Thousands of cryptocurrency investors recently raised more than $40 million and nearly — but ultimately fell short of — purchasing a copy of the U.S. Constitution.
Now, a separate group of crypto fans is building momentum with another acquisition target: An NBA franchise.
In both cases, the crypto enthusiasts organized under what’s known as a decentralized autonomous organization, or a DAO, which is an online group with a collective bank account and a mission statement.
Calling itself Krause House DAO, a reference to the late Chicago Bulls general manager, Jerry Krause, the group of some 2,000 members raised the equivalent of $4 million U.S. in the cryptocurrency Ethereum in six days. The crowdfunding, in the form of an NFT sale, ended Thursday morning.
The idea isn’t exactly a slam dunk yet.
For one thing, it is no where in the universe of what the group would need to place a credible bid on even the least-valuable NBA team (The Memphis Grizzlies, estimated to be valued around $1.3 billion).
Second, convincing the NBA to be open to a collectively-controlled crypto investment might not be the easiest sales pitch.
Organizers of Krause House DAO are asking the public to please refrain from laughing.
“We understand the reader’s first instinct may be to scoff at this and say owners will never let this happen,” reads the group’s so-called “flightpaper,” a nod to the more traditional white paper research report.
“It’s important to understand that there was a time not too long ago where players were at the same place on the totem pole where fans are today,” it says. “There’s no reason fans can’t do the same if organized correctly.”
A co-creator of Krause House DAO, speaking to NPR only by his pseudonym on the social network Discord, said the money raised so far will be invested into future projects focused on becoming a serious NBA team bidder one day. The exact plan for all the new cash is light on specifics, however.
Members of the group will vote on where the money should be spent. The ultimate aim is to be able to prove to franchise owners that a DAO can be an effective way to run a professional basketball team.
In its Discord community, organizers sign off from updates about the group with “WAGBAT,” which stands for: “We are going to buy a team.”
The pandemic ushered in a new generation of crypto investors, but there were few ways to use the newfound riches. Some turned to acquiring NFTs — a kind of limited-edition digital collectible — but now there is a growing push to move on to loftier ideas, like trying to help create the next version of the Internet. This, dubbed Web3, seeks to give collective control of major online sites to the crypto masses. A DAO is part of that utopian dream, only now hoping for collective ownership of things in the real world, like an NBA team.
Investor Michael Lewkowitz, who put the equivalent of $100,000 into Krause House DAO, dismissed questions about whether the effort is just the latest crypto community publicity stunt.
“Kraus House is absolutely serious,” Lewkowitz said in an interview. “We’re used to thinking about a billionaire buying a team as a one-time event. But this will be different. It’s about people coming together and taking ownership of something they’re really passionate about. Sports should be in the hands of people who care most about it.”
In some ways, the DAO community is still licking its wounds from the ConstitutionDAO flop.
That group, which bid on a rare copy of the U.S. Constitution, has decided to dissolve, with investors now attempting to recoup as much of their money back as possible, some of which having been gobbled up by notoriously-high transaction costs known as gas fees.
But Lewkowitz, who invested in ConstitutionDAO, sees a silver lining. No surprise, since crypto fanatics tends to be an enthusiastic and optimistic lot.
“You can see it as a bid that was lost, or you can view it as thousands of people who came together around a common cause and almost doing something amazing,” Lewkowitz said.
While crypto fans taking control of an NBA franchise may be a pipedream right now, the group’s members do now have NFTs, of course.
With the NFTs, which are images that resemble a tickets to an an imaginary Krause House basketball game, comes voting power in the community, in the form of a $KRAUSE token.
But the disclaimer on the page, the proverbial fine print, concedes to what may be the end result of this movement.
“Neither this ticket NFT nor $KRAUSE are a promise for future ownership of a team,” says the group’s site.