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 Translator: Ismay, BlockBeats
Editor's Note: This article delves into the shocking capital operations behind David Bailey and his controlled Nakamoto Holdings ($NAKA). From the frenzied surge during the reverse merger to the 99% plunge after retail investors entered, and then to the acquisition of his private assets with the overvaluation of the now worthless public company, it is a meticulously designed wealth transfer that exploits information asymmetry and loopholes in the rules.
This is a brutal investigation into greed, compliance games, and influencer capitalism. It warns us that when faith is packaged as a financial product, and when the slogan of decentralization meets the greed of centralization, retail investors often become the last exit liquidity. Understanding this story may help you maintain some awareness and less blind obedience the next time a big name shouts a buy signal.
The following is the full content:
This morning, David Bailey used a publicly traded company whose market value has evaporated by 99% to acquire his two private companies that he founded at a premium of four times the current stock price—without needing shareholder votes at all.
What is most astonishing? This asset transfer drama was already locked in before retail investors bought the first share.
To understand how this was achieved, we must start from the beginning.
In May 2025, a zombie company named KindlyMD announced its merger with David Bailey's Bitcoin reserve tool, Nakamoto Holdings.
The stock price skyrocketed from $2 to over $30 in a matter of days, with retail investors flocking in. Bitcoin influencers celebrated, and Bailey even compared himself to the Morgan family, the Medici, and the Rothschilds.
Nine months later, the stock price dropped to 29 cents, just as Bailey had purchased his own company with this stock.
The Pump
The mechanism is ingeniously designed.
KindlyMD was originally an overlooked micro-cap stock on NASDAQ. Nakamoto Holdings went public through a reverse merger, backed by $510 million in PIPE (private equity investment) 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 rushing to tell you why you should buy $NAKA (of course, the reason being to hold more Bitcoin).
In just a few days, NAKA's price-to-book ratio (Multiple-to-NAV) reached an astonishing 23 times, meaning speculators were paying $23 for every $1 of Bitcoin held by the company.
Michael Saylor's MicroStrategy has never achieved such a premium. The difference lies in the fact that MicroStrategy has years of operational history, generates actual revenue from its software business, and has a CEO who did not manipulate the transaction structure to line his own pockets.
Insiders knew secrets that retail investors did not. PIPE investors—including notorious BIP-110 opponents Udi Wertheimer, Jameson Lopp, and Adam Back—acquired their shares at $1.12 per share. Retail's buy-in prices were $28, $30, $31, or even higher.
This information asymmetry was embedded in the structure from day one.
In June, Bailey completed another PIPE financing of $51.5 million at $5.00 per share. Although the cost for the second batch of investors was still far above $1.12, it was still much lower than retail investors. They ultimately got harvested as well.
Bailey celebrated the completion of the financing, declaring 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%.
PIPE investors who acquired shares at $1.12 could finally cash out after the August merger completion, and they did just that.
Bailey's response, quite bizarre for a CEO of a public company, was to tell those shareholders only looking to trade to get out quickly.
So they really did leave.
The stock price plummeted further. Below $1. Below 50 cents. Below 30 cents. A company holding about 5,765 Bitcoins (worth over $500 million) is now valued at less than $300 million.
The market's valuation of Nakamoto is even lower than the Bitcoin value on its balance sheet, indicating how investors view the management team and company structure surrounding those Bitcoins.
Debt Spiral
As the stock price crashed, Bailey shifted lenders as frequently as a gambler borrowing 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 consume equity. Thus, 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 7% interest to repay Two Prime. Antalpha's loan term was only 30 days (with an option to extend for another 30 days). They replaced convertible bonds with term loans within a week, then replaced term loans with 30-day bridge loans.
The original plan was to convert this bridge loan into a $250 million 5-year secured convertible bond from Antalpha. Use the new convertible bonds to repay the bridge loan, repay the bridge loan with the term loan, and repay the term loan with the old convertible bonds.
But that $250 million convertible bond never materialized under Antalpha's terms.
On December 16, Nakamoto borrowed $210 million in USDT from Kraken at 8% interest, using Bitcoin in its treasury as 150% over-collateral.
Calculating this account: the lenders have $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 falls by 33%, Kraken is still unharmed. At every stage of this drama, lenders were tightly protected while common shareholders bore the full brunt of the reflexive collapse.
Every new loan tightened the noose.
Countdown
On December 10, NASDAQ notified Nakamoto that it was at risk of delisting due to a stock price that had remained below $1 for 30 consecutive trading days. The company must re-compliance before June 8, 2026, meaning a 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) issuances, cannot issue convertible bonds, nor use stocks as acquisition currency. Everything Bailey assembled in this shell relies on a NASDAQ listing that cannot currently be sustained.
