The Bitcoin Guru's Scythe: How did $NAKA harvest retail investors after a 99% stock price plunge and a reverse acquisition?

Title: The Nakamoto Heist: How David Bailey Used a 99% Stock Collapse to Buy His Own Empire
Author: Justin Bechler, Bitcoin OG

Translated by: Ismay, BlockBeats

Editor’s Note: This article delves deeply into the astonishing capital operations behind David Bailey and his control of Nakamoto Holdings ($NAKA). From the crazy surge during the shell listing, to the 99% crash after retail investors entered, and then to using a worthless listed company at a high premium to acquire his private companies—this is a meticulously designed wealth transfer that exploits information asymmetry and regulatory loopholes.
This is a brutal investigation into greed, compliance games, and influencer capitalism. It warns us that when faith is packaged as financial products, and the slogans of decentralization clash with centralized greed, retail investors often end up as the last to exit liquidity. Understanding this story may give you more clarity and less blind obedience when the big players call the shots next time.
Below is the full content:
This morning, David Bailey used a publicly traded company that had lost 99% of its market value to acquire his two private companies—he paid four times the current stock price—without any shareholder voting.
What’s most shocking? Long before retail investors bought the first share, this asset transfer scheme was already locked in.
To understand how this was done, we need to start from the beginning.
In May 2025, a zombie company called KindlyMD announced a merger with Nakamoto Holdings, a Bitcoin reserve tool founded by David Bailey.
Within days, the stock soared from $2 to over $30, attracting a flood of retail investors. Bitcoin influencers cheered wildly; Bailey even likened himself to the Morgan, Medici, and Rothschild families.

Nine months later, the stock plummeted to 29 cents, and Bailey had just used this stock to buy his own companies.
The Pump
Its mechanism is quite ingenious.
KindlyMD was originally a little-known microcap on Nasdaq. Nakamoto Holdings went public via reverse merger, backed by $510 million in PIPE (private investment in public equity) financing and $200 million in convertible bonds.
On paper, it looked like the birth of a Bitcoin reserve giant. The new generation of Bitcoin influencers rushed to tell you why to buy $NAKA (of course, to hold more Bitcoin).
Within days, NAKA’s price-to-NAV ratio hit an astonishing 23x, meaning speculators paid $23 for every $1 worth of Bitcoin held by the company.
Michael Saylor’s MicroStrategy never reached such a premium. The difference is that MicroStrategy has years of operational history, real revenue from software businesses, and a CEO who isn’t scheming behind the scenes to line his pockets.

Insiders knew secrets that retail investors didn’t. PIPE investors—including notorious opponents of BIP-110 like Udi Wertheimer, Jameson Lopp, and Adam Back—got their shares at $1.12 each. Meanwhile, retail buyers paid $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 at $5.00 per share. Although the second batch of investors paid far less than retail, they still paid much more than the $1.12 floor and were ultimately harvested.
Bailey celebrated the financing, claiming it took less than 72 hours and that investor demand was extremely strong.
Let’s examine this strategy carefully.
The Dump
By September, NAKA had already fallen 96%.
PIPE investors who bought at $1.12 finally cashed out after the August merger, and they did so.
Bailey’s response was bizarre for a CEO of a listed company—he told those just trading for quick gains to get out.
And they did.
The stock kept falling. It broke $1, then 50 cents, then 30 cents. A company holding about 5,765 Bitcoin (worth over $500 million) now had a market cap below $300 million.

Market valuation of Nakamoto was even lower than its Bitcoin assets on the balance sheet, illustrating how investors viewed the management team and corporate structure wrapped around these Bitcoins.

Debt Spiral
As the stock crashed, Bailey kept switching lenders like a gambler borrowing on the casino floor.
Initially, the capital structure included $200 million in convertible bonds from Yorkville Advisors, with a conversion price of $2.80. When NAKA’s stock fell below that, the convertible bonds risked turning into equity.
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 at 7% interest from Antalpha to repay Two Prime. The loan had a 30-day term (with a 30-day extension option). They swapped the convertible bonds for a term loan, then replaced that with a 30-day bridge loan.
The original plan was to convert this bridge loan into Antalpha’s $250 million, 5-year secured convertible bonds. The new bonds would pay off the bridge loan, which would pay off the term loan, which would pay off the old convertible bonds.
But that $250 million convertible bond was never issued under Antalpha’s terms.
On December 16, Nakamoto borrowed $210 million USDT from Kraken at 8% interest, with Bitcoin from its reserves as 150% overcollateralization.

Let’s do the math: the lender holds $315 million worth of Bitcoin as collateral for the $210 million loan. If NAKA’s price drops to zero, Kraken takes the collateral. If Bitcoin falls 33%, Kraken remains unscathed. At every stage of this drama, the lender is tightly protected, while ordinary shareholders bear the full brunt of the reflexive collapse.
Every new loan tightens the noose.
Countdown
On December 10, Nasdaq notified Nakamoto that, due to the stock trading below $1 for 30 consecutive trading days, it faced delisting risk. The company must regain compliance by June 8, 2026—that is, close above $1 for 10 consecutive trading days.
The current price is 29 cents.

