NBA Blocks Brooklyn Nets’ Spencer Dinwiddie Shot to Tokenize His Investor Contract

The NBA dismissed a shot by point guard Spencer Dinwiddie from Brooklyn Nets to “tokenise” the investment contract of his player, stating the proposition breaches the collective bargaining agreement (CBA) of the league.

Last December Dinwiddie 26,agreed to a three-year contract extension with the Nets worth $34 million. The group provided a four-year, $47 million offer to the Colorado commodity, however he turned it down in order to become a free agent much sooner, possibly entering a more profitable contract down the line. His prospective free agency was one of the selling points that Dinwiddie was pressing behind the $D8 sign, which refers to his jersey number.

“What better way to be invested in a player as a fan than to have some level of skin in the game,” said the Nets guard in an interview with The Athletic. “With the way mine works, if I play well in that player option year and we split the profits up the first year of my new deal, it greatly appreciates the return on this investment vehicle.”

The $D8 token would have been targeted at accredited investors with at least $150,000 if it had been approved. That ilk’s buyers would presumably have a higher risk tolerance and a greater appetite for alternative investment vehicles. But the concept was still being panned by the NBA.

“According to recent reports, Spencer Dinwiddie intends to sell investors a ‘tokenized security’ that will be backed by his player contract,” said the association. “The described arrangement is prohibited by the C.B.A., which provides that ‘no player shall assign or otherwise transfer to any third party his right to receive compensation from the team under his uniform player contract.”

The proposition by Dinwiddie to allow shareholders to participate in the future benefit of his NBA income is not a fresh concept. Fantex, a firm established in 2012, provides investment vehicles that are exposed to agreements from athletes, including several NFL players like Michael Brockers, Alshon Jeffrey and Mohamed Sanu.

What was distinctive about the strategy of Dinwiddie was the element of tokenization. The player would have started an offer to raise $4.95 million to $13.5 million if $D8 had been accepted. The $D8 trade in ethereum blockchain was scheduled. Blockchain is a centralized ledger that records digital currency operations.

Another intriguing element of the $D8 scheme was that it was intended in Dinwiddie’s agreement to leverage efficiency provisions. For example, the token might eventually have become more valuable than the player’s agreement that it would have been tied to if it hit some statistical milestones, became an all-star, or won a championship.

Compared to the $D8 token, the player said the digital asset could deliver 15 percent returns, “something most guys won’t beat.” Over the previous three years, the S&P 500 Growth Index, a well-observed development equity pool, has a compound annual development rate of 15.7 percent and a complete yield of almost 55 percent.

The Nets Guard attempted to relieve some of the liquidity and volatility problems related to larger cryptocurrencies by offering to support $D8 with $1 million in money, $1 million in gold, and $1 million in bitcoin deposited in an unknown government bitcoin car.