SharpLink Gaming (SBET) became the latest company to jump on the crypto treasury bandwagon, but it’s paying the price for unclear communication.
The online gambling marketing firm stunned markets last week when it announced the acquisition of 176,271 ETH for $463 million, officially making it the largest publicly traded holder of Ethereum.
CEO Rob Phythian called the move “a landmark moment” for public company adoption of digital assets.
“We believe Ethereum is foundational infrastructure for the future of digital commerce and decentralized applications,” he said.
“Our decision to make ETH our primary treasury reserve asset reflects deep conviction in its role as programmable, yield-bearing digital capital.”
To fund the purchase, SharpLink said it raised $425 million through a private investment in public equity (PIPE) deal.
Notable participants included Consensys, Galaxy Digital, ParaFi Capital, Pantera Capital, and Ondo Finance.
Then the stock cratered 70%.
The crash came shortly after SharpLink filed an S-3 registration statement with the SEC, which is a standard form allowing prior PIPE investors to potentially resell their shares.
Some investors mistakenly interpreted the filing as a signal that those backers had already dumped their holdings.
Ethereum co-founder and Consensys CEO Joseph Lubin, who also chairs SharpLink’s board, attempted to clear things up on X, saying the S-3 was being misread.
“It registers shares for potential resale by prior investors,” Lubin wrote. “The ‘Shares Owned After the Offering’ column is hypothetical… This is standard post-PIPE procedure in tradfi, not an indication of actual sales.”
“To clarify, neither Consensys nor I have sold any shares,” he added.
The damage was done, nevertheless. Shares of SBET remain down 54.4% over the past five trading days.
That’s a U-turn for a stock that had surged more than 400% earlier this year following the initial ETH treasury announcement before the S-3 ever hit the SEC’s website.
Crypto treasury trend grows
SharpLink isn’t alone in chasing crypto as a treasury strategy.
As The Wall Street Journal reported, more than 60 companies with no prior crypto exposure have embraced digital assets as a way to boost their stock or offset cash erosion.
The trend started with Michael Saylor’s MicroStrategy (MSTR), now the largest corporate holder of bitcoin. But the strategy is spreading beyond bitcoin into altcoins.
DeFi Development (DFDV) — formerly known as Janover — holds over $96 million in Solana and is actively building out a non-Bitcoin treasury strategy.
So far, it’s a mixed bag. SharpLink’s stock is still up 74.6% this year, despite the recent collapse.
But the confusion surrounding its SEC filings could be a cautionary tale for other companies hoping to tap crypto hype without sparking shareholder panic.
