An NBA player who is trying to create a new option for athletes receive a large chunk of their enormous contracts up front via securitization is being stymied by the NBA, which has said it's still reviewing a revised plan from Brooklyn Nets' Spencer Dinwiddie to sell a new crypto-bond on a proprietary platform he developed with a crypto-focused startup.
In many ways, the "Spencer Dinwiddie Bond" is a modern twist on a bond backed by musician David Bowie's catalogue revenues.
That bond holds a special place in fixed-income market history, mostly as a novelty, but also increasingly as a way for musicians with valuable catalogues to try and generate money for investments or tax payments.
"Spencer Dinwiddie’s advisers provided us 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," the NBA said in a statement.
Yesterday, Dinwiddie retweeted a Forbes reporter who claimed that the "long awaited release of his SD8 securities-backed bond" would happen on Monday.
We're just one day from @SDinwiddie_25's long-awaited release of his SD8 securities-backed bond. For @ForbesSports, the #Nets star told me why he's doing it, how the #NBA threatened to terminate his contract & how his season has progressed https://t.co/OeNgYieYxv #cryptocurrency— Shlomo Sprung (@SprungOnSports) January 12, 2020
Dinwiddie also tweeted that the bond would launch on Monday, and that he'd be taking 8 fans to All Star Weekend with him.
Right now, the plan is to only offer the tokens to accredited investors. But someday, Dinwiddie hopes to open sales to all.
I can’t wait to have a Reg A offering as well. The hoops we have to jump through now Make the process cumbersome. NDAs, KYC/AML, Accredited investors, cross reference with other approved lists etc etc. but soon we will have it for ALL! I promise https://t.co/l4E1U36LdD— Spencer Dinwiddie (@SDinwiddie_25) January 12, 2020
Dinwiddie partnered with digital securities company Securitize, whose CEO, Carlos Domingo, tweeted that he was "extremely proud" to be Dinwiddie's strategic partner.
At @securitize we 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. https://t.co/F7STPJfWaw— Carlos Domingo (@carlosdomingo) January 10, 2020
Dinwiddie announced his plans to launch a new investing platform called DREAM Fan Shares back in September. According to the press release, the platform was designed to be a "portal for supporters and fans who want to invest in the potential success of athletes and stars."
He developed his SD8 tokens under his company SD8 LLC, and he reportedly plans to sell 90 of the tokens on his new platform.
The plan is for Dinwiddie to sell the SD8 bond tokens on DREAM. To entice potential buyers, Dinwiddie is offering access to revenues from his $34 million contract, in exchange for money up front, allowing him to put that money to work now.
However, the NBA initially expressed notable concerns over Dinwiddie’s plans, which included a "player option," leading to investor dividends based on specific circumstances, Sprung said in a Jan. 10 article. The NBA warned Dinwiddie that his career might be at risk if he followed through with his plan without the league's blessing.
The SEC has devised strict rules for celebrities dealing in cryptocurrency after the ICO frenzy of 2017 and 2018 led to thousands of gullible investors being swindled out of their money, followed by a bevy of lawsuits and even some criminal penalties. But Dinwiddie appears to be serious about his plans to revolutionize how athletes can financialize their contracts.
Dinwiddie's plan has already been delayed once, and it's still unclear whether the NBA will go along with it. But if they do, several other athletes have already expressed interest in following in his footsteps.
Of course, if a bunch of athletes get access to the bulk of their contracts up front, just imagine what such an infusion of wealth might do to asset prices.