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. "[G]iven 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.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.