An anonymous cryptocurrency user contracted a loan of $ 1.1 million US dollars ($ 1.7 million in) from an online foreigner and used an NFT as a guarantee.
There is a lot to unpack here – let's start.
Borrow millions from foreigners
The transaction took place on ArcadeA DEFI platform that facilitates cryptographic loans, and has been noticed for the first time by an X user Who traveled on online blockchain files.
According to Arcade Chain recordsan anonymous borrower loaned $ 1.1 million US dollars ($ 1.7 million in) from an anonymous lender. The annual percentage rate (APR) for this loan was 40% and the reimbursement must be made within 60 days. Thus, the borrower must return 1.172 million US dollars ($ 1.82 million in) by November 1, 2023.
If this loan was facilitated by a traditional lender, a precious asset should be put on the table in warranty – like Gollum's Precious. However, we are in Cryptoland and we are dealing with magic internet money. Thus, everything that is of value can be accepted. In this case, the borrower used his collection of supreme t-shirts as guaranteed instead.
Supreme t-shirts are not regular t-shirts-they come from supreme Box logo collectionwhich contains each design of t-shirts that the streetwear brand published-from 1994 to 2020. With 253 t-shirts, supreme's Box logo collection was estimated at 2 million US dollars ($ 3.1 million in) by the auction house Christiein 2020.
Supreme t-shirts have turned into NFT
Supreme t-shirts were sent for the first time to a whole company called 4K To check their authenticity. The company then published an NFT to the borrower (the owner of the T-shirts) confirming the authenticity and the legal property of the T-shirts. The loan of 1.1 million US dollars ($ 1.7 million in) was then processed.
If the borrower does not reimburse his loan in time, alias if he is in default, the lender can now use the NFT as proof to “exchange” the physical physical t-shirts. Thus, the lender would now hold the Supreme Box logo collection of 2 million US dollars ($ 3.1 million in).
The NFT of supreme t-shirts represents the property of a real asset. NFTs are supported by Blockchain technology, which retains immutable transaction records on the Internet. Thus, in this case, it also serves as a legal product which authorizes the lender to reimburse if the borrower is fault on the loan.
Maybe NFT has a user case after all
This is not the first time that someone has used NFT as a guarantee for an expensive purchase. In JulyAn anonymous borrower obtained a loan of US $ 35,000 ($ 54,200 in) using a Patek Philippe Look at the warranty.
Patek Philippe watches are considered the most expensive luxury watches in the world. They cost more than a rolex, and Less than a million of them have been manufactured since 1839.
In this case, the Patek Philippe watch used as a guarantee was estimated at US $ 200,000 ($ 309,000 in), and an NFT certifying the authenticity of the watch was issued to the borrower, who was also the owner of the watch.
On X, people in the NFT community have also come forward and claimed that they witnessed rare Pokémon cards listed on arcade as guarantee.
“The reason why I entered the NFT is because my physical art collection is very very difficult to catalog … ebay vault is essentially to all that is all that is in everything, ” said a user x.
A small section of the NFT community has long considered NFT as JPEG with a high price. Now, while people are starting to treat NFT as a legal representation of property rather than a speculative toy, perhaps jpegs of works of funky art could have a real utility after all.
But what if …?
Since almost all cryptographic transactions occur on interwebs, which happens if the borrower is lacking on the loan and disappears in the south of France with money And Supreme t-shirts?
In Traditional financeThe lender – for example, the bank – would have the legal right to enter the guarantee. It could be a house, furniture or electronics – you call it.
In decentralized finance (DEFI), anonymity on the Internet would present a challenge if we had to go after a borrower and grasp their assets. However, blockchain trackers could work with the police to find the address of the borrower's cryptographic portfolio and the geographic location.
Blockchain follow -up companies (such as the chainysis) have had partnerships with authorities like the FBI to resolve financial crimes. Thus, the solution here would not be too different from that of traditional finance.
But so far, there are not yet any cases of cases where an borrower with an NFT as a default warranty on a loan.
