The Back Room: Red Alert

This week: the war's blowback on the art economy, a CryptoPunk collusion, high-flying auction action, and much more.

A February 2014 protest against Russia’s annexation of the Ukrainian territory of Crimea. Photo: Sean Gallup/Getty Images.. Illustration by Artnet News.

Every Friday, Artnet News Pro members get exclusive access to the Back Room, our lively recap funneling only the week’s must-know intel into a nimble read you’ll actually enjoy.


This week in the Back Room: the war’s blowback on the art economy, a CryptoPunk collusion, high-flying auction action, and much more—all in an 8-minute read (2,231 words).


Top of the Market

Hammer Vs. Sickle

Phillips London's 20th Century & Contemporary Art Evening Sale. Image © Thomas De Cruz Media Haydon Perrior.

Phillips London’s 20th century and contemporary art evening sale. Image © Thomas De Cruz Media Haydon Perrior.

As Russia’s increasingly brutal invasion of Ukraine enters its second week, no concern outweighs the ghastly, worsening human toll. Yet the war’s lesser consequences are shaking the halls of wealth, finance, and commerce worldwide, which means the art business is feeling the effects, too.

Nowhere in the industry were anxieties about the conflict’s legal and financial impacts greater than at London auction week, where the Big Three houses hoped to do hundreds of millions of dollars in business. But the sales were exposed to new risks as international economic sanctions ratcheted up against institutions and elites linked to Vladimir Putin


Select Sanctions Imposed by Thursday

  • “Full blocking,” asset freezes, and/or other restrictions were placed on some of Russia’s largest banks by the U.S., U.K., and E.U.
  • Multiple Russian banks were removed from the SWIFT global payment system.
  • British banks capped Russian nationals’ accounts at a maximum £50,000.
  • E.U. banks banned Russian deposits larger than 100,000.
  • The U.S. launched Task Force KleptoCapture to target the assets of Russian elites fueling Putin’s war machine.
  • France and Germany seized yachts owned by Russian oligarchs, while the U.K. pledged to explore doing the same for other oligarchic assets.
  • Even famously neutral Switzerland is mirroring E.U. sanctions against Russian assets, including luxury goodsreal estate, and artworks, per a Swiss official.


No wonder the largest questions at London auction week surrounded Phillips.

Owned by Russian nationals Leonid Fridlyand and Leonid Strunin (via their luxury conglomerate, Mercury Group), the house worked all week to reassure consignors, bidders, and intermediaries that their artwork and/or sales proceeds were at no risk.

Phillips CEO Stephen Brooks even made calls himself to relay his personal version of what a house spokesperson told my colleagues: “The owners of Phillips are not the subject of sanctions and have no connections to any individuals or institutions that may be included directly or indirectly in any sanctions list.”

Still, by Thursday morning, some art-world figures (including collector Andy Hall and former Bonhams CEO Matthew Girling) were calling for a Phillips boycott. The house then announced it would donate 100 percent of its net proceeds from Thursday’s 20th century and contemporary evening auction to the Ukrainian Red Cross Society.

The shrewd move likely helped Phillips secure a within-estimate £30 million ($40 million) during the sale. This means its donation will total £5.8 million ($7.7 million)Christie’s and Sotheby’s also beat back uncertainty, bringing in more than $630 million in combined sales (see Paint Drippings for details).

Yet the success of London auction week hardly means the art business can breathe easy. As long as the war in Russia and the corresponding sanctions persist, the following issues will demand extra attention, care, and costs…


Anti-Money Laundering and “Know Your Customer” Regulations

Various laws require businesses to identify the ultimate beneficial owner of limited liability companies, trusts, and private foundations, partly to steer clear of transacting with any specially designated nationals or sanctioned individuals—especially through a third-party intermediary.

Although U.S. art dealers have so far avoided even more stringent industry-specific regulations of this type, their British and E.U. counterparts are not as fortunate. International auction houses too have to be rigorous in this regard at all times, but even more so now.

As the economic clamps tighten, wealthy Russians will only grow more desperate to convert hard assets like artworks into cash at distressed prices. This means the temptations for art sellers and “runners” (the term of art for shadier go-betweens) to lapse or look the other way will only intensify.


Crypto Camouflage

The good news? Ukraine’s government has been accepting millions of dollars in donations via cryptocurrency, including more than $3 million raised via NFTs. Ukrainian aid organizations are also benefiting, most notably via UkraineDAO, which just sold a “one of one” NFT of the nation’s flag for 2,100 ETH ($6 million).

The less good news? Up to $60 million worth of rubles were being converted to crypto daily as of Monday, per research firm Chainalysis. Some of the world’s largest crypto exchanges (including BinanceCoinbase, and FTX) are so far refusing to restrict any, or nearly any, Russian accounts.

