Shares in sports betting company Sharplink Gaming plummeted 73% in after-hours trading on Thursday, following a regulatory filing that was widely misinterpreted by investors.
The company registered nearly 58.7 million shares for potential resale in a Form S-3 filing with the U.S. Securities and Exchange Commission.
The news spooked investors, leading to a major sell-off and confusion over whether insiders were offloading stock.
Chairman Lubin Clarifies: No Shares Sold
Joseph Lubin, chairman of Sharplink and CEO of blockchain firm Consensys, attempted to set the record straight.
He emphasized that the filing does not reflect any actual sales.
“Some are misinterpreting” the filing, Lubin said on Wednesday.
He clarified that the registration is standard practice following a PIPE (Private Investment in Public Equity) deal and does not indicate any insider exit.
“This is standard post-PIPE procedure in tradfi, not an indication of actual sales,” he said.
Despite Lubin’s efforts to reassure markets, Sharplink’s stock dropped from $32.53 to under $8 in after-hours trading, according to Google Finance.
It later recovered slightly to $10.55, marking a 67.6% drop from Thursday’s close.
Treasury Strategy Involving Ether Raises Eyebrows
Sharplink recently announced an ambitious Ethereum-based treasury strategy.
The company disclosed plans on May 30 to raise up to $1 billion in equity, with a large portion earmarked for acquiring Ether (ETH).
This strategy, backed by Consensys in a $425 million funding round, signaled a bold shift into blockchain-based assets.
However, the timing of the filing and its perceived connection to share sales unsettled investors.
Matt Corva, general counsel for Consensys, also weighed in, noting that the filing doesn’t imply actual selling.
“It doesn’t reflect anyone’s sales, which may or may not ever happen,” Corva said.
He added, “It’s a basic filing.”
Existing Investors Spooked by Dilution Concerns
BTCS Inc. CEO Charles Allen said the reaction is understandable.
“This creates a prisoner’s dilemma: everyone rushes to sell before the others do — a classic race to the bottom,” he said.
Allen suggested Sharplink could reverse the sell-off by immediately announcing their planned Ethereum purchase.
“If they played cards right would expect a surprise PR tomorrow with $1b of ETH purchases — which could light the match to reignite the stock,” Allen noted.
“They may have played it brilliantly,” he added.
Despite reassurances from leadership, investor sentiment remains fragile as the firm moves forward with its crypto strategy.
As of publication, Sharplink shares are trading at $10.55.