ConstitutionDAO, which crowdfunded over $40M, loses Sotheby's US Constitution auction to a $43.2M bid from Citadel CEO Kenneth Griffin

Wall Street Journal 2021-11-21 Kelly Crow

Context & Ripple Effects

Before the sale, coverage had already identified payment, ownership, custody and display problems that ConstitutionDAO would need to solve if it prevailed. The loss turns those unresolved operating questions into a wind-down problem for a group that had assembled more than $40M from supporters.

Kenneth Griffin’s purchase also gives the document a single owner with a stated plan to lend it to Crystal Bridges, rather than placing stewardship under the DAO’s proposed collective structure.

First-order effects

ConstitutionDAO supporters do not receive the asset they funded; its organizers must instead manage the aftermath of the failed bid and participants’ funds.
Griffin gains control of the document and can carry out the planned museum loan, while Sotheby’s closes the sale with a $43.2M winning bid.

Second-order effects

ConstitutionDAO’s refund process is immediately constrained by transaction costs: subsequent coverage says high fees could leave roughly half of participants unable to recover what they contributed.
The failed auction puts the DAO’s small decision-making group under scrutiny, as later coverage describes existential governance questions around a “core team” making key choices.

Third-order effects

The episode exposes a structural gap between crowd-raising capital and executing a time-sensitive, high-value purchase: collective ownership, legal control and payment mechanics must be settled before a DAO can compete with a conventional buyer.
ConstitutionDAO’s planned Discord wind-down points to a short-lived campaign model for such groups, unless future organizers build durable governance and exit procedures into the project from the start.

The trend: Crypto-native crowdfunding is testing collective ownership models, but high-stakes purchases are revealing the importance of governance, execution and participant-exit design.

