Voyager had filed for bankruptcy in 2022 and settled a case with the FTC for $1.65bn due to its CEO’s fraudulent remarks.
John Reed Stark, previously at the helm of internet enforcement for the U.S. Securities and Exchange Commission (SEC), has sided with the cryptocurrency investors disgruntled by the National Basketball Association (NBA) in a lawsuit. Stark, in a post dated Feb. 8 X, berated the NBA for endorsing a collaboration between the now-dissolved cryptocurrency exchange Voyager Digital and the Dallas Mavericks, a move that sparked a group lawsuit from investors. The association between Voyager and the basketball team, which was declared in October 2021, was marked by the crypto exchange allegedly issuing false statements on investor security. “In my opinion, the Mavericks, by aligning with Voyager, not only ruthlessly took advantage of their fans and players by promoting cryptocurrency hype and dependability, but also share the blame for the havoc Voyager inflicted on its investors,” Stark stated. He compared it to an unthinkable partnership between the Washington Wizards and a heroin producer or a conflict diamond mine, for which the NBA would certainly intervene. Similar measures should be implemented for crypto collaborations, he argued. His thoughts extend to the NBA's possible accountability for the alleged Voyager deception. He suggested that the NBA should be held accountable for purported misconduct involving Voyager and similar affiliations by NBA teams. The NBA is being accused of crypto scam: it's high time this happened. Voyager's investors have recently lodged a lengthy 108-page lawsuit against NBA and law firm McCarter & English over their roles in the process. Voyager filed for Chapter 11 bankruptcy in July 2022 during a slump in the crypto market, and around eight months after announcing a partnership with the Dallas Mavericks. In October 2023, Stephen Ehrlich, the former CEO of Voyager, was issued a lawsuit by The U.S. Commodity Futures Trading Commission and Federal Trade Commission (FTC) for deceptive remarks. Voyager consented to a settlement with the FTC for $1.65 billion for financial relief in November 2023. Stark suggested NBA too should face legal charges for allegedly deceiving investors, over and above the civil class-action lawsuit launched on Feb.6. As of the publication's date, Voyager's case was still being heard by the U.S. Bankruptcy Court for the Southern District of New York. A recovery plan proposed in May 2023 indicates Voyager's customers will initially recuperate 35.7% of their claims either in cryptocurrency or cash. Stark served for 18 years in the SEC as an enforcement lawyer and leading its Internet Enforcement Office. Presently, he is the president of John Reed Stark Consulting.
Published At
2/9/2024 8:13:20 PM
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