Avalanche Treasury, the largest publicly-traded company holding Avalanche (AVAX) as a strategic reserve, has warned the U.S. Securities and Exchange Commission of substantial doubt about its ability to continue operations, just three weeks after its Nasdaq listing.
The company purchased approximately $265 million worth of AVAX but the reserve is now valued at roughly $123 million, representing a loss of more than half its original investment. The stock has plummeted 93% from its listing price, erasing substantial shareholder value in a remarkably short timeframe.
The situation has been compounded by significant leverage on the holdings. Of the company's 13.8 million AVAX tokens, 7.8 million are currently pledged as collateral for outstanding loans, limiting the company's ability to liquidate assets to meet operational needs. The combination of underwater reserves and debt obligations has triggered the going-concern disclosure, a critical red flag that typically indicates existential financial distress.