Accounting Disaster
In November, Nakamoto submitted a 12b-25 form to the SEC, admitting that it could not submit its quarterly financial report on time due to the accounting complexity arising from the merger. Preliminary figures revealed the truth:
Nakamoto's acquisition resulted in a $59.75 million loss (the purchase price exceeded net asset value)
Unrealized losses of $22.07 million on digital assets
Realized losses of $1.41 million from Bitcoin sales
Debts incurred from refinancing amounted to a loss of $14.45 million
Quarterly losses of around $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.
The 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 runs the Bitcoin Conference. 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 over the CEO title to Brandon Greene, creating a thin veil this thin between himself and the entities he was about to acquire with shareholder equity.
This morning's transaction was entirely financed through Nakamoto's stock, priced at $1.12 according to a call option embedded in the original marketing service agreement. Meanwhile, $NAKA is still desperately trying to crawl back to 0.29 dollars.
Stocks obtained by Bailey's company are valued almost four times the current market price. Holders of securities from BTC Inc and UTXO will receive 363.6 million shares, valuing the deal at $107.3 million at market price.
But these shares are issued at $1.12, meaning the deal was constructed while NAKA's stock was soaring, and the terms were never adjusted when the stock price collapsed.
Never mind the fictitious pricing on the contracts. What truly matters is that 363.6 million new shares have just entered circulation. Regardless of whether they are labeled at $1.12 or $0.29, existing shareholders have been diluted by this quantity. The $1.12 tag is a courtesy to the sellers, but the dilution is real.
No additional shareholder approval was needed because the call option was already embedded in the original merger documents, and shareholders voted to approve these documents when the NAKA stock was still at $20 and $30.
Retail investors who approved these terms had no idea they authorized a future high-premium acquisition of Bailey's private business, while their stocks were going up in smoke.
Structure of Self-Dealing Transactions
Stepping back, the whole structure is breathtakingly elegant.
Bailey created Nakamoto Holdings. Through KindlyMD, it was merged into a listed shell company, raising $710 million in the process. Fueled by retail enthusiasm, the stock price was driven up to 23 times NAV. PIPE investors entered at $1.12, while the public paid prices 20 to 30 times that number. The stock price then plummeted by 99%.
During this time, the company switched three lenders in a week, trying to manage $200 million in debt, the structure of which was initially intended to convert into equity when the stock price was well above current levels.
Now, as this blasted stock price falls below 30 cents, Bailey is using this hollowed-out tool to gobble up his private empire under terms agreed upon when prices were still at sky-high levels. The initial KindlyMD merger was just a Trojan horse; the acquisition of BTC Inc is the true payload.
Bailey had told us from the beginning. In the initial press release, he said the acquisition of BTC Inc by Nakamoto was contingent upon 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—just like all complex financial engineering, the truth is buried in piles of documents that no one will read.
This person, who operates Bitcoin Magazine, organizes the largest Bitcoin conference globally, and positions himself as a leader of the Bitcoin movement, built a public company that destroyed 99% of shareholder value, and is now using it to acquire his own businesses at a premium.
He compared himself to the Medici. At least the Medici created value for Florence before taking their cut.
Nakamoto is the freak that happens 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 like that of the Morgans, the Medicis, and the Rothschilds, a financial dynasty built on Bitcoin. He told them Nakamoto would bring Bitcoin to the center of the global capital markets. He said their names would echo in history.
But he delivered a 99% loss.
He priced the PIPE at $1.12, while retail buy-in prices were $28. He embedded call options for acquiring his own company into the documents without shareholders understanding the authorization content. He rotated three lenders in a week to prevent $200 million in debt from crushing equity, accumulating $14 million in debt repayment losses in the process. He sold Bitcoin at a loss from what should have been a treasury that was only hoarding. He couldn't even submit quarterly financials on time. And when the stock price ultimately dropped to 29 cents...
When the dust settled, and trust was stripped from retail investors, he exercised that call option to use the wreckage of investors’ investments to buy back his private empire at four times the market price.
Bailey holds 11 million shares, with a cost of $1.12. Adam Back holds nearly 9 million shares. Balaji, Lopp, Yusko, Salinas, Wu Jihan, all of their entry prices are unattainable by teachers, truck drivers, or first-time investors. These individuals shape the narrative of Bitcoin. They operate conferences, publish magazines, manage funds, and tweet. They are the supply chain of faith, turning skeptics into believers and believers into bag holders.
Now, Bailey owns Bitcoin Magazine, the Bitcoin conference, and a hedge fund, all encapsulated in a public company worth only a fraction of its Bitcoin holdings, for which all acquisitions were conducted with shares valued at four times the market price, all of which were approved before a single penny from retail investors entered.
And he’s not done yet.
Nakamoto has submitted a $5 billion ATM (at-the-market) stock issuance application to the SEC. Bailey now controls the media division, the conference division, the hedge fund, and a shelf registration that allows him to continue issuing stocks with Bitcoin treasury as collateral until he squeezes out the last bit of value.
When exactly did the Bitcoin community hand over the keys to conference promoters and influencer capitalists? Why is anyone surprised when they drive off with the car?
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