Seward & Kissel LLP advised Sotheby’s on the historic auction house’s first-ever sale of non-fungible tokens, which occurred April 12-14, 2021 through Sotheby’s collaboration with the renowned digital artist known as Pak. Over the three-day event, Pak’s NFTs sold for nearly $17 million.
Hosted on Nifty Gateway, a leading NFT marketplace, the uniquely formatted sale allowed collectors to bid on NFTs for limited-edition artworks in “The Fungible Collection” and open edition artworks in “The Fungible Open Collection.” The NFT for “The Pixel,” a single-edition piece consisting of a lone 1x1 pixel, sold for $1.35 million, and the NFT for “The Switch,” a single-edition piece of artwork developed to change form at a specific point of time in the future, known only to the artist, sold for $1.4 million. The NFTs were minted on the Ethereum blockchain.
Seward & Kissel advised Sotheby’s on all aspects of the sale of Pak’s artwork, including agreements with the artist and with Nifty Gateway, as well as a number of legal and regulatory requirements.
The engagement was an extension of the firm’s active work on blockchain-related transactions, including, for instance, its representation of OneGold.com, an online marketplace for tokenized precious metals, and DocuWalk, a blockchain-based document and contract platform launched by ShelterZoom. The firm also has significant experience advising service providers and actors in the cryptocurrency industry, including payment service providers, custodians, investors, arbitrageurs, and others in crypto fund formation; defending clients in regulatory enforcement actions and private litigation; and providing licensing, regulatory, and sanctions advice.
Meir Grossman, a partner in Seward & Kissel’s Business Transactions Group and Blockchain and Cryptocurrency Group, and Anthony Tu-Sekine, head of the firm’s Blockchain and Cryptocurrency Group, led the representation of Sotheby’s in its collaboration with Pak. The team also included partner Jon Brose, counsel Danielle Lemberg, and associates Maria Rivera-Diaz, Andrew Jacobson, Casey Jennings, and Brett Cotler from the Business Transactions, Blockchain and Cryptocurrency, and Tax Groups.