By Pradeep Saran
Sep 17, 2023
This month, an anonymous clothing collector made a bold move, borrowing a staggering $1.1 million for just a 60-day period, with an eye-popping interest rate of 40%. This decision underscores a lingering trend of embracing risk in the pursuit of excitement and unconventional investments.
The collector possesses a prized collection of 253 T-shirts adorned with the iconic Supreme logo, collectively referred to as the “box logo collection.” In exchange for this valuable collection, the collector handed it over to a company called 4K and received a non-fungible token (NFT) in return.
Here’s how it works: If the collector fails to repay the total sum of $1,172,328.77 by the end of the upcoming month, they will forfeit ownership of the NFT. The lender, who provided the $1.1 million, will then become the new owner of the NFT. The NFT holder has two options: sell it or “burn” it. Burning the NFT serves as a mechanism to reclaim legal ownership of the physical T-shirts.
Notably, this collection was sold through the private sales division of Christie’s, making it challenging to determine the acquisition date and price precisely. However, it is estimated to have fetched around $2 million, reinforcing its credibility and value in the eyes of specialist lenders like Jane Heller at Bank of America. Such lenders typically offer lower interest rates and longer repayment periods to clients with valuable assets like this collection.
So, why would the collector opt for such a high-interest loan in the first place? One plausible explanation is that they might not fit the criteria for loans from regulated financial institutions. 4K, responsible for safeguarding the T-shirt collection, likely has less stringent Know Your Customer (KYC) protocols compared to established banks.
Another intriguing theory is that the borrower may have considered a conventional asset-backed loan but couldn’t secure it in time to bid on the recent sale of Princess Diana’s black sheep sweater, which went for $1,143,000 to an online bidder.
In a broader context, this situation reflects a growing trend where a new breed of investors actively seeks out risky ventures. These investors don’t merely tolerate risk as a necessary aspect of high-return investments; they actively relish it, finding the thrill of risk itself to be a significant part of their investment journey.
The bottom line; the T-shirts in this unique collection cannot be worn, leaving borrowing against them as perhaps the only alternative means of deriving excitement and value from these iconic pieces.