Reuters Investigation: The Rise of MetaKovan, the Bidder of the Most Expensive NFT in History

Authors: Angus Berwick, Elizabeth Howcroft

Original Title: From Crypto to Christie's: How an Indian metaverse king made his fortune

Translation: Linqi, Dong Yiming

Introduction: On March 11 this year, the NFT artwork "Everydays: The First 5000 Days" by crypto artist Beeple was sold for $69.3 million at the world-renowned auction house Christie's, making its buyer MetaKovan an instant focus in the crypto industry.

In recent months, Reuters has conducted a detailed investigation into MetaKovan's identity and his rise to fortune, uncovering several questionable incidents involving him.

On January 23, 2021, hundreds of partygoers squeezed into an unusual art gallery. Champagne flowed into glasses floating above a black disco floor. Guests' avatars danced weightlessly to electronic music. The host was an Indian cryptocurrency investor using the alias MetaKovan, wearing a purple crown.

MetaKovan's real name is Vignesh Sundaresan. The event held in the virtual metropolis Origin City celebrated his recent purchase of a series of images from digital artist Beeple for $2.2 million. Sundaresan also hired designers to build a gallery on an online "metaverse" platform to showcase these works. At the time, he was also launching a cryptocurrency that gave buyers the right to purchase these artworks.

This was a very notable move by MetaKovan. Two months later, he purchased another work by Beeple at Christie's for $69 million: "Everydays: The First 5000 Days." This was the first time a new form of crypto asset—non-fungible tokens (NFTs), which are digital certificates of ownership—was auctioned at a major auction house. It also became the third most expensive artwork ever sold at auction by a living artist.

This purchase shocked the entire art and crypto world, and made Sundaresan stand out among crypto investors.

In recent years, interest in NFTs has been brewing at the fringes of crypto culture, as fans pay small amounts to designers, artists, or third parties for cartoon cats and pixelated characters. In the months leading up to this auction, NFTs had become a sensation. Christie's auction sparked a gold rush for NFTs that is still very hot today, with a series of celebrities like Lionel Messi and Paris Hilton launching NFT artworks for sale.

While some view NFTs as speculative assets, proponents argue they are an essential part of the new digital economy and the next step in art collecting. The internet is evolving into a metaverse—a parallel universe of virtual spaces—a concept that has gained so much momentum that Facebook changed its name to "Meta" last month.

Sundaresan says he buys NFTs as an investment, he feels that owning NFTs is like "owning the signatures of your favorite artists."

When Sundaresan first became famous this year, few people knew him. In a blog post after the auction, he described his story of immigrating from South India to Canada and starting from scratch under the name MetaKovan. In his hometown Tamil, MetaKovan translates to "King of Meta." He wrote in his blog that his purchase of Beeple proved that cryptocurrency has "balancing power," facilitating the rise of the "Global South." In June, he told the Financial Times in the UK that the $69 million acquisition was "far below" 10% of his net worth, which he said was almost entirely in crypto assets.

To describe Sundaresan's rise, Reuters interviewed 40 people who have worked or collaborated with him and reviewed records from his companies, even examining previously unreported complaints from others. The report shows that Sundaresan has experienced ups and downs in his asset accumulation journey, leaving behind a group of clients and investors who lost millions of dollars in total.

In three interviews with Reuters for this article, Sundaresan only mentioned that he had encountered some "setbacks" in his career, denying any wrongdoing. "Being an entrepreneur is very difficult, and I would never do anything that harms others' economic property," he said in an interview.

Sundaresan represents a new generation of investors, where cryptocurrency enables wealth creation outside the gaze of financial regulators. The true net worth of this group of investors is murky, as their assets primarily exist on semi-anonymous blockchains (a distributed ledger that supports cryptocurrencies) rather than in traditional financial assets like bank accounts, stocks, or real estate.

