Datavault AI said it could not withdraw bitcoin tied to a $150 million share transaction from a third-party custodial wallet, forcing the company to restate several financial filings and reclassify the assets as a subscription receivable rather than digital assets on its balance sheet.
The disclosure places custody arrangements at the center of the company’s financial reporting. Datavault AI said Scilex agreed on Sept. 25, 2025, to purchase 15 million common shares and pre-funded warrants for $150 million, paying in bitcoin valued at $112,915.52 per coin. The transaction involved roughly 1,328.43 BTC, transferred into a digital wallet held at Biconomy.
Datavault AI later returned 491.431 BTC to Scilex for about $40.5 million in cash between Sept. 26, 2025, and Jan. 30, 2026. When the company requested a withdrawal of the remaining bitcoin from the Biconomy-linked wallet in June 2026, the transfer had not been completed by the date of its 8-K filing, according to the company.
Bitcoin custody issue triggers balance-sheet revisions
The company said it no longer believes the bitcoin met the accounting criteria for recognition as a digital asset, because it could not demonstrate control over the holdings. Instead, it plans to recognize a subscription receivable connected to the share issuance.
Datavault AI estimated that the revisions would reduce total assets by $8.10 million as of Sept. 30, 2025; $92.20 million as of Dec. 31, 2025; $57.10 million as of March 31, 2026; and $49 million as of June 30, 2026.
The episode illustrates how a corporate bitcoin purchase or payment can carry risks beyond price volatility. A company may report an asset’s market value, but its ability to account for and deploy that asset depends on its legal and practical control of the private keys or the custody arrangement governing access.
Datavault AI shares closed at $0.09 on Oct. 28, following a decline to $0.07 on Oct. 27 from $0.13 a day earlier. The last reported trade was $0.088.
Fed split lifts long-term treasury yields
The custody disclosure arrived as financial markets absorbed a divided Federal Reserve decision and renewed pressure on long-term borrowing costs. The Federal Open Market Committee voted 10-2 on Oct. 28 to maintain its federal funds target range at 3.75% to 4.00%.
Lisa Cook and Beth Hammack dissented in favor of a 25-basis-point increase, according to the decision details. The 10-year U.S. Treasury yield rose to 5.045% as markets reacted to the vote, while the 20-year yield reached 5.41%, above the 30-year yield of 5.37%.
That unusual inversion between the 20-year and 30-year maturities points to sustained concern around the cost of financing the U.S. government and the inflation outlook over the coming decades. Higher Treasury yields also raise the hurdle for risk assets, including technology shares and companies that use equity or preferred stock to build bitcoin reserves.
Mortgage Bankers Association data showed mortgage applications rose 3.4% week over week, while the average 30-year fixed mortgage rate declined slightly to 7.37% from 7.41%.
Recent U.S. data gave policymakers little immediate evidence of a sharp slowdown. September durable goods orders increased 1.8% month over month, exceeding a 1.7% estimate, while the Conference Board’s October consumer confidence index rose to 91.7 from 84.2 in the prior reading. September new home sales reached an annualized 676,000, above the 651,000 consensus estimate.
The Atlanta Federal Reserve’s GDPNow tracker projected third-quarter economic growth of 3.3% as of Oct. 28, marginally below its prior 3.4% estimate. Markets were awaiting the preliminary third-quarter GDP report and September core PCE data, the Fed’s preferred inflation gauge.
Corporate bitcoin holders face a tougher valuation backdrop
Strategy, the largest publicly traded corporate holder of bitcoin, disclosed holdings of 848,517 BTC acquired at a total cost of $64.02 billion. At a bitcoin price of $79,775, those holdings were worth about $67.69 billion, compared with a reported company market capitalization of $61.732 billion.
That produced a market-capitalization-to-bitcoin-holdings-value ratio of about 0.91, based on the supplied figures. Strategy’s shares closed up 2.66% at $145.16 on Oct. 28 before slipping 0.70% in after-hours trading.
The company’s structure has become increasingly tied to capital markets as it finances bitcoin accumulation through equity and preferred-share offerings. At a special shareholder meeting on Oct. 28, shareholders approved changes to daily dividend terms for four preferred shares: STRF, STRC, STRK and STRD. The changes for STRC are due to take effect on Nov. 1, 2026, while the amendments for STRF, STRK and STRD are scheduled for Jan. 1, 2027.
Strategy was set to release third-quarter results after the close on Oct. 29. Its earnings will be watched for updates on financing costs, preferred-share obligations and the company’s approach to bitcoin purchases while long-dated Treasury yields remain elevated.
Strive also reported holding 43,000 BTC, purchased at an average price of $82,732. At $79,775 per bitcoin, the position was worth about $3.43 billion, below the disclosed average acquisition price. Strive shares gained 1.46% to close at $27.53.
AI spending divides technology earnings
Technology earnings added another source of market volatility. Alphabet reported third-quarter revenue of $127.577 billion, up 25% from a year earlier, while Google Cloud revenue rose 103% to $30.709 billion. Yet the company reported capital expenditures of $51.355 billion and negative free cash flow of $9.065 billion.
Alphabet’s diluted earnings per share came in at $2.12, below the $2.94 Nasdaq calendar estimate cited in the supplied data. Its shares fell 9.97% in after-hours trading after the company maintained 2026 capital-spending guidance and said spending would rise further in 2027.
Microsoft moved in the other direction, gaining 2.88% after hours after reporting fiscal first-quarter revenue of $92.279 billion and diluted earnings per share of $4.92, above the $4.71 estimate. Azure revenue grew 48% year over year, while capital expenditures totaled $39.367 billion.
The contrasting reactions show that markets are demanding clearer evidence that large AI infrastructure budgets can translate into earnings and cash generation. In an environment of elevated rates, cash-intensive growth strategies face tighter scrutiny, whether the spending is directed toward data centers or bitcoin acquisitions.
Concerned about custody and valuation risks? Learn how digital assets reshape corporate balance sheets and compliance.
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