After the gavel fell on the painting, an anonymous attendee hit a radio-controlled device that dropped the piece through a shredder at the bottom of the frame.
The artwork was signed and dedicated and the vendor acquired it from the artist in 2006, the auction house said. The shredding is now part of the integral art work.
"It was a brilliant PR stunt", Offer Waterman, a dealer in 20th-century British art, who attended the art auction, told The New York Times.
"You'd nearly wonder if he'd recognize the fact that it would've doubled the value of the work", Benrimon adds.
Banksy posted a video on Instagram at the weekend showing how he built a shredder into one of his paintings. Sotheby's maintains the art house was unaware of any plans for the stunt before it occurred.
Banksy - whose previous stunts include Dismaland, the "family theme park unsuitable for children" in Weston-super-Mare, Somerset - has refused to reveal his identity.
"We are busy figuring out what this means in an auction context ..." Was Banksy in the room? "It's certainly the first piece to be spontaneously shredded as an auction ends". In imagining a conceptual moment in how his art might be remembered, Banksy has created a work whose value can only be assessed in posterity, but whose price will remain in step with the art world's idiosyncratic bars. Millions of people have seen Banksy's video of the stunt on Instagram, and it captured global headlines over the weekend. "There aren't many points of reflection like this", Benrimon says. The graffiti artist's pieces have commented on a slew of issues from the Israeli-Palestinian conflict, Europe's migrant crisis, war, and consumerism, among other issues.
However, it will perhaps now be worth even more now, going down in history as one of the art work's greatest ever pranks.