Datavault AI Bitcoin Freeze Crashes Stock by Half

The Datavault AI bitcoin freeze just handed crypto a fresh cautionary tale. Shares of the Nasdaq-listed company fell nearly fifty percent on Tuesday after it admitted it has been unable to withdraw bitcoin from the Biconomy exchange since June, according to CoinDesk. The stock closed at six point seven cents.

What Datavault actually disclosed

In a filing on October twenty-sixth, the company said a withdrawal it requested in June to an outside account was never completed. It also said it would restate its financial results. The filing gave no reason for the delay or a clear date for when the coins might move, as CoinCentral noted.

The Block reports that roughly two hundred and forty-four million shares changed hands, about eight times the prior day's volume. The previous close was about thirteen cents, so the drop wiped out half the stock's value in a single session.

The Scilex deal behind it

The trouble traces back to September twenty twenty-five, when Scilex Holding agreed to buy one hundred and fifty million dollars of Datavault shares and warrants using bitcoin. CoinDesk says Scilex credited 1,309.04 BTC to Datavault's account at Biconomy through off-chain transfers. That means balances changed inside the exchange rather than on the Bitcoin blockchain.

Datavault later sold about four hundred and ninety-one bitcoin back to Scilex for roughly forty point five million dollars in cash. The rest stayed parked at Biconomy. Do the math and a little over eight hundred bitcoin, by TFTC's estimate, remains out of reach.

Scilex's own June financial report, cited by CoinDesk, says it sold two hundred million dollars of shares in its subsidiary Semnur to Biconomy for bitcoin, then used one hundred and fifty million of that to buy Datavault securities. In other words, Biconomy sat on both sides of the chain that supplied the coins. That tangled setup is exactly why outsiders are asking tougher questions now.

Why the accounting is the real shock

Here is the twist. Datavault now says that bitcoin should have been recorded as money Scilex owed for the shares, not as crypto the company owned. That change would cut reported assets by ninety-two point two million dollars at the end of twenty twenty-five and forty-nine million as of June twenty twenty-six.

The company had counted those balances as funds it could draw on to keep the business running. It must now revisit that assumption. According to Crypto Briefing, four sets of financials should no longer be trusted, covering the third quarter of twenty twenty-five through the second quarter of twenty twenty-six.

Not your keys, not your coins

Crypto people love saying not your keys, not your coins, and this saga is the textbook example. A balance shown on an exchange is a promise, not coins sitting in a wallet you control. When the exchange stops processing withdrawals, that promise gets very hard to cash in.

It also shows how fragile the so-called bitcoin treasury trend can be. Public companies piled into holding crypto on their balance sheets, and investors bought stock partly for that exposure. If the custody setup is shaky, the whole story can unravel overnight. For more on the market, see our crypto hub.

Retail investors who bought the stock for its crypto angle are now staring at a company worth a fraction of what it was a day earlier. Penny-stock territory brings more volatility, thinner protection and a real risk of delisting rules kicking in. Anyone tempted to buy the dip should read the filing first and remember that a restatement means the numbers they saw before may have been wrong.

What happens next

CoinDesk said Biconomy did not respond to a request for comment. Watch for the restated filings, any statement from Scilex, and whether the withdrawal finally goes through. Also watch for Nasdaq or regulators asking questions about a stock trading under a dollar.

Bitcoin itself barely flinched, hovering around eighty-one thousand dollars on Wednesday as traders waited on the Federal Reserve. The lesson for newer investors is simple: know where your coins live, and never confuse a number on a screen with money you can actually move.