Wednesday, July 28, 2021

Martin Shkreli, the Wu Tang Clan, and NFTs

You may remember that when he was riding high, "Pharma Bro" Martin Shkreli bought a unique album by the Wu Tang Clan for $2 million. When he was convicted of securities fraud the Feds seized it, among with a lot of other property, and they just sold it for an undisclosed sum:

Earlier today, the United States sold the sole copy of the Wu-Tang Clan album “Once Upon a Time in Shaolin” (the “Album”) which had previously been ordered to be forfeited as a substitute asset in connection with the approximately $7.4 million forfeiture money judgment (Forfeiture Money Judgment) entered against Shkreli at his March 2018 sentencing. Proceeds from the sale of the Album will be applied to satisfy the outstanding balance owed on the Forfeiture Money Judgment. The contract of sale contains a confidentiality provision that protects information relating to the buyer and price. …

At the time Shkreli purchased the Album in 2015, it was marketed as “both a work of art and an audio artifact.” The Album includes a hand-carved nickel-silver box as well as a leather-bound manuscript containing lyrics and a certificate of authenticity. The Album is subject to various restrictions, including those relating to the duplication of its sound recordings. In September 2017, just weeks after his conviction but before the district court-imposed forfeiture, Shkreli attempted to sell the Album through an on-line auction. 

Matt Levine thinks the Feds showed a real lack of imagination here:

Ehh I guess? I mean, fine, it’s a box and a book and an associated set of contractual provisions. I suppose if you are buying the thing you have to figure out whether you succeed to Shkreli’s contractual rights to prevent Wu-Tang from releasing more copies of the album; it’d be funny if someone paid the government a lot of money for this one-of-a-kind Wu-Tang album and then Wu-Tang just put it on Spotify. You’d still have the certificate of authenticity, though; no one else has that. Unless they type up their own. You’d have the only authentic certificate of authenticity.

Obviously the thing that Martin Shkreli bought from the Wu-Tang Clan was a non-fungible token? It was a non-fungible token rendered in paper and leather and nickel and silver rather than immutable blockchain code, but still. And then the government seized it and re-sold it, which is a thing it can do, but you can certainly imagine a more interesting deal? What if the government had securitized Martin Shkreli’s Wu-Tang album? Or what if it had sold a limited edition of 1,000 non-fungible tokens, each recorded on the blockchain, each accompanied by a certificate of authenticity signed by the U.S. Attorney for the Eastern District of Brooklyn, each representing “hey I bought an NFT of the time the U.S. government seized Martin Shkreli’s Wu-Tang album”? What if the government had held a press conference and said “crime does not pay, and we will destroy everything associated with this crime,” and then burned the Wu-Tang album on camera and then sold an NFT of that? What if I sold this section of this column as an NFT? What if someone filmed Martin Shkreli reading this paragraph and sold that as an NFT?

Do you remember when NFTs were a big deal? It was only like a couple of months ago.


G. Verloren said...

Do you remember when NFTs were a big deal? It was only like a couple of months ago. Matt Levine one of the people who still don't understand that NFT was a literal scam?

Shadow said...

I'm waiting for Goldman Sachs to bundle crappy (low grade) NFTs and sell them. Can't wait to get in on the ground floor.