Trump's encryption mentor bets $653 million on Bitcoin, why is Wall Street not buying it?

Written by: Nina Bambysheva, Forbes

Compiled by: Luffy, Foresight News

In the words of David Bailey, the past six months can be described as a “Saving Private Ryan-style brutal battle.” The 35-year-old CEO of Nakamoto Holdings — a digital treasury company he founded to manage corporate Bitcoin reserves — has witnessed his boldest bet yet: the merger with Utah-based small public medical company KindlyMD, moving from an initial victory to the current test.

“I'm busy getting beaten up in the stock market,” he said. The company's stock price has plummeted from $25 to 92 cents in six months.

Bailly is not a typical executive of a Nasdaq-listed company. He is better known as the CEO of Bitcoin Magazine, the organizer of the world's largest Bitcoin conference, and also a key figure in changing Donald Trump's attitude towards cryptocurrency. “Our goal,” he stated, “is to become the world's number one Bitcoin company.”

In May of this year, KindlyMD, a public medical clinic operator in Utah with an annual revenue of $2.7 million that offers traditional and alternative therapies, announced a reverse merger with Bailey's Nakamoto Holdings, aiming to transform into a Bitcoin holding company. The merged company is listed on NASDAQ under the ticker symbol NAKA and currently holds approximately $653 million worth of Bitcoin.

Wall Street is not optimistic about Bailey's plan. After the company's stock reached a peak of nearly $35 in May, the price was below $1 for most of October, representing a 98% discount to the net value corresponding to the 5,765 bitcoins held on its balance sheet.

It has been proven that Nakamoto Holdings is a victim of its own financing strategy. To raise funds to purchase cryptocurrencies, the company completed a series of Private Investment in Public Equity (PIPE) transactions, totaling approximately $563 million. These transactions issued hundreds of millions of new shares to private investors at a significant discount, leading to a substantial dilution of existing shareholders' equity. In September, a large number of PIPE shares were unlocked for circulation, and investors rushed to cash out and secure profits, triggering a stock price collapse. Furthermore, Bailey's letter to shareholders urging short-term speculators to exit the stock only added fuel to the fire.

“Those investors who come solely for trading are actually a very costly source of funds for us,” Bailey said, “I know some people disagree with this view, but what we need are partners with aligned long-term interests. This is a high-stakes gamble for us.”

In fact, Bailey stated that he will soon integrate his other businesses — including Bitcoin Magazine, the Bitcoin Conference, and the parent company of the consulting business BTC Inc., as well as UTXO Management, which owns the hedge fund 210k Capital and the venture capital firm 2140 — into KindlyMD. Forbes estimates that these entities could add up to $200 million in value to this Bitcoin treasury company, while increasing Bailey's equity stake (currently 3%).

Belly did not comment on the data from Forbes but stated that the cash generated from these profitable businesses would help KindlyMD purchase more Bitcoin. According to informed sources, the asset management scale of 210k Capital has quietly increased from about 100 million USD in January of this year to 400 million USD, achieving a fourfold growth.

The logic of this emerging financier is simple: Michael Saylor holds over 600,000 bitcoins and does not have, nor does he need, too many operating businesses. Other players must have differentiated strategies to prove their value in existence.

“We need to do things that can create value,” Bailey said, “operating a real company is one way to do that.”

Although KindlyMD is headquartered in Salt Lake City, Utah, Bailey primarily works from his home in Guaynabo, Puerto Rico. During video calls, he often sits in front of a large painting depicting a bank engulfed in flames. This piece is by crypto artist Cypherpunk Now and is one of Bailey's hundreds of collectibles, titled “Burning Bank.”

“Every time I have a meeting with the banker, I make sure this painting is in the background,” he said with a smile. For someone who wants to create their own bank, this scene couldn't be more fitting.

Belly grew up on a farm in Fayetteville, Tennessee, about an hour's drive south of Nashville. From a young age, he developed a strong interest in money and markets. In 2009, he entered the University of Alabama to study economics, finance, and mathematics, with the ambition of becoming an investment banker.

