{"id":5441,"date":"2022-07-06T00:25:29","date_gmt":"2022-07-06T00:25:29","guid":{"rendered":"http:\/\/cryptoheretostay.com\/?p=5441"},"modified":"2022-07-06T00:25:30","modified_gmt":"2022-07-06T00:25:30","slug":"3ac-is-broke-whats-next-for-its-multi-million-dollar-nft-collection","status":"publish","type":"post","link":"https:\/\/cryptoheretostay.com\/?p=5441","title":{"rendered":"3AC Is Broke. What&#8217;s Next for Its Multi-Million Dollar NFT Collection?"},"content":{"rendered":"<p> <script type=\"text\/javascript\">\r\namzn_assoc_placement = \"adunit0\";\r\namzn_assoc_tracking_id = \"totafreearti-20\";\r\namzn_assoc_ad_mode = \"search\";\r\namzn_assoc_ad_type = \"smart\";\r\namzn_assoc_marketplace = \"amazon\";\r\namzn_assoc_region = \"US\";\r\namzn_assoc_default_search_phrase = \"crypto\";\r\namzn_assoc_default_category = \"All\";\r\namzn_assoc_search_bar = \"false\";\r\namzn_assoc_title = \"\";\r\namzn_assoc_rows =\"1\";\r\n<\/script>\r\n<script src=\"\/\/z-na.amazon-adsystem.com\/widgets\/onejs?MarketPlace=US\"><\/script><br \/>\n<\/p>\n<h3>Key Takeaways<\/h3>\n<p>The contagion from Three Arrows Capital&#8217;s ongoing liquidation could spread to its associated NFT fund, Starry Night Capital.<br \/>\nStarry Night Capital was founded in August 2021 and sought $100 million to invest in high-end NFTs.<br \/>\nWhether Starry Night will be forced to sell its collection is not yet clear, but a liquidation would likely result in a huge realized loss for the fund. <\/p>\n<p>Share this article<\/p>\n<p><em>Crypto Briefing<\/em> explores whether Starry Night Capital will be forced to liquidate its prestigious NFT collection and the impact that such an event could have on the NFT space.\u00a0<\/p>\n<h2><strong>3AC Faces Liquidation\u00a0<\/strong><\/h2>\n<p>Three Arrows Capital is facing bankruptcy, but it\u2019s currently holding onto a multi-million dollar collection of sought-after NFTs.\u00a0<\/p>\n<p>The troubled crypto hedge fund popularly known as 3AC first roused concern in the crypto community in early June as rumors circulated online that it had failed to meet margin calls on several of its loans. On Jun. 17, Kyle Davies, who co-founded the firm with his high school classmate Su Zhu in 2012 told The <em>Wall Street Journal<\/em> that the fund was considering asset sales and a potential bailout in order to pay off its debts. He also revealed that it had lost over $200 million in Terra\u2019s collapse and the subsequent market meltdown.\u00a0<\/p>\n<p>It soon became apparent that 3AC was facing a severe financial crisis, leaving the fund with few options besides\u00a0drastic restructuring. On Jun. 27, Voyager Digital issued the firm with a $665 million notice of default. A British Virgin Islands court then\u00a0ordered the firm to liquidate its assets. 3AC filed for Chapter bankruptcy in New York last Friday. <\/p>\n<p>Teneo Restructuring, the firm tasked with liquidating 3AC, is leaving no stone unturned in its investigation of the fund\u2019s illiquid wealth. Last week, it was widely reported that Zhu had privately listed a Singapore property he and his wife had purchased for $35 million and assigned to their three-year-old son in December 2021.\u00a0As liquidators turn their attention to 3AC\u2019s assets, Starry Night Capital, the NFT fund set up by the firm\u2019s founders last year, could become their next target.\u00a0<\/p>\n<h2><strong>Starry Night Capital<\/strong><\/h2>\n<p>Starry Night Capital was launched by Zhu and Davies in partnership with the pseudonymous NFT collector VincentVanDough. Making its public debut at the height of a period of speculative NFT mania on Aug. 30, 2021, the fund aimed to raise $100 million to invest in rare pieces from popular, sought-after collections, along with unique, culturally significant, one-of-a-kind works from prominent NFT artists.\u00a0<\/p>\n<p>Before Starry Night officially launched, 3AC had been using its own funds to collect Art Blocks NFTs from acclaimed generative artists such as Tyler Hobbs and Dmitri Cherniak, along with works from other in-demand collections like CryptoPunks. 