The Bitcoin leader's scythe: a reverse takeover after a 99% stock price plunge, a pre-planned Nasdaq harvest.

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 by Ismay, BlockBeats

Editor's Note: This article provides an in-depth analysis of the astonishing capital operations behind David Bailey and his controlled Nakamoto Holdings ($NAKA). From the frenzied surge during the backdoor listing to the 99% plunge after retail investors entered the market, and then to the high-premium acquisition of his private assets by the disarrayed listed company, it is a meticulously designed wealth transfer that exploits information asymmetry and regulatory loopholes.

This is a brutal investigation into greed, compliance-driven games, and influencer capitalism. It warns us that when faith is packaged as a financial product, and when the slogan of decentralization meets centralized greed, retail investors are often the last line of defense against liquidity depletion. Understanding this story might help you be more clear-headed and less blindly follow the next big investor's recommendations.

The following is the full text:

This morning, David Bailey used a publicly traded company whose market value had evaporated by 99% to acquire two of his own private companies at a premium of four times the current share price—all without requiring a shareholder vote.

What's most astonishing is that this asset transfer drama was already locked in long before retail investors bought the first share.

To understand how this was done, we must start from the beginning.

In May 2025, a zombie company called KindlyMD announced its merger with Nakamoto Holdings, a Bitcoin reserve founded by David Bailey.

The stock price soared from $2 to over $30 in a few days, attracting a flood of retail investors. Bitcoin influencers celebrated wildly, with Bailey even comparing himself to the Morgan, Medici, and Rothschild families.

Nine months later, the stock price had fallen to 29 cents, and Bailey had just used that stock to buy his own company.

The Pump

Its mechanism is quite ingeniously designed.

KindlyMD was originally an untapped microcap stock on Nasdaq. Nakamoto Holdings went public through a reverse merger, backed by $510 million in PIPE (private equity) funding and $200 million in convertible bonds.

On paper, this appears to be the birth of a Bitcoin reserve giant, with a new generation of Bitcoin influencers vying to tell you why you should buy $NAKA (of course, the reason being to own more Bitcoin).

Within days, NAKA's price-to-book ratio (Multiple-to-NAV) reached an astonishing 23 times, meaning that speculators paid $23 for every $1 of Bitcoin held by the company.

Michael Saylor's MicroStrategy never commanded this premium. The difference lies in MicroStrategy's years of operational history, its revenue-generating software business, and a CEO who didn't manipulate deal structures to line his own pockets on the back end.

Insiders know secrets that retail investors don't. PIPE investors—including notorious BIP-110 opponents Udi Wertheimer, Jameson Lopp, and Adam Back—acquired their shares at $1.12 per share. Retail investors, on the other hand, bought in at $28, $30, $31, or even higher.

This information asymmetry was embedded in the architecture from day one.

In June, Bailey completed another $51.5 million PIPE funding round at $5.00 per share. Although the second batch of investors entered the market at a much lower cost than retail investors, it was still far above the floor price of $1.12, and they were ultimately also fleeced.

Bailey celebrated the completion of the financing, saying it took less than 72 hours and that investor demand was extremely strong.

Let's take a closer look at this strategy.

The Dump

By September, NAKA had plummeted by 96%.

Early PIPE investors who acquired shares at $1.12 were finally able to cash out after the merger in August, and they did.

Bailey's response was quite bizarre for a CEO of a publicly traded company; he told shareholders who were just there to trade short-term fluctuations to get out of there.

So they really left.

The stock price continued to fall. It dropped below $1. It dropped below 50 cents. It dropped below 30 cents. A company holding approximately 5,765 bitcoins (worth over $500 million) now has a market capitalization of less than $300 million.

The market's valuation of Nakamoto is even lower than the value of its Bitcoin on its balance sheet, which speaks volumes about how investors view the management team and corporate structure that are wrapped around those Bitcoins.

Debt spiral

When the stock price crashed, Pele frequently changed lenders, much like a gambler borrowing money on the casino floor.

