$150 Million in Bitcoin Exposes Accounting Flaw and Withdrawal Failure at Datavault
Key Facts
Datavault AI disclosed that, as of October 26, 2026, it had been unable to complete a request to withdraw bitcoin from its Biconomy wallet to an external account, prompting it to reassess the transaction’s accounting treatment, liquidity and going-concern assumption. The company had requested the withdrawal in June 2026, but it remained incomplete when Datavault filed its report with the U.S. Securities and Exchange Commission. Datavault said the bitcoin tied to the transaction did not meet the criteria for recognition as a digital asset owned by the company. Instead, the amount should be recorded as subscription receivables due for the share issuance, with a reduction in shareholders’ equity. It said collection of the amounts due from Scilex was uncertain, and that management was reassessing the going-concern assumption and related disclosures.
The transaction dates to September 25, 2025, when Scilex agreed to buy 15,000,000 Datavault common shares, plus a pre-funded warrant to purchase 263,914,094 shares, for $150 million payable in bitcoin. The agreement valued the consideration at about 1,328.43 bitcoin, based on a spot price of $112,915.52 per coin at the time. Scilex deposited a total of 1,309.04 bitcoin into Datavault’s Biconomy wallet through off-chain transfers in September and November 2025, after 19.39 bitcoin was deducted for cash advances. Datavault then sold 491.431 bitcoin to Scilex through off-chain transfers between September 26, 2025, and January 30, 2026. Cash proceeds from those sales totaled about $40.5 million, according to the company’s disclosure.
Datavault said restating its financial statements would reduce total assets by about $8.1 million as of September 30, 2025, $92.2 million as of December 31, 2025, $57.1 million as of March 31, 2026, and $49.0 million as of June 30, 2026. On October 20, 2026, the audit committee and management concluded that the affected financial statements should no longer be relied upon, and the company filed its current report on October 26. The periods covered include the third quarter of 2025, the year ended December 2025, and the first and second quarters of 2026. The warning also extended to earnings statements and communications based on those financial statements. The expected asset adjustments therefore form part of a broader review of prior financial records, rather than a single-period accounting change.
The company’s earlier disclosures show that its bitcoin balance fell from 1,054 bitcoin at the start of the first half of 2026 to 837 bitcoin at the end, after 217 bitcoin was transferred to Scilex to repay cash advances. In its second-quarter report, Datavault recorded revenue of $6.717 million, compared with $1.735 million in the same period of 2025. But it posted a net loss of $88.0 million for the quarter and $141.2 million for the first half of 2026. Cash used in operating activities during the first half totaled $80.0 million, compared with $12.8 million in the first half of 2025. The company said cash and cash equivalents stood at $1.4 million on June 30, 2026, compared with $2.0 million at the end of 2025, and that available resources were insufficient to fund operations and cash needs for the following twelve months.
The disclosure affected trading on October 27, when The Block described DVLT shares as falling about 50% that day and said they closed near $0.067 after the company announced it could not withdraw the bitcoin. On October 29, the stock closed at $0.0801, while Scilex shares, which trade under the ticker SCLX, closed at $2.06. The October 29 closing data did not link that session’s share-price move to the disclosure. Datavault plans to reissue corrected financial statements but has not set a filing date. The company said its review of the statements and assessment of internal controls are ongoing, and that the possibility of identifying additional errors could delay the corrected statements.