Three Arrows Capital's NFTs fetch $10.9 million at Sotheby's

LONDON (Reuters) - A set of non-fungible tokens previously bought by bankrupt cryptocurrency hedge fund Three Arrows Capital sold for $10.9 million at Sotheby's in New York on Thursday, the auction house said.

Three Arrows Capital, which filed for U.S. bankruptcy a year ago, spent $15.5 million worth of cryptocurrency on the 37 NFTs in a series of purchases in July and August 2021, data from blockchain tracker DappRadar showed.

Non-fungible tokens (NFTs) are a blockchain-based asset that represents ownership of a digital item such as an image, video or piece of text.

The most expensive item "Ringers #879 (The Goose)" is part of a series of 1,000 computer-generated abstract images by Canadian artist Dmitri Cherniak.

It sold for $6.2 million on Thursday, Sotheby's said, having been bought by Three Arrows Capital for around $5.9 million in August 2021 according to DappRadar data.

"We see a growing interest and more non-crypto, non-NFT collectors starting to really understand the quality and why it’s interesting," said Michael Bouhanna, head of digital art and NFTs at Sotheby's.

NFTs only exist in digital form and anyone can view them online for free, but many of the items in the auction are accompanied by physical print copies which buyers can display, Bouhanna added.

Singapore-based Three Arrows Capital was the first in a series of major crypto firms to go bankrupt in 2022, following the collapse of cryptocurrencies Luna and TerraUSD.

The market for NFTs exploded in 2021, as cryptocurrency prices surged and technology enthusiasts bet that digital assets would become highly-valued in online virtual environments.

But the speculative frenzy has since cooled, with around $675 million worth of NFT sales in May 2023, down from a peak of $5.7 billion in January 2022, according to DappRadar data.

Another seven of Three Arrows Capital's NFTs were already sold for $2.5 million at a Sotheby's auction in May.

(Reporting by Elizabeth Howcroft; Additional reporting by Nilutpal Timsina; Editing by Sonali Paul)

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