Sotheby’s sells seven NFTs from bankrupt crypto hedge fund for US$2.5 million

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Image credit: Sotheby's.

20th May 2023 – (New York) Sotheby’s auction house announced on Friday that seven non-fungible tokens (NFTs) from the bankrupt cryptocurrency hedge fund Three Arrows Capital were sold for approximately $2.5 million. The highest-priced NFT was “Fidenza #725,” an image that featured graphic dashes and curves in a muted color palette of cream, yellow, pink, and black. This NFT fetched over $1 million, as it was purchased by Three Arrows Capital for 135 ether in 2021, equivalent to approximately $341,786 at the time, according to DappRadar.

The auction was part of the liquidation of Three Arrows Capital, as noted in a February memo from Teneo, one of the court-appointed liquidators. Singapore-based Three Arrows was the first major crypto firm to go bankrupt in 2022 due to the collapse of cryptocurrencies Luna and TerraUSD. The company filed for bankruptcy in the British Virgin Islands in late June 2022.

At the time of its bankruptcy filing, Three Arrows estimated its assets to be around $1 billion, with its extensive NFT collection valued at approximately $22 million, as reported by cryptocurrency news site The Block. NFTs are blockchain-based assets that represent ownership of a digital item, such as an image, video, or piece of text.

The market for NFTs experienced an explosion in 2021, with auction houses such as Sotheby’s and Christie’s joining the craze. However, sales volumes and prices have since dropped, as the demand for speculative assets has cooled down.

The sale of NFTs from Three Arrows Capital, albeit in the context of bankruptcy liquidation, highlights the evolving nature and potential risks of the cryptocurrency market. While NFTs and other digital assets have gained mainstream acceptance and attracted significant investment, the volatile nature of cryptocurrencies and their susceptibility to market fluctuations pose significant risks to investors.

The sale of “Fidenza #725” for over $1 million is a testament to the continued interest in NFTs among collectors and investors. The particular NFT is part of the Fidenza collection, which features abstract and geometric designs created by artist Tyler Hobbs. The Fidenza collection has gained significant attention and has been sold at various auctions, with some pieces fetching millions of dollars.

Sotheby’s, one of the world’s leading auction houses, has been at the forefront of the NFT market‘s surge in popularity. The auction house made headlines in 2021 when it sold a digital artwork by the artist Beeple for a record-breaking $69 million. Since then, Sotheby’s has continued to hold auctions featuring NFTs and other digital assets.

Fidenza #725. Image source: Sotheby’s