Spencer Dinwiddie of the Brooklyn Nets launched an investment service on January 13. Dinwiddie’s investment service is in partnership with Securitize, a security token platform. The service was first announced in October when Dinwiddie said he planned on launching an investment platform based on the cryptocurrency Ethereum called DREAM Fan Shares, to sell 90 “SD8 coins”, which will work like bonds. This investment would allow him to immediately collect $13.5 million. Token holders would receive payment with a 4.95% base interest rate on a monthly basis over the next three years and could get more if Dinwiddie gets a raise himself. The tokens are called Professional Athlete Investment Tokens. This investment is the first of its kind and would provide Dinwiddie with more than the $10.6 million the Nets will pay him for the 2019-2020 season.
The securities-backed SD8 coins will only be available to qualified accredited investors, who have passed SEC and legal standards and are willing to invest at least $150,000. Due to SEC regulation, the coins cannot be sold or traded for a year. The bond will mature and be paid out in full by February 10, 2023, netting investors a little more than $2 million over the three years.
Securitize CEO Carlos Domingo tweeted, “[W]e are extremely excited and proud to be the digital transfer agent and technology partner for @SDinwiddie_25 and @DreamFanShares world’s first Professional Athlete Investment Security Token. Innovation takes courage, kudos.” In relation to the deal, Domingo also stated, “First bond being managed by a digital transfer agent operating on the Ethereum Blockchain…Hopefully many more to come.”
The NBA is not fond of Dinwiddie’s investment plan and has threatened to terminate his contract over gambling concerns. The third year of his contract is a player option for approximately $12.3 million. Originally, his token investment plan “called for the possibility of significant dividend for investors if he elected to opt out of the final year of his deal in 2021 and come to terms with a more lucrative contract with Brooklyn or another team.” The NBA claimed that the player option was gambling, which would constitute cause for termination.
An NBA spokesperson stated, “Spencer Dinwiddie’s advisors provided us today with new information regarding a modified version of their digital token idea, which we are reviewing to determine whether the updated idea is permissible under league rules.”
Dinwiddie hired Debevoise & Plimpton to represent him in the discussion with the NBA and Players Association, among other parties to come to terms. Dinwiddie believes that some of the NBA’s opposition stems from how new and creative this service is. The new agreement between the NBA and Dinwiddie permits all of his original plan except the player option.
“The jurisdiction doesn’t go further than once they pay me, it’s over,” Dinwiddie said, adding “I’m my own man. I can do what I want. I am free to use my money the way I see fit. We’ve had multiple meetings with them, and besides them not liking a little bit of loss of control, legally there’s not much they can do about it.”
A key component of Dinwiddie’s token effort is to engage and interact with his fans. He is trying to be selected for the NBA’s All-Star weekend. He was not selected in the top ten guards for the Eastern Conference but is hoping for a comeback through votes. He will bring eight investors to All-Star Weekend if he is selected.
On January 10, he tweeted, “[t]he Spencer Dinwiddie bond launches January 13. I’ll also be taking 8 fans to ASW with me. #NBAVote.”
Other athletes, entertainers, and businesspeople have shown interest in investment options similar to Dinwiddie’s. He has received interest and support in person and on social media. Supporters include those in business and cryptocurrency, such as the Winklevoss twins (who are athletes and internet entrepreneurs themselves), David Schwartz, CTO of Ripple, and Presidential candidate Andrew Yang.