In theory, the public nature of blockchain records provides a way to verify that a buyer hoping to pay for art or NFTs in crypto is legit. In practice, it can create more cloaking for capital flight by tech-savvy people with something to hide. Seller beware.


Problematic Optics

Put simply, even if you’re sure a deal is free of legal and ethical jeopardy today, do you want to be seen doing business with prominent Russians or Russian-owned entities right now? Could it have negative effects elsewhere down the line?


International Shipping Difficulties

Carriers often used Russian airspace for shortcuts to and from Asian hubs, according to Fritz Dietl, founder of art-logistics company Dietl International. The need to reroute around the war will increase flight times and fuel consumption, with the higher costs being passed on to clients.


The Bottom Line

Major Russian art buyers and patrons are already backing away from the culture sector, perhaps partly because the culture sector is backing away from them, too.

Newly E.U.-sanctioned banker Petr Aven just bailed from the board of London’s Royal Academy, and the institution returned his recent donation to its Francis Bacon show. Oligarch Vladimir Potanin, who has so far avoided sanctions, resigned from the board of the Guggenheim.

Roman Abramovich’s sudden attempts to sell Premier League juggernaut Chelsea F.C., along with several London properties, could be previews of a coming art liquidation before he too is slapped with international penalties. (Israel’s Holocaust memorial and museum is advocating for Abramovich to remain sanction-free.)

For every sector of the art business, the situation is going to get more complicated before it gets simpler. But if any of us ever feels the urge to complain about that, we should ask ourselves whether we’d rather trade our problems for those of Ukraine’s residents.



Paint Drippings

A Larva Labs CryptoPunk. during a media preview on June 4, 2021, at Sotheby's.(Photo by TIMOTHY A. CLARY/AFP via Getty Images)

A Larva Labs CryptoPunk. during a media preview on June 4, 2021, at Sotheby’s.(Photo by TIMOTHY A. CLARY/AFP via Getty Images)

In the latest Wet Paint: Remember 0x650d, the consignor who bragged on Twitter about “rugging” Sotheby’s with an 11th hour withdrawal of 104 Cryptopunks expected to sell for $20 million to $30 million? Well, crypto-fluent sources (including our own Kenny Schachter) say the cancellation was a joint decision by Sotheby’s and 0x650d, spurred by good ol’ fashioned lack of demand.

Meanwhile, two sizzling artists have defected from tastemaking gallery JTT ahead of its relocation to Tribecaenfant terrible Jamian Juliano-Villani and master of skin-crawling sculptures Dan Herschlein. (Juliano-Villani is still riding with Massimo de Carlo, and Herschlein with Matthew Brown.)

Here’s what else made a mark around the industry since last Friday morning…


Art Fairs

  • Volta New York will take place from May 18–22 (concurrent with Frieze) at a new venue: 548 West, a Chelsea gallery space that formerly housed Dia and Hauser and Wirth. (Press release)
  • ARCO Madrid attracted more than 70,000 visitors and reported big-ticket sales, which dealer Belén Herrera Ottino of Marlborough Gallery‘s Madrid branch chalked up to everyone having been “oppressed for too long.” (Artnet News Pro)

  • Correction to last week’s editionArt Basel Unlimited will open on Thursday, June 16, not Friday, June 17.


Auction Houses

  • Christie’s amassed $334 million across a hat trick of sales on Tuesday, ranging from 20th and 21st century art to Surrealism, and from Shanghai to London. The top seller was Franz Marc’s restituted Foxes for $57 million, more than double his previous record. Bidders also clashed over ultra-contemporary artists Emmanuel Taku, Edgar Plans, and others. (Artnet News)
  • Sotheby’s London netted $297.2 million across its modern, contemporary, and “The Now” sales on Wednesday. (Its Surrealist auction will be held in Paris later this month). The star lot was a $79.8 million René Magritte, more than triple his previous auction peak. Fierce competition for wet paint also shattered records for Flora YukhnovitchShara Hughes, and Hilary Pecis. (Artnet News)
  • Phillips’s $40 million modern and contemporary evening sale was led by a $6.5 million David Hockney from the Morris and Rita Pynoos collection that was pulled from the New York sales last May. A single bidder snapped up a $4.3 million Cecily Brown, a $835,000 Shara Hughes, and set a new auction record ($590,499) for Issy Wood. (Artnet News)
  • We also ID’d some of the top consignors to this week’s London sales, including the family of Ian and Mercedes Stoutzker (who sold Lucian Freud‘s portrait of artist Janey Longman at Christie’s) and Jose Mugrabi (who offloaded a dud Basquiat at Sotheby’s). (Artnet News Pro)