3AC\u2019s purchases pushed the floor prices of many of these collections to new highs; as on-chain data revealed that the firm had bought into top-tier collections like Ringers and Fidenza, other collectors rushed to copy trade them, helping their prices soar. <\/p>\n<p>However, the firm\u2019s biggest purchase was yet to come. On Aug. 27, the fund shocked NFT enthusiasts worldwide when it purchased Ringers #879 for 1,800 ETH (worth roughly $5.9 million at the time) from fellow collector Peter Molick, known in the NFT space as pixelpete. Flexing the purchase to his Twitter followers, Zhu tweeted a picture of the striking NFT with the caption \u201cThesis: we like the Goose.\u201d<\/p>\n<p><em>\u201cRingers #879\u201d by Dmitri Cherniak (Source: Dmitri Cherniak\/OpenSea)<\/em><\/p>\n<p>The Ringers #879 sale was a record-breaker for OpenSea NFT sales at the time. But 3AC didn\u2019t stop there.\u00a0Under the Starry Night Capital banner, Zhu, Davies, and VincentVanDough continued to spend big on NFT art. The fund\u2019s notable purchases included \u201cPepe the Frog NFT Genesis\u201d bought for 1,000 ETH, XCOPY\u2019s \u201cDANKRUPT\u201d bought for 469 ETH, and Robbie Barrat\u2019s \u201cAI-Generated Nude Portrait #7 Frame #184\u201d bought for 300 ETH.\u00a0<\/p>\n<p>With so many unique, one-of-a-kind pieces, it\u2019s difficult to put a value on Starry Night\u2019s collection at its peak. CoinMetrics researcher Kyle Waters estimates the fund spent over $21 million on the NFT platform SuperRare alone. Adding the thousands of ETH Starry Night dropped on other marketplaces like OpenSea, the total spend comes closer to the $100 million the fund reportedly started with.<\/p>\n<p>Despite on-chain evidence showing Starry Night making millions of dollars worth of NFT purchases, only one firm has publicly announced investing in the fund as part of its $100 million raise. KR1 PLC, a European digital asset investment company, reportedly staked $5 million in Starry Night Capital to gain exposure to the fund\u2019s portfolio of high-value NFTs. With this in mind, it\u2019s unknown how much of Starry Night\u2019s liquidity came from 3AC and its founders, and how much was provided by external investors.\u00a0<\/p>\n<h2><strong>Starry Night Goes Dark<\/strong><\/h2>\n<p>As news of Three Arrows Capital\u2019s liquidity issues made the rounds on social media in June, onlookers kept a close watch on the firm\u2019s affiliated projects to look for signs of contagion.\u00a0<\/p>\n<p>The first hint that Starry Night could be facing issues came on Jun. 15, when Waters pointed out on Twitter that the fund had moved its entire collection of NFTs acquired through SuperRare to a new address. \u201cThe new wallet seems to have some linkage to other 3AC wallets but it\u2019s unclear so far what\u2019s going on,\u201d Waters said, speculating that the transfers could have been done in preparation for liquidation or over-the-counter sales to another party.\u00a0<\/p>\n<p>As the details of the relationship between Starry Night and 3AC remain unclear, onlookers have been left to speculate over the fate of the fund\u2019s NFT. Some, such as amatus\u2019 Head of Trading Strategies John Hartery, assert that Starry Night\u2019s assets are siloed, meaning it would be unlikely that they could be used to service 3AC\u2019s debts. While 3AC launched Starry Night, it\u2019s likely that the proceeds from any NFT sales would be distributed to the fund\u2019s liquidity providers rather than 3AC\u2019s creditors.\u00a0<\/p>\n<p>However, if 3AC contributed a significant amount of liquidity to Starry Night, liquidators could force the sale of some of the fund\u2019s NFTs to make its stake liquid. To avoid such a situation, another party would likely need to reach an agreement to buy 3AC\u2019s stake from them directly. Under the current circumstances, it seems unlikely that Starry Night\u2019s NFTs will be liquidated in the immediate future. However, the opaque nature of the fund\u2019s contracts and backing, paired with the recent wallet movements, means a sell-off cannot be ruled out.\u00a0<\/p>\n<p>If Starry Night does ever sell any of its NFTs, the collection has some way to go to reach its previous purchase value, particularly given recent market conditions.