Discussion

@sinakian1 Sina Kian on x
1 - I want to share my experience as a (very very minor) participant in @ConstitutionDAO because it was a very meaningful experience for me, and I think it's instructive esp for my non-crypto friends.
@constitutiondao @constitutiondao on x
Community: We did not win the bid for the copy of the U.S. Constitution.
@sothebys @sothebys on x
#AuctionUpdate: Tonight's historic sale of The ‘Official Edition’ of The United States Constitution soared to a record-breaking $43.2 million, with all proceeds benefiting the Dorothy Tapper Goldman Foundation's educational programs for students. https://twitter.com/...
@jchervinsky Jake Chervinsky on x
Citadel decided 2021 was the year to wage war on the internet. The internet will win. https://www.wsj.com/...
@rsarver Ryan Sarver on x
I was intrigued by the @ConstitutionDAO movement, but sure makes it easy to outbid when everyone knows your max https://twitter.com/...
@nischalshetty Nischal on x
DAOs are the answer to online money collaboration 🤝 Good to see such early experiments and attempts! #DAO #ConstitutionDAO https://twitter.com/...
@iamdcinvestor DCinvΞstor on x
we can all rest easy knowing that the Constitution is safely in the hands of Ken Griffin, billionaire CEO of hedge fund Citadel, which has been fined for front-running customers, rather than a DAO comprised of 17,000+ crypto enthusiasts focused on promoting economic freedom 🇺🇸
@cdixon Chris Dixon on x
Great thread on lessons from ConstitutionDAO 👇 https://twitter.com/...
@cdixon Chris Dixon on x
Don't bet against the internet. https://twitter.com/...
@alexrkonrad Alex Konrad on x
incredible FTK energy here https://twitter.com/... https://twitter.com/...
@0xmakesy Makesy.Eth on x
@twobitidiot Almost makes for a better story for Ken Griffin to outbid us because we were too transparent. We get all of the publicity and public sympathy for none of the cost or effort of managing the artifact. It's a (3, 3) strategic position, so have at it supervillains 🙏🤝
@joemccann @joemccann on x
Something ironic about a guy who got bailed out multiple times buying the US Constitution... https://www.wsj.com/...
@scottmelker @scottmelker on x
I don't blame him. Priceless artifact that any billionaire would kill to own. This is only a story to “us” because he outbid ConstitutionDAO, which was one of the most exciting crowdfunding campaigns of all time. Shame we lost, but it's not a grand conspiracy. https://twitter.com…
@joshelman Josh Elman on x
When you are already considered a supervillain by so many observing memestocks, you might as well double down and piss off the crypto world too https://www.wsj.com/...
@carnage4life Dare Obasanjo on x
Announcing max bid prior to auction was quite the self own in hindsight. https://twitter.com/...
@matt_levine Matt Levine on x
ideally he would immediately sell it to the dao at a markup though?
@grimezsz @grimezsz on x
@Techmeme @KellyCrowWSJ 😠
@dbreunig Drew Breunig on x
Wow. Props to the writers on this twist. https://twitter.com/...
@levie Aaron Levie on x
Crypto has its darth vader https://twitter.com/...
@cwarzel Charlie Warzel on x
feels like the last few years are a good example of what happens when there's way too much money out there and people who don't have any idea what to do with it all https://twitter.com/...
@jason_koebler Jason Koebler on x
huge day for fiat supervillains, such a wild development https://www.vice.com/...
@katiedrumm Katie Drummond on x
What the fuck is HAPPENING https://www.vice.com/...
@mulligan BrendΞn Mulligan on x
Tomorrows headline: “Ken Griffin reveals that he is @gmoneyNFT.” https://twitter.com/...
@caseynewton Casey Newton on x
Great. This is who I was rooting for. Love to see my team notch a big win https://twitter.com/...
@kevinroose Kevin Roose on x
Gotta say, aping into a Constitution auction to beat a DAO and putting it in a museum owned by the Wal-Mart family is a pretty good old economy troll. https://twitter.com/...
@noupside Renee DiResta on x
👀big potential for “legacy institutionalist vs emergent populist financial movement” articles here https://twitter.com/...
@alexisohanian @alexisohanian on x
Can't wait for r/WSB to see this... https://twitter.com/...
@chuckrossdc Chuck Ross on x
Lol heads will explode over this https://twitter.com/...
@brycent_ Brycent on x
It puts into perspective the @ConstitutionDAO was a great idea but the the downside ended up being how transparent the raise was. 🥲 https://twitter.com/...
@tomgara Tom Gara on x
The Virgin decentralized autonomous organization vs the Chad massively centralized hedge fund manager https://twitter.com/...
@shanegoldmacher Shane Goldmacher on x
Ken Griffin, Republican megadonor, buys first-edition copy of Constitution for more than $43 million https://www.wsj.com/...
@matt_kohrs Matt Kohrs on x
So... Instead of letting “the people” buy the US Constitution, Ken Griffin bought it for himself. Neato. https://www.wsj.com/...
@austen Austen Allred on x
Have to hand it to him - pretty solid $43.2 million troll https://www.wsj.com/...
@willoremus Will Oremus on x
Billionaire hedge-fund manager narrowly outbids blockchain-based crypto-bro collective for ownership of the U.S. Constitution, no metaphors to see here people, move along https://www.wsj.com/...
@matt_kohrs Matt Kohrs on x
I think we should start a GoFundMe to hire Nicolas Cage https://twitter.com/...
@apompliano Pomp on x
Ken Griffin outbid the ConstitutionDAO for the US Constitution. Ken vs the memes is a 2021 theme. https://www.wsj.com/...
