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 deeply analyzes the stunning capital operation behind David Bailey and his control of Nakamoto Holdings ($NAKA). From the crazy surge during the reverse merger to a 99% crash after retail investors entered, and then to the high-premium acquisition of his private assets using the wreckage of the listed company, this is a wealth transfer meticulously designed to exploit information asymmetries and regulatory loopholes.
This is a brutal investigation into greed, compliance games, and influencer capitalism. It warns us that when belief is packaged as a financial product, and when the mantra of decentralization meets centralized greed, retail investors often become the last line of exit liquidity. Understanding this story might give you more clarity and less blind following when the big players call for buying.
Here is the full content:
This morning, David Bailey utilized a publicly listed company whose market value had evaporated by 99% to acquire his two private companies he founded at a premium of four times the current stock price—without needing to go through a shareholder vote.
What's most astonishing? The asset transfer spectacle had been locked in long before retail investors bought their first share.
To understand how this was accomplished, we must start from the beginning.
In May 2025, a zombie company named KindlyMD announced a merger with the Bitcoin reserve tool Nakamoto Holdings established by David Bailey.
The stock price soared from $2 to over $30 in a matter of days, and retail investors flocked in. Bitcoin influencers celebrated, and Bailey even compared himself to the Morgan family, the Medici family, and the Rothschild family.
Nine months later, the stock price fell to $0.29, just as Bailey had used these shares to buy his own company.
The Pump
The mechanism was designed quite cleverly.
KindlyMD was originally a neglected micro-cap stock on the NASDAQ. Nakamoto Holdings went public through a reverse merger backed by $510 million in PIPE (Private Investment in Public Equity) financing and $200 million in convertible bonds.
On the surface, this seemed like the birth of a Bitcoin reserve giant, with a new generation of Bitcoin influencers eagerly telling you why you should buy $NAKA (of course, the reason was to acquire more Bitcoin).
Within days, NAKA’s price-to-NAV multiple reached an astonishing 23 times, meaning speculators paid $23 for every $1 of Bitcoin held by the company.
Michael Saylor's MicroStrategy has never achieved such a premium. The difference is that MicroStrategy has years of operational history, a real revenue-generating software business, and a CEO who has not manipulated the transaction structure to enrich himself at the backend.
Insiders knew secrets that retail investors did not. PIPE investors—including the notorious BIP-110 opponents Udi Wertheimer, Jameson Lopp, and Adam Back—acquired their shares at $1.12 each. Retail investors, on the other hand, bought in at $28, $30, $31, or even higher.
This information asymmetry was embedded in the structure from day one.
In June, Bailey completed another $51.5 million PIPE financing at $5.00 per share. Although the second batch of investors entered at costs much lower than retail investors, they were still far above the $1.12 floor price, and they too ended up being harvested.
Bailey celebrated the completion of the financing, claiming it was done in 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 already plummeted by 96%.
Early PIPE investors who obtained shares at $1.12 were finally able to cash out after the merger was completed in August, and they did just that.
Bailey's response was quite bizarre for a CEO of a listed company—he told the shareholders who were merely looking to trade to leave quickly.
So they really did leave.
The stock price continued to fall. Below $1. Below $0.50. Below $0.30. A company holding about 5,765 Bitcoins (worth over $500 million) now had a market value of less than $300 million.
The market valuation of Nakamoto fell even below the value of Bitcoin on its balance sheet, which is sufficient to illustrate how investors perceived the management team and company structure wrapped around these Bitcoins.
Debt Spiral
When the stock price crashed, Bailey frequently changed lenders 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 stock price fell below this price, the convertible bonds became debt that could potentially swallow the equity. Therefore, on October 3, Nakamoto borrowed $203 million in a term loan from Two Prime Lending to redeem Yorkville's notes and interest.
Four days later, on October 7, they borrowed $206 million in USDT from Antalpha at a 7% interest rate to repay Two Prime. Antalpha's loan term was only 30 days (with a 30-day extension option). They swapped the term loan for convertible bonds within a week, and then swapped a 30-day bridge loan for the term loan.
The plan was to convert this bridge loan into Antalpha's $250 million 5-year guaranteed convertible bonds. Use the new convertible bonds to repay the bridge loan, the bridge loan to repay the term loan, and the term loan to repay the old convertible bonds.
But that $250 million convertible bond never materialized under Antalpha's terms.
On December 16, Nakamoto borrowed $210 million USDT from Kraken at 8% interest, using the Bitcoins in its treasury as 150% over-collateral.
Let’s do the math: the lender had $315 million worth of Bitcoins as collateral for a $210 million loan. If NAKA’s stock price went to zero, Kraken would take the collateral. If Bitcoin dropped by 33%, Kraken would still be unharmed. At every stage of this saga, the lender was well-protected while common shareholders bore the full brunt of the reflexive crash.
Every new loan tightened the noose.
Countdown
On December 10, NASDAQ notified Nakamoto that it faced delisting risk due to the stock price being below $1 for 30 consecutive trading days. The company must regain compliance by June 8, 2026, meaning the closing price must be above $1 for 10 consecutive trading days.
The current stock price is $0.29.
If delisted, Nakamoto would be unable to conduct ATM (at the market) issuances, issue convertible bonds, or use its stock as currency for acquisitions. Everything Bailey assembled in this shell relied on a NASDAQ listing status that could not presently be maintained.
