Datavault AI shares crash, can't withdraw Bitcoin from Biconomy

This situation highlights the inherent risks associated with illiquid digital assets, potentially shaking investor confidence in the broader market.

The Nasdaq-listed entity disclosed that its request to pull Bitcoin from Biconomy has been pending for four months. Furthermore, the company stated that several quarters of its financial statements can no longer be relied upon.

The trouble stems from a September 2025 equity purchase agreement with Scilex Holding Co. Under the $150 million arrangement, 1,309.04 BTC was credited to Datavault's account that month. After selling 491.431 BTC back to Scilex for about $40.5 million in cash, approximately 817.61 BTC remains trapped on Biconomy.

The company subsequently determined that this Bitcoin did not qualify as a digital asset on its books; instead, it will be classified as a subscription receivable. This reclassification is projected to reduce Datavault's total assets across several periods, including a $92.2 million reduction for December 31, 2025.

The market reacted sharply on October 27, 2026, the day after the SEC Form 8-K filing. Share prices fell by between 37% and 48%, with the stock trading near $0.07.

The core accounting issue revolves around control: if an asset cannot be moved, its inclusion on the balance sheet is challenged. Investors now face uncertainty as they await revised financials covering about a year of the company's history.

The inability to access over $65 million worth of BTC raises concerns about how corporate treasuries manage their Bitcoin and the risk of insolvency if liquid assets cannot be secured.

Why it matters

This incident highlights significant risks associated with illiquid crypto assets held by publicly traded companies. Investors should watch how this accounting and custody failure impacts overall market trust in digital asset holdings.