NFT artwork seized from Three Arrows Capital sold for $10.9 million in Sotheby’s auction.

Recently, Sotheby’s auction house revealed that Three Arrows Capital (3AC), a major crypto firm, sold their digital collectibles for a total of $10.9 million at a New York auction on June 15. Prior to this, 3AC was the first major crypto firm to file for bankruptcy in 2022 following the collapse of Luna and TerraUSD cryptocurrencies.

Before filing for bankruptcy, Three Arrows Capital had acquired a collection of non-fungible tokens (NFTs). NFTs are unique digital collectibles that are linked to virtual or physical content, serving as proof of ownership for items such as images, videos, artwork, or text fragments.

Christopher Farmer, a senior managing director at consultancy Teneo, announced in February that certain NFTs previously held by the bankrupt Singaporean crypto hedge fund Three Arrows Capital (3AC) would be made available for sale. This was part of efforts to retrieve funds for its creditors. Plans for the auction were revealed in April through a press release:

Sotheby’s is preparing to host an auction for a collection of non-fungible tokens (NFTs) seized from now-defunct crypto hedge fund Three Arrows Capital.

According to data from blockchain tracker DappRadar, the hedge fund had spent $15.5 million worth of crypto to acquire the 37 NFTs in several rounds of purchases between July and August 2021. Among the collection of artworks by Canadian artist Dimitri Cherniak, one of the most valuable non-fungible tokens (NFTs) owned by the hedge fund was “The Goose.” It was featured as Ringer #879 in a series of 1,000 computer-generated abstract images.

Ringer #879 sold for $6.2 million, which is $0.3 million higher than what 3AC had spent acquiring it in August 2021, according to DappRadar data. Another seven of 3AC-owned NFTs had already sold in May for $2.5 million at the Sotheby’s auction.

Michael Bouhanna, head of digital art and NFTs at Sotheby, noted the growing interest in NFTs, explaining the existence of the NFTs at the auction. Bouhanna said that while they only existed in digital form, physical print copies accompanied most of the items, allowing buyers to display them. It is worth mentioning that the hype surrounding NFTs has diminished significantly, with sales declining from a peak of approximately $5.7 billion in January 2022 to around $675 million in May 2023.

The decline in NFT sales can also be attributed to a general sense of Fear, Uncertainty, and Doubt (FUD) prevalent in the market. This atmosphere of uncertainty has made market participants more cautious and risk-averse. Additionally, it is worth noting that crypto prices surged in 2021 in tandem with the NFT boom, causing a surge in crypto prices as technology enthusiasts wagered on digital assets becoming lucrative across online virtual marketplaces.