Shares of Datavault AI (DVLT) plunged 49.55% to close at $0.067 on Tuesday, accompanied by trading volume of around 244 million shares. Selling pressure mounted after company disclosure documents revealed that Datavault has been unable to withdraw its Bitcoin holdings from crypto exchange Biconomy since June 2026.
The trapped coin balance was originally earmarked by management as a source of liquidity to fund business operations. Without certainty regarding withdrawals and with no response yet from the exchange, the company’s cash strategy must now be reevaluated from scratch.
The Trail of a $150 Million Off-Chain Transfer
The issue traces back to a business deal in September 2025 between Datavault and Scilex Holding Company. Under that agreement, Scilex agreed to purchase Datavault stock and warrants worth $150 million, payable in Bitcoin.
To execute payment, Scilex credited 1,309.04 BTC to Datavault’s account on the Biconomy exchange. The funds were not transferred via direct on-chain transactions on the blockchain network, but rather through an off-chain transfer - an internal ledger mechanism between accounts within the exchange’s system. Biconomy itself held a dual role in this web of transactions. Prior to facilitating Datavault, the exchange acted as an intermediary Bitcoin provider for Scilex: Scilex sold $200 million worth of stock in its subsidiary, Semnur, to Biconomy to obtain the Bitcoin supply that was subsequently delivered to Datavault.
The transaction relationship functioned briefly when Datavault sold 491.4 BTC back to Scilex to raise approximately $40.5 million in cash. Trouble only surfaced when the remaining Bitcoin holdings were to be transferred out of the exchange.
Failed Withdrawal and a $92 Million Asset Correction
In June 2026, Datavault submitted a request to withdraw its remaining Bitcoin from its Biconomy account to the company’s external custody wallet. The transfer request failed to be executed by the exchange. As of the official disclosure filing submitted on Monday, the asset withdrawal status remains unresolved and Biconomy has not responded.
Following the frozen withdrawal, Datavault was forced to adjust the accounting treatment in its financial reports. Management stated that the Bitcoin held at Biconomy should not have been recognized as direct cryptocurrency holdings, but instead classified as a Scilex receivable on stock that reduces stockholders’ equity.
The accounting reclassification had an immediate impact on the balance sheet. Datavault estimated that this accounting adjustment slashed the company’s asset value by $92.2 million on its year-end 2025 financial statements, followed by an asset reduction of approximately $49 million for the period ending June 2026.
For shareholders, the news serves as a stark reminder of the risks of crypto assets held solely on an exchange’s internal books without self-custody. As long as the balance remains unmoved to an external custodial wallet and the exchange stays silent, claims of millions of dollars in Bitcoin remain fragile on paper.
Reported by CoinDesk.
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Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
