Sotheby’s offered up for auction a cache of Monkey NFT as a lot in a special sale called Ape In! The digital art revolution had seemingly remade the art market in the months prior, and this was the finest collection of non-fungible tokens ever assembled by one of the world’s oldest auction houses, founded in 1744. Scrolling through the catalog of cartoon monkeys in funny hats and jackets, one could see one rare Bored Ape with solid gold fur and holographic eyes, but also rarer yet, the Ape with an unshaven face eating a piece of pizza. For digital-art enthusiasts who aspired to membership in the Monkey NFT, this was a huge deal.
The house was confident that Ape In! could ride the NFT momentum that had been building since the prior spring—one that began when Everydays, a work by the digital artist Beeple, sold at Christie’s for $69 million—and move these online pictures of weird primates to the tune of millions. A promotional video showed the cartoon monkeys in DJ booths spinning EDM at a party in what appeared to be Sotheby’s global headquarters on York Avenue in Manhattan. Young and ambitious specialists in the house’s digital-art department, a brand-new endeavor, bullishly offered the lot at an estimate of somewhere between $12 million and $18 million.
Instead, the lot of 107 NFTs sold for $24.4 million, smashing records for Bored Apes. What newly minted patron of the digital arts snagged this for eight figures? Sotheby’s wouldn’t comment on the buyer apart from saying that among those heavily involved in the bidding were legacy art collectors.
“We’re seeing a growing number of traditional art buyers getting interested in NFTs,” Michael Bouhanna, cohead of digital art sales at the house, told ARTnews at the time. And why not? Some thought these monkeys with headgear and lasers for eyeballs could be worth billions in our not-so-distant virtual lives. Monkey NFT, the moniker given to the 10,000 unique iterations of the NFT created by Yuga Labs in April 2021 and initially sold for about $190 a pop, tweeted out, “To the buyer, I think we speak for everybody when we say: WELCOME TO THE CLUB.” It punctuated the message with a skull-and-crossbones emoji, a monkey emoji, and a boat emoji—to signify a yacht.
Increasingly, it looks as though the buyer was not a traditional art collector or even a human person that other Ape owners could welcome to a club. The blockchain is an opaque-at-best space, but in the months following the purchase, some close observers have settled on the idea that the buyer of the Apes at Sotheby’s was FTX, the crypto exchange that recently crashed and burned, resulting in an inquiry into the possible market machinations of its founder, Sam Bankman-Fried, who is currently charged with crimes related to the overnight disappearance of billions of his investors’ funds in the fall. (Bankman-Fried has pleaded not guilty and, in a statement, said he “did not steal funds.”)
The evidence, per Blockchain Twitter, boils down to this: A few months after the Sotheby’s sale, FTX had listed the 101 Apes on a page detailing its NFT holdings. When FTX launched its NFT sales platform in December 2021, some of the Apes FTX had available to sell were clearly identifiable from the Sotheby’s sale three months earlier—one Twitter watcher posted a screenshot of the platform that shows eight of the Sotheby’s-sold Apes. That December 1, FTX announced the marketplace with a video where the Apes from the Sotheby’s sale were front and center, to which two-time NBA MVP Stephen Curry, who had been recently named FTX’s “global ambassador,” responded, “Cool announcement video, but my editing skills are missed,” adding a crying-laughing emoji. (The blockchain, it maybe goes without saying, gets pretty internecine pretty quickly, but Conor Grogan, a director at rival crypto exchange Coinbase, did his best to dig through the extremely Web3-style paper trail. You can read his whole thread.)
When a new crypto denomination, ApeCoin, debuted in March 2022, $8 million worth of the stuff was transferred from the digital wallet that made the purchase at Sotheby’s back to Alameda Research. Alameda is the sister firm of FTX where, complaints allege, Bankman-Fried could park his missing billions. (More fun with org charts: Yuga Labs has been clear that it is not the entity that launched ApeCoin. That would be something called ApeCoin DAO. It just so happens, as The Verge reported in March, that ApeCoin DAO gave a good chunk of the early windfall of the coin’s launch to “Yuga Labs, Yuga Labs’ founders, and the VCs who backed the project.”)
And what firm was a prominent part of Yuga Labs’ $450 million fundraising round in 2022? That would be, you guessed it, FTX.
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If Blockchain Twitter’s sleuthing bears out—and they really do seem to have the receipts—what we’d have is a major Yuga Labs investor inflating the value of Yuga Labs’ most valuable asset by bidding it up at auction. With Bankman-Fried now facing charges of fraud, money laundering, and campaign finance violations, his company’s trove of Monkey NFT remains in the FTX wallet. The old link to the NFT collection now goes to a claims agency.
