Bitcoin's Big Brother Scythe, a Nasdaq Heist Chronicle
Original Title: The Nakamoto Heist: How David Bailey Used a 99% Stock Collapse to Buy His Own Empire
Original Author: Justin Bechler, Bitcoin OG
Original Translation: Ismay, BlockBeats
Editor's Note: This article delves into the intricate capital operation behind David Bailey and his controlled Nakamoto Holdings ($NAKA). From the frenzied surge during the backdoor listing to a staggering 99% collapse after retail investors entered, and finally to using a listed company with nothing but liabilities to acquire his own private assets at a hefty premium, this was a meticulously crafted wealth transfer leveraging information asymmetry and regulatory loopholes.
It is a harsh investigation into greed, regulatory arbitrage, and influencer capitalism. It warns us that when belief is packaged as a financial product and when the slogan of decentralization meets centralized greed, retail investors often end up as the final liquidity exit. Understanding this story may give you more sobriety and less blind obedience the next time a big shot makes a call.
Below is the full article content:
This morning, David Bailey utilized a publicly traded company whose market value had evaporated by 99% to acquire his own two privately held companies at a 4x premium to the current stock price — all without the need for shareholder approval.
What's most astonishing? The asset transfer spectacle was already locked in well before retail investors bought their first share.
To understand how this was achieved, we must start from the beginning.
In May 2025, a zombie company named KindlyMD announced a merger with David Bailey's Bitcoin reserve tool Nakamoto Holdings.
The stock price skyrocketed from $2 to over $30 within a few days, and retail investors rushed in. Bitcoin influencers celebrated, with Bailey even likening himself to the Morgan, Medici, and Rothschild families.
Nine months later, the stock price had plummeted to 29 cents, and Bailey had just used this very stock to acquire his companies.
The Pump
Its mechanism is quite ingenious.
KindlyMD was originally a Nasdaq microcap stock that no one paid attention to. Nakamoto Holdings went public through a reverse merger, backed by a $510 million PIPE (Private Investment in Public Equity) financing and $200 million in convertible bond support.
On paper, this seemed to be the birth of a Bitcoin reserve giant, with the new generation of Bitcoin influencers eagerly telling you why you should buy $NAKA (of course, the reason being to own more Bitcoin).
Within days, NAKA's Price-to-NAV ratio reached an astonishing 23x, meaning speculators were willing to pay $23 for every $1 of Bitcoin the company held.
Michael Saylor's MicroStrategy never reached such a premium. The difference is that MicroStrategy has years of operating history, a software business generating actual revenue, and a CEO who did not manipulate the trading structure to line his pockets on the backend.
Insiders know secrets that retail investors don't. PIPE investors — including the notorious BIP-110 opponent Udi Wertheimer, Jameson Lopp, and Adam Back — got their chips at a price of $1.12 per share. Retail investors bought in at $28, $30, $31, or even higher.
This information asymmetry was ingrained in the architecture from day one.
In June, Bailey completed another $51.5 million PIPE financing at $5.00 per share. While the second batch of investors entered at a cost far below that of retail investors, it was still well above the $1.12 floor price, and they too were eventually harvested.
Bailey celebrated the financing completion, stating it took less than 72 hours and the investor demand was extremely strong.
Let's take a closer look at this strategy.
The Dump
By September, NAKA had already plummeted by 96%.
The PIPE investors who acquired shares early at $1.12 were finally able to cash out after the merger completion in August, and indeed, they did.
Bell's response was quite quirky for a public company CEO; he told those who were just here to play the stock market to hit the road.
So they did.
The stock price continued to fall. Dropped below $1. Dropped below 50 cents. Dropped below 30 cents. A company holding around 5,765 bitcoins (worth over $500 million) now had a market cap of less than $300 million.
The market's valuation of Nakamoto was even lower than the bitcoin value on its balance sheet, which is enough to illustrate how investors view the management team and company structure wrapped around those bitcoins.
Debt Spiral
As the stock price collapsed, Bell, like a gambler on the casino floor, kept switching loan providers.
