Datavault AI Stock Falls Nearly 50% as Bitcoin Stuck at Third-Party Custodian
Datavault AI's stock collapsed nearly 50% after the company disclosed it has been unable to withdraw bitcoin from Singapore custodian Biconomy Pte. Ltd. since June 2026, triggering a restatement that wipes up to $92.2M from four sets of financial statements.
A $150 million Bitcoin deal, an off-chain transfer, and a withdrawal that never came through.
Key takeaways
- Datavault AI (DVLT) stock fell nearly 50% after the company disclosed it has been unable to withdraw bitcoin from third-party custodian Biconomy Pte. Ltd. since June 2026, with approximately 817-837 BTC still inaccessible (the arithmetic from the 8-K, 1,309.04 BTC received minus 491.431 BTC sold, implies roughly 817.6 BTC, while the March 2026 10-Q shows 837 BTC on the balance sheet; the approximately 19 BTC difference is unreconciled in public filings).
- Datavault's audit committee concluded the bitcoin never qualified as the company's own digital asset under GAAP, forcing a restatement of four financial statements covering Q3 2025 through Q2 2026 and wiping up to $92.2 million from the balance sheet.
- The failure traces directly to deal structure: Scilex paid in bitcoin via off-chain transfer into a Biconomy custodial wallet, meaning Datavault never held keys to coins it had already booked as assets.
Datavault AI Inc. (NASDAQ: DVLT) stock fell nearly 50% on October 27, 2026, after the company filed an SEC Form 8-K disclosing that it cannot access bitcoin held at Singapore-based Biconomy Pte. Ltd. and that four consecutive sets of financial statements should no longer be relied upon. The story was first reported by The Block.
The chain of events starts on September 25, 2025, when Datavault signed a Securities Purchase Agreement with Scilex Holding Company (NASDAQ: SCLX). Under the deal, Scilex agreed to purchase 15,000,000 shares of DVLT common stock plus a pre-funded warrant for 263,914,094 shares for $150 million, payable in bitcoin. The implied quantity at the contract price of $112,915.52 per BTC was approximately 1,328.43 BTC. Scilex credited 1,309.04 BTC to Datavault's Biconomy wallet on September 26 and November 25, 2025, via off-chain transfer.
The shortfall versus the implied 1,328.43 BTC was attributed in the filing to cash advances Scilex had previously made to Datavault.
How the Accounting Fell Apart
Between September 26, 2025, and January 30, 2026, Datavault sold 491.431 BTC back to Scilex for approximately $40.5 million in cash, also via off-chain transfer. That left approximately 817-837 BTC sitting in the Biconomy wallet. The arithmetic from the 8-K (1,309.04 BTC received minus 491.431 BTC sold) implies roughly 817.6 BTC remaining, while the March 2026 10-Q shows 837 BTC on the balance sheet at that date; the approximately 19 BTC difference is unreconciled in public filings. In June 2026, Datavault requested a withdrawal to an external account. As of the 8-K filing date of October 26, 2026, that withdrawal remains incomplete.
The accounting consequence is severe. Datavault's audit committee and management concluded on October 20, 2026, that the bitcoin never qualified as the company's own digital asset under GAAP. Specifically, the arrangement violates ASC 505-10-45-2: because Scilex paid for shares by transferring bitcoin it owed for those shares, the BTC must be treated as a subscription receivable, a reduction of stockholders' equity, not an asset on the balance sheet.
Under GAAP, an asset requires access and control. Datavault had booked the BTC as an asset when it held only a credit claim against a counterparty.
The restatement figures from the 8-K are blunt: asset reductions of $8.1 million for the quarter ending September 30, 2025; $92.2 million for December 31, 2025; $57.1 million for March 31, 2026; and $49.0 million for June 30, 2026. For context, the March 2026 10-Q showed 837 BTC on the books at a cost basis of $73.1 million and fair value of $57.1 million. That is the same BTC still frozen at Biconomy. The company's going-concern status is now under reassessment.
