Liquidators will reportedly sell some NFTs from the bankrupt Three Arrows Capital.
Three Arrows Capital’s now defunct high-end cryptocurrency fund Starry Night NFT will not be included in this round of liquidations.
NFTs belonging to the failed cryptocurrency hedge fund Three Arrows Capital (3AC) will be put up for sale, but will not include a prized selection of its portfolio, the fund’s liquidator said. In fact, the new memo reads as follows:
“The Joint Liquidators intend to take steps to initiate the sale of certain NFTs.”
Sale of Three Arrows Capital’s NFTs: the details
The sale of some of Three Arrows Capital’s NFTs in their possession will begin within the next month, according to the liquidators’ latest update, starting around 23 March. Christopher Farmer, senior managing director at consulting firm Teneo and joint receiver in the 3AC case, commented as follows:
“The purpose of the sale is to realize the value of the NFTs for settlement purposes.”
The process will not include the so-called Starry Night Capital fund, a collection of assets put together by pseudonymous collector Vincent Van Dough for 3AC’s Starry Night Capital.
When it was launched in August 2021, 3AC said that Starry Night Capital was to be a new fund to assemble the world’s best collection of NFTs. Hence, here are the prospects for Starry Night NFTs.
Liquidators already took custody of that collection in October, which includes the assets of Art Blocks, CryptoPunks, and Rare Pepe. While the consultants said at the time that they planned to sell the NFTs, the assets are now subject to a petition before the Eastern Caribbean Supreme Court in the High Court of Justice of the British Virgin Islands.
Therefore, they will be excluded from the sale announced today. The value of 3AC’s NFTs held by the liquidator is $21 million, according to data compiled by Dune, while the NFTs still held by 3AC itself appear to be worth $2.4 million.
However, moving the assets could be a challenge, with NFT sales down sharply from this time last year, despite a monthly increase in trading last month.
The collapsed crypto fund filed for bankruptcy in June last year and now owes $3.5 billion to creditors.
Its collapse was one of several serious blows suffered by the industry last year and contributed to Voyager Digital‘s downfall.
About Starry Night Capital, Three Arrows Capital’s fund
After that the expensive Ethereum-based NFTs belonging to cryptocurrency hedge fund Three Arrows Capital were moved to a new wallet in October, the liquidator behind the company’s bankruptcy proceedings confirmed it had taken custody of the collection.
Teneo, the business consulting firm leading the Chapter 15 bankruptcy process, said it is now in possession of the NFTs owned by Starry Night Capital, a fund established by Three Arrows Capital and pseudonymous investor Vincent Van Dough in 2021.
The assets were transferred to the new wallet in the same month of October. According to the liquidator, all of Starry Night Capital’s NFTs have been accounted for and are in their possession or being transferred to them.
Teneo credited Vincent Van Dough for facilitating the transfer of the NFTs and ensuring that they were not sold outside the liquidation process. Teneo also said the pseudonymous collector will help the company sell the NFT collection to cover Three Arrows Capital’s losses.
At one time a high-profile hedge fund in the crypto space, Three Arrows Capital became insolvent in May following the collapse of Terra’s UST and LUNA ecosystem, in which the company had invested heavily.
Three Arrows Capital cited other recent bad bets, including staked Ethereum and Grayscale Bitcoin Trust, which founders Su Zhu and Kyle Davies said were a trigger.
As anticipated, Three Arrows filed for Chapter 15 bankruptcy proceedings in June and claimed it owed $3.5 billion to creditors as a result of its collapse. In August, the Singapore High Court approved a more thorough investigation into the company’s collapse.
Hedge fund Starry Night Capital was announced in August 2021 when the NFT market soared to new heights, with plans to raise up to $100 million to buy and hold high-value NFTs. The fund was announced along with the purchase of an Art Blocks Ringers NFT from Dmitri Cherniak for $5.66 million worth of ETH at the time.
NFT market: prices rise, Bored Ape Yacht Club leading the way
Recent signs of life in the NFT space eventually produced a significant increase in market activity in January, as organic trading volume grew 38% since December, according to data from DappRadar.
NFT asset sales totaled $946.7 million last month, according to the analytics firm, which tracks data across multiple networks and blockchain marketplaces. This is a significant increase from the $683.9 million figure recorded in December and marks the largest market-wide total since June 2022.
DappRadar excludes data from suspicious wash trades or sales that have been manipulated in some way.
Often in wash trading, a user sells an NFT at an inflated price back and forth between their own wallets, usually in an attempt to deceive a market reward model or increase the visibility of a lesser-known project.
Organic trading volume increased in January, but so did the total number of NFTs traded during the month.
DappRadar recorded more than 9.5 million NFT sales in January, the largest count recorded in nearly a year, since February 2022. This is a 42% increase from the total of about 6.7 million NFTs sold in December.