Former SEC chief criticizes NBA handling of controversial crypto partnerships News ▸ US ▸ FTX ▸ Bankruptcy
Former SEC chief criticizes NBA handling of controversial crypto partnerships
The NBA is being sued for its marketing partnerships with the defunct crypto lender Voyager Digital.
2 min read
Updated: Feb. 9, 2024 at 1:31 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
The National Basketball Association (NBA) should be held responsible for the alleged misconduct of its teams, according to a former official of the US Securities and Exchange Commission (SEC).
On Feb. 6, a proposed class-action lawsuit was filed against the sports organization concerning its marketing partnerships with the defunct crypto lender Voyager Digital.
The lawsuit asserts that the NBA demonstrated “gross negligence” by endorsing Voyager’s promotional agreement with the Dallas Mavericks. It further contends that the NBA should be accountable for approving Voyager’s unregistered securities.
Additionally, the plaintiffs argue that the NBA knowingly embraced the risks associated with collaborating with crypto entities like Voyager, Coinbase, and FTX.
They claim the NBA accepted “billions in promotional compensation” amidst challenges such as dwindling arena attendance and substantial television revenue losses due to the COVID-19 pandemic.
“The NBA violated their own written Crypto Currency Protocols, all solely for its own financial gain,” the lawsuit stated.
Former SEC official makes case against NBA.
A former SEC official argued that the NBA should be made to pay if it is complicit.
John Reed Stark, the former SEC Chief of Internet Enforcement, said:
“The NBA should be held responsible for Voyager-related and other similar kinds of alleged misconduct by NBA teams.”
Stark highlighted that the NBA, being a globally renowned and financially influential entity, likely exercises some degree of oversight on how its teams engage investors and navigate risky investments.
Therefore, the organization has to justify its actions or inactions, particularly as its teams continue to promote precarious NFT ventures, questionable crypto platforms, and other financially perilous investments.
The NBA has yet to respond to CryptoSlate’s request for comment as of press time.
While Stark suggested potential refunds for affected investors if NBA complicity in the Voyager matter is confirmed, he also emphasized the need for the NBA to establish a robust compliance framework for team advertising partnerships. Such measures, he argued, would prevent associations with questionable crypto firms and illicit businesses like heroin manufacturers.
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Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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FTX
FTX is a defunct cryptocurrency exchange, currently in bankruptcy proceedings, that was founded by Sam Bankman-Fried and Zixiao “Gary” Wang in May 2019.
Coinbase
Coinbase is a digital currency exchange and wallet service that allows individuals to buy, sell, and store digital currencies, such as Bitcoin, Ethereum, and Litecoin.
Voyager
Voyager Digital is a bankrupt cryptocurrency exchange company in the United States that was founded in 2018.