Sources: After months of back-and-forth with NBA, Spencer Dinwiddie to launch digital investment vehicle

NEW YORK, NEW YORK - JANUARY 04: Spencer Dinwiddie #8 of the Brooklyn Nets lays up a shot against Serge Ibaka #9 of the Toronto Raptors during the game at Barclays Center on January 4, 2020 in New York City. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Matteo Marchi/Getty Images)
By Shams Charania
Jan 10, 2020

Spencer Dinwiddie is enjoying a career season for the Brooklyn Nets, catapulting himself to NBA All-Star candidacy, and now he is making a landmark decision.

After months of discussions with the NBA, Dinwiddie, on Jan. 13,  will launch his digital investment vehicle, The Athletic has learned. Dinwiddie has made changes to his product and has no longer tied the platform to his NBA contract, according to sources.

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“Spencer Dinwiddie’s advisors 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,” NBA chief communications officer Mike Bass told The Athletic in a statement.

Sources tell The Athletic that Dinwiddie had been bracing and preparing for any potential disciplinary action from the NBA when he launches on Jan. 13, but his final proposals have made tremendous changes. The NBA, who previously hired outside legal counsel in the Debevoise & Plimpton law firm for its part in the discussions with Dinwiddie, had previously informed him that his digital token couldn’t be approved.

Dinwiddie’s lawyers believe his investment vehicle is cleared by a litany of channels, such as the SEC, to ensure it is a secure platform. He has also modified his plans based on a series of meetings and conversations with NBA officials, removing the league’s likeness and name from his investment vehicle and essentially turning it into what Dinwiddie believes to be a safe and secured investment bond, according to sources.

The Athletic first reported on Sept. 12 that Dinwiddie was planning to convert his contract into a digital investment vehicle through his own company (DREAM Fan Shares), under the token name “$SD8,” and receive an upfront lump payment — an unprecedented move for a pro athlete. The Athletic also followed up with Dinwiddie to get him to explain, in his own words, how it would all work.

Several obstacles emerged from the NBA’s perspective in its discussions with Dinwiddie — such as believing his plan was a “third-party assignment” and his third-year player option worth $12.3 million being an issue and violating anti-gambling rules.

Dinwiddie maintained that his player option is simply a performance-based incentive that has been tied to thousands of players — not a gambling angle — and that his investment vehicle actually encourages him to play as much as possible and perform well. So Dinwiddie edited his investment vehicle again, and instead of tying investors to his basketball-related income that option year, it would simply be a flat bond with no performance incentives. The NBA came away from meeting with Dinwiddie satisfied that his career and the Nets are his primary priorities.

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Dinwiddie has wanted to design a method that he hopes could improve NBA players’ economic options while also making the alterations that would accommodate the league’s concerns. With All-Star voting underway, this would serve as another method toward his goal of increasing the league’s fan engagement: Dinwiddie plans to bring eight fans and investors with him to All-Star weekend if he is voted in. He finished in the top 10 among Eastern Conference guards in the first round of All-Star fan voting.

Dinwiddie is in the midst of a career season and has been one of the top guards in the league, averaging 22.4 points, 6.2 assists and 3.1 rebounds in 36 games this season. He has helped lead the Nets to playoff positioning despite Kyrie Irving playing in only nine games this season and Kevin Durant being sidelined for the entire season.

“(Dinwiddie) has been an All-Star caliber player this season,” one high-ranking NBA team official told The Athletic, “and now this will create an interesting dilemma for the league.”

Dinwiddie has remained in communication with the National Basketball Players Association, including meeting with executive director Michele Roberts.

“The NBPA’s mission is to support its members and we are currently assisting Spencer and his business associates in seeking to address the League’s concerns,” the NBPA said in a statement in November. “Our hope is that a resolution satisfactory to all parties can be achieved.”

(Photo: Matteo Marchi / Getty Images)

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Shams Charania

Shams Charania is the Senior NBA Insider for The Athletic. He is also an NBA analyst for Stadium. From 2015-18, Shams was the national NBA Insider for Yahoo Sports. Follow Shams on Twitter @ShamsCharania