SBF and the Mystery of the 101 Apes (working title) is emblematic of the art world’s deal-with-the-devil approach to the NFT market, a golden goose cut open and killed by those seeking the source of the bullion. During the bull years—well, months, really—of the phenomenon, auction houses built up their digital art departments (Sotheby’s Metaverse, Christie’s 3.0, etc.) and even the galleries established separate wings to pump out NFT sales, most notably Pace Verso. Hollywood talent agencies hired Silicon Valley–adjacent fixers to score content deals to make movie franchises from NFT IP. In 2021, an estimated $2.6 billion in art NFTs were sold, and anyone in the art market that hopped on that gravy train seemed to be getting a cut.
And then in mid-2022 the bottom fell out. In late June, crypto hedge fund Three Arrows Capital went belly up, leaving investors both big and small holding the bag. Genesis Capital had put billions into 3AC—all gone. Terra, a $60 billion Singapore-based crypto exchange, imploded spectacularly, after its stablecoin, UST, collapsed and its token, Luna, fell from a price of $80 to pennies. And then the FTX zeppelin fire brought the crypto crisis to the front pages, causing a global sell-off of risky assets. The cheapest available Bored Ape in April 2022 was about $429,000, and earlier that year Justin Bieber reportedly had to pay $1.29 million to get his. In the days after FTX imploded, Apes were available for as little as $76,400.
“Oh, the bubble burst,” Kimberly Grauer, the head of research at crypto data firm Chainalysis, and an expert on trends in cryptocurrency economics and crime, recently told True Colors. “People stopped viewing it as a way to make money via speculation. It dried up, it cooled down. People were less eager to put their money in NFTs than they were before.”
The crisis has forced economists, cultural prognosticators, art world rubberneckers, and tech world cheerleaders to collectively grapple with the phenomenon that we witnessed. Was it a legitimate burst of enthusiasm for a revolutionary way to create and sell a new kind of art? Or a tulipomania speculation bonanza that was driven purely by greed and hype? Here’s another way of framing the question: The art world figures who presumably know better—were they selling snake oil to marks? Or did they really believe in the value of these digital-token things?
We got on the horn with Benedict Evans, a tech thinker who is a partner at Mosaic Ventures and had a stint at Andreessen Horowitz—though he had left a16z before it led the $450 million fundraising round for Yuga Labs, just before the crypto winter.
“Does a real estate broker feel any obligation to tell you that you’re in a real estate bubble, and you shouldn’t buy this?” Evans said. “No. That’s not their job. Their obligation is still to the seller.”
For more insight into how the sky-high prices of certain NFTs got built up, there’s an explosive lawsuit making its way through the US District Court in the Western Division of the Central District of California that takes aim at the founders of Bored Ape and their most famous fans. The 94-page complaint reads like an episode of Entourage set in the midst of the crypto-crazed early ’20s, starring a Mad Libs grab bag of rappers, zeitgeist hitters, and A-listers: Diplo, The Weeknd, Gwyneth Paltrow, Snoop Dogg, Post Malone, Future, Kevin Hart, and—last but not least—The Chainsmokers. The suit, which is seeking class-action status for buyers of Yuga NFTs or ApeCoin, weaves a narrative of alleged crypto fraud, Hollywood machismo, social media spamming, celebrity worship, and a little bit of Bono (who is, it should be noted, very much not a defendant; U2 catches a drive-by mention via their former longtime manager). Ultimately, it alleges that the rise of the planet of the Bored Apes was nothing more than a scheme to make the monkeys look like assets that celebrities and art dealers were spending millions to obtain. Those transactions were staged, the suit claims: The famous and influential were getting their Apes gratis and were being paid to promote the stuff, a fact they failed to disclose.
“These famous celebrities, they’re getting in, and they’re going to cause a spike in the price as they continue to interact in the ecosystem. They’re part of the club, and more people are going to want to have these to be a part of the club with the celebrities,” said attorney John Jasnoch, a partner at the San Diego firm Scott+Scott, which filed the case on behalf of a pair of aggrieved NFT and ApeCoin owners named Adonis Real and Adam Titcher, as well as other plaintiffs yet to be named. “And so, ‘Oh, they’re unique and they’re scarce’—it drives that thought that it’ll be a successful investment for you.”
