3AC Starry Night NFT collection moved by liquidator

More than 300 high-profile NFTs from the insolvent crypto hedge fund’s Starry Night Capital collection have been transferred to a Gnosis Safe, a self-custody platform for digital assets.

Starry night sky with clouds - stock photo

According to a tweet by crypto analytics firm Nansen, 383 NFTs worth 625 ETH (around $840,000 at the moment of writing) were moved to a Gnosis Safe address. Some notable artworks from the lavish collection include three Max Pain NFTs by XCOPY (purchase prices ranging from $1.4m to $2.3m), Fidenza #718 by Tyler Hobbs (bought for $1.1m), Pepe the Frog NFT Genesis (bought for $3.5m), and AI-Generated Nude Portrait #7 Frame 184 by Robbie Barrat (bought for $1.1m).

Starry Night also holds several CryptoPunks, Rare Pepes, CrypToadz, and Pudgy Penguins. However, 89% of NFTs in the collection have low liquidity with less than 35 sales over the past week, Nansen added. And most of the artworks are currently valued at a much lower price than 3AC originally paid. Perhaps that should not be surprising: according to Bloomberg, trading volumes in non-fungible tokens tumbled by a whopping 97% from January 2022 highs, pulled down by a broader crypto downturn.

Starry Night Capital, a $100 million NFT-focused fund, was launched in August 2021 by 3AC founders Zhu Su and Kyle Davis together with pseudonymous collector Vincent Van Dough. The fund planned to invest in “the most desired” digital artworks and managed to acquire an array of blue-chip NFTs, including an Art Blocks Ringers NFT from artist Dmitri Cherniak that cost 3AC $5.66 million.

“Our thesis is simple, we believe the best way to gain exposure to the cultural paradigm shift being ushered in by NFTs is owning the top pieces from the most desired sets,” VVD tweeted, announcing his partnership with Three Arrows Capital. The fund’s ambitious plans included launching an NFT education portal and a physical gallery in a “major city” though they never came true: 3AC filed for Chapter 15 bankruptcy in July 2022 after it failed to repay $666 million lent from now insolvent crypto broker Voyager Digital.

3AC creditors accused Davis and Zhu of reckless spending, including a $50 million megayacht purchased with borrowed funds. According to leaked legal documents, the bankrupt hedge fund owes 27 companies $3.5 billion. The creditors' committee claimed that both founders have not been cooperating in the liquidation process of Three Arrows Capital, and their whereabouts remain unknown.

Now, the liquidation process of 3AC is being overseen by Teneo, a public relations and advisory company. The firm entered the possession of certain Starry Night Capital NFTs and eventually plans to auction the artworks with the help of VVD, who is said to cooperate with Teneo "in an effort to protect the value of these assets for the benefit of all relevant stakeholders."

"More details about the disposal process will be shared at a later date," Teneo told The Block. All investors of Starry Night Capital who are impacted by the matter or have questions about the liquidation process are advised to reach out to the company.