In this week’s newsletter, learn how Galaxy Digital is using a non-fungible token (NFT) of a historic violin to secure a loan and how NFT sales volume plummeted in May. Find out what the US Treasury has to say about NFTs and how Bitcoin NFTs have reached a new milestone. Separately, Dapper Labs CEO Roham Gharegozlou says NFTs are not securities after reaching a settlement in the NBA Top Shot Moments lawsuit.
Galaxy Digital uses a historic NFT violin to secure the loan
Yat Siu, co-founder of Galaxy Digital and Michael Novogratz’s Animoca Brands, tokenized a 300-year-old violin as collateral for a loan. Galaxy loaned Siu an undisclosed amount, and to secure the loan, the Animoca CEO used an NFT of a historic Stradivarius violin and physical assets as collateral.
The violin belonged to Russian Empress Catherine the Great. Musical instrument auction house Tarisio has traced the origins of the violin back more than 300 years ago. Siu acquired the violin at auction in 2023 for $9 million.
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NFT Sales Volume Drops 54% in May: CryptoSlam
NFT sales showed a decline in May despite a recent spike in April. According to CryptoSlam, NFT sales reached over $1 billion in April. However, volume fell to $624 million in May, recording a 54% month-over-month decline.
Bitcoin-based NFTs saw a 68% drop in sales in May. Other major NFT chains, such as Solana and Ethereum, have also seen downward trends. Solana-based collectibles are down 48%, while Ethereum NFTs are down 55%.
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US Treasury report outlines potential financial risks of NFTs
The US Treasury Department has released an NFT risk assessment to provide insight to regulators. The ministry highlighted several security concerns, including the possibility of terrorists funding operations using non-fungible tokens (NFTs).
In addition to terrorist financing, the Treasury Department also said that NFTs could be used by government entities to finance nuclear proliferation and money laundering. Additionally, the government agency said there are risks for investors who could be exposed to carpet recalls and theft.
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Bitcoin NFTs have a record turnover of $4 billion
NFTs based on the Bitcoin blockchain have seen an unprecedented $4 billion in sales volume. Data from NFT tracker CryptoSlam on June 4 showed that Bitcoin-based NFTs generated a record volume of $3.97 billion and wash volume of $82 million.
Bitcoin-based digital collectibles also recorded a sales volume of $171 million, taking the top spot over the past 30 days. Meanwhile, sales of Ethereum-based collectibles only reached $159 million last month.
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Dapper Labs $4M Settlement Reaffirms NBA NFTs Are Not Securities: CEO
Dapper Labs, the company behind NBA Top Shot Moments NFTs, has reached a $4 million settlement to end a class-action lawsuit, which alleged the NFTs were sold as unregistered securities.
The company’s CEO, Roham Garegozlou, claimed that the case revealed that NFTs on a decentralized public network are not securities “in the same way that trading cards are not securities.”
The settlement agreement showed Dapper Labs agreeing to pay $4 million if the plaintiffs stopped claiming the NFTs were securities. This also ensures that the Flow blockchain will be sufficiently decentralized and away from company control.
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Thanks for reading this roundup of the week’s most notable developments in the NFT space. Check back next Wednesday for more reports and information on this actively evolving space.