Perhaps you noticed in early 2022 that nearly every celeb was on a crypto company payroll—Stephen Curry was making bank as the spokesperson for FTX and various celebrities were putting up Instagram Stories about their pricey NFTs. And there was that Larry David Super Bowl ad. According to the suit, the alleged scheme began when Yuga Labs partnered with music industry veteran Guy Oseary, who manages Madonna and U2. Oseary, who’s named as a defendant in the suit, allegedly brought in high-profile friends and clients to buy and promote their NFTs.
But what the lawsuit alleges is that Oseary and company used a consumer-crypto app called MoonPay—think Venmo or PayPal but for crypto—to allow the “transactions” to occur without having to disclose them to investors, so that the bold-faced names never had to actually spend money on the NFTs they said they were buying. In addition, the suit alleges that Oseary’s venture capital firm Sound Ventures (of which Ashton Kutcher, who is not named as a defendant in the suit, is a partner), along with several of the other celeb Ape endorsers named elsewhere in the lawsuit, were early investors in MoonPay, allowing them to “financially benefit from the cross-pollination and promotional efforts for the Yuga Financial Products.”
“Together, Oseary, the MoonPay Defendants, and the Promoter Defendants each shared the strong motive to use their influence to artificially create demand for the Yuga securities, which in turn would increase use of MoonPay’s crypto payment service to handle this new demand,” the suit reads. “At the same time, Oseary could also use MoonPay to obscure how he paid off his celebrity cohorts for their direct or off-label promotions of the Yuga Financial Products.”
Asked for comment, a Yuga Labs spokesperson said, “In our view, these claims are opportunistic and parasitic. We strongly believe that they are without merit, and look forward to proving as much.” Oseary did not respond to requests for comment last week, and the court docket shows that he was granted an extension to respond to the suit.
A MoonPay spokesperson said, “MoonPay says all celebrity clients were charged in full for the price of the NFTs and a service fee.”
While the lawsuit is in its earliest stages, it may have already provided some much-needed context to one of the more baffling exchanges of our entire pandemic-era screen consumption: the “I bought an Ape” back-and-forth between Jimmy Fallon and Paris Hilton on The Tonight Show in January 2022, in which the pair, Ape owners each, discussed the finer parts of NFT shopping. Fallon, with the somber tone of a man who has come to terms with the state of his soul, says he picked his Breton-striped Ape because he, too, wears striped shirts. Hilton, as if she hadn’t the faintest idea what she was saying, offered, “I saw you on the show with Beeple and you said you got it on MoonPay.” As the suit alleges, for all its unintended comedic gold, the exchange was helping to build up the idea of Bored Apes as investment pieces worth millions—a sort of Tinker Bell play—and attract more buyers. As the plaintiffs and their lawyers tell it, celebrities talking about their Apes on social media, or late-night TV, became the public-facing part of a plan in which their hundreds of thousands of dollars of NFTs translated to the popularity of ApeCoin. Which translated to a $450 million seed fundraise, and a $4 billion valuation.
Neither Fallon nor Hilton responded to requests for comment last week.
“Did you watch the DJ Khaled one?” Jasnoch, the lawyer, asked me.
He was referring to footage of DJ Khaled, aughts-era hip-hop’s walking exclamation point, standing on a yacht looking at multiple phone screens, various people telling him, “You bought an Ape! You bought an Ape!” as Khaled wobbles around confused.
“Yeah, it’s pretty bad,” Jasnoch said. “He’s just like, ‘I don’t know what this is.’”
In the auction world, the sale of the digital future was a relatively subtle proposition: The houses needed to incept the cultural cognoscenti and implant the idea that NFTs are art. Was Beeple’s Everydays—a series of thousands of images and illustrations, some of which are sexist or downright puerile—actual fine art worthy of a downtown gallery opening and a celebratory private dinner at Frenchette, which Beeple really had thrown for him last March? In retrospect, is it a bit crazy to say things such as “I look at life as pre-Beeple and post-Beeple—like the world thinks about before Jesus Christ and after,” as Noah Davis, who arranged the $69 million Beeple sale at Christie’s as the house’s head of digital sales, really did once say. (Davis has since left Christie’s and now works, as it happens, as a brand lead at Yuga Labs for CryptoPunks, another of its NFT offerings. They look kinda like the Apes, if they were punky-looking cartoon guys.)
But it doesn’t quite matter if it’s art—auction houses sell wine and constitutions and sneakers and watches and first editions. If it’s selling, you sell it.
“It’s like Hollywood making movies about how Hollywood sucks. You actually embrace it,” Evans, our crypto sherpa, said. “Like, yeah, I’ll take that money.”
