Datavault AI plunges on frozen Bitcoin

Datavault AI hit by bitcoin access failure and stock crash

Datavault AI shares plunged about 50% after the company disclosed it has been unable to withdraw bitcoin held on the Biconomy cryptocurrency exchange since June. The disclosure, made in a regulatory filing, indicated that the firm cannot access the bitcoin associated with a major equity transaction and will need to restate its financial results. The stock closed at $0.067, down 49.55% on the day, with roughly 244 million shares changing hands, and trading in the shares was halted following the collapse.

The market reaction reflects deep concern over Datavault AI’s digital asset custody arrangements and the verifiability of its stated bitcoin holdings. Investors quickly repriced the stock as the inability to access or move the cryptocurrency raised questions about the company’s asset management framework, capital structure integrity, and overall risk controls.

Origins of the trapped bitcoin in Scilex deal

The inaccessible bitcoin traces back to a September 2025 agreement between Datavault AI and Scilex Holding Company. Under that deal, Scilex agreed to purchase Datavault shares and warrants using bitcoin valued at $150 million. Instead of on-chain transfers, Scilex credited 1,309.04 BTC to Datavault’s account at Biconomy through off-chain ledger entries within the exchange.

Datavault later sold 491.4 BTC back to Scilex for approximately $40.5 million in cash, demonstrating that at least part of the credited balance was usable within the exchange environment. However, when Datavault attempted in June to withdraw the remaining bitcoin to an external wallet, the transfer could not be completed and the funds remained locked on the platform as of the latest filing.

Separately, Scilex disclosed in a June financial report that it had sold $200 million of shares in its subsidiary Semnur to Biconomy in exchange for bitcoin, and then used $150 million of those digital assets to buy Datavault securities. The web of transactions involving Scilex, Biconomy and Datavault underscores the central role of the exchange in the flow and custody of the bitcoin at issue.

Unresolved questions over Biconomy and financial reporting

Datavault AI has not publicly detailed Biconomy’s internal operations or given a clear explanation for why the withdrawal request remains frozen. The company has also not indicated whether the problem arises from technical constraints, custodial restrictions, smart contract issues, or other causes. This lack of clarity has itself become a risk factor as investors assess the reliability of the firm’s digital asset reporting.

Because the inaccessible bitcoin is tied to a $150 million share purchase commitment from Scilex, the access failure has effectively blocked completion of that transaction. The company has stated that it must restate its financial results, and markets are trading cautiously as they evaluate the impact of the unresolved custody issue on Datavault AI’s balance sheet and ability to execute large digital asset deals.

Broader implications for corporate bitcoin treasuries

Datavault AI is part of a group of public companies that have added bitcoin to their corporate treasuries in an effort to diversify holdings. The current episode highlights that such strategies can shift risk from core operating performance to counterparties and exchange infrastructure. In this case, shareholders are exposed to the durability and transparency of Biconomy’s systems rather than solely to Datavault’s underlying business.

The 50% single-day decline in Datavault AI’s stock illustrates how quickly markets can react when access to digital assets is called into question. The situation underscores the importance for listed companies of demonstrable control over crypto holdings, clear disclosure of custody arrangements, and contingency planning for exchange-related failures.