In a surprising turn of events, the digital art collection from the now-bankrupt cryptocurrency hedge fund, Three Arrows Capital, has been sold at Sotheby's auction house in New York.
The sale fetched a staggering $11 million, setting a new record for non-fungible tokens (NFTs), despite a wider market downturn. One notable piece, Dmitri Cherniak's "Ringers #879," also known as "The Goose," was sold for an impressive $6.2 million.
Three Arrows Capital, once a leading player in the crypto market, went through a significant financial crisis in 2022, leading to one of the largest hedge-fund trading losses of all time.
The firm had borrowed heavily to fund its trading, resulting in bankruptcy with $3.5 billion in creditors' claims. At the peak of its operations, the company's net asset value was reported to be $18 billion, but subsequent investigations revealed a significant proportion of these assets were derived from uncollateralized borrowing from various lending platforms.The firm's downfall sent shockwaves through the industry, contributing to the overall market downturn. The strategy of borrowing heavily across the industry to invest in other crypto projects resulted in significant losses for companies like Blockchain.com, Voyager Digital, Genesis, BlockFi, BitMEX, and FTX when Three Arrows Capital was unable to repay its lenders. The bankruptcy of the firm triggered a downward spiral in the crypto market, leading to a market-wide decrease of more than $1 trillion since April 2022.
This downfall is reflective of the broader state of the NFT market. After a booming 2021, the NFT market has seen a steep decline in demand and valuation. Factors such as the overall decline in the cryptocurrency market, coupled with the failure of key industry players like Three Arrows Capital, have contributed to this downturn.