  • Parisian powerhouse Templon announced plans to expand to New York in September. A solo show by Senegalese artist Omar Ba will be the first in its new Chelsea home, a freshly renovated space at 293 Tenth Avenue formerly occupied by Kasmin. (Artnet News)
  • Petzel Gallery has appointed Kevin Choe as a director. Choe comes to Petzel from Mitchell-Innes and Nash, where he held the same title. (Press release)
  • Perrotin will set up shop in Dubai’s DIFC district, near the main auction houses and several other galleries, later this year. Primary and secondary market sales are both on the agenda. (Press release)



  • Scholars at Austria‘s Kunsthistorisches Museum say they may have uncovered a genuine Titian painting of Christ holding a globe, which they are now calling the “Viennese Salvator Mundi.” The work is on view at the museum through October 16. (Artnet News)
  • The Met made its second priciest acquisition ever, a $23 million bronze roundel by Renaissance master Gian Marco Cavalli. The funds were bequeathed by former curator James David Draper, who missed the chance to buy the work for the Met in 2003. (Artnet News)


NFTs and More

  • Kenny Schachter is launching NFTUkraine, a collection of crypto works whose sale will benefit the Ukrainian state’s official ETH account. (Artnet News)
  • teamLab will drop its first NFT on a date TBD, via an event at the Aomori Museum of Art. The unique work, titled Matter Is Void, depicts scrawled text that can be edited at will by the lone owner. An unlimited number of changing copies can also be downloaded by other users, with the value of the original theoretically rising with each download. (Press release)
  • U.S. attorneys charged Rob Newland, a longtime associate of soon-to-be-sentenced fraudster Inigo Philbrick (and most recently, a sales director at Superblue), with wire fraud and conspiracy to commit wire fraud in connection to Philbrick’s scams. (Artnet News)



Data Dip

High-Altitude Flora

© 2022 Artnet Worldwide Corporation.

© 2022 Artnet Worldwide Corporation.

At Sotheby’s London on Wednesday, Flora Yukhnovich’s Warm, Wet ‘N’ Wild (2020) reset the artist’s auction record to £2.7 million ($3.6 million), more than 11X the painting’s high estimate. It’s only the latest case of drastic outperformance by one of the market’s young comets.

  • Yukhnovich’s work first appeared at auction last year. Of the 13 lots offered through February 2022, all sold for more than their respective high expectation.
  • Among her top 10 lots by value, each work brought at least 2.9X its rosiest estimate.
  • Her previous auction apex also flew furthest beyond anticipations: I’ll Have What She’s Having (2020) hit $3.1 million—more than 28X its £80,000 ($109,484) high estimate.

Click through below to read Yukhnovich assess her head-spinning rise in her own words.


[Read More]


“Everything we say now can be used against us in the future… No one could imagine this. Now anything is possible. We understand that the next hit will be against the enemies inside Russia. It’s us.”


—a Russia-based museum staffer and petition signer, speaking on condition of anonymity about the dangers faced by in-country culture workers willing to speak out against the invasion of Ukraine. (Artnet News)


Artwork of the Week

Jean-Michel Basquiat’s Untitled

Jean-Michel Basquiat, Untitled (1982). Image courtesy Phillips.

Jean-Michel Basquiat, Untitled (1982). Image courtesy Phillips.


Date:                    1982
Seller:                  Yusaku Maezawa

Estimate:             $70 million
Selling at:            Phillips New York
Sale Date:            May 18


The circle of auction life continues unbroken. Just before gavels fell in London this week, the major houses unveiled a few prime lots for their May sales in New York. Christie’s will be the first ever to auction Vincent van Gogh’s Fields Near the Alpilles (1889), once owned by Yves Saint Laurent and Pierre Bergé, at an estimate of $45 millionPhillips will aim higher with this robustly pedigreed (and apparently Russia-agnostic) Basquiat.

Untitled (1982) currently boasts the third-highest price ever paid for a JMB canvas at auction: $57.3 million, shelled out by billionaire entrepreneur Yusaku Maezawa at Christie’s in May 2016. Six years later, Maezawa is sending the work back to the block, and Phillips hopes it can coax at least a $12.7 million markup out of the return trip. A third-party guarantee is already in place.

Still, Phillips is pulling every lever in reach to try to send the final price higher. Untitled is already in London to kick off a multi-city tour, with intermediate stops scheduled in Los Angeles and Taipei before it lands at Phillips’s Park Avenue flagship. Once the sale goes live, bids will be accepted in BitcoinEther, and all major fiat currencies.

One thing these efforts probably won’t change, though, is which Basquiat work wears the all-time auction crown. When the dust settles, the king is still likely to be the other major untitled painting from 1982 currently owned by Maezawa. He paid Sotheby’s $110.5 million for the latter work (which features a giant skull against a field of blue) a year after buying this one for about half the price from its chief rival. New decade, SAMO story, I guess…


With contributions by Naomi Rea. 


Thanks for joining us in the Back Room. See you next Friday.

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