David Bailey Folds BTC and UTXO Into Nakamoto in Unusual Stock Deal

Nakamoto Holdings is making a bold and controversial move: it plans to acquire BTC Inc, the company behind Bitcoin magazine and the Bitcoin conference, along with UTXO Management, a Bitcoin-focused investment firm. All three companies were founded by the same person, David Bailey, who stepped down as Nakamoto’s CEO just before the deal was announced.

The twist is in how the acquisition will be paid for. Instead of cash, Nakamoto will issue new shares priced at $1.12 each, a number locked in long ago through a marketing agreement. The problem is that Nakamoto’s stock currently trades around $0.29. That means Bailey’s companies are being purchased at a valuation far above what the market thinks Nakamoto is worth today, and it means existing shareholders will be heavily diluted as more than $360 million new shares are created to complete the deal.

Examining Company History and Deal Mechanics

To understand why this is happening, you have to rewind to 2025, when a tiny public company called KindlyMD merged with Bailey’s Bitcoin treasury vehicle and became Nakamoto Holdings. The deal came with enormous financing commitments, more than $700 million between PIPE investments and convertible notes, and the stock went wild. It rocketed from about $2 to over $30, fueled by Bitcoin influencers like Jameson Lopp and Udi Wertheimer, who pitched it as a way to get leveraged exposure to BTC.

But not everyone entered at the same price. Early PIPE investors got in at $1.12, while retail traders piled in at $20, $25, even $30. When the lockups expired, early investors began selling, and the stock collapsed. By September, it had fallen 96% from its peak.

As the price dropped, Nakamoto scrambled to manage its debt. A $200 million convertible note became unworkable once the stock fell below its conversion price, leading to a rapid series of loans. First from Two Prime, then from Antalpha, and finally from Kraken, which lent $210 million in Tether (USDT) backed by Nakamoto’s Bitcoin treasury.

Meanwhile, the company struggled to file its quarterly financials, citing the complexity of the merger. Preliminary numbers showed tens of millions in losses tied to the acquisition and to swings in the value of its Bitcoin holdings.

Why the New Deal Matters

The acquisition of BTC Inc and UTXO Management is only possible because of provisions buried in the original merger documents, provisions shareholders approved back when the stock was trading in the $20s and $30s. Those documents allow Bailey to sell his companies to Nakamoto at the predetermined $1.12 share price, no matter what the stock is worth today.

That structure raises eyebrows because Bailey is effectively on both sides of the deal, even though he stepped down as CEO before finalizing it.

If completed, Nakamoto will become a public company that owns a major Bitcoin media brand, the industry’s largest conference, and a Bitcoin investment firm, all while holding more than 5,700 BTC on its balance sheet. Yet the market currently values the entire company at under $300 million, less than the value of its Bitcoin alone. Nasdaq has already warned Nakamoto that it risks delisting if it can’t get its share price back above $1.