Starry Night & the 3AC collapse
In 2021 a ~$100M fund set out to buy the best NFTs ever made. A year later its backers were bankrupt, and the collection ended up on the block at Sotheby's. It remains the largest forced NFT liquidation in the space's short history — and a marker for the era's peak and crash.
The fund
Starry Night Capital launched in August 2021 — a fund with a reported ~$100M target, formed by the pseudonymous mega-collector Vincent Van Dough (VVD) together with Su Zhu and Kyle Davies, the founders of the crypto hedge fund Three Arrows Capital (3AC). The thesis was simple and maximal: own the top pieces from the most desired sets, and build a gallery and education arm around them.
The collection became a who's-who of blue-chip NFTs — Art Blocks (a Fidenza, Dmitri Cherniak's Ringers, Chromie Squiggles), Autoglyphs, CryptoPunks, XCOPY works and CrypToadz. It also included the “original Pepe” NFT — the version authorised by Pepe creator Matt Furie, a scan from his Boys' Club comic — bought on 5 October 2021 for 1,000 ETH (~$3.5M).
“Original Pepe” ≠ a Rare Pepe card
The collapse
In May 2022 the Terra (LUNA/UST) collapse detonated 3AC's heavily leveraged, heavily exposed book. Margin calls followed in June; on 27 June 2022 a court in the British Virgin Islands ordered 3AC into liquidation, appointing Teneo. On 2 July 2022 the firm filed for Chapter 15 bankruptcy in the US. A fund that had once managed a peak of roughly $18 billion now faced creditor claims of around $3.5 billion.
The Starry Night NFTs were 3AC assets, so they fell under the liquidation. In October 2022 Teneo took custody of 300+ NFTs, moving them out of the Starry Night wallet for the first time in months — with VVD publicly cooperating in accounting for and transferring them.
The Sotheby's “Grails” liquidation
The collection was sold — at Sotheby's, not Christie's — under the series title “GRAILS: Property from an Iconic Digital Art Collection.”
- Grails Part I (~19–20 May 2023): 7 NFTs for ~$2.4M — Fidenza #725 alone made $1.02M.
- Grails Part II (15 June 2023): 37 NFTs for ~$11M, every lot beating its high estimate — headlined by Cherniak's Ringers #879 “The Goose” at $6.2M (to Punk6529).
- A later private sale (March 2024) moved the Furie “original Pepe” from the estate to Andrew Kang (Mechanism Capital).
Across the two auctions and a private sale, the estate's NFTs realised on the order of ~$17M — a fraction of what was spent assembling them, but with the marquee lots selling above estimate.
What it meant for Rare Pepe
Here the record and the memory diverge, so we separate them.
Documented
Community sentiment (lore)
Sources: Sotheby's “Grails” series; The Block, CoinDesk, Decrypt, Artnet, ARTnews, Fortune coverage of the 3AC liquidation and the Grails auctions; Wikipedia (Three Arrows Capital). VVD's real identity is unconfirmed and not asserted here.