December 5, 2021

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Crypto Investors Lose Out In $43.2 Million Sale Of Rare Copy Of U.S. Constitution

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This story has been updated to reflect the full price that the Constitution sold for after all auction fees.

A rare copy of the U.S. Constitution sold for $43.2 million at Sotheby’s Thursday, and while the winner remains unknown, the internet collective called Constitution DAO, which mounted an upstart bid and publicly touted its interest, has confirmed it wasn’t the buyer.

The Constitution sold Thursday is one of 13 remaining from a printing made for the 1787 Constitutional Convention and one of only two privately owned copies. Constitution DAO had hoped to place it in a museum or another public home; it has said it would return the money it raised if it lost.

[Read More: What is a DAO—and why does one want to buy the Constitution?]

The Constitution’s previous owner, Dorothy Goldman, plans to donate the proceeds from the sale to her foundation, which supports constitutional law study. She should be pleased: The transaction represents a 24,700% return on the $165,000 her husband, real estate developer S. Howard Goldman, paid for the Constitution in 1988.

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Constitution DAO crowdfunded its bid, attracting thousands of individual donors who contributed in Ether, a popular cryptocurrency. The group’s organizers first met a week ago and began soliciting donations on Sunday, ochestrating a word-of-mouth campaign through Twitter and other social media. (Most of Constitutional DAO’s original organizers have revealed themselves—largely a group of young people working in technology and crypto—but the majority of its membership remains anonymous.) It set a goal of $20 million, the high end of what Sotheby’s had originally estimated the document could fetch. By Tuesday, it had raised $5 million. A day later, over $40 million. It’s not clear how much the group eventually raised or why it wasn’t able to surpass the winning bid.

“I definitely thought we would reach $20 million, but I didn’t expect the rapid acceleration,” says Yossi Hasson, CEO of Metaversal, a New York-based crypto investment firm that put $1 million into Constitution DAO. “These crypto networks enable global coordination of people so quickly.”

Constitution DAO is a so-called Decentralized Autonomous Organization, or DAO, an organization that records its membership using blockchain ledger technology and lets those members vote on how the DAO should operate. There are no boardrooms or club lounges involved: DAOs are organized and promoted through chat apps like Discord and social media platforms like Twitter. And they’re an obvious pairing with cryptocurrencies, since both focus on upending traditional centers of power.

DAOs are an new-age experiment in governance, and the chance to buy an artifact connected to the start of the most significant governance experiment in the last 300 years appealed to Constitution DAO’s base.

“What we’re seeing here is people using a DAO to communicate an emotional connection with their country’s history. How cool is that?” says Robbie Heeger, CEO of Endaoment, an advisory firm for crypto investors. Endaoment helped the DAO understand and carry out the small-print details of the Sotheby’s sale, including the fact that it would’ve needed to pay in U.S. dollars, not Ether. “‘DAO’ and ‘cryptocurrency’ can really seem like foreign terms. We’re demystifying them with this through an approachable lens: buying a rare document.”

DAO enthusiasts hope they’ll grow in popularity over the next few years—just as cryptocurrencies did during the mid to late 2010s. By design, their co-op nature can make a DAO resemble a disorganized group-text-message thread, and some of the earliest ones suffered mishaps, including a high-profile hack in 2016.

More recently, another such group, PleasrDAO, bought a different high-profile item: the one-of-a-kind digital Wu Tang album originally purchased by disgraced pharmaceutical financier Martin Shkreli. PleasrDAO acquired it for $4 million last month.

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