SharpLink Gaming Acquires $463 Million in Ethereum, Stock Drops 67%

SharpLink Gaming, a prominent player in the gaming industry, has made a significant move by acquiring over 176,000 Ethereum (ETH) tokens at an average price of $2,626 per token. This acquisition, valued at $463 million, positions SharpLink as the first Nasdaq-listed company to adopt an Ethereum-focused treasury strategy. The company now holds the largest public ETH reserve, second only to the Ethereum Foundation.

SharpLink's strategy aims to provide shareholders with direct exposure to the digital asset while reinforcing the company's belief in ETH's role in powering future technologies. The company reported an 11.8% growth in ETH per share since it began building its treasury earlier this month. Notably, SharpLink has staked over 95% of its Ethereum holdings, contributing to the network's security and earning additional yield.

Joseph Lubin, SharpLink's chairman, emphasized the company's commitment to Ethereum's long-term security and trust properties. "By allocating significant capital to ETH and deploying it in network activities such as staking, SharpLink is both contributing to Ethereum’s long-term security and trust properties while earning additional ETH for that work," Lubin stated. The company plans to use a significant portion of its recently raised $79 million to further expand its Ethereum reserves.

Despite this strategic move, SharpLink's stock performance has seen a sharp decline. The company's stock plunged nearly 67% on June 13 and was trading around $10.87 as of press time. The steep decline appears to stem from market fears tied to shareholder dilution. A viral post on social media alleged that nearly all participants in SharpLink’s recent private placement rushed to sell their shares following the Ethereum treasury announcement.

Addressing these concerns, Lubin clarified that the S-3 filing referenced in the viral tweet simply registers shares for potential resale, a standard procedure following PIPE (private investment in public equity) deals. Matt Corva, a legal officer at Consensys, explained that shares in public stock companies have to go through a registration process to come into existence, which is part of the market infrastructure. As part of the SBET PIPE, a bunch of new shares were sold to investors that came into existence. Those shares have to get ‘registered’ to ever make it into market.