Executive-held tokens directly included in DAT assets?…"Concerns over increased risk to retail investors"

A report said cases of incorporating unlisted, low-liquidity tokens into DAT by 'in-kind' contributions are rapidly increasing. However, critics say this structure is enlarging risks for individual investors because insider-held tokens are being assetized without price verification.

On the 15th, Bloomberg reported that some small- and mid-cap listed companies are expanding the 'in-kind' method in which executives directly put tokens they hold into DAT, instead of the conventional method of raising cash to buy tokens. In such cases, issuers can arbitrarily assess token value, raising concerns that the valuation may diverge significantly from actual market prices.

Market analysts say that especially for pre-listing tokens or low-liquidity assets, the downside risk is passed on to individual investors.

There have been consecutive cases among small companies in sectors such as biotech and mining. U.S.-listed company Tharimmune contributed pre-listing Canton Coin as 80% of a $545 million transaction. The company valued the token at $0.20 at the time, but the post-listing price fell to $0.11 on the 10th.

Alt5 Sigma also provided World Liberty Financial (WLFI) tokens in kind to form a total DAT of $1.5 billion. Flora Growth similarly filled $366 million of a $401 million transaction with unlisted 0G tokens; the token had been $3 each but is trading at about $1.20 after listing.

Experts note that because of the DAT structure, when token prices fall, the stock price can drop by a larger margin. Akshat Baidya of Singapore investment firm Maelstrom said, "A DAT with a high in-kind contribution ratio is effectively driven by a single token's price," and "even if the token falls 50%, the DAT stock price could fall 80~100%."

Singapore's 10X Research estimated in a recent report that individuals who followed Strategy (formerly MicroStrategy)'s DAT model have lost about $17 billion this year. Bloomberg reported that amid the bitcoin correction and deteriorating liquidity, the DAT structure is operating in a way that increases the burden on individual investors.