Accounting Disaster
In November, Nakamoto submitted Form 12b-25 to the SEC, admitting that due to the accounting complexities arising from the merger, it could not submit its quarterly financial report on time. Preliminary data revealed the truth:
Nakamoto’s acquisition resulted in a loss of $59.75 million (purchase price exceeded net asset value)
Unrealized losses on digital assets amounted to $22.07 million
Realized losses from Bitcoin sales totaled $1.41 million
Refinancing rotation resulted in $14.45 million of debt repayment losses
The company suffered a quarterly loss of approximately $97 million, partially offset by an accounting gain of $21.8 million from contingent liabilities. This company, which should have been a perfect Bitcoin reserve tool, could not even submit its books on time.
Heist
This brings us back to this morning.
Nakamoto announced 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 hedge fund focused on Bitcoin.
Bailey is the chairman and CEO of the buyer, Nakamoto.
He is also the founder of the seller, BTC Inc and UTXO.
He is the buyer, the seller, and the CEO approving the terms.
But in the weeks leading up to the acquisition, he quietly handed the CEO title to Brandon Greene, creating a thin layer too insubstantial between himself and the entities he was about to purchase using shareholder equity.
This morning's transaction was completely financed through Nakamoto's stock, with the stock priced at $1.12 based on the embedded call option in the original marketing service agreement. Meanwhile, $NAKA was still desperately trying to climb back to $0.29.
The shares his company received were valued at nearly four times the current market price. The securities holders of BTC Inc and UTXO will receive 363.6 million shares, valued at $107.3 million at market prices.
But these shares were issued at $1.12, meaning the transaction was built when NAKA's stock price was soaring, and the terms were never adjusted when the price plummeted.
Forget about the fictitious pricing on the contract. What really matters is that 363.6 million new shares just entered the float. Regardless of whether the documents state $1.12 or $0.29, existing shareholders were diluted by this quantity. The $1.12 label was a courtesy to the sellers, but the dilution was very real.
No additional shareholder approval was needed since the call option had long been embedded in the original merger documents, which shareholders voted to approve when NAKA’s stock price was still at the $20s and $30s.
The retail investors who approved these terms had no idea that they had authorized a future high-premium acquisition of Bailey's private business, while at the same time, their stocks were going up in smoke.
Self-Interested Transaction Structure
Stepping back, the entire structure is elegantly suffocating.
Bailey created Nakamoto Holdings. He merged it with a public shell company through KindlyMD, raising $710 million in the process. Fueled by retail enthusiasm, the stock price was inflated to 23 times NAV. PIPE investors entered at $1.12, while the public paid a price 20 to 30 times that number. The stock price then plummeted by 99%.
During this period, the company rotated through three lenders in a week, trying to manage $200 million of debt, the structure of which was originally designed to convert to equity while stock prices were far above current levels.
Now, as this wreckage of stock price plummets below $0.30, Bailey is using this hollowed-out tool to swallow his private empire at terms agreed upon when the stock price was still exponentially high. The initial KindlyMD merger was the Trojan horse, and the acquisition of BTC Inc is the real payload.
Bailey told us from the start. In the initial press release, he stated that Nakamoto's acquisition of BTC Inc was contingent on audits and the exercise of the call option. The MSA was publicly submitted, and the option terms were disclosed. Everything was legally compliant and completely transparent—just like all complex financial engineering, the truth was buried in a pile of documents nobody would read.
This person who operates Bitcoin Magazine, organizes the largest global Bitcoin conference, and positions himself as a leader of the Bitcoin movement, established a publicly listed 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 monstrosity that occurs when influencer culture meets the public stock market.
Exit Liquidity
David Bailey raised $710 million from over 200 investors across six continents. He promised them a future akin to the Morgans, Medicis, and Rothschilds, a financial dynasty built on Bitcoin. He told them that Nakamoto would bring Bitcoin to the center of global capital markets. He said their names would echo through history.
But what he delivered was a 99% loss.
He priced the PIPE at $1.12, while the retail buy-in was at $28. He embedded the call option for the acquisition of his own company into the documents without shareholders understanding what they authorized. He rotated through three lenders in a week to prevent the $200 million debt from crushing the equity, accumulating $14 million in debt repayment losses along the way. He sold Bitcoins at a loss from the treasury, which should have only been hoarded and not sold. He couldn't even submit quarterly financial reports on time. And when the stock price finally fell to $0.29…
When the dust settled and the retail investors who trusted him were cleaned out, he exercised that call option, buying his private empire at four times the market price using the remains of the investors' investments.
Bailey owned 11 million shares at a cost of $1.12. Adam Back held nearly 9 million shares. Balaji, Lopp, Yusko, Salinas, Wu Jihan—everyone's entry price is something that teachers, truck drivers, or first-time investors could never have obtained. These people shape the narrative of Bitcoin. They run conferences, publish magazines, manage funds, tweet. They comprise the supply chain of faith, turning skeptics into believers and believers into bag holders.
Now, Bailey has acquired Bitcoin Magazine, the Bitcoin conference, and a hedge fund, all packed into a public company worth only a fraction of its Bitcoin holdings, all acquisitions made at four times the market price, all pre-approved before a single penny from retail investors entered.
And he’s not done yet.
Nakamoto has already submitted a $5 billion ATM (at-the-market) stock issuance application to the SEC. Bailey now controls the media division, conference division, hedge fund, and a shelf registration that allows him to continue issuing stock using the Bitcoin treasury as collateral until the very last bit of value is squeezed out.
When exactly did the Bitcoin community hand over the keys to conference promoters and influencer capitalists? Why are there still people surprised when they drive away with the car?
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