Nasdaq-listed Datavault AI saw its stock price plunge nearly 50% on Tuesday after an October 26 filing with the U.S. Securities and Exchange Commission (SEC) revealed that a $150 million Bitcoin transaction collapsed into an accounting disaster. Trading volume spiked as roughly 244 million shares changed hands, leaving the stock trading about 88% below the valuation a major investor agreed to pay last year.
Off-Chain Ledger Transfer Leaves 818 BTC Inaccessible
The dispute originates from a September 2025 agreement where painkiller manufacturer Scilex Holding committed to buying $150 million in Datavault shares and warrants using Bitcoin. Just two days prior, Scilex had arranged to swap $200 million worth of shares in its subsidiary, Semnur Pharmaceuticals, for Bitcoin, retaining crypto exchange Biconomy to facilitate the arrangement. At the time, Scilex Chief Executive Officer Henry Ji stated, "Biotech is a market we know well," while pledging to assist Datavault's market growth.
However, the underlying Bitcoin was never transferred on-chain. Instead, Scilex allocated 1,309 BTC to Datavault's account at Biconomy using internal exchange balances. Datavault subsequently liquidated 491 BTC back to Scilex for $40.5 million. The remaining 818 BTC have remained stuck since Datavault submitted a withdrawal request in June, with the filing providing no explanation for the delayed transfer. Financial disclosures across corporate markets have grown increasingly sensitive to risk, similar to recent warnings when public companies face unexpected operational disruptions.
SEC Filing Triggers $92.2 Million Asset Reduction
According to Datavault's SEC Form 8-K, the company determined that the uncollected Bitcoin balances should never have been classified as direct corporate assets. Consequently, the holding must be reclassified as a debt owed by Scilex, a accounting change that could reduce Datavault's previously reported balance sheet assets by $92.2 million. The revision forces the firm to restate four separate financial statements while management evaluates whether the business maintains sufficient resources to continue operations.
Analyzing the disclosures, VanEck Head of Digital Assets Research Matthew Sigel described the submission as "one of the ugliest 8-Ks you'll ever see." While Datavault retains a formal legal claim against Scilex, the initial findings remain preliminary.
Key Takeaways
- Datavault AI stock dropped nearly 50% on 244 million shares traded following its October 26 SEC disclosure.
- Scilex credited 1,309 BTC via off-chain exchange ledgers at Biconomy, but 818 BTC remain stuck following a June withdrawal request.
- Reclassifying the holdings as debt owed by Scilex reduces reported corporate assets by up to $92.2 million and forces restatements across four financial reports.
- Datavault previously sold 491 BTC back to Scilex for $40.5 million before access was restricted.
Why It Matters
This accounting breakdown highlights the severe balance sheet risks public companies take when accepting cryptocurrency through internal exchange ledgers rather than requiring direct on-chain settlement and verified custody. Relying on off-chain IOUs leaves corporations exposed to third-party settlement delays and counterparty credit risks that traditional financial audits may fail to catch immediately. As institutional participation grows, regulatory authorities and auditors will likely demand strict proof-of-reserves and on-chain verification before allowing digital assets to count toward primary balance sheet reserves.
