First reported by The Athletic, Dinwiddie will issue shares tied to his contract beginning Jan. 13, months after the NBA pushed back on his plan to create a tokenization platform for entertainers to essentially issue debt instruments based on their future earnings.
Brooklyn Nets guard Spencer Dinwiddie will be able to tokenize his contract after all.
Dinwiddie announced last year that he would tokenize his three-year, $34.5 million contract, looking to raise $13.5 million for the first year. Essentially, he’d raise his contract’s value as an upfront lump sum, with token holders receiving payouts through the season.
The basketball league said in September that Dinwiddie’s plan was barred under the collective bargaining agreement NBA players operate under. According to Forbes, the specific point of contention was the potential for Dinwiddie to execute an option on the third year of his contract, promising “significant dividends for investors” if he indeed opted out and signed a higher-paying contract.
Dinwiddie told Forbes that removing this clause and offering a flat bond instead would allow the plan to proceed. Accredited investors will be able to purchase tokens for a minimum $150,000 buy-in, giving him his contract’s value up front.
Paxos Trust Company will provide escrow services and facilitate payouts to token holders using its dollar-pegged PAX stablecoin.
Spokespeople for Dinwiddie, the NBA and Paxos did not immediately return CoinDesk’s requests for comment. However, Dinwiddie tweeted Friday that “the Spencer Dinwiddie bond launches January 13th.”
The NBA told The Athletic in a statement that the league was reviewing the modified plan, indicating that it may not have actually given Dinwiddie the sign-off to go live on Monday as he intends.
NBA Player Spencer Dinwiddie Taps Broker-Dealer in Push to Tokenize Sports Contracts
An initiative by National Basketball Association (NBA) player Spencer Dinwiddie to tokenize the value of professional athletes’ contracts has engaged a specialist investment bank to manage an upcoming offering.DREAM Fan Shares (DFS) announced Tuesday it has brought in New York-based Tritaurian Capital, a FINRA-registered investment bank and broker-dealer providing specialized private placement expertise, to help facilitate the company’s inaugural offering in securities linked to athletes’ earnings.
«We are happy to announce the engagement of Tritaurian Capital for the upcoming SD26 offering,» DFS said in an email made public by journalist Roy Katsiri on Twitter earlier today. «We believe they are the best suited team to help bring this emerging asset class to market.»
DFS and Tritaurian Capital did not immediately respond to requests for comment.
DFS will offer ethereum-based tokens linked to shares in the contracts, beginning presumably with Dinwiddie’s. The NBA player has previously said he wants to tokenize his three-year contract, worth a total of $34.5 million, and sell to investors for a lump sum.
«DFS leverages guaranteed contracts and the potential for performance-based bonuses and other contingent bonuses to structure debt securities represented by PAInTs Professional Athlete Investment Tokens, giving accredited investors the opportunity to invest in securities tied to the financial success of athletes, artists and influencers,» reads DFS’ website.
It’s unclear whether the contracts of other sports players will be included in the initial token offering, which will only be available to accredited investors at a minimum $150,000 buy-in. DFS says plans to tokenize securities based on the contracts of artists and social media influencers are also in the pipeline.
A player for the Brooklyn Nets, Dinwiddie first outlined his intentions to tokenize his own contract back in September, even partnering with custodian Paxos Trust Company. Days later, the NBA said this was in violation of the league’s collective bargaining agreement, which outlines how athletes are employed by their respective clubs.
In January, Dinwiddie reached a compromise with the NBA where instead of paying out dividends, as originally intended, he would issue a flat bond, which would offer no accrued interest. At the time, the NBA said it was reviewing the modified agreement and refused to say whether it had fully signed off on the sale.
Established in 2001, Tritaurian provides expertise in both traditional finance as well as with blockchain technology. The bank claims it was the first non-ATS broker-dealer licensed to sell digital private placements that use blockchain back in July.
DFS has so far not provided a timeframe for when it expects the token offering to launch. «Given the novel structure of this project, we are taking the appropriate time and precautions to make sure we establish a conservative approach for this launch,» the company said in its email Tuesday.
