On October 4th, crypto insights and analysis firm Nansen reported that a high-profile collection of more than 300 NFTs had been transferred from a fund linked to the now-bankrupt Three Arrows Capital, to a Gnosis Safe wallet address.
Major Transfer From Three Arrow Capital Fund
The transfer originated from the wallet of Starry Night Capital, a $100 million-valued fund co-founded by Three Arrow Capital executives Su Zhu and Kyle Davies, along with well-known, pseudonymous NFT collector “Vincent Van Dough”, in August 2021.
Following the initial NFT boom, the fund served as an investment vehicle for digital collectibles with the aim of assembling “the world’s finest collection of CryptoArt.”
Three Arrows’ NFT wallets initially snatched up assets from well-known collections such as CryptoPunks, and invested in multimillion-dollar art pieces by artists like Dmitri Cherniak. The company also had plans to open physical galleries, and an educational site focused on NFTs.
NFTs previously collected by Starry Night Capital are moving to a Gnosis Safe address.— Nansen 🧭 (@nansen_ai) October 4, 2022
These NFTs include:
- Pepe the Frog NFT Genesis, sold for 1,000 ETH (~$3.5M) on Oct 5, 2021
- Fidenza #718, sold for 240 ETH (~$1.1M) on Nov 13, 2021
Some other notable NFTs below👇 pic.twitter.com/8PU13CqMnn
High-Profile NFTs in the Collection
According to a Bloomberg estimate, the NFT collection held in Starry Night Capital is worth around $35 million. According to Nansen, when sold at the peak of the cryptocurrency bull run of late 2021, some of the NFTs in question commanded prices in the range of $1-$3.5 million in ETH.
One of the most expensive of these NFTs was ‘Pepe the Frog NFT Genesis’, which sold for 1,000 Ether (ETH) in October last year, putting its value at $3.5 million at the time.
Another high-profile NFT was ‘Fidenza’. The asset from the generative, Ethereum-based NFT project by artist Tyler Hobbs was worth approximately $1.1 million at the time of purchase in November 2021. ‘Some More A**hole’, ‘DANKRUPT’, and ‘DECAY’, were three other, well-known names to have been picked up for the collection, with each having previously sold for between 240-550 ETH.
According to Nansen, the portfolio’s value as of right now is 625 ETH, or around $847,000 at the current rate of exchange. It also stated that, with less than 35 sales made over the previous seven days, approximately 90% of the NFTs likely possess poor liquidity.
Motives Remain Unclear
The motive behind the recent transfer remains unclear, with the movement taking place four months after virtually all of the digital tokens in Starry Night Capital’s primary cryptocurrency wallet had been transferred to a new address.
The transfer of the assets to a Gnosis Safe is noteworthy, since it is a smart contract, digital asset management platform that requires multiple signatures before an asset transfer can be approved, ensuring that several team members agree to each transaction in advance. The process is key to preventing a single party from withdrawing and fleeing with the valuable assets
After declaring bankruptcy in June, Three Arrows Capital finds itself in a complex financial state, with the company’s founders involved in a struggle with court-appointed liquidators over the dissolution of the rest of their holdings.
A British Virgin Islands court ordered Three Arrows Capital to be liquidated in June. Teneo took control of the liquidation process, and now controls at least $40 million of 3AC’s assets. Nevertheless, the amount represents just a tiny portion of 3AC’s debt to creditors, which totals to at least $2.8 billion.
On the Flipside
- Nansen’s estimates have been erroneous before. In September, the firm misidentified one wallet as belonging to 3AC, when, in fact, it belonged to cryptocurrency financial services company Matrixport.
Why Should You Care?
Terra’s (LUNA) collapse in May had a cascading impact on the whole cryptocurrency market. While 3AC had appeared to be a successful cryptocurrency fund, its $600 million in assets of exposure to Terraform Labs signaled the beginning of the hedge fund’s tragic ending.
Read more about the Three Arrows Capital Liquidation process:
Three Arrows Capital (3AC) Files $30M Lawsuit Against Own Company While on the Run
The founders of Three Arrows Capital were on the run:
The Race: Three Arrows Capital (3AC) Founders Detained in Dubai Airport