“I was a huge fan of Warren Buffett and attended every Berkshire Hathaway shareholder meeting during college. I never imagined I would buy Bitcoin; it was completely at odds with who I was back then,” he recalled.

In 2012, a friend sent him an article about Bitcoin, and everything began to change. Bailey initially thought Bitcoin was a scam but could not prove it. In November of the same year, when the price of Bitcoin fluctuated between $10 and $12, he made his first investment.

In 2014, a year after graduation, Bailey joined Bitcoin Magazine, an early publication focused on the emerging cryptocurrency, co-founded by Vitalik Buterin, who later founded Ethereum. Soon after, Bailey and his college friend Tyler Evans acquired the magazine through their jointly founded company, BTC Inc.

To expand their brand influence, the two launched the Bitcoin Conference in 2019. This festive event has now become the “Coachella of the crypto space,” making Bailey one of the most influential evangelists of Bitcoin. Last year's conference held in Nashville attracted 35,000 believers, investors, and politicians, with then-presidential candidate Donald Trump also attending the event.

Bailey stated that his connection with Trump began in 2024 during a conversation in Puerto Rico: how to pique the president's interest in Bitcoin. “Paul Manafort was the initial gatekeeper who helped us get into his circle,” he said. Soon, Bailey's team was granted permission to pitch at Trump Tower. The core message was simple: Bitcoin voters would play a key role in the presidential election. Trump, who has always been good at making deals, decided to meet if Bailey and his friends could bring votes and enthusiastic support, thus giving the cryptocurrency industry a chance to have a voice.

“Trump would turn everything into a season of 'The Apprentice.' You're always auditioning,” he added, “'Okay, you want to be a Bitcoin advisor? I'll bring in three more people to compete for the spot.'” Bailey ultimately emerged victorious, rallying industry leaders to raise over $100 million for Trump's campaign, with $21 million raised at the Nashville convention alone. At that convention, Trump's famous pledge – to make America the global capital of cryptocurrency – became widely known.

“He was very uncertain at first, but the cheers from the audience changed his attitude. When leaving, he said, 'These Bitcoin enthusiasts like me; they are my people,'” Bailey recalled. Now, he serves as an informal advisor to the president. In his view, Trump simply realized that cryptocurrencies were treated differently from all other asset classes (after the election, Trump has profited hundreds of millions of dollars from the cryptocurrency space). He believes that the current goal is to create a fair competitive environment, while the grander vision is to make the United States the most friendly country in the world for Bitcoin businesses.

Belly claims that in his 13-year career, he has invested in over 100 Bitcoin-related companies, with the best performers being Metaplanet and Smarter Web, which turned millions of dollars in investments into hundreds of times returns. He stated that the returns are not just financial; good ideas will be replicated. “If thousands of Bitcoin companies thrive, we win.”

This long-term vision inspired by Buffett is now driving the development of KindlyMD. Bailey envisions turning it into a large holding company with profitable and independently operated subsidiaries. For him, this is not just an investment strategy, but a reenactment of monetary history. What he calls the “Bitcoin standard” echoes the evolution of gold: gold and silver trading houses became gold and silver banks, which then evolved into central banks and investment banks. He believes that today's Bitcoin treasury companies are the digital age's gold and silver trading houses, moving towards a new type of banking.

KindlyMD is driving this transformation. The company has invested in other Bitcoin holding companies, namely Japan's Metaplanet and the Netherlands' Treasury B.V. “Imagine nurturing an ETF,” Bailey explained, “what we are doing is exactly this — nurturing these actively managed ETFs globally in the form of corporate stocks.” Of course, like other newly established crypto treasury companies, Bailey's approach to entering the public market has circumvented the scrutiny of the U.S. Securities and Exchange Commission (SEC) over ETFs and IPOs.

Although KindlyMD's “debut show” on Wall Street ended poorly, Bailey didn't mind too much. “One of the best things about Bitcoin is that it is very forgiving; you can make mistakes in your career and then start over,” Bailey said.