David Bailey, chairman and CEO of Bitcoin Treasury Nakamoto (Nasdaq: NAKA), has dismissed fraud charges after the company’s shares crashed by 99%.
For Bailey, the criticism of him and the company is simply “noise on Twitter.”
Source: X/David Bailey
Baiely announced that Nakamoto has acquired BTC Inc., the brand behind Bitcoin Magazine and The Bitcoin Conference, and UTXO Management, a BTC-focused hedge fund.
These two companies were also founded by Bailey. However, Nakamoto’s opaque dealings have since caught the attention of the community.
Bitcoin community opposes Nakamoto
In May 2025, Nakamoto announced a merger with a little-known company called KindlyMD. The stock exploded from $2 to over $30 and posted a gain of 1,400% within days.
According to analyst Justin BechlerSome investors who supported the merger struck a lucrative deal, buying NAKA stock for a fraction of what was offered to retailers.
The first round of investors bought at $1.12 per share, while retail bought at $28 or more. The deal allowed Bailey to 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 sale price. By the time the merger closed in August, investors were the first to dump, negatively impacting the retail industry.
The stock has since fallen 99% from its May high.
Source: NAKA, TradingView
Furthermore, the company has reportedly entered into over-collateralized loan agreements that could result in the loss of its 5,765 BTC at the expense of NAKA shareholders.
Furthermore, critics have claimed that the recent buyout of BTC Inc. and UTXO Management did not involve shareholder approval.
Analyst Felix Jauvin responds to the accusations warned,
“We have to pay for our DAT sins before we have a chance at becoming a serious industry again. Too bad.”
Bitcoin money flows are decreasing
BTC’s price drop has further dented Nakamoto’s prospects.
Since the October crash, Nakamoto’s BTC shares have fallen below enterprise value, as evidenced by mNAV falling below 1. Put another way, the market seemed bearish on the treasury BTC.
Source: Blokwerken
Moreover, overall demand for BTC government bonds (orange) has also declined after a weak recovery attempt in January.
With fluctuations in ETF flows, these key players could undermine BTC’s chances of price recovery.
Source: DeFiLlama
Final summary
- David Bailey denied claims of using retail as exit liquidity and poor debt management, calling the criticism “noise on Twitter.”
- However, critics believe that Nakamoto’s actions have damaged the reputation of the broader Bitcoin industry.