The professional basketball organization noted on September 27 that Dinwiddie’s plan to allocate a portion of his contract earnings for a security token offering (STO) would violate the NBA’s collective bargaining agreement.
NBA’s management stated:
“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.’”
National Basketball Association (NBA) player Spencer Dinwiddie had attempted to tokenize his $35 million contract, however, the league association blocked him from doing so.
However, Dinwiddie appeared to disagree with the NBA’s statements. He remarked via Twitter:
“The architecture by definition is not an assignment lol FUD.”
The Brooklyn Nets guard said that he had informed the league about his plans to tokenize part of his contract before it was officially announced. Dinwiddie stated:
“The news tonight is disappointing because all it does is inspire #FUD in the birth of a previously unrealized asset class under the assumption that I’m breaking a rule that I’ve been clear I’m not breaking in multiple conversations.”
“I look forward to an understanding because as I stated in the previous articles it was made with the NBA in mind. Hopefully being able to bring added fan engagement to the different players/teams and liquidity for team owners.”
Dinwiddie had revealed on September 26 that he was planning to tokenize a portion of his contract earnings on the Ethereum blockchain, in order to generate $13.5 million from his three-year, $35 million contract.
Dinwiddie will make $16 million during the first year of the contract.
The professional athlete noted that a platform called DREAM Fan Shares would allow celebrities and entertainers to tokenize their contracts, which would help them raise part of their salary upfront for investment purposes or to use the funds immediately.
Token holders would have been entitled to a portion of Dinwiddie’s salary payments, which would have allowed the investors to recover their initial investment while earning interest.
Paxos Trust Company had been appointed to provide custody and escrow services for the tokenization project. Paxos would have paid investors in the Paxos Standard Token (PAX).
Dinwiddie’s plan has received support from US presidential candidate Andrew Yang, who recommends developing a comprehensive set of regulations for the blockchain and crypto asset industry.
Yang thought that Dinwiddle’s STO plan was “genius.” He also said that he was “disappointed the NBA is disallowing it.”
Dinwiddie had also partnered with the Tron Foundation and its CEO, Justin Sun, to donate 8.2 Bitcoins (appr. $65,000) to charity by selling his game shoes.
Looks like a no-go by the NBA: https://t.co/cVYZqBr1yY
— Ivan Chow (@ichow23) September 27, 2019