DraftKings Billionaire: Why I Paid $11.8 Million for a CryptoPunk NFT

Fantasy sports and betting company DraftKings’ largest shareholder Shalom Meckenzie, who is also a board member, bought a CryptoPunk NFT for $11.8 million worth of Ethereum (ETH) on Thursday in a Sotheby’s auction.

“I really wanted this particular CryptoPunk,” Meckenzie told Decrypt. “It is part of the alien collection, which is the rarest of the punks, and the only alien that has a mask. I thought it was symbolic of Covid and the popularization of NFTs.”

NFTs or non-fungible tokens are blockchain-based crypto tokens that show proof of ownership of a digital or physical asset; NFT sales exploded in February but have since cooled. CryptoPunk #7523, or “Covid Alien” as the media has taken to calling it, is the only one in the 10,000-strong CryptoPunk collection—a 2017 NFT project of pixelated portraits named after British punk rock culture of the 70s—with accidental Covid-19 symbolism, which sent its value through the roof. Last night’s sale surpassed the previous collection record held by the pipe-smoking alien CryptoPunk #7804, which sold for $7.5 million worth of ETH in March.

The mask-wearing CryptoPunk was last sold in July 2017 for only 8 ETH, which was $1,650 then. Sillytuna, the anonymous NFT collector behind yesterday’s sale, acquired it in March at a price he declined to disclose to Decrypt—the purchase was over-the-counter (OTC), not on-chain, so there’s no price record on the public ledger.

“I had the opportunity to acquire it at a time I felt NFTs were in a great place to do fun things, and I wanted to do something interesting,” Sillytuna told Decrypt. “Sotheby's counted as interesting.”

The same Sotheby's auction also included the first NFT ever created, artist Kevin McCoy's 2014 animation “Quantum.” Sillytuna snapped it up for $1.4 million, adding to his collection of more than 1,000 NFTs. “In a few years we'll know the true state of NFTs,” he said. “We need a full range of pricing rather than just ‘expensive.’” He plans to donate 5% of the proceeds from his $11.8 million sale to COVID-19 charities.

At the Nasdaq opening-bell ceremony on Friday, Meckenzie and DraftKings CEO Jason Robins sported t-shirts with a print of Meckenzie’s new CryptoPunk purchase.

DraftKings warms up to crypto

“I’m a big fan of NFTs,” Meckenzie said. “I did a lot of research on the value and I have no doubt that NFTs will be a disruptor in the art industry.”

Covid Alien is Meckenzie’s first personal NFT purchase, but DraftKings is no stranger to NFTs or CryptoPunks.

In April, the company purchased a rare NFT, CryptoPunk #1871, for $70,400 worth of ETH, and put it up as the first-place prize in one of its daily fantasy sports (DFS) golf contests. Last month, its rival FanDuel offered a free-to-play fantasy NBA contest with NBA Top Shot NFTs as prizes.

DraftKings is edging closer to crypto, but it’s not just there yet.

The company has yet to accept crypto payments. Two days ago, DraftKings CEO Jason Robins cited the strict regulations in online betting as a major barrier for the company.

Luckily, there’s no regulation preventing it from acquiring CryptoPunks—or promoting them  on their clothes at the Nasdaq, for that matter.

Editor's note: This story was updated after Sillytuna reached out to say his plans for what to do with the proceeds from his NFT sale had changed.