A $150 million contract with Bitcoin at its center has seen DataVault AI’s stock drop 50 percent. The issue, which has put a spotlight on the perils of crypto transactions, is tied to an arrangement with the well-known DJ Skrillex.
How the Skrillex Deal Led to Trouble for DataVault AI
It all started with a high-profile deal between Skrillex and DataVault AI. Under the terms of the agreement, the celebrity was to put down $150 million in Bitcoin for 15 million of the company’s shares. It was hailed as a coup, demonstrating the firm’s willingness to incorporate cryptocurrency into its operations. But there was a catch: rather than the Bitcoin being deposited in a wallet controlled by DataVault AI, the company was left with a balance on Byconomy, an offshore exchange. That would turn out to be significant.
Bitcoin Was Never in Company Control
By June, when DataVault AI attempted to withdraw the Bitcoin, the problem became clear. The company had not actually taken possession of the currency; it was still sitting in an account on Byconomy. Auditors have been quick to point out that under those circumstances the Bitcoin can hardly be called an asset of DataVault AI, but rather something yet to be transferred. Consequently, the firm has had to go back and restate financials from the past.
Consequences for DataVault AI and the Wider Market
Investors have been unimpressed and the stock has tumbled 50% in the wake of the revised statements and the loss of any claim to the $150 million. One need only listen to the host of The Wolf Of All Streets to know this has given pause to other firms doing big business with crypto; analysts and investors are wary of the kind of risk an offshore exchange can pose. In the end, the episode serves as a reminder of the necessity for a company to have direct custody of its crypto assets in a large transaction.
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