Datavault AI (NASDAQ: DVLT) saw its shares fall approximately 49.55% on October 27, closing at about $0.067, after the company disclosed that it had been unable to complete a Bitcoin withdrawal from an account maintained by cryptocurrency exchange Biconomy. The disclosure also included expected accounting corrections that could reduce previously reported assets by as much as $92.2 million.
Bitcoin Withdrawal Remains Unresolved
The issue traces back to a September 2025 agreement with Scilex Holding Company, which committed to purchasing $150 million worth of Datavault securities using Bitcoin. Under the arrangement, Scilex credited 1,309.04 BTC to Datavault’s Biconomy account through off-chain transfers.
However, when Datavault requested a withdrawal to an external wallet in June 2026, the transaction could not be completed. As of the company’s October 26 disclosure, the withdrawal remained unresolved. The company has not provided a definitive explanation for the unsuccessful withdrawal.
Datavault subsequently exchanged approximately 491.43 BTC back to Scilex for roughly $40.5 million in cash. The remaining withdrawal issue has raised questions about the accessibility of the cryptocurrency associated with the original agreement. The disclosure does not establish that the Bitcoin was stolen or permanently lost.
Accounting Corrections and Asset Reductions
In its October 26 SEC filing, Datavault explained that Bitcoin associated with the Scilex transaction did not qualify for recognition as its digital asset. Instead, the arrangement should have been recorded as a subscription receivable related to the issuance of company shares, presented as a reduction in shareholders’ equity.
Management and its audit committee concluded that several previously published financial statements should no longer be relied upon. The expected reductions in previously reported assets include:
- $8.1 million as of September 30, 2025.
- $92.2 million as of December 31, 2025.
- $57.1 million as of March 31, 2026.
- $49 million as of June 30, 2026.
These adjustments remain preliminary and could change as the company completes its review.
Custody and Liquidity Concerns
The situation highlights risks associated with third-party Bitcoin custody. Rather than moving Bitcoin directly between independent blockchain wallets, Scilex credited the funds through off-chain transactions within Biconomy. Such arrangements can simplify transactions but also introduce dependence on a third-party platform.
Datavault previously considered the Bitcoin balances a potential source of liquidity to support its business operations. Now that those balances will no longer be recognized as company-owned digital assets, management is reassessing its ability to continue operating under applicable accounting standards. The company also acknowledged uncertainty surrounding the collection of amounts owed by Scilex.
Investors following the broader cryptocurrency industry will recognize that treasury strategies require more than exposure to digital asset prices. Reliable access to funds, transparent accounting, and financial controls remain essential.
What to Watch
Several developments could determine whether Datavault can restore investor confidence. Clarification regarding the Bitcoin withdrawal and any progress involving Biconomy will be closely watched. The company’s revised financial statements should provide a clearer picture of its assets, shareholders’ equity, and financial position. Management’s reassessment of liquidity, financing requirements, and internal accounting controls will also be monitored.
The incident raises broader questions for companies incorporating digital assets into their balance sheets. As institutional participation expands across the blockchain sector, investors may increasingly scrutinize whether reported cryptocurrency holdings are independently verifiable and accessible.
