Datavault AI Plunges 50% After It Cannot Withdraw Bitcoin From Biconomy
October 28, 2026
A Bitcoin Treasury Company That Cannot Reach Its Bitcoin
Shares of Datavault AI (DVLT) fell almost 50% on Tuesday after the company admitted it has been unable to withdraw bitcoin from its Biconomy account, a crypto exchange. The company made the withdrawal request in June, and it was still incomplete when it filed its disclosure on Monday. The stock closed at $0.067, down 49.55% from the prior close of $0.133. Around 244 million shares changed hands, according to CoinDesk, several times a normal day’s volume. The episode lands at a sensitive moment for companies that hold bitcoin on their balance sheets, and it raises a basic question every holder eventually faces: who actually controls the coins?How a $150 Million Bitcoin Deal Went Sideways
The bitcoin traces back to a September 2025 agreement with Scilex Holding Co. Scilex agreed to buy 15 million Datavault shares plus a pre-funded warrant covering more than 263.9 million shares, for a total of $150 million payable in bitcoin. Scilex credited 1,309.04 BTC to Datavault’s account at Biconomy. Crucially, those transfers were made off-chain, meaning the balances changed inside the exchange’s own ledger rather than through transactions recorded on the Bitcoin blockchain. Between September 2025 and January 2026, Datavault sold 491.4 BTC back to Scilex for about $40.5 million in cash. Then, in June 2026, it asked Biconomy to move bitcoin out to an external account. According to its Oct. 26 Form 8-K, the company remains “unable to complete the withdrawal” and gave no explanation for the failure.
A Restatement That Rewrites a Year of Accounts
The filing goes well beyond a stuck transfer. Datavault said more than a year of its financial statements can no longer be relied upon, The Block reported. The company has concluded that the bitcoin tied to the Scilex deal never qualified as its own digital asset. Instead, it should have been booked as a subscription receivable, essentially money Scilex still owes for the shares, shown as a reduction of shareholders’ equity. The expected cuts to reported total assets are steep:- $8.1 million as of Sept. 30, 2025
- $92.2 million as of Dec. 31, 2025
- $57.1 million as of March 31, 2026
- $49 million as of June 30, 2026
Why “Off-Chain” Balances Carry Extra Risk
The case is a textbook example of the difference between owning bitcoin and holding a claim on it. When bitcoin sits on an exchange, the exchange controls the private keys, the secret codes that authorise any movement of coins. The customer sees a balance on a screen, but that number is effectively an IOU. Moving coins between two accounts on the same exchange often happens off-chain: the exchange simply edits its internal records, and nothing appears on the public blockchain. That is fast and cheap, but it means nobody outside the exchange can independently confirm the coins exist. The only real test comes at withdrawal, when the exchange must send actual bitcoin to an outside address. A self-custody digital wallet, where the holder keeps the keys, removes that dependency, though it shifts the responsibility for security onto the owner.Questions Now Facing Biconomy and Scilex
CoinDesk said Biconomy had not responded to questions about the withdrawal request or the bitcoin backing Datavault’s account. The Block noted that collection of the amount from Scilex “remains uncertain.” The money trail adds another layer. Scilex’s June financial report says it sold $200 million of shares in its subsidiary Semnur to Biconomy in exchange for bitcoin, then used $150 million of that to buy Datavault’s securities. If that account is accurate, the same exchange sits at both ends of the arrangement. The value gap is also striking. The deal priced bitcoin at $112,915.52 per coin, while the BTC price was trading near $81,000 on Wednesday, so even a successful withdrawal would now be worth far less than the headline $150 million.What Could Come Next for Corporate Bitcoin Holders
Regulators and auditors could take a closer look at how listed companies verify crypto they claim to hold, particularly balances that have never moved on-chain. Shareholders may also start asking treasury firms to prove that their reserves sit in wallets the company controls. The pattern is familiar. Exchange failures have locked up customer coins before, and the long-running Mt. Gox repayment saga shows how many years such disputes can take to unwind.Proof of Custody Becomes the Real Test
Datavault’s collapse is less about bitcoin’s price than about plumbing. An exchange balance is only as good as the exchange’s willingness and ability to honour a withdrawal, and an off-chain credit offers no public proof either way. For the growing group of companies that hold bitcoin as a treasury asset, the lesson appears clear. Investors may increasingly judge them not by how much bitcoin they report, but by whether they can show, on-chain, that they actually control it.
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Madiha Riaz
Madiha is a seasoned researcher in cryptocurrency, blockchain, and emerging Web3 technologies. With a background in organic chemistry and a sharp analytical mindset, she brings scientific depth to decentralized innovation. Since discovering crypto in 2017 and investing in 2018, she’s been uncovering and sharing deep insights into how blockchain is redefining the digital asset landscape.