The initial capital structure included $200 million in convertible bonds from Yorkville Advisors, with a conversion price of $2.80. As NAKA's share price fell below this price, the convertible bonds became debt that could potentially devour equity. Therefore, on October 3, Nakamoto borrowed a $203 million term loan from Two Prime Lending to redeem Yorkville's notes and interest.

Four days later, on October 7, they borrowed another $206 million in USDT from Antalpha at 7% interest to repay Two Prime. Antalpha's loan term was only 30 days (with an option to extend for another 30 days). Within a week, they replaced the convertible bonds with term loans, and then replaced the term loans with 30-day bridge loans.

The original plan was to convert the bridge loan into $250 million of Antalpha's 5-year guaranteed convertible bonds. The new convertible bonds would then be used to repay the bridge loan, the bridge loan to repay the term loan, and the term loan to repay the old convertible bonds.

However, the $250 million convertible bond was never issued according to Antalpha's terms.

On December 16, Nakamoto borrowed $210 million USDT from Kraken at an interest rate of 8%, and used Bitcoin from his national treasury as 150% overcollateral.

Let's do the math: The lender has $315 million worth of Bitcoin as collateral for a $210 million loan. If NAKA's stock price goes to zero, Kraken takes the collateral. If Bitcoin drops 33%, Kraken remains unscathed. At every stage of this drama, the lender is heavily protected, while common shareholders bear the brunt of the reflexive collapse.

Every new loan is tightening the noose.

Countdown

On December 10, Nasdaq notified Nakamoto that it faced delisting risk because its stock price had been below $1 for 30 consecutive trading days. The company must regain compliance by June 8, 2026, which means its closing price must be above $1 for 10 consecutive trading days.

The current stock price is 29 cents.

Once delisted, Nakamoto will be unable to conduct ATM (market price) issuances, issue convertible bonds, or use shares as acquisition currency. Everything Bailey assembled within this shell depends on a Nasdaq listing status that is currently unsustainable.

Accounting disaster

In November, Nakamoto filed Form 12b-25 with the SEC, acknowledging that accounting complexities arising from the merger prevented it from filing quarterly financial statements on time. Preliminary data reveals the truth:

The Nakamoto acquisition resulted in a loss of $59.75 million (the price paid exceeded the net asset value).

Unrealized losses of $22.07 million in digital assets.

The sale of Bitcoin resulted in a realized loss of $1.41 million.

The refinancing rotation resulted in a debt repayment loss of $14.45 million.

The company reported a quarterly loss of approximately $97 million, partially offset by a $21.8 million accounting gain on contingent liabilities. This company, which should have been the perfect Bitcoin reserve, couldn't even submit its ledgers on time.

robbery

This brings us back to this morning.

Nakamoto has announced the signing of a definitive merger agreement to acquire BTC Inc. and UTXO Management. BTC Inc. owns Bitcoin Magazine and runs Bitcoin conferences. UTXO manages a Bitcoin-focused hedge fund.

Bailey is the chairman and CEO of the buyer, Nakamoto.

He is also the founder of BTC Inc and UTXO.

He is the buyer, the seller, and the CEO who approves the terms.

But just weeks before the acquisition, he quietly handed over the CEO title to Brandon Greene, creating an almost imperceptible barrier between himself and the entity he was about to acquire with shareholder equity.

This morning's trading was entirely financed through Nakamoto stock, priced at $1.12 based on call options embedded in the original marketing services agreement. $NAKA is currently struggling to climb back to $0.29.

The stock valued at nearly four times the current market price was acquired by Bailey's company. Holders of BTC Inc and UTXO securities will receive 363.6 million shares, a transaction worth $107.3 million at market prices.

However, these shares were issued at $1.12, meaning the deal was set up when NAKA's stock price was soaring, and the terms were never adjusted when the stock price crashed.

Forget about the fictitious pricing in the contract. What really matters is that 363.6 million new shares have just entered the free float. Whether the document states $1.12 or $0.29, existing shareholders are diluted by this amount. The $1.12 label is a concession from the seller, but the dilution is real.