With almost no government regulation or legal recourse, cryptocurrency investors face significant risks of loss in any project. Some regulators have issued warnings about the dangers of the new market. Gary Gensler, chairman of the U.S. Securities and Exchange Commission, stated this year in a speech about the intersection of crypto and national security that the field is "rife with fraud, scams, and abuse."

In an April podcast interview, Sundaresan described the crypto market as the "Wild West," saying there are many ways for "foolish people" to lose money. "Entering the crypto industry is like walking down the streets of Somalia with cash in your pocket," he said.

Today, he and others who have profited in this world are flocking to the NFT market, just as past billionaires spent their fortunes on masterpieces by Picasso and Monet.

Sundaresan told Reuters that he purchased Beeple's works using profits earned from investing in cryptocurrencies. He said in an interview, "I am fortunate to be involved in various projects, you know, these projects are thriving."

Christie's declined to comment on the auction of Beeple's works and its financing activities, citing client confidentiality. Beeple also did not respond to requests for comment.

Sundaresan was born in 1988 in Chennai, India. He said his family actually hoped he would find a stable job like his father, who was a mechanical engineer. "Society had already planned for me," he said in a 2020 blog post.

He learned programming in high school and built websites for local companies with a friend. In 2006, Sundaresan began studying mechanical engineering at a university, and after returning to Chennai in 2012, he stumbled upon Bitcoin while researching how to design code for automating bank transfers. At that time, a single Bitcoin cost about $10, while today it has risen to $60,000.

In May 2013, Sundaresan quit his job as a newspaper developer and launched an online cryptocurrency exchange called Coin-E, where customers could buy and sell cryptocurrencies. At gatherings in Chennai cafes, he taught other students how blockchain works and told them that crypto technology would give them the freedom to do anything they wanted.

In September of the same year, Sundaresan left India to pursue his dreams, moving to Ottawa to study for a master's degree in technology innovation at Carleton University. However, his focus remained on Coin-E, and he even improved the website's interface during class. Of course, hard work pays off, and the Coin-E platform successfully attracted thousands of customers.

Then, the Coins-E platform did attract public attention for other reasons.

In early 2014, about 50 traders posted complaints on a public blockchain forum, stating that Coins-E had not returned their deposits worth tens of thousands of dollars despite repeated requests. Sundaresan responded under an account named "coin-e support," saying he would resolve the issue. Four traders interviewed by Reuters and others who posted again on the public forum stated that their money was never returned.

In interviews for this article, Sundaresan stated that the rapid expansion of Coins-E made it difficult for him to meet customer demands. He said it was a stressful time. He denied intentionally withholding funds. He claimed that when he sold the business in May 2014 for 315 Bitcoins (then worth about $180,000), those deposits were intact.

The buyer of Coins-E was Saif Altimimi, a businessman from Ontario. Reuters reviewed the contract, which stated that Coins-E held 456 Bitcoins for clients, worth a total of $260,000, and noted that Sundaresan "fulfilled all transactions made by users."

Altimimi did not comment for this article. Coins-E subsequently shut down. Reuters does not know the reason.

Sundaresan launched a new project. That same year, he partnered with three other cryptocurrency enthusiasts to form a startup called BitAccess, dedicated to producing Bitcoin ATMs. Its purpose was to allow users to convert deposited cash into cryptocurrencies. To keep costs low, the founders were paid very little. As a result, Sundaresan drove an old, frequently malfunctioning Nissan Sentra.

"You might think he was a student who could barely afford food," said Ryan Wallace, co-founder of BitAccess.

Sundaresan has stated that his Ethereum investment journey was the "source" of his subsequent speculation and entrepreneurial career. In an interview with Reuters, he said he purchased about 20,000 ETH during the Ethereum ICO, which was worth about $6,000 at the time.

According to a review and calculations by two Reuters analysts, this scale of investment could have grown to about $37 million by the time of this year's Christie's auction. Additionally, Sundaresan told Reuters that he had sold some ETH over the years to invest in other ICO projects. However, he did not disclose how much he had sold.