Once delisted, Nakamoto can no longer issue ATM (at-the-market) offerings, convertibles, or use its stock as acquisition currency. Everything Bailey assembled in this shell depends on maintaining a Nasdaq listing that is now unsustainable.
Accounting Disaster
In November, Nakamoto filed a Form 12b-25 with the SEC, admitting it couldn’t file quarterly reports on time due to accounting complexities from the merger. Initial data reveal the truth:
Nakamoto’s acquisition caused a $59.75 million loss (purchase price above net asset value)
Unrealized digital asset losses of $22.07 million
$1.41 million realized loss from Bitcoin sales
Refinancing rounds resulted in $14.45 million debt repayment losses
Total quarterly loss around $97 million, offset only partially by $21.8 million in contingent liabilities accounting gains. A company that should have been a perfect Bitcoin reserve tool can’t even file its books on time.
Heist
This brings us back to this morning.
Nakamoto announced it signed a final merger agreement to acquire BTC Inc. and UTXO Management.
BTC Inc. owns Bitcoin Magazine and runs the Bitcoin conference.
UTXO manages a Bitcoin-focused hedge fund.
Bailey is the chairman and CEO of Nakamoto, the buyer.
He is also the founder of BTC Inc. and UTXO—the sellers.
He is the buyer, the seller, and the CEO who approved the terms.
But weeks before the acquisition, he quietly handed the CEO role to Brandon Greene, creating a thin veneer between himself and the entity he plans to buy with shareholder equity.
This morning’s deal was entirely financed through Nakamoto’s stock, based on a call option embedded in the original marketing agreement, with shares priced at $1.12. Meanwhile, $NAKA is desperately trying to climb back to $0.29.
The stock valuation Bailey’s company received was 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 price.
But these shares were issued at $1.12, meaning the deal was built when NAKA’s stock was soaring, and the terms were never adjusted when the price collapsed.
Forget about the fictitious pricing in the contract. The real issue is that 363.6 million new shares just entered circulation. Whether the document says $1.12 or $0.29, existing shareholders are diluted by this volume. The $1.12 label is a courtesy to the seller; the dilution is real.
No additional shareholder approval was needed, as the call options were embedded in the original merger documents, approved by shareholders when NAKA traded at $20–$30.
Retail investors who approved these terms had no idea they were authorizing future high-premium acquisitions of Bailey’s private businesses, while their own shares were vanishing.
Self-Serving Structure
On a broader view, the entire setup is almost breathtaking in its elegance.

Bailey created Nakamoto Holdings, merged it into a listed shell via KindlyMD, and raised $710 million. Driven by retail enthusiasm, the stock was pumped to 23x NAV. PIPE investors entered at $1.12, while the public paid 20 to 30 times that. The stock then crashed 99%.
During this period, the company changed lenders three times in a week, trying to manage $200 million in debt, originally structured to convert to equity when the stock was much higher.
Now, with the worthless stock below 30 cents, Bailey is using this hollowed-out tool to acquire his private empire at terms agreed when the stock was at hundreds of dollars. The initial KindlyMD merger was a Trojan horse; the real payload was the acquisition of BTC Inc.
Bailey told us from the start. In the initial press release, he said Nakamoto would acquire BTC Inc., contingent on audits and the exercise of call options. The MSA was publicly filed, and the option terms disclosed. Everything was legally compliant and fully transparent—like all complex financial engineering, the truth is buried in unreadable documents.
This person, who runs Bitcoin Magazine, organizes the world’s largest Bitcoin conference, and positions himself as a Bitcoin movement leader, built a public company that destroyed 99% of shareholder value, then used it to buy back his own companies at a premium.
He once compared himself to the Medici family. At least the Medici created value for Florence before taking their cut.
Nakamoto is the monster that happens when influencer culture meets 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, Medici, Rothschild—a Bitcoin-based financial dynasty. He told them Nakamoto would bring Bitcoin to the center of global capital markets. Their names would echo through history.
But what he delivered was a 99% loss.
He set PIPE at $1.12, while retail paid $28. Then, without investors understanding the authorization, he embedded a call option to buy his private business at a high premium. Over a week, he cycled through three lenders, trying to prevent $200 million in debt from crushing equity, accumulating $14 million in debt repayment losses. He sold Bitcoin from reserves that should have been held, at a loss. He couldn’t even file quarterly reports on time.
And when the stock finally fell to 29 cents…
When the wreckage was cleared and trusting retail investors were looted, he exercised that call option, using the investors’ wreckage to buy his private empire at four times the market price.
Bailey owns 11 million shares at a cost of $1.12. Adam Back owns nearly 9 million. Balaji, Lopp, Yusko, Salinas, Wu Jihan—everyone’s entry prices are beyond what teachers, truck drivers, or first-time investors could ever get. They are the ones shaping Bitcoin’s narrative. They run conferences, publish magazines, manage funds, tweet. They are the supply chain of faith, turning skeptics into believers, believers into bagholders.
Now, Bailey owns Bitcoin Magazine, the Bitcoin conference, and a hedge fund—all tucked into a listed company with a market cap only a small fraction of his Bitcoin holdings. All acquisitions were made with four times the market value in stock, all approved before a single dollar of retail money entered.
And he’s not done.
Nakamoto has already filed with the SEC for a $5 billion ATM (at-the-market) stock issuance. Bailey now controls media, conferences, hedge funds, and a shelf registration allowing him to continue issuing stock collateralized by Bitcoin reserves until the last ounce of value is drained.
When did the Bitcoin community hand over the keys to conference promoters and influencer capitalists? Why are people still surprised when they drive away?