The anonymous buyer decided to keep the damaged painting after the stunt, which Sotheby's said took them by surprise at the time.
"The hammer came down, and all of a sudden, we heard this beeping noise. It wasn't a Sotheby's alarm. So, we were all like, 'what's going on?' And everybody was sort of out of their seats, phones in the air, sort of hands over mouths," said Emma Bake, a specialist at Sotheby's.
"I looked over... and the picture looked like it had fallen half out of the frame. And it wasn't until a bit later that we realized that it actually shredded."
The painting has since become one of Banksy's most famous images. And his other artworks have ballooned in value.
Another painting by Banksy, honoring health care workers in the UK, went for $20 million earlier this year.
The shredded painting, renamed "Love is in the Bin," will go on a global tour before it is auctioned again by Sotheby's in October.
Cover image: Gallery assistants next to the 'Love is in the Bin', which will be sold at auction in London. /Reuters/ Tom Nicholson