Former SEC Official Compares Dallas Mavericks Partnership with Voyager to Heroin

Former head of internet enforcement at the U.S. Securities and Exchange Commission (SEC), John Reed Stark, has joined the chorus of discontented crypto investors in a lawsuit against the National Basketball Association (NBA).

In a statement released on February 8th, Stark criticized the NBA for approving a partnership between bankrupt cryptocurrency exchange Voyager Digital and the Dallas Mavericks, resulting in a collective lawsuit from investors. The partnership, announced in October 2021, allegedly stemmed from false claims made by the crypto exchange regarding investor protection.

According to Stark, by collaborating with Voyager, the Dallas Mavericks not only exploited their fans and players by hyping cryptocurrency investments but also shared responsibility for the losses inflicted on Voyager's investors. He drew a parallel, suggesting that if another NBA team partnered with a heroin production or blood diamond mining company, the NBA would intervene and prohibit such a deal, arguing that the same scrutiny should apply to crypto partnerships.

Stark implied that the NBA should face criminal charges for allegedly misleading investors in addition to the civil collective lawsuit filed on February 6th. Voyager filed for Chapter 11 bankruptcy in July 2022 amidst the crypto market downturn, approximately eight months after announcing the partnership with the Mavericks. In November 2023, the crypto exchange agreed to a $1.65 billion settlement with the FTC.

As of publication, Voyager's bankruptcy case in the Southern District of New York was ongoing, with a restructuring plan suggesting that clients would initially receive 35.7% of their claims in cryptocurrency or cash. Stark, who served at the SEC for 18 years and headed the Internet Enforcement Division, is now the president of John Reed Stark Consulting.