According to four acquaintances, by 2016, Sundaresan wanted to conduct an ICO to fund a trading platform based on Ethereum that he and his BitAccess colleagues were creating. These insiders said that around this time, reports emerged of other exchanges being hacked, and Sundaresan's partners believed the project was too risky. He later said that Sundaresan left BitAccess in November 2016 and had almost no income, which was unfortunate. In a tweet shortly after his departure, he complained that some people hindered the ambitions of others, like "the virus carried in your words."

So he set out on his own.

In early December 2017, Sundaresan dined with potential investors at a French bar in San Francisco. He shared his vision for Lendroid, describing the platform as a "reimagining of trading." This was an early version of what is now known as "DeFi," a financial product that has skyrocketed in popularity. Traditionally, borrowers rely on banks or intermediaries. In contrast, Lendroid envisioned a "lending pool" for storing cryptocurrencies, facilitating peer-to-peer loans by allowing users to lend and borrow crypto funds directly without intermediaries.

Working with Sundaresan was Paul Martens, who hired the San Francisco digital strategist partly to garner investor support. Sundaresan told the 20 or so attendees that Lendroid hoped to raise about $3 million in its ICO. Martens recalled that the atmosphere at the time was "very optimistic."

By the time the fundraising campaign launched in February 2018, with billions of dollars flooding into the ICO market, the total fundraising target skyrocketed to 50,000 ETH, equivalent to about $48 million at the time. Sundaresan established a company in Singapore to operate the ICO.

Company filing documents show that Lendroid successfully raised the target amount. The company stated they achieved this within two days. However, the project's progress stalled. According to Martens and two other insiders, Sundaresan did not hire more employees but instead downsized the team to nine people. Sundaresan told Reuters that part of the reason was that employees had difficulty obtaining work permits in Singapore.

A review by Reuters of Lendroid's company records in Singapore, its software on the code hosting platform GitHub, and blockchain data shows that after 2019, the company's development essentially stopped. It was found that most of the ETH from the ICO had been sold or transferred to unspecified entities. By the end of 2019, the cryptocurrency balance in Lendroid's accounts was only $85,431, equivalent to just over 650 ETH at the time.

Sundaresan told Reuters that Lendroid sold ETH on multiple cryptocurrency exchanges at the end of 2018 to cover expenses and retained $5 million in cash proceeds. He stated that Lendroid is a "legitimate company, its mission still exists, and every dollar belonging to Lendroid has been audited and accounted for."

Reuters requested detailed documents for review, but Sundaresan did not respond. Lendroid's auditing firm in Singapore, Entrust Public Accounting Corporation, also did not respond to requests for comment.

Many investors posted in Lendroid's chat group, expressing anger over the platform's delayed progress and the plummeting price of the LST they received from the ICO.

Martens stated that he left Lendroid in August 2018. He was dissatisfied with the lack of progress on the project and Sundaresan's lack of communication regarding the development roadmap. In May of the following year, he submitted a whistleblower report to the Ontario Securities Commission, accusing Sundaresan of fraud.

"There was almost no progress on the software," he wrote in the report. Reuters has seen this report. Martens shared a timeline he drafted with Reuters, in which he recorded Lendroid's slow development progress.

In August of this year, in response to Martens' inquiry email, the OSC's whistleblower office told him, "We have carefully reviewed the information you submitted and have archived the file." According to Reuters, the OSC's response did not indicate whether any action would be taken regarding the review. An OSC spokesperson declined to comment on Martens' complaint or whether an investigation would be conducted.

Now, Sundaresan splits his time between Chennai and Singapore, participating in the virtual consumption boom in the emerging NFT market. In 2019, he purchased a diamond-studded F1 digital model from an online racing game for $112,000, the most expensive NFT of that year. He has snapped up hundreds of acres of digital land in the virtual world, building a virtual property empire.

