Datavault AI Shares Plunge 50% Amid Bitcoin Withdrawal Issues and Restated Earnings

Datavault AI Shares Plummet 50% on Accounting Errors, Bitcoin Withdrawal Issues

New York, NY – Datavault AI (NASDAQ: DVLT) saw its stock price collapse by nearly 50% on Tuesday, closing at $0.067 per share on trading volume eight times the previous day’s average. The sharp decline was triggered by a filing on October 26th revealing that a $150 million stock transaction paid for in Bitcoin did not meet digital asset recognition criteria, necessitating the restatement of four financial reports. Compounding the issue, 1,309 Bitcoin held in a third-party wallet have been inaccessible since June 2026.

Transaction Details and Accounting Reclassification

The problematic transaction dates back to September 25, 2025, when Datavault AI entered into a securities purchase agreement with Scilex Holding. Scilex agreed to acquire 15 million common shares and pre-funded warrants for 263,914,094 shares, in exchange for $150 million paid in Bitcoin. The agreed-upon exchange rate was $112,915.52 per Bitcoin, totaling approximately 1,328.43 Bitcoin.

Between September 26 and November 25, 2025, Scilex transferred 1,309.04 Bitcoin to a digital wallet held by BICONOMY PTE. LTD. on behalf of Datavault AI. A portion of this, 19.39 Bitcoin, was used to offset cash advances made by Scilex between the agreement signing and final settlement.

Further complicating matters, between September 26, 2025, and January 30, 2026, Datavault AI sold 491.431 Bitcoin back to Scilex via off-chain transfers, receiving approximately $40.5 million in cash.

The Bitcoin Withdrawal Impasse

The core of the current crisis emerged in June 2026, when Datavault AI attempted to withdraw Bitcoin from the Biconomy wallet to an external account. As of the October 26th filing, this withdrawal had not been completed, with the 8-K report offering no explanation for the failure.

Upon re-examination, the company determined that the Bitcoin in question did not qualify for recognition as a digital asset on its balance sheet. Instead, they should have been recorded as a subscription receivable from the issuance of common stock, treated as a reduction of shareholders’ equity, in accordance with U.S. Generally Accepted Accounting Principles (GAAP) ASC 505-10-45-2 and Regulation S-X Rule 5-02.29. The cash received from the sale back to Scilex was consequently used to reduce the receivable from Scilex. This reclassification also requires the reversal of previously recognized gains or losses on cryptocurrency. The company emphasized that this determination is preliminary and unaudited, with the possibility of further errors being identified.

Financial Reporting and Going Concern Concerns

The impact of these accounting adjustments is significant. The Audit Committee and management concluded on October 20th that four financial reports could no longer be relied upon: the third quarter 2025 10-Q, the 2025 annual 10-K, the first quarter 2026 10-Q, and the second quarter 2026 10-Q. All associated press releases and investor presentations issued at the time of these filings are also rendered invalid. Datavault AI estimates that the restated financial statements will result in a reduction of total assets by $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 million as of June 30, 2026. The timeline for this restatement remains undetermined.

More critically, the company’s liquidity assessment is now in question. Management had previously relied on the Bitcoin holdings as a source of liquidity when evaluating its ability to continue as a going concern. With the Bitcoin no longer recognized as an asset and the collectibility of Scilex’s debt uncertain, Datavault AI must re-evaluate its going concern conclusions for the 2025 annual report and the first quarter 2026 report.

The 8-K filing outlines an extensive list of risks, including potential delays in filing the restated financial statements and the third quarter 2026 10-Q, the company’s ability to maintain its Nasdaq listing, its capacity to continue operations and secure new financing, its reliance on third-party custodians and Scilex’s creditworthiness, the outcome of efforts to collect payments from Scilex or secure cooperation from Biconomy, and the potential for litigation or regulatory investigations related to the restatement. The Audit Committee has communicated with its current auditor, CBIZ CPAs, and its former auditor, BPM LLP, regarding these matters. The report was signed by Chief Financial Officer Brett Moyer.

Lessons in Digital Asset Accounting and Custody

Viewed in the context of 2026, the lessons from this situation extend beyond the volatility of Bitcoin prices. Over the past year, publicly traded companies have increasingly engaged in selling stock for Bitcoin, booking it as an asset, and leveraging it for financing and liquidity narratives. Datavault AI’s approach, where it sold stock to another public company and received Bitcoin as payment, highlights the inherent risks. This structure ties the collection, custody, and accounting recognition of assets to the counterparty and third-party wallets. When accounting recognition fails and the Bitcoin cannot be withdrawn from the wallet, the entire narrative supporting the company’s valuation can unravel. The stock’s halving in a single day reflects the market’s repricing of the gap between “having Bitcoin on the books” and “actually being able to access the Bitcoin.”

Future Outlook and Key Watchpoints

Two key areas will be critical for Datavault AI moving forward. First, the timeline for the financial restatement and the filing of the third quarter 2026 10-Q will directly impact Nasdaq compliance and the company’s need for further financing. Second, whether Scilex makes its payments and Biconomy releases the Bitcoin will determine if the receivable is ultimately recognized as an asset or written off as a loss. For other publicly traded companies that have similarly treated Bitcoin as a source of liquidity, this case serves as a cautionary example regarding recognition criteria, custody risks, and the assumptions underpinning going concern assessments.