Three Arrows Capital was liquidated, an opportunity to miss top NFT collectibles...

An article by Bloomberg this morning, "The History of the Rise and Fall of Three Arrows Capital", was widely screened in the currency circle. The hedge fund that was once the most important in the field of cryptocurrency has now encountered bankruptcy and liquidation. The excessive trust that was once caused by rising asset prices is now facing the consequences of a collapse in confidence.

Today, we will not discuss the history of the rise and fall of Three Arrows Capital (commonly known as 3AC), but there is a paragraph in the article that has attracted my attention. It is said that 3AC has launched two venture capital sub-funds: DeFiance Capital in charge of DeFi investment and Starry Night Capital in charge of digital art, but because of these two funds, the bankruptcy liquidation has become more complicated .

What we are going to discuss today is whether StarryNight Capital, which focuses on NFT investment, will also be forced to liquidate. Will those well-known NFTs in the fund also face this problem? And whether such events have a slight impact on the NFT field?

3AC faces reckoning

We all know that not long ago, the British Virgin Islands court ordered the liquidation of Three Arrows Capital (3AC), but let’s not forget that they also hold NFTs worth millions of dollars.

3AC first came to the attention of the cryptocurrency community in early June after rumors that it had failed to meet margin calls on several of its loans. On June 17, 3AC partners disclosed that they are considering selling assets and potential bailouts to repay debts. At the same time, they also stated that in the collapse of Terra and the subsequent market crash, direct losses exceeded 200 million U.S. dollars.

After that, 3AC was really facing a serious financial crisis, and there was no other way but bankruptcy and reorganization. On June 27, VoyagerDigital issued a $665 million notice of default to 3AC. At this time, 3AC, which has been unable to repay any debts, was ordered by the British Virgin Islands court to liquidate its assets. At the same time, 3AC filed for bankruptcy protection in New York last Friday. The latest news, the New York Bankruptcy Court, has frozen 3AC assets.

Teneo Restructuring, the firm responsible for liquidating 3AC, is investigating the company's illiquid wealth with much fanfare. Last week, according to relevant media reports, Zhusu privately listed the Singapore real estate he and his wife bought for US$35 million, and gave it to their three-year-old son in December 2021. When liquidating 3AC's assets, these liquidators targeted StarryNight Capital, an NFT fund established by founder zhusu and other bigwigs last year, to check its value.

Origin of Starry Night Capital

Starry Night Capital was initiated by Zhu su and Davies in cooperation with the pseudonym NFT collector VincentVanDough. The fund will make its public debut in August 2021 at the brightest moment of NFT, aiming to raise $100 million to invest in rare works in popular and sought-after collections, as well as unique, culturally significant, and one-of-a-kind works from famous NFT artists. of similar works.

Before the official launch of Starry Night, 3AC has been using its own funds to collect ArtBlocks NFTs from many famous artists, as well as some popular NFT collections, such as CryptoPunks, etc. Of course, due to 3AC's vigorous acquisition, many NFT series The floor price pushed to a new high. According to the data on the chain, 3AC purchased many top NFT art collections, such as Ringers and Fidenza, which caused other collectors to copy and imitate the transaction, and also promoted the price of these top NFT collections to soar.

Later, on August 27 of the same year, the fund purchased Ringers #879 from Peter Molick, a collector in the NFT field, for 1,800 ETH (worth about $5.9 million at the time). , What a scene, if he could have imagined that today, he would still be so extravagant. After the purchase, zhusu tweeted a photo of the NFT, tweeting "Theme: We love geese."

Regardless of whether you understand this goose or not, the sales at that time broke the record in the history of OpenSea NFT sales. Do you think this is over, but it is not. Instead, under the StarryNight Capital fund, several founders have increased their efforts to invest heavily in NFT art. These include “Pepethe Frog NFT Genesis” for 1,000 ETH, “DANKRUPT” for 469 ETH, and “AI-Generated Nude Portrait #7 Frame #184” for 300 ETH.

According to calculations by some netizens, this fund has spent more than 21 million US dollars on the NFT platform SuperRare, and has also purchased thousands of EHT on other platforms such as OpenSea. $100 million.

Careful netizens also found that, although the evidence on the chain shows that Starry Night Capital’s large purchases of NFTs worth millions of dollars, only one company has publicly announced investment in the fund as part of its $100 million financing. With this in mind, it is unknown how much of StarryNightCapital’s liquidity comes from 3AC and its founders, and how much is provided by external investors. This part of the data cannot be known, just like some of 3AC’s data, which is opaque.

Starry Night Capital Danger!

With 3AC’s liquidity problems and subsequent liquidation and other news, many netizens are paying attention to what 3AC will do next. At the same time, netizens are also targeting 3AC’s subsidiaries.

On June 15th, the researcher KyleWaters pointed out on Twitter that StarryNight Club had moved all the NFTs it acquired through Super Rare to new addresses. At the same time, these new wallet addresses seemed to have some connection with the 3AC wallet, but the author speculated , these transfers may be in response to liquidation, or they may be the transfer of assets.

Since the relationship between StarryNight Club and 3AC is clear, but some details are not well understood, we can only guess whether the fund is independent of 3AC. But as CFA John Hartery claims that the assets of StarryNight Capital are independent, this is equivalent to telling us that the assets of the fund are unlikely to be used to repay 3AC’s debts, because logically speaking, the proceeds of NFT sales in the fund are distributed To the fund's liquidity providers, not to 3AC's creditors.

Assuming that we follow the above logic, if 3AC contributes a large amount of liquidity to StarryNight Capital, then the liquidator may force the sale of some of the fund's NFTs to make its equity liquid. Under the current circumstances, it seems unlikely that StarryNight Capital’s NFT will be liquidated. However, as mentioned above, the opacity of the foundation, coupled with wallet movements, does not rule out the possibility of being dumped.

There is another situation, if Starry NightCapital does sell its NFT, according to the current market and NFT market conditions, although NFT has a rebound trend, it did not follow the trend of the big pie, especially after the US CPI came out last night, relatively high-quality NFT has stepped out of an upward trend when the pie fell, but there is still some way to go to reach the value of its previous purchases. Many of the fund's NFTs have certain historical significance or have unique collection value. I think StarryNightCapital should not sell these, and may make a lot of money from them. After all, 3AC is good at long-term investment and is optimistic about the cryptocurrency field. 3AC's logo is the best interpretation of the investment philosophy, three upward arrows.

Starry NightCapital entered the market at the brightest moment of NFT (in August last year, 1EHT exceeded $3,000, and in November, it climbed to $4,800 1ETH), according to the current market, most of the NFT collections it invested in have plummeted (as of today , 1ETH is almost climbing around $1,000), which means that NFTs that previously reached eye-popping valuations are now trading at a fraction of their all-time highs. In the downturn of the overall environment, it brought serious losses to StarryNight Capital and led to the end of the fund's pioneering investment strategy.

Of course, although we don’t know whether StarryNightCapital will be liquidated, it does not prevent us from imagining that if it is liquidated, it means that we may encounter a once-in-a-lifetime opportunity to buy some of the most exciting stocks on the market at a discounted price. Coveted NFTs. If this really happens, it will also be a big shock wave for the NFT field, because it may depress the floor price of most valuable collectibles in the market. So, now we'll have to wait to see if the fund, one of the world's most prestigious NFT collectibles, falls victim to the harshest bear market yet.

As of press time, neither Starry Night Capital nor zhu su responded to the consultation and answering questions from PRO.

The above views represent the views of the author only, not the views of the platform. Investment is risky, please invest carefully!