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From Liquidation to "Celebration:" Sotheby's $17 Million Grails Sales
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From Liquidation to “Celebration:” Sotheby’s $17 Million Grails Sales

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For one night earlier this month, the bear market felt like a world away.

On June 15, digital art enthusiasts packed the Sotheby’s New York showroom for the highly anticipated Grail Part II live auction, showcasing a remarkable trove of generative art NFTs headlined by Dmitri Cherniak’s Ringers #879 — affectionately nicknamed ‘The Goose’.

The collection that went up for auction had an eventful past. Curated by pseudonymous collector Vincent Van Dough on behalf of now-defunct hedge fund Three Arrows Capital (3AC), the artwork became entangled in liquidation proceedings after 3AC imploded following the collapse of Terra Luna.

Where many saw a potential sell-off was Sotheby’s VP and head of digital arts Michael Bouhanna saw an opportunity. Crowned by the $6.2 million sale of The Goose, the night surpassed pre-auction estimates by closing at $11 million. During two auctions and one private sale, the Grail collection totaled $17 million – an impressive result in the depths of a market downturn.

In this week’s nft now podcast interview, Bouhanna takes us behind the scenes of Grailintroduces Sotheby’s new Gen Art program with Art Blocks and reflects on the lessons learned from the Natively Digital: Glitch-ism backlash.

Matt Medved: Briefly tell us about your background for those who may not know your story. How did you get into digital art and NFTs?

Michael Bouhanna: I have been working at Sotheby’s for about eight years, mainly in Paris and London, as a contemporary art specialist. So I was in charge of the business, getting expertise, pricing and sales strategy. I came into contact with NFTs by seeing what’s on social media and became very curious about it.

It took me a while to understand the technology behind it, and that was in late 2020. I discovered some conceptual artists who were doing some really interesting work. The market started to pick up at that point. So I brought the first NFT sales to Sotheby’s in June 2021 for the Natively Digital auction.

We wanted to inform people about the different movements and we succeeded very well. In that time, we achieved the record for a CryptoPunk and featured some of the artists who are among the top performers in the digital art space today. We started from there and it became a real passion for me to work in this new, innovative space.

Sotheby’s made headlines with its second Grails auction on June 15. The auction resulted in an $11 million sale in the depths of a bear market, beating many people’s expectations. How did Sotheby’s secure the ability to auction off the assets that originally belonged to 3AC?

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Like many, we were aware of 3AC’s failure and that their NFT collection was going to be liquidated. The liquidators have publicly announced the progress of the liquidation, so we had a chance to contact them, and in the end they decided to work with us for many reasons.

First of all, we specialize in the sale of very complex and important collections in volume, quality and diversity. So it appealed to them that we could propose global sales through multiple channels. I think our past sales really prove that it doesn’t feel like liquidation, but more like a celebration of the works and artists that are in this collection.

We saw The goose all over social media and people having fun memes it; it was an enduring image that represented much. Furthermore, many remarkable pieces have been sold. What made the auction so successful, from your expertise?

There are many different components that came together. The first is the strategy of presenting an art sale and moving away from just selling NFTs. It’s important to talk to collectors in the same way we would talk about good works of art.

Then there is the living art auction. It is something important to the core of the NFT community. We provided a great live experience of a very traditional way of selling some masterpieces. It was great to have 150+ people in the room, 20+ people with the paddle ready to jump on some bids, on the phone, online. It was very lively and felt like a traditional sale and a market full of very passionate collectors looking for great pieces.

There’s also the celebration of generative art we’ve created through the story and curation of the sale. They were mainly works by Art Blocks, and we cannot deny that generative art has a long history from the 1960s. Whenever we talk about generative artworks on the blockchain, we have to put them in the context of 20th and 21st century art history.

The real challenge was to turn the story of a liquidation, where many collectors thought they could get a big discount when purchasing this work, into a party, to make sure we sell them for full price in the current market.

“I don’t think it’s a good entry point for traditional collectors to buy their first NFT for $6 million.”

Michael Bouhanna

It is rumored that several of the underbidders in Sotheby’s digital art auctions have been traditional art collectors, as opposed to Web3 natives. What level of interest do you see from this demographic around NFTs?

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There is some interest from traditional collectors and it is easier to introduce them to this new medium through lower value works. I don’t think it’s a good entry point for traditional collectors to buy their first NFT for $6 million, but that’s why we also wanted that sale to include every prize.

Each sale like this is a new opportunity to talk to this traditional type of collector. So it’s a step-by-step process that we learn a little bit more each time. And the ecosystem will evolve and become a little friendlier to them. It ties in with crypto in terms of value but also culture.

Part of the difficulty is understanding how to enjoy them physically. That’s why we try to show works and give them the same look of a real work of art.

Earlier this year, Sotheby’s was criticized for its Natively Digital auction of glitch art, which originally did not include representation of female artists. The company then relaunched the show with a more equitable lineup. What were some of the lessons learned from that?

We had sold a lot before the glitch sale, and each time we were very careful about representing underrepresented communities and female artists. Two weeks before that sale, we had a sale for female artists who worked with Pussy Riot and Unicorn DAO.

With this glitch sale, we missed a big part of how underrepresented communities and female artists are very important in this movement, more so than other movements. We are very grateful that the community picked up on the issue and relaunched in two weeks with an all new story and curation, including many female, transgender and non-binary artists who have played a key role in the evolution of this glitch movement .

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So I am very grateful. They helped us a lot to let us rework the curation. It was very important for us to listen.

You also teased an upcoming project in the generative art space. What can you tell us about it?

It’s really exciting and something the whole team has been working on for over a year. It fits our new strategy to have a lot of involvement within the generative art movement. We are going to launch a new Gen Art program powered by Art Blocks Engine.

It is a huge honor to work with Art Blocks. I’m a fan myself and I think they’ve done a great job of innovating and creating this whole new artist ecosystem with these tools. There will only be two or three sales in the program each year, so it will be extremely curated in a very artful way with exhibition videos and good education on the works.

I am very happy to usher in this GenArt program with Vera Molnár. She is 99 years old. She is like the mother of generative art. She has been searching for the latest technology all her life, innovating and pushing boundaries.

If you look at her career, it’s full of different periods depending on the new tools she used. And now she’s looking at what the blockchain, creative coding, and long-form generative art can provide to create this new body of work. She collaborates with a great artist, Martine Grasseur, who is well known in the generative art space. This sale will take place at the end of July.

It’s important news for the generative art scene, because she’s the artist who influenced so many of the young artists we know today, like Tyler Hobbs and Dmitri Cherniak. We couldn’t be here today without the progress she made in the 60’s.

This interview transcript has been edited for brevity and clarity.

For the full and uncut interview, listen to our podcast episode with Michael Bouhanna.



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