The auction houses have their boilerplate explanations of why a certain NFT should be contextualized as art, making sure that they remain as devoted as ever to the seller, not the buyer. Did Beeple really “achieve something historic” when Christie’s slotted his NFT-cum-walking-man-sculpture, Human One, into its evening sale between paintings by Issy Wood and Stanley Whitney?
Jasnoch, the plaintiffs’ lawyer in the Yuga suit, attempted to thread this needle by comparing the Monkey NFT and their crypto complement, ApeCoin. The former can, in the broadest sense, be argued to be an artwork. The latter is purely a unit of currency with no artistic value whatsoever—making it, in his estimation, a viable thing to be regulated. The linking of the two entities so closely is where things get tricky—and the lawyers get involved.
“I think the concept of an NFT can have intrinsic value, and that a token can represent value in some fashion, and I think there’s value in people liking the look of the artwork,” he said. “But in terms of it being a financial product and how they were marketed and how they were sold, it really is an unregistered security and it needs to be subject to proper disclosure. And once you get into generating all that hype around the Monkey NFT itself, they release the ApeCoin token, which doesn’t even have the pretense of a piece of art or anything. And that’s just a straight-up unregistered security that is used for speculation and for trading.”
Evans offered another conundrum. When a market offers something for sale at a large sum, there is, at a base level, an understanding among the public that it has some legitimate importance. Perhaps the artwork is not to one’s liking, but it has a provenance and the artist is in museum collections—or there’s historic relevance to something that makes it at the very least a curio.
“When you are buying vintage vinyl, or rare sneakers, or Marilyn Monroe’s shoes, or a Salvador Dalí print, or whatever it is, you’re getting something that has no tangible physical value, but you’re also getting it in the belief that other people attribute value to that too,” Evans said. “There’s like a deep cultural base that thinks Jordan sneakers are worth something, early Sex Pistols vinyl is worth something. And the challenge with all of these NFTs was you didn’t really know that there was that broad, deep cultural base. It was just: ‘Oh, my gosh, somebody just bought one for 200 grand.’”
For the time being, some in the art world are still acting as though the devotion to NFTs could result in some kind of windfall. Sotheby’s Metaverse has a sale up right now. It’s offering the first NFTs by the artist Sebastião Salgado, but they aren’t exactly lighting the place on fire. They cost $250 each. Back in 2021, the Natively Digital sale netted Sotheby’s $17.1 million, with $11.75 million paid for a single NFT from the series of CryptoPunks.
But in February 2022, Sotheby’s set up a special sale where it expected a set of 104 CryptoPunks to go for as much as $30 million, only to see the thing collapse minutes after the scheduled gavel-in when the consignor backed out, reportedly due to a lack of interest from bidders. The house didn’t explain at the time and the seller crowed online that it had all been an elaborate gaming of the system—though just how anyone got played remains unclear. By last December, the Natively Digital sale seemed to have lost its luster entirely. Sotheby’s offered the first-ever Keith Haring NFT as the star lot of the sale, but it sold for $25,000, well below the $80,000 high estimate.
Things aren’t much better at Christie’s, where the NFT platform Christie’s 3.0 has a smattering of work for sale, mostly in the low four figures. Despite the fact that the auction house launched an on-chain marketplace in the Web3 space in 2022, sales of the stuff were way, way down year to year. In 2021, the house sold $150 million in NFTs. In 2022, sales were just $5.9 million, a 96% downturn. And it’s not like Christie’s had a bad year that dragged down the digital sector: The house saw a record $8.4 billion in top-line sales, and NFTs were just about 0.07% of the total.
When asked for comment on whether they plan to continue with their NFT platforms, Sotheby’s declined. Christie’s did not respond to a request for comment.
There’s no definitive way to say whether the NFT market will ever come back. When asked what the data says, Grauer, the crypto expert, said it’s certainly a bear market at the moment, but things could hypothetically recover.
“A lot of people are very eager, and say that we are in the heads-down-and-build phase and are looking for the right projects to invest in when liquidity opens up in the next year or so,” she said. “Other people have said the bubble’s burst, and I certainly don’t have a strong idea of which one’s correct.”
One tech entrepreneur seems to have found a solution. In 2022, Skyler Hallgren, David Sawyer, and Zach Miller launched Unsellable, a start-up that purchases worthless NFTs for a penny as a way to provide a tax write-off. It’s proven quite popular with collectors looking to exit the space as quickly as possible, those who have accepted the fact that these once-promising investments are, in fact, devoid of value. The Unsellable Collection, the start-up’s vast haul of worthless digital detritus, is currently home to over 16,000 objects.