David Bailey, Chairman and CEO of Bitcoin treasury Nakamoto (Nasdaq: NAKA), has dismissed allegations of a scam after the firm’s stock crashed 99%.
For Bailey, the criticism leveled against him and the firm is just “noise on Twitter.”
Source: X/David Bailey
Baiely announced that Nakamoto acquired BTC Inc., the brand behind Bitcoin Magazine and The Bitcoin Conference, and UTXO Management, a BTC-focused hedge fund.
These two firms were also founded by Bailey. However, Nakamoto’s opaque transactions have since drawn scrutiny from the community.
Bitcoin community backlash against Nakamoto
In May 2025, Nakamoto announced a merger with a little-known corporation called KindlyMD. The stock exploded from $2 to over $30, posting gains of 1,400% within days.
According to analyst Justin Bechler, some investors backing the merger secured a lucrative deal and bought NAKA shares at a fraction of what retailers were offered.
The first round of investors bought at $1.12 per share, while retail bought at $28 or more. The deal helped Bailey raise $510 million in financing and $200 million in convertible notes.
Bechler added that the second round of investors helped Bailey raise $51.5 million at $5 per share, which was still lower than the retail buying price. By the time the merger was finalized in August, the investors were the first to dump, hurting the retail.
The stock has since dropped by 99% from its May high.
Source: NAKA, TradingView
Besides, the firm has reportedly entered into overcollateralized loan agreements that could result in the forfeiture of its 5,765 BTC at the expense of NAKA shareholders.
Additionally, critics have claimed that the recent buyout of BTC Inc. and UTXO Management didn’t involve shareholder approval.
Reacting to the allegations, analyst Felix Jauvin cautioned,
“We have to pay for our DAT sins before we have a chance of being a serious industry again. Shame”
Bitcoin treasury flows wane
BTC’s price decline has further dented Nakamoto’s outlook.
Since the October crash, Nakamoto’s BTC holdings have dropped below its enterprise value, as shown by the mNAV falling below 1. Put differently, the market seemed to be bearish on the BTC treasury firm.
Source: Blockworks
Additionally, the overall demand from BTC treasuries (orange) has also waned after a weak recovery attempt in January.
With fluctuations in ETF flows, these key players could undermine BTC’s odds of price recovery.
Source: DeFiLlama
Final Summary
- David Bailey denied claims of using retail as exit liquidity and flawed debt management, calling the criticism “noise on Twitter.”
- However, critics believe that Nakamoto’s actions damaged the broader Bitcoin industry’s reputation.