No additional shareholder approval was required because the call options had already been incorporated into the initial merger documents, which shareholders had approved when NAKA's stock price was still around $20 or $30.

Retail investors who approved these terms had no idea that they were authorizing a future private acquisition of Bailey's business at a locked-in premium, while their shares were vanishing into thin air.

Self-interested trading framework

Looking at it from a different perspective, the entire architecture is simply breathtakingly elegant.

Bailey created Nakamoto Holdings. He merged it into a publicly traded shell company through KindlyMD, raising $710 million in the process. Fueled by retail investor enthusiasm, the stock price soared to 23 times its NAV. PIPE investors entered at $1.12, while the public paid 20 to 30 times that figure. The stock price subsequently plummeted by 99%.

During this period, the company changed lenders three times within a week in an attempt to manage $200 million in debt, which was originally structured to be converted into equity when the stock price was much higher than it was at the current level.

Now, with the stock price plummeting below 30 cents, Bailey is using this hollowed-out tool to swallow up his personal empire, according to the terms agreed upon when the stock price was still a hundred times its initial value. The initial KindlyMD merger was a Trojan horse; the acquisition of BTC Inc. is the real payload.

Bailey told us this from the beginning. In the initial press release, he said Nakamoto would acquire BTC Inc, contingent on an audit and the exercise of call options. The MSA was publicly filed, and the option terms were disclosed. Everything was legally compliant and completely transparent—like all complex financial engineering, the truth was buried in piles of documents no one would read.

This man, who runs Bitcoin Magazine, organizes the world's largest Bitcoin conference, and positions himself as a leader of the Bitcoin movement, built a publicly traded company, destroyed 99% of shareholder value, and is now using it to acquire his own business at a premium.

He once compared himself to the Medici family. At least the Medici family created value for Florence before taking their cut.

Nakamoto is the freak that emerged when influencer culture encountered the public stock market.

Exiting liquidity

David Bailey raised $710 million from over 200 investors across six continents. He promised them a future like Morgan, the Medici, and the Rothschilds—a financial empire built on Bitcoin. He told them that Nakamoto would bring Bitcoin to the center of global capital markets. He said their names would resonate in history.

But he delivered a 99% loss.

He priced PIPE at $1.12, while retail investors bought it at $28. He included call options to acquire his own company in the filings without shareholders understanding the mandate. He switched lenders three times in a week to prevent $200 million in debt from crushing the equity, accumulating $14 million in debt repayment losses in the process. He sold Bitcoin at a loss from the national treasury, which was supposed to be held only. He couldn't even file quarterly financial reports on time. And when the stock price finally plummeted to 29 cents…

When the ruins were cleared and the retail investors who had trusted him were wiped out, he exercised the call option and used the remnants of their investments to buy his own private empire at four times the market price.

Bailey holds 11 million shares at a cost of $1.12. Adam Back holds nearly 9 million shares. Balaji, Lopp, Yusko, Salinas, and Jihan Wu—their entry prices are prices that teachers, truck drivers, or first-time investors could never afford. These are the people who shape the Bitcoin narrative. They run conferences, publish magazines, manage funds, and tweet. They are the supply chain of faith, turning skeptics into believers and believers into bagholders.

Now, Bailey owns Bitcoin Magazine, Bitcoin conferences, and a hedge fund, all crammed into a publicly traded company with a market capitalization that is only a fraction of its Bitcoin holdings. All acquisitions were made with four times the market value of the shares, and all of this was approved before retail investors could even get a penny in.

And he's not done yet.

Nakamoto has filed for a $5 billion ATM (market value) stock offering with the SEC. Bailey now controls the media division, conference division, hedge fund, and a shelf registration that allows him to continue issuing stock backed by the Bitcoin Treasury until it's completely worthless.

When exactly did the Bitcoin community hand over the keys to conference promoters and influencer capitalists? And why are people surprised when they drive off with the car?