Nets guard Spencer Dinwiddie introduced to plan to sell digital tokens. Investors’ payouts would depend on how much Dinwiddie earns in 2021-22, when he holds a $12,302,496 player option.
The NBA prohibited the scheme. Dinwiddie said he’d move forward, anyway. Then, he met again with the league without finding a satisfactory resolution. Then, he still said he’s moving forward, anyway.
Dinwiddie is getting closer to launching – but with a major alteration.
Dinwiddie:
The Spencer Dinwiddie bond launches January 13th. I’ll also be taking 8 fans to ASW with me. #NBAVote pic.twitter.com/dhXKt0qPqh
— Spencer Dinwiddie (@SDinwiddie_25) January 10, 2020
So the two sides came to a compromise, Dinwiddie said, where the original plan from October would mainly remain intact, but the player option element would be removed.
Dinwiddie is going to sell his securities-backed SD8 tokens, which can’t be traded for a year, for $150,000 apiece to verified accredited investors under SEC Regulation D, Rule 506 (c). What he created, he said, allows players to structure and issue debt instruments in digital token form to invest their money how they’d like. It would function as a decentralization of the personal loan to athletes through bonds they create with their guaranteed contracts as collateral.
The SD8 coin will be a three-year bond expected to pay out 4.95% base interest on a monthly basis— much better than you’d be able to get at a bank— with the full principal paid out at the end of the period upon maturity in a bullet payment. The investment period will begin on Monday and end on Feb. 10, with the bond notes maturing and paying out in full on Feb. 10, 2023. According to a chart provided by Dinwiddie’s representatives, if all 90 coins were purchased, it would net investors just over $2 million over the course of the three years.
When contacted regarding the NBA’s stance on Dinwiddie’s plan, a league spokesman released the following statement on Thursday:
“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.”
I wonder whether Dinwiddie knows he has NBA approval, even if the league isn’t ready to publicly announce it. Otherwise, this would be incredibly risky. The consequences could be significant – fine, suspension or even a voided contract. Of course, if the NBA doesn’t explicitly approve, Dinwiddie could back down. He has before.
Without the bond being tied to Dinwiddie’s contract, I don’t see why this should generate future interest. It sounds like it’ll be rich people loaning money to another rich person (Dinwiddie).
But if Dinwiddie finds investors happy to participate and the league approves, good for everyone involved, I guess.