A separate June 2026 8-K shows Datavault had already entered a binding term sheet for Scilex to purchase the stuck 837 BTC for $50 million ($30 million upfront, $20 million in quarterly installments through December 2028). That arrangement predates the restatement and appears overtaken by events. Scilex is simultaneously the counterparty that paid for the shares in bitcoin, the entity from which Datavault cannot retrieve that bitcoin, and the buyer Datavault was hoping would take the coins off its hands. The circularity is not subtle.
Adding to the pressure: a class action lawsuit, Aramouni v. Datavault AI (Case No. 2:26-cv-05548-JS, E.D. Pa., filed August 5, 2026), was already pending before the restatement, alleging false and misleading statements. No comment from Chairman and CFO Brett Moyer was available at filing time.
What This Failure Actually Demonstrates
The bitcoin did not vanish. The protocol worked. What failed is the trust stack built on top of it.
Datavault accepted payment via off-chain transfer into a custodian's wallet, with no on-chain settlement and no keys in Datavault's possession. Biconomy held the coins; Datavault held a balance on a platform. When Datavault needed to exit, the custodian did not process the withdrawal. The accounting standard then confirmed what the deal structure had always implied: under GAAP, you cannot book an asset you cannot access or control.
This is the self-custody argument rendered as an SEC disclosure, not a Bitcoin Twitter thread. The Bitget hot wallet breach earlier this year made a similar point from a different angle: assets held by a third party are subject to that third party's failures, disputes, and operational problems. Datavault's situation adds a GAAP dimension. Off-chain settlement into a custodian does not transfer economic or legal ownership in a way auditors will recognize.
The thesis that disproves itself: if Datavault successfully completes the Biconomy withdrawal, Scilex makes Datavault whole at full BTC value, and the company files a clean restatement with no going-concern flag, the structure worked eventually and self-custody would have added no marginal value here. Watch for that outcome. It requires Biconomy to process the withdrawal, Scilex to cooperate rather than litigate, and auditors to accept the restated financials. Each of those is a separate dependency.
What to Watch
The controlling question is whether Biconomy releases the bitcoin and on what terms. The filing is silent on why the withdrawal is stuck. Whether the hold stems from a legal dispute, Biconomy's own operational or liquidity issues, or instructions from another party is not disclosed.
That answer determines whether Datavault has a recoverable asset or an unsecured claim in what could become an insolvency proceeding. Watch for follow-on filings, any Biconomy statement, and whether the class action expands its allegations to incorporate the restatement.
Sources
Frequently Asked Questions
What is Biconomy and why hasn't it released Datavault's bitcoin?
Biconomy Pte. Ltd. is a Singapore-registered crypto exchange and custodian. The October 26, 2026 8-K discloses only that Datavault requested a withdrawal in June 2026 and that it remains incomplete. The filing does not state why.
Whether the hold reflects a legal dispute, a freeze initiated by another party, or an operational failure at Biconomy is not publicly known. Biconomy has not issued a statement.
What is a "subscription receivable" and why does reclassifying bitcoin as one wipe out assets?
A subscription receivable is money a shareholder still owes a company for shares that have already been issued. It is a credit claim against a counterparty, not a hard asset. Under ASC 505-10-45-2, it sits as a reduction of stockholders' equity rather than an asset line.
If the counterparty cannot or does not pay, the receivable is worth nothing. Datavault booked BTC as a digital asset. Auditors concluded the BTC was instead a promise by Scilex to pay, which is a fundamentally weaker position, especially when the coins are inaccessible.
Does this say anything about Bitcoin, or only about how the deal was structured?
This says something only about the structure. The BTC exists somewhere on-chain, and Bitcoin on-chain is not the failure here. What failed is off-chain settlement into a custodial account with no on-chain transfer to keys Datavault controlled.
The parallel is leaving cash at a bank that freezes withdrawals: that is a bank failure, not a dollar failure.
