# Datavault AI Shares Plummet 50% Amid Bitcoin Withdrawal Crisis Company faces existential threat after failing to retrieve BTC assets from Biconomy exchange. - **Source:** [CryptoPotato](https://brifing.si/source/bd22636b-ec8d-42a8-8cca-1937c50e0f6c) - **Published:** 2026-10-28 - **Topic:** [Finance](https://brifing.si/c/finance) - **Original article:** - **On Brifing:** https://brifing.si/s/be440cfa-a84c-44a3-a319-b8df83e4f381 ## Stock Market Collapse Datavault AI shares experienced a severe decline, dropping 49.55% to close at $0.067 on October 28. The market reaction followed the company's disclosure regarding its inability to access Bitcoin held on the Biconomy exchange. This sharp sell-off reduced the company's total market capitalization to approximately $65 million during the trading session. ## Failed Withdrawal Request The company initiated a withdrawal request for its Bitcoin holdings from Biconomy in June but has yet to receive the assets. No specific reason was provided by the exchange for this ongoing delay. This liquidity bottleneck has left the firm unable to access its digital reserves, triggering significant concerns among its shareholders. ## Complex Transaction History Datavault received 1,309.04 BTC from Scilex in September 2025 as part of an equity purchase agreement. The transaction involved an initial valuation of $112,915 per unit. Later, the company transferred 491.431 BTC back to Scilex for $40.5 million in cash, leaving the remaining balance held within the Biconomy digital wallet system. ## Off-Chain Asset Risks All transactions between Datavault and Biconomy were executed off-chain, meaning assets were recorded solely on the exchange's internal books rather than the Bitcoin network. This structure removed the transparency of blockchain verification. Consequently, the company now faces difficulty proving ownership or securing the assets, highlighting the inherent risks of custodial reliance. ## Accounting and Recognition Issues A recent SEC Form 8-K filing revealed that Datavault determined the Bitcoin associated with the Scilex deal failed to meet requirements for recognition as a company digital asset. This accounting reassessment complicates the firm's financial standing. Management is now questioning whether the company can continue its operations given these significant asset recognition hurdles. ## Existential Business Uncertainty Management is currently evaluating the company's ability to remain a going concern. The uncertainty stems from the inability to collect funds from Scilex and the inaccessible Bitcoin reserves. Since these assets were previously counted as primary sources of cash, their loss threatens the fundamental viability of the firm's entire business model. ## Treasury Management Vulnerability Industry observers have long warned that companies holding Bitcoin treasuries expose shareholders to extreme volatility and management-related risks. CEO Andrew Webley previously noted that financing choices made by treasury managers can severely impact shareholder value. Datavault's current situation serves as a practical example of these systemic risks manifesting within a corporate structure. ## Future Outlook and Monitoring Investors are now focused on whether Datavault can successfully negotiate the release of its BTC from Biconomy. The company's future depends on resolving these custody issues and clarifying its financial reporting to the SEC. Until these critical questions are answered, the firm remains in a precarious position regarding its long-term operational survival. ## Sources covering this story - https://cryptopotato.com/datavault-ai-stock-plunges-50-as-bitcoin-withdrawal-stalls/ — --- _Summary written by Brifing from the original reporting. Copyright in the original article belongs to its publisher; read the full piece at the link above._