By Sandeep Bishnoi
16 September 2023, 08:18 PM
At the start of this month, an unidentified clothing enthusiast borrowed a substantial sum of $1.1 million for a short 60-day period, with an eye-popping interest rate of 40%. This peculiar financial maneuver highlights a lingering appetite for risk-taking in a world that still embraces the “You Only Live Once” (YOLO) ethos.
Here’s the fascinating backstory: The borrower possesses an impressive collection of 253 T-shirts adorned with the iconic Supreme logo, collectively referred to as the “box logo collection.” In a rather unconventional move, they entrusted this prized collection to a company called 4K in exchange for a non-fungible token (NFT).
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The twist in this unusual financial arrangement is that if the borrower fails to repay a total of $1,172,328.77 by the end of the upcoming month, they will forfeit their ownership of the NFT. In this event, ownership will transfer to the individual who lent the initial $1.1 million. This new owner then has the choice to either sell the NFT or execute a unique action known as “burning” it. This burning process effectively redeems the T-shirts, granting the holder legal real-world ownership of this coveted collection.
Peering beneath the surface, the origins and purchase details of the collection remain shrouded in mystery, as it was sold through Christie’s private sales arm. Nevertheless, it’s safe to assume that the collection’s value likely hovers around the $2 million mark, making it an asset that traditional lenders, such as Bank of America’s Jane Heller, would readily consider for a loan with significantly lower interest rates and a more extended repayment period, typically spanning years.
Now, the intriguing question arises: Why would the collector opt for such a high-interest loan instead of a conventional asset-backed loan with more favorable terms? One plausible explanation is that the collector might not meet the stringent criteria required by regulated financial institutions. The platform in charge of safeguarding the T-shirt collection, 4K, has yet to disclose its “know your customer” (KYC) protocols. Still, it’s reasonable to assume that they are less rigorous compared to institutions like Bank of America.
An interesting theory emerges: The borrower may have needed quick access to cash to bid on a time-sensitive acquisition. For instance, the collector might have been eyeing Princess Diana’s iconic black sheep sweater, which recently fetched a staggering $1,143,000 from an online bidder.
In the realm of investment, there exists a new breed of investors who actively seek out risky ventures. They view risk not only as a necessary means to achieve high returns but also as an exhilarating component of the investment journey itself. This mindset is explored in “The Phoenix Economy,” where the allure of risk plays a central role in the investment decision-making process.I
n conclusion, the Supreme-logo T-shirts in this collection are destined never to be worn. Therefore, borrowing against them may be the collector’s chosen avenue to derive excitement and satisfaction from their prized possessions.