@jeffjohnroberts Jeff Roberts on x
Guy who bought the Constitution also owns the richest home in the US. I liked the DAO crowd better.. https://www.businessinsider.com/ ...
@cnbcnow @cnbcnow on x
JUST IN: Billionaire Citadel founder Ken Griffin is the person who outbid crypto investors to win a copy of the U.S. Constitution for $43 million, CNBC's @LesliePicker has learned. https://cnbc.com/... https://twitter.com/...
@pt Parker on x
Is it a coincidence that the traditional financial system, which respects the financial laws and traditions of our land, wanted our founding document more than the crypto scofflaws? Huge win for American values here. https://www.wsj.com/...
@pbump Philip Bump on x
crypto remains the undefeated champion of “reddit, but with zeal” https://twitter.com/...
@trungtphan @trungtphan on x
In 1994, Jeff Bezos spent a year and took 100+ meetings to raise $1m from 22 investors to start Amazon (each got ~1% for ~$50k). If he waited 27yrs to start Amazon, he could have used a DAO to raise that in 2hrs and own way more of the equity. LESSON: Don't rush into things. http…
@tomfgoodwin Tom Goodwin on x
You get a full refund minus gas fees. This is indeed a turning point in DAO's realizing what a incredibly dumb idea they are. https://twitter.com/...
@steven_ehrlich Steven Ehrlich on x
I get the excitement about ⁦@ConstitutionDAO⁩ - even in losing. But not sure this is a vindication of DAOs more than plain crowdfunding. They still had to rely on many centralized partners. The real test is what they would have done had they won. https://www.forbes.com/...
@kellycrowwsj Kelly Crow on x
The art market wasn't ready for revolution. A rare copy of the U.S. Constitution sold for $43.2m @Sothebys, but the winner is a private collector rather than an online group of cryptocurrency investors @ConstitutionDAO. w/@omarabdelb https://www.wsj.com/... via @WSJ
@shiraeis Shira on x
At the end of the day, we still have the memes
@katies Katie Jacobs Stanton on x
I think the @ConstitutionDAO movement is fascinating (and I've contributed), but I wish we were as excited about saving our planet as much as a historic artifact. Do Earth DAOs exist? 🌍
@niubi Bill Bishop on x
They should should have used solana https://twitter.com/...
@cathsimard_ Cath Simard on x
Still legendary https://twitter.com/...
@jason_koebler Jason Koebler on x
lots of people are like “the media sucks” and “journalists are biased” but i listened to dozens of crypto bros talking to thousands of people falsely claim that they bought a copy of the Constitution and CoinDesk published that the DAO won when it didnt https://www.vice.com/...
@adriyoung Paddingtonbear.Eth on x
the energy in @ConstitutionDAO has been unreal and y'all still did the wildest most historic shit i've ever seen, all within a week— not an L in my book 💖🎉🥳
@penllawen Richard Gaywood on x
I missed the news that ConstitutionDAO failed and so in the end was just a massive crowdfund for inflated ETH gas fees. lmao, sfyl. gg to the ETH miners who made out like bandits. https://twitter.com/...
@kevinroose Kevin Roose on x
A @ConstitutionDAO organizer tells me that David, not Brooke, was the group's representative at the auction. Meaning they didn't win.
@bigmagicdao Molly on x
You can always click right and save it . https://twitter.com/...
@mdudas Mike Daodas on x
is it a taxable event to send $eth to a dao that later gets returned to you without being spent?
@riptari @riptari on x
Where the emoji for scam? https://twitter.com/...
@basedlemahieu @basedlemahieu on x
Since @ConstitutionDAO failed to snag the constitution & now has to refund ETH to hundreds of contributors. They should use @nano payouts for refunds so that ETH gas fees don't screw over little guys who donated. @3LAU https://twitter.com/...
@drgonzo123 Dennis Detwiller on x
Auctioning the US Constitution is a bit on the nose. https://twitter.com/...
@dlberes @dlberes on x
CoinDesk, maybe the most well-known cryptocurrency news website, has deleted its article falsely reporting that ConstitutionDAO won the auction 😬😬 https://twitter.com/...
@litcapital Litquidity on x
The real winner in this was ETH Gas https://twitter.com/...
@sub8u Subrahmanyam Kvj on x
The story is not about @ConstitutionDAO being outbid. But its ability to raise $40Mn in a week. We are barely beginning to scratch the surface in understanding how some of the newer crypto/web3 communities come together and operate. https://www.wsj.com/...
@dalmaer Dion Almaer on x
Imagine pivoting those funds to doing something good and interesting in the world now. They can vote on what that is and allow multiple ideas? Maybe something gut related that helps with your constitution so the name still works? https://twitter.com/...
@ishverduzco @ishverduzco on x
Damn we didn't win :( Still incredible that strangers from around the world used web3 to raise nearly 50 million dollars in a few days This is just the beginning https://twitter.com/...
@tanayj Tanay Jaipuria on x
Pretty cool that ~20% of the ~12,500 addresses that contributed to @ConstitutionDAO hadn't done a prior ETH transaction. ConstitutionDAO onboarded thousands of people into web3
@autismcapital @autismcapital on x
It was a good way to bring attention to the space. Whether that is for better or worse remains to be seen. Valiant effort. At least we burned some ETH. https://twitter.com/...

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