The original capital structure included a $200 million convertible note from Yorkville Advisors, with a conversion price of $2.80. As NAKA's stock price plummeted below this price, the convertible note turned into debt that could potentially swallow equity. Therefore, on October 3, Nakamoto borrowed a $203 million term loan from Two Prime Lending to redeem Yorkville's note and interest.
Four days later, on October 7, they borrowed $206 million in USDT from Antalpha at 7% interest to repay Two Prime. Antalpha's loan had a term of only 30 days (with an option to extend for another 30 days). Within a week, they swapped a term loan for a convertible note, then swapped that for a 30-day bridge loan.
The plan was to convert this bridge loan into Antalpha's $250 million 5-year secured convertible note. The new convertible note was to pay off the bridge loan, the bridge loan to pay off the term loan, and the term loan to pay off the old convertible note.
But the $250 million convertible note never materialized on Antalpha's terms.
On December 16, Nakamoto borrowed $210 million USDT from Kraken at 8% interest, using its bitcoin treasury as 150% overcollateralization.
Let's do the math on this: The creditor holds $315 million worth of Bitcoin as collateral for a $210 million loan. If the NAKA stock price goes to zero, Kraken seizes the collateral. Even if Bitcoin drops by 33%, Kraken remains unscathed. At every stage of this drama, the creditor has been closely protected, while common stockholders have borne the brunt of a reflexive collapse.
Each new loan is a further tightening of the noose.
Countdown
On December 10, NASDAQ notified Nakamoto that due to the stock price being below $1 for 30 consecutive trading days, it faces delisting risk. The company must regain compliance by June 8, 2026, with the closing price above $1 for 10 consecutive trading days.
The current stock price is 29 cents.
Once delisted, Nakamoto will be unable to conduct ATM (at-the-market) offerings, issue convertible bonds, or use its stock as acquisition currency. Everything Beale assembled in this shell depends on a NASDAQ listing that is currently unsustainable.
Accounting Disaster
In November, Nakamoto filed an SEC Form 12b-25, acknowledging the inability to timely file quarterly reports due to accounting complexities from a merger. The preliminary data unveiled the truth:
The Nakamoto acquisition resulted in a $59.75 million loss (purchase price exceeding net asset value)
A $22.07 million unrealized loss on digital assets
A $1.41 million realized loss from selling Bitcoin
A $14.45 million debt repayment loss from a refinancing round
A quarterly loss of approximately $97 million, only partially offset by $21.8 million in accounting gains from contingencies. This company, meant to be a perfect Bitcoin reserve tool, can't even file its books on time.
Heist
This brings us back to this morning.
Nakamoto announces the signing of a final merger agreement to acquire BTC Inc and UTXO Management. BTC Inc owns Bitcoin Magazine and operates Bitcoin conferences. UTXO manages a Bitcoin-focused hedge fund.
Bailey is the Chairman and CEO of Buyer Nakamoto.
He is also the Founder of Seller BTC Inc and UTXO.
He is the Buyer, the Seller, and the CEO with approval rights.
But in the weeks leading up to the acquisition, he quietly transferred the CEO title to Brandon Greene, creating a thin veil between himself and the entity he was about to acquire with his shareholder equity.
This morning's transaction was fully financed through Nakamoto's stock, priced at 1.12 dollars per the embedded call option in the original marketing services agreement, while $NAKA is still struggling to crawl back to 0.29 dollars.
Valuation of Bailey's company's stock received is nearly four times the current market price. Securities holders of BTC Inc and UTXO will receive 3.636 billion shares, translating to a transaction value of 1.073 billion dollars at market prices.
However, these shares were issued at 1.12 dollars, meaning the deal was structured at the peak of the NAKA stock price surge, and the terms were never adjusted when the stock collapsed.
Forget about the fictional pricing in the contract. What really matters is that 3.636 billion new shares just entered the float. Regardless of whether it says 1.12 dollars or 0.29 dollars on the paperwork, existing shareholders have been diluted by this amount. The 1.12 dollar label is a nod to the Seller, but the dilution is real.
