3AC Liquidator to Sell $21M NFT Portfolio in Bankruptcy

Christopher Farmer, managing director at advisory firm Teneo and joint liquidator on the 3AC bankruptcy case, confirmed that the NFT sale will begin 28 days after the official notice. According to the court filing, the purpose of the sale is specifically ‘to realize the value of the NFTs for the purposes of the liquidation.’ This decision follows extensive consideration of all available options to maximize the value of 3AC’s remaining assets, with the liquidator emphasizing that the move represents the optimal path for creditor recovery.

The portfolio’s valuation comes from blockchain intelligence firm Dune, which pegs the total value at $21 million. This figure represents only the NFTs held by the liquidator, while the bankrupt hedge fund itself still holds approximately $2.4 million in additional NFTs. The liquidators have confirmed that the sale will not include the collection informally dubbed the ‘Starry Night Portfolio,’ which Teneo moved to a Gnosis Safe wallet in October 2022. This separate collection had originally cost 3AC $21 million to assemble during the peak of the NFT frenzy in 2021.

The liquidation encompasses hundreds of NFTs from some of the most prestigious collections in the digital art space. According to the official filing, the sale includes pieces from renowned collections such as the Bored Ape Kennel Club, Autoglyphs, Chromie Squiggles, CryptoPunks, Fidenza, Nimbuds, and Ringers. Crypto analyst Tom Wan provided additional specificity, noting that among the high-profile pieces scheduled for sale are 11 CryptoPunks, 1 Bored Ape Yacht Club (BAYC), 2 Mutant Ape Yacht Club (MAYC), 3 Otherdeeds, 3 Autoglyphs, and 8 PEGZ tokens.

The diversity of collections reflects 3AC’s aggressive acquisition strategy during the NFT market peak, when the hedge fund was actively building what it considered premium digital assets. The inclusion of CryptoPunks and Bored Ape derivatives represents particularly significant holdings, given these collections’ status as blue-chip assets in the NFT ecosystem. The official notice, however, maintains some opacity regarding the complete inventory, failing to reveal comprehensive details about all NFT types the liquidators plan to sell.

Three Arrows Capital’s bankruptcy filing in July came after what the firm described as ‘extreme fluctuations’ in crypto markets, exacerbated by massive losses from the Terra Luna network collapse two months earlier. The hedge fund’s implosion created a devastating ripple effect across the cryptocurrency sector, forcing several prominent firms to seek bankruptcy protection. According to court documents, 3AC owes $3.5 billion to 27 companies, including major industry players like Blockchain.com, Voyager Digital, and Genesis Global Trading.

Teneo’s asset recovery efforts extend beyond the NFT portfolio as the liquidator works to identify and liquidate all of Three Arrows’ remaining assets. The NFT sale represents a significant component of this broader recovery strategy, though the $21 million valuation represents just a fraction of the total debt. The liquidation occurs amid a substantially cooled NFT market compared to 2021’s frenzy, raising questions about whether the final sale prices will align with the current valuation estimates.

The exclusion of the Starry Night Portfolio from the sale adds another layer of complexity to the liquidation process. This separate collection, which includes works by prominent digital artists, was specifically segregated in October 2022, suggesting potential different treatment or valuation challenges. As the 28-day notice period progresses, market participants and creditors alike will be watching closely to see how this unprecedented liquidation of a failed hedge fund’s digital art collection unfolds in a markedly different market environment.