DAT companies are liquidating digital assets to support market prices amid falling confidence and financial pressures, with the sector accumulating estimated losses of $17 billion and isolated operations, such as FG Nexus’s sale of $32.7 million in ether, illustrating the magnitude of the phenomenon. The treasury-in-crypto model — exposure to volatile assets within an equity wrapper — now faces liquidity stresses, leverage and regulatory scrutiny.
Digital Asset Treasury (DAT) are companies that hold significant cryptocurrency reserves on their balance sheet to offer crypto market exposure via shares. The model relies heavily on the valuation of those assets and, when shares trade below their net asset value (mNAV < 1.0), investor distrust surges. In that context, approximately 15% of DATs trade below the value of their underlying assets, forcing emergency measures.
The use of debt and convertible structures has amplified volatility: the leverage that multiplied gains in rallies now becomes an accelerator of losses and margin calls, forcing sales at adverse moments. These liquidations introduce additional supply into an already weak market and create a domino effect.
A concrete example was FG Nexus, which sold $32.7 million in ether to fund a share buyback; similar moves have contributed to the sector recording estimated accumulated losses of $17 billion and a near 95% drop in institutional capital inflows. Extreme cases illustrate the divergence of outcomes: Strategy Inc reported cumulative gains of $6.15 billion after acquiring 649,870 BTC, while BitMine Immersion Technologies registered losses of $4.52 billion.
Regulation, governance and the cost of trust
Increased regulatory scrutiny is another pressure vector: authorities like the SEC and market bodies are investigating trading patterns prior to crypto purchases and possible irregularities; the Japan Exchange Group (JPX) is considering stricter audits for companies with large crypto reserves. The potential exclusion of some DATs from benchmark indices such as MSCI poses the risk of massive outflows from passive funds.
Governance is also in question: share buyback practices by at least seven companies in the sector, fee structures similar to hedge funds and signs of insider trading have spurred investigations. The fragility of the model is aggravated by dependence on speculative appreciation of crypto assets instead of generating sustainable operating revenues.
The strategy of selling crypto to support shares exposes the DAT model to a vicious circle of losses, distrust and greater scrutiny.
