NEW YORK, NY (April 15, 2021)—Seward & Kissel LLP announced today that it advised Sotheby’s on the historic auction house’s first-ever sale of non-fungible tokens, which occurred this week through Sotheby’s collaboration with the renowned digital artist known as Pak. Over the three-day event, which concluded yesterday, Pak’s NFTs sold for nearly $17 million.
“We were honored to assist Sotheby’s in this groundbreaking sale that keeps it firmly at the frontier of the art world while introducing collectors to an important new form of artistic expression and ownership,” said Meir Grossman, a partner in Seward & Kissel’s Business Transactions Group and Blockchain and Cryptocurrency Group.
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 1×1 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.
Pak’s status as a standard-bearing digital artist made them an ideal artistic partner for Sotheby’s as it entered the NFT market. Known only by their pseudonym, Pak has been creating digital art for more than 25 years and, in late 2020, became the first artist to sell an NFT for $1 million. Pak may be best known as the creator of Archillect, which uses artificial intelligence to discover and share visually interesting content on social media.
“Sotheby’s and Seward & Kissel both understand how important it is for historic institutions to stay attuned to new developments in their fields,” said Seward & Kissel partner Anthony Tu-Sekine, who heads the firm’s Blockchain and Cryptocurrency Group. “We are grateful that Sotheby’s chose us to advise them on their first foray into the world of NFTs. This deal may have involved a law firm founded in 1890 advising an auction house founded in 1744, but it shows that both firms understand that to stay relevant, you have to be able to understand and embrace new developments, and that you can never stop looking forward.”
Along with Grossman, Tu-Sekine led the representation of Sotheby’s in its collaboration with Pak. The full Seward & Kissel team included partner Jon Brose, counsels Danielle Lemberg and Philip Moustakis, and associates Maria Rivera-Diaz, Andrew Jacobson, Casey Jennings, and Brett Cotler from the Business Transactions, Blockchain and Cryptocurrency, and Tax Groups.
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.
Seward & Kissel’s blockchain and cryptocurrency practice maintains a cryptocurrency blog, SKrypto.