Galaxy Digital and Animoca Brands co-founder Michael Novogratz, Yat Siu, coded a 1708 Stradivarius violin to use as collateral for a multi-million dollar loan.
On June 4, Galaxy allegedly advanced an undisclosed sum of money to Seo, who used a 316-year-old violin he owned as collateral. The digital asset company turned the violin into a non-fungible token (NFT) and will keep the NFT and physical copy until Siu settles the loan.
Although Galaxy and Seo did not share the loan amount, they said it was “in the millions.” A Hong Kong-based conservator will keep the violin until Siu and Galaxy sign its removal from their custody.
A 300-year-old Stradivarius violin
The violin previously belonged to Russian Empress Catherine the Great. According to musical instrument auction house Tarisio, they have documented the provenance of the violin, dating back over 300 years.
Tarisio reports that the Russian ambassador in Venice purchased the violin for Empress Elizabeth Petrovna, who ruled the Russian Empire from 1741 to 1762.
Upon her death, the violin was given to her successor, Catherine II, better known as Catherine the Great.
Siu acquired the violin last year at auction for more than $9 million.
Tokenization of assets in loans
The ability to tokenize physical assets could change the landscape for cryptocurrency lending, said Thomas Cowan, vice president of tokenization at Galaxy. The collateral associated with crypto assets is generally very high due to the volatility of digital assets.
In an interview with Bloomberg, Cowan said tokenizing physical assets allows them to lend more to their customers, even against volatile assets like Bitcoin (BTC) or Ethereum (ETH). While it may be a fiddle today, the executive envisions this could extend to real estate in the future.
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NFT sales decline in May
While NFTs are used to tokenize physical assets, digital collectibles have seen a decline in sales volume. In May, data tracker CryptoSlam showed that NFT sales volume fell 54% in May.
In April 2024, NFTs recorded a sales volume of over $1 billion, up from just $624 million in May. Major NFT chains such as Bitcoin, Ethereum, and Solana saw a significant decline in sales.
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