Crypto Donors Raised Millions for a Constitution—and Lost the Auction

1. Forming the DAO

A decentralized autonomous organization formed in November 2021 with the goal of purchasing a rare, original copy of the United States Constitution. Organizers utilized blockchain crowdfunding tools to gather capital from internet enthusiasts across the globe. The initiative gained rapid traction on social media platforms and cryptocurrency forums. Participants received governance tokens in exchange for their financial contributions to the cause.

Thousands of crypto enthusiasts contributed funds to the project.

2. Massive Capital Raised

Contributors sent cryptocurrency to the project during the days before the auction, bringing its fundraising total to about $47 million. Roughly 17,000 contributors took part. The group intended to bid through an auction arrangement and use governance tokens for decisions if it succeeded. Those tokens did not themselves confer ownership of an original copy of the Constitution.

The money was raised, but winning the auction was still uncertain.

3. The Sotheby's Auction

Organizers entered the Sotheby's auction with their multi-million-dollar war chest to bid on the historic artifact. However, the decentralized group ultimately lost the auction to a higher bid made by billionaire Ken Griffin. The winning bid totaled $43.2 million, outmatching the collective's financial limits. Organizers later stated that they intentionally stopped bidding because they lacked sufficient additional funds to insure, store, and transport the document properly.

A billionaire outbid the collective at the auction.

4. Immediate Dissolution

After losing the auction, the organizers announced that the project would wind down. Contributors could use the refund process to reclaim their contributions, subject to transaction costs on the network. A refund still required a transaction; it was not the same as every contribution returning automatically. The group had raised money but had not purchased the document.

Participants faced the separate decision of claiming their refunds.

5. Refund Complications

Contributors attempting to claim refunds encountered unexpected financial hurdles due to high transaction fees on the Ethereum network. In some cases, the gas fees required to process a refund exceeded the actual value of the individual donation. Weeks after the event, millions of dollars in unclaimed funds remained locked in smart contracts. These transaction costs disproportionately affected smaller donors who had contributed modest amounts to the pool.

High blockchain transaction fees complicated the refund process.

6. Persistent Token Value

Despite the official disbandment and the return of underlying funds, the governance tokens retained a surprising market valuation. Trading activity continued on decentralized exchanges, pushing the total market capitalization of the defunct tokens into hundreds of millions of dollars. This high valuation occurred even though the tokens possessed no official utility or governance rights after the shutdown. Market analysts pointed to this phenomenon as an example of speculative market froth.

The defunct governance tokens retained a massive market valuation.

7. Speculative Trading

The continued trading of the governance tokens saw daily volumes reach significant heights among retail investors. Holders utilized the smart contracts to redeem tokens for ethereum at the original contribution ratio if they chose to exit. Meanwhile, other community members elected to retain their tokens for potential future projects. Organizers clarified that the defunct organization could not endorse any future plans utilizing the token.

Traders continued buying and selling the inactive governance tokens.

8. Broader Market Context

ConstitutionDAO did not win the Sotheby’s auction. Organizers then opened a refund process, with contributors facing transaction fees when claiming funds. That was different from every donor automatically receiving the full amount originally sent. The collective had raised the money to buy a particular surviving copy of the Constitution, and losing the auction ended that specific acquisition attempt without giving it ownership of the document.

The auction was lost and a refund process followed.

Sources

• Original narrative adaptation — CC BY-SA 4.0
• Wikipedia contributors — ConstitutionDAO (CC BY-SA 4.0)
• Tokens of the defunct DAO that failed to buy a copy of the constitution are worth $300 million even after disbanding