\u00a0Many of the fund\u2019s NFTs have some historical significance or derive their value as unique examples from popular collections. When Starry Night bought pieces such as \u201cPepe the Frog NFT Genesis\u201d and AlphaCentauriKid\u2019s \u201ctil death do us part,\u201d it likely did so with the thesis that the crypto space would grow exponentially over the next few years, meaning early examples of unique NFT art could become highly sought after. In the past, 3AC has discussed how it typically adopted a long-term outlook for its investments. Similarly, it\u2019s unlikely Starry Night had any intention of selling pieces from its collection for many years\u2014if ever. <\/p>\n<p>Starry Night launched during crypto\u2019s so-called \u201cNFT summer,\u201d and the floor prices of most of the NFT collections it invested in have since plummeted in ETH terms. ETH has also dropped in dollar terms, meaning NFTs that previously hit dizzying valuations are now trading for fractions of their all-time highs. In the current market downturn, a forced liquidation would almost certainly result in a significant realized loss for Starry Night and bring an untimely end to the fund\u2019s pioneering investment strategy.\u00a0<\/p>\n<p>In the event that Starry Night is ordered to liquidate, it could potentially provide other collectors a once-in-a-generation opportunity to buy some of the most coveted NFTs on the market at heavily discounted prices. However, such an event would also send shockwaves through the NFT space, likely pushing down the floor prices for collections that Starry Night is heavily exposed to. While 3AC works through its liquidation, the NFT community will have to wait to see if one of the world\u2019s most prestigious NFT collections will fall victim to what is arguably the harshest crypto bear market to date.\u00a0<\/p>\n<p><em>Neither Three Arrows Capital, Starry Night Capital, nor VincentVanDough had responded to <\/em>Crypto Briefing\u2018s<em> request for comment at press time.<\/em><\/p>\n<p><em>Disclosure: At the time of writing this feature, the author owned BTC, ETH, and several other cryptocurrencies.\u00a0<\/em><\/p>\n<p>Share this article<\/p>\n<p>The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.<\/p>\n<p>You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.<\/p>\n<p>See full terms and conditions.<\/p>\n<p><script type=\"text\/javascript\">\r\namzn_assoc_placement = \"adunit0\";\r\namzn_assoc_tracking_id = \"totafreearti-20\";\r\namzn_assoc_ad_mode = \"search\";\r\namzn_assoc_ad_type = \"smart\";\r\namzn_assoc_marketplace = \"amazon\";\r\namzn_assoc_region = \"US\";\r\namzn_assoc_default_search_phrase = \"bitcoin\";\r\namzn_assoc_default_category = \"All\";\r\namzn_assoc_search_bar = \"false\";\r\namzn_assoc_title = \"\";\r\namzn_assoc_rows =\"1\";\r\n<\/script>\r\n<script src=\"\/\/z-na.amazon-adsystem.com\/widgets\/onejs?MarketPlace=US\"><\/script><br \/>\n<br \/><a href=\"https:\/\/cryptobriefing.com\/3ac-broke-whats-next-multi-million-dollar-nft-collection\/?utm_source=category_feed&#038;utm_medium=rss\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways The contagion from Three Arrows Capital&#8217;s ongoing liquidation could spread to its associated NFT fund, Starry Night Capital. Starry Night Capital was founded in August 2021 and sought $100 million to invest in high-end NFTs. Whether Starry Night will be forced to sell its collection is not yet clear, but a liquidation would [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":5442,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_wp_rev_ctl_limit":""},"categories":[4],"tags":[],"class_list":["post-5441","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/5441","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=5441"}],"version-history":[{"count":1,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/5441\/revisions"}],"predecessor-version":[{"id":5443,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/5441\/revisions\/5443"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/media\/5442"}],"wp:attachment":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5441"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5441"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5441"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}