In early 2020, Sundaresan adopted a new online identity: MetaKovan. He later described this virtual identity as an "exosuit" created for the mission of "building the metaverse." It wasn't until March of this year at the Christie's auction that American journalist Amy Castor revealed that MetaKovan was actually Sundaresan.

Under the identity of MetaKovan, Sundaresan began accumulating a large collection of digital art, including a piece titled "Contemplation (of Creation)," depicting a symbolic deity. He used it to represent his new identity. By mid-2020, he launched a fund called Metapurse under the name MetaKovan to invest in NFTs. "NFTs are the perfect medium for crypto," MetaKovan wrote on Twitter. He did not disclose the scale of Metapurse, only stating that he was the sole funder.

In December of the same year, at a series of NFT auctions, MetaKovan's fund purchased 20 works from American digital artist Mike Winkelmann (nicknamed Beeple) for a total of $2.2 million in ETH, promising in a blog post to bring about a "revolution" in the art world.

On January 23 of this year, MetaKovan hosted a Metapalooza party at his virtual art gallery in Origin City. He thanked everyone for attending this "historic event." Attendees could purchase a digital token called B20 to gain shares in MetaKovan's Beeple collection. "Art belongs to everyone," read the billboard at the party. A token website described it as "the key to unlocking the financial realm related to artworks."

Metapurse issued 10 million B20 tokens, with 25% sold publicly at an initial price of $0.36 each. Metapurse received payments in DAI, a cryptocurrency pegged to the dollar. Overall, half of the tokens were held by MetaKovan, while the other half was distributed to the public, some of MetaKovan's friends, and business partners.

Then, in mid-February, Christie's announced the auction of Beeple's "Everydays: The First 5000 Days." Marketers predicted that the publicity from this event would boost the price of B20. One marketer, Andrew Steinwold, released an "investment summary," stating that the total value of B20 could reach $200 million.

According to CoinGecko, by the time of the auction, the price of B20 had been skyrocketing, reaching a high of $29 on exchanges, including Uniswap. "This is completely speculation," said Chris Nunes, an NFT enthusiast from Colorado. He spent about $30,000 to purchase around 6,000 B20 tokens.

Just as the Christie's auction was concluding, the price of B20 plummeted. Data collected by blockchain analytics firm Nansen showed that a few wallets selling millions of dollars' worth of B20 caused the crash. Additionally, wallets publicly identified as belonging to MetaKovan did not sell their held assets.

Steinwold, who runs his own NFT investment fund, told Reuters that his clients were among the sellers, but he declined to disclose their identities. When asked about his earlier investment summary, he expressed shock at the price drop of B20. "I still think B20 is undervalued, but it's also art, so it's subjective," he said.

Now, investors are left with tokens currently valued at $1.10, a mere fraction of what they previously paid. When an investor accused MetaKovan's team on Twitter of moving on to "the next cash cow," Metapurse representative Anand Venkateswaran retorted, "I owe you nothing." Anand Venkateswaran is an old friend of Sundaresan in Chennai.

When asked by Reuters about the dissatisfaction of investors regarding the B20 crash, Venkateswaran said, "You need to do your own research before asking."

Sundaresan told Reuters that he did not discuss B20 with Christie's before the auction, did not monitor the price of B20, and did not tell anyone to speculate on its price. "This has nothing to do with money," Sundaresan said, wearing a jacket with "$CARTEL" printed on the collar.

The winning bid for Beeple's "Everydays: The First 5000 Days" was made through cryptocurrency exchange Gemini, paying 42,329 ETH. Days later, journalist Castor revealed MetaKovan's true identity. Crypto influencers hailed Sundaresan as a "crypto billionaire." In a statement released by Christie's, Sundaresan referred to the artwork as the "crown jewel" of his collection.

For six months, Sundaresan quietly kept the piece in his crypto wallet. Then, in early September, Metapurse announced the "first physical event" for the artwork. At an exhibition in New York on November 4, fans were invited to view Beeple's work on a giant screen. The announcement read: "NFTs are alive." Admission fee: up to $2,500 per person.