Three Arrows CryptoPunks & Other Ethereum NFTs to Be Liquidated

  • Teneo now owns the Ethereum NFTs that Three Arrows Capital owned through its Starry Night Capital fund, the company said.
  • Starry Night Capital spent tens of millions of dollars to buy high-value NFTs like Art Blocks, CryptoPunks, and Rare Pepe assets.

This week, expensive Ethereum-based NFTs that belonged to the crypto hedge fund Three Arrows Capital were moved to a new wallet. The liquidator in charge of the firm’s bankruptcy has confirmed that the collection has been taken into custody.

In a statement, Teneo, the business consulting firm in charge of the Chapter 15 bankruptcy process, said that it now owns the NFTs that were owned by Starry Night Capital, a fund set up in 2021 by Three Arrows Capital and an investor who goes by the name “Vincent Van Dough.” In the last two days, most of the assets were moved to the new wallet.

The liquidator said that all of Starry Night Capital’s NFTs “have been counted and are in our possession or are being transferred to us.” Teneo credited Vincent Van Dough with helping to transfer the NFTs and making sure they weren’t sold outside of the liquidation process. Teneo also said that the pseudonymous collector will help the company sell the NFT collection to pay for Three Arrows Capital’s losses.

Arrows Capital went out of business in May after Terra’s UST and LUNA ecosystem, in which the company had a lot of money invested, broke down. Three Arrows Capital said that other recent bad bets, like staked Ethereum and the Grayscale Bitcoin Trust, were also a factor. Founders Su Zhu and Kyle Davies pointed to staked Ethereum and the Grayscale Bitcoin Trust as examples.

In June, Three Arrows filed for Chapter 15 bankruptcy. It said it owed $3.5 billion to creditors because of its failure. In August, Singapore’s highest court agreed to look into the collapse of the company in more depth.

The hedge fund’s Starry Night Capital was announced in August 2021, when the NFT market was reaching new heights. The plan was to raise up to $100 million to buy and hold high-value NFTs. At the same time that the fund was announced, it bought an Art Blocks Ringers NFT from Dmitri Cherniak for $5.66 million worth of ETH.

The collection grew to include more valuable pieces, such as CryptoPunks, Rare Pepes, and more Art Blocks NFTs. Data platform Dune has an incomplete list of Starry Night’s holdings, which suggests that the company spent at least $35 million on NFTs in 2021.

But it’s hard to figure out how much the collection is worth right now because the NFT market is falling and prices and trading volume are down a lot. This is because the crypto market as a whole is falling, too.

Nansen, a company that analyses crypto, said that the collection was worth about $846,000 in ETH, but many of the individual estimates are much lower than the last purchase price. More likely, Teneo could get back millions of dollars’ worth of ETH by selling the NFT holdings. This is because people still want CryptoPunks and artwork from well-known generative artists.

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