Datavault AI Flags Inaccessible Bitcoin at Biconomy, Triggers Major Restatement and Stock Slide

Datavault AI’s treasury just collided with exchange risk and accounting reality. After disclosing it has been unable to move Bitcoin out of Biconomy since June, the Nasdaq-listed firm said four prior financial statements can’t be relied upon and will be restated. The market response was swift: shares fell 49.55% to $0.067 on Oct. 27 and closed Tuesday down more than 50% at $0.06, before rebounding near $0.085 on Wednesday.

The catalyst was a Form 8-K filed Oct. 26. Datavault said it initiated a withdrawal to an external wallet in June and has been “unable to complete the withdrawal.” The filing offered no reason for the holdup. Management is now reassessing going-concern status after previously treating those Bitcoin balances as a source of liquidity and acknowledging uncertainty in collecting amounts owed by its counterparty, Scilex Holding.

My read: this is phantom liquidity born from off-chain credits. When BTC is credited inside an exchange without an on-chain transfer, treasuries sometimes treat the number on the screen as cash-equivalent. That works until it doesn’t. Here, Datavault now concludes the Bitcoin tied to its Scilex transaction never qualified as a company-owned digital asset and will reclassify it as a subscription receivable—effectively an IOU from a share purchaser—reducing stockholders’ equity rather than padding assets. That shift exposes a deeper issue: relying on exchange ledger entries and counterparties for treasury solvency can lull boards, auditors, and investors into confidence that evaporates the moment settlement has to leave the venue.

How the Scilex deal wired the risk into the balance sheet: - On Sept. 25, 2025, Scilex Holding agreed to pay $150 million in Bitcoin for 15 million Datavault shares plus a pre-funded warrant covering another 263.9 million shares (a structure where nearly the entire exercise price is paid up front). - The agreed BTC reference price was $112,915.52 per coin, implying about 1,328.43 BTC. - Scilex credited 1,309.04 BTC to Datavault’s Biconomy account on Sept. 26 and Nov. 25, 2025, reflecting a 19.39 BTC deduction for prior cash advances. These were off-chain, internal book entries—not blockchain transactions. - Between Sept. 26, 2025, and Jan. 30, 2026, Datavault sold 491.431 BTC back to Scilex through the same off-chain process for approximately $40.5 million in cash.

Following a review, Datavault determined the Bitcoin from that arrangement never met the criteria to be recognized as a digital asset on its balance sheet. It will now record the Scilex consideration as a subscription receivable that reduces equity, with the $40.5 million in cash received applied against the amount Scilex owes. The restatements will reverse previously recognized crypto gains and losses.

Estimated adjustments to total assets are significant: - Down $8.1 million as of Sept. 30, 2025 - Down $92.2 million at year-end 2025 - Down $57.1 million as of March 31 (subsequent quarter) - Down $49 million as of June 30

These cover the 2025 annual report and three quarterly reports filed between November 2025 and August 2026. Datavault has not provided a date for the amended filings and warned potential delays could extend to its quarter ended Sept. 30, 2026.

Scilex’s own filings add context. On Sept. 23, 2025, Scilex sold 12.5 million shares of its Semnur Pharmaceuticals subsidiary to Biconomy for $200 million in Bitcoin, then used $150 million of that to purchase Datavault equity. On June 24, 2026—the same month Datavault says it attempted to withdraw coins—Scilex signed a binding term sheet to buy 837 BTC from Datavault’s Biconomy wallet for $50 million, subject to a definitive agreement. The terms contemplated $30 million upfront with $20 million paid in quarterly installments through Dec. 31, 2028, payable in cash or Scilex securities. The 837 BTC, added to the 491.431 BTC previously sold back, reconciles to the original 1,328.43 BTC exposure.

Risk factors now front and center include Scilex’s creditworthiness, dependence on a third-party custodian, Nasdaq listing compliance, and potential litigation or regulatory scrutiny tied to the restatement. For reference, under the 2025 deal Scilex’s effective purchase price was $0.5378 per Datavault share.

Where I focus attention: settlement finality. Corporate treasuries benefit from actually moving assets on-chain to controlled wallets, using qualified custody, and demanding verifiable proof-of-reserves from venues. Otherwise, companies can drift into recognizing receivables as liquidity, which sometimes passes internal muster until cash has to leave the platform. That gap—between visible balances and transferable assets—often explains sharp reassessments like this one.