Metaplanet Was CAUGHT Doing The UNTHINKABLE??? Here's What it Means For Bitcoin! | EP 1587

Nico Moran (0:02)

Metaplanet's Latest Controversy This Weekend. What really exploded over the weekend is once again, forcing everyone to question the Bitcoin treasury thesis. And also in the last five days, Metaplanet is down about 21%. It's actually might be a little lower if you're counting from like Thursday, while Strategy and Strive are ripping right now. But that's not what the controversy is about. So even if you're not a holder of Metaplanet, I think you do need to be paying attention to what the third largest treasury company is doing, because of course, they hold 43,000 Bitcoin. And is it so crazy to think that they could become a four seller of that Bitcoin if this spiral continues? Interesting story here. Now, again, before I start, I obviously need to in full disclosure say I am not a Bitcoin treasury holder. I don't hold Bitcoin treasuries for the most part. I don't really see the reason for me to hold Bitcoin treasuries. I am a spot Bitcoin holder, though it does seem as if the market was interested in Bitcoin treasuries. As we all know, 2025 was a Bitcoin treasury hype cycle. And now in the bear market, there has been a lot of discussion of whether there is even a need for Bitcoin treasury companies. In particular, many of the discussions have revolved around dilution. Is digital credit even a thing? Can there be other companies, Bitcoin treasury companies besides Strategy? Of course, Michael Saylor. And it doesn't help that the Bitcoin price was down about 50%. Now it seems like we are pulling out of a bear market, but the discussions are still on going right now. Everyone is re-evaluating whether they should even be holding these Bitcoin stocks. Okay, so that's kind of the context of this discussion. Now, I am going to kind of give a bit, hold on, a bit of from what I'm seeing, this potential controversy drama could be a disgruntled Metaplanet holder, though it is coming from a few different accounts on Twitter that are essentially disclosing the same thing.

And it does seem as if the market has responded to, again, a breach of trust. Now, this is one of the main conversations that I don't really see a lot of people talking about in terms of when you buy a Bitcoin treasury company, you're, it's being marketed as, oh, you get Bitcoin exposure through a more traditional financial vehicle. But the underlying, maybe the asterisk of that investment thesis is, you are, in fact, trusting that the executive management of these companies are going to do what is in their fiduciary responsibility to the shareholders to increase your shareholder value. But that implies there is a level of trust that you as the stockholder have, that the leaders of these companies are doing everything they can to benefit you. And once that trust is breached, is where we've seen a few different controversies. Mainly, the first one of this bear market was, of course, Saylor with the never sell your Bitcoin, I will never sell Bitcoin. And then he kind of came out and was like, well, actually, I said that I personally won't, and you shouldn't sell your Bitcoin, but never that strategy. The company wouldn't sell their Bitcoin. And as we saw in response to that, the MSTR price and the stretch price suffered because people, I think, felt like they're breaching my trust, like they broke my trust. I can never trust them now. And I think this is kind of a good way to sum up this whole controversy. There was like a theme of what we're seeing happen right now. It is that idea of can you trust the executive board, the leadership of these companies, to essentially not line their own pockets. Is the Bitcoin treasury play a grift, or is this in fact a way for you as the shareholder to get quote unquote, amplified Bitcoin return? So I want you to hold that thought in your mind. And as I go through this, there is a little bit of back and forth from Twitter's account and analysis on what's going on. So anyways, enough of that. Let me get into the, I think this is the first one that I saw, or maybe this is kind of like the main account kind of leading the charge, and this is Zynx. And to give a little context on Zynx, he is a trader. He is very bullish on Bitcoin treasury companies. He was in fact a big Metaplanet bull for a little bit. And then over the weekend, we just saw an explosion happen in regards to Metaplanet. So here's the controversy kind of boiled down. I am going to read a little bit, guys. I know you hate when I do that, but I'll read some of the tweets, and then I will kind of summarize what it is without bogging you down with all of the technicals here. So here is, I think, the initial post. I'm pretty sure this is like ground zero for the controversy we saw over the weekend. So it's Metaplanet Update. This is a post I would rather not make, but as someone who has covered the stock extensively, I feel it is my duty too. It gets into the weeds of the 10th series stock acquisition rights, which saw 46 million shares become 319.4 million shares. And because the pool was defined as a permanent 20% of fully diluted shares rather than a fixed count. So that is essentially in very jargon terms, the controversy. Let me explain this to you from as much as I can gather. Okay. So if you know anything about Metaplanet, it was once a hotel chain, and then they made a pivot into Bitcoin Treasury Company. And of course, they started to attract investors. They started to do a similar strategy play where you would essentially attract capital, and then you would buy Bitcoin and further, you know, maybe issue some debt so you can buy some Bitcoin, and then you raise this really big Bitcoin Treasury Company. Well, the controversy comes from a kind of a latent clause that was sitting in the disclosures for Metaplanet when it was still a hotel company. And anyways, the part of the clause that really is now the whole debate going on is that there was this quote unquote anti-dilution clause from a legacy warrant from when Metaplanet was a hotel company. And essentially what it said was, hey, if we issue more shares to the company, then the executive suite, these series 10 holders wouldn't be diluted. And that no matter how many shares you added to Metaplanet, that the 10th series, you know, the C suite leadership of Metaplanet, would at all times get a 20% of the outstanding shares of Metaplanet. Instead of getting a, say, a certain number of Metaplanet shares, so you would essentially be diluting yourself if you're creating more Metaplanet shares, they got a fixed percentage of the shares compared to the entire dilution of the outstanding shares. So say, as we saw the numbers here, what were the numbers? So, and this was leftover again. So if it went from 46 million outstanding shares of Metaplanet, then at that time, the Series 10 stock acquisition rights said that the leadership would get 20% of that 46 million shares. Now, when it expanded to 319.4 million, instead of just getting a certain number of shares of that 319.4 million, you essentially have a fixed share price, anti-dilution clause for the leadership of Metaplanet. So that would be 20% of 319.4 million. So a fixed numbers of shares depending on the outstanding shares. Now, if you're starting to catch on to why this is a controversy, it could essentially be boiled down to if you are a Metaplanet shareholder, as in you bought the stock. Well, as Metaplanet expands the share, starts to dilute your share holdings to do these ATM, issue debt, buy back more Bitcoin, or issue more stock so you can buy more Bitcoin, well, the leadership would still retain 20% of all the outstanding shares. So from that perspective, I think this is where the controversy comes about, where it's essentially saying, hey, look, the leadership, you know, the C-suite, the CEO, et cetera, of Metaplanet has an incentive to essentially dilute you, the shareholder, issue more shares because then they get a bigger percentage of the outstanding shares, or further, I guess, they get a fixed percentage of the outstanding shares, which means they get a better paycheck. So you see the incentive structure here is, it's a little wonky, I'm not going to lie.