No additional shareholder approval was required as the call option was embedded in the initial merger documents, and shareholders had already voted on these documents back when NAKA was trading at 20 or 30 dollars.
The retail investors who approved these terms had no idea that they were authorizing a future locked-up acquisition of Bailey's private business at a substantial premium, while their own shares were going up in smoke.
Self-Dealing Transaction Architecture
Stepping back, the entire architecture is simply breathtaking.
Bailey created Nakamoto Holdings. Merged it into a publicly listed shell company via KindlyMD, raising 7.1 billion dollars. Fueled by retail enthusiasm, the stock price was pumped to 23 times NAV. PIPE investors entered at 1.12 dollars, while the public paid 20 to 30 times that figure. The stock price then plummeted by 99%.
During this time, the company went through three loan providers in a week, attempting to manage $200 million in debt, which was originally structured to convert to equity at a stock price much higher than the current level.
Now, as the stock price of this dumpster fire plummeted to below 30 cents, Bailey is leveraging this hollowed-out tool to, per terms agreed upon when the stock was trading at a hundredfold high, merge his private empire. The initial KindlyMD merger was a Trojan horse; the acquisition of BTC Inc was the actual payload.
Bailey had told us from the beginning. In the initial press release, he stated Nakamoto would acquire BTC Inc, subject to audit and the exercise of call options. The SPA was publicly filed, and the option terms disclosed. Everything was legally compliant and entirely transparent—just like with all opaque financial engineering, the truth lay buried in piles of unread documents.
This operator of Bitcoin Magazine, organizer of the largest Bitcoin conference, positioning himself as a leader in the Bitcoin movement, established a public company, destroyed 99% of shareholder value, and is now using it to premium-repurchase his enterprise.
He had likened himself to the Medicis. At least the Medicis created value for Florence before taking their cut.
Nakamoto is the freakshow that occurs when internet fame meets the public stock market.
Liquidity Event
David Bailey raised $710 million from over 200 investors across six continents. He promised them a future akin to Morgan, Medici, and Rothschild, a financial dynasty built on Bitcoin. He told them Nakamoto would bring Bitcoin to the heart of the global capital markets. He said their names would resonate in history.
But what he delivered was a 99% loss.
He priced the PIPE at $1.12 while retail bought in at $28. Without shareholders grasping the contents of the authorization, he embedded call options to acquire his own company in the documents. He cycled through three loan providers in a week to prevent $200 million in debt from crushing the equity, accumulating $14 million in debt payoff losses in the process. He sold Bitcoin from the treasury, intended to be held, at a loss. He couldn't even file quarterly reports on time. And when the stock finally hit 29 cents...
When the rubble was cleared, and the retail investors who trusted him were left with nothing, he exercised that call option, using the wreckage of investor capital to buy back his private empire at four times the market price.
Bellamy holds 11 million shares at a cost of $1.12. Adam Back holds nearly 9 million shares. Balaji, Lopp, Yusko, Salinas, and Wu Jihan, all entered at prices that a teacher, truck driver, or first-time investor will never see. These are the people shaping the Bitcoin narrative. They run conferences, publish magazines, manage funds, and tweet. They are the supply chain of belief, turning skeptics into believers and believers into bag holders.
Now, Bellamy owns Bitcoin Magazine, the Bitcoin conference, and a hedge fund, all tucked into a publicly traded company worth only a fraction of his Bitcoin holdings, all acquisitions done at four times market price worth of stock, all approved before a penny of retail money entered.
And he is not done.
Nakamoto has filed a $5 billion ATM (at-the-market) stock issuance with the SEC. Bellamy now controls the media division, conference division, hedge fund, and a shelf registration allowing him to continue issuing stock against the Bitcoin treasury until the last shred of value is squeezed out.
When exactly did the Bitcoin community hand the keys over to conference promoters and influencer capitalists? Why is anyone surprised when they drive away with the car?
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