Shares in sports betting platform Sharplink Gaming tumbled 73% in after-hours trading on Thursday after filing to register a large volume of shares for potential resale as the firm is soon to bet big on Ether.
However, Sharplink Gaming chairman Joseph Lubin, who is also CEO of blockchain software firm Consensys, said that market watchers had misinterpreted the filing.
Lubin says he and Consensys not sold shares
Lubin said in a post on Wednesday that “some are misinterpreting” Sharplink’s Form S-3 filing with the Securities and Exchange Commission that registers the potential resale of nearly 58.7 million common shares.
Lubin reiterated that it is registering for the “potential resale” of shares, not an actual sale. “This is standard post-PIPE procedure in tradfi, not an indication of actual sales,” Lubin said.
The filing comes as the company prepares for a significant Ether (ETH) purchase as part of its newly announced Ethereum-based treasury strategy.
Shares in Sharplink Gaming (SBET) closed Thursday trading down 12.25% at $32.53 and plunged a further 73% after hours to under $8 on the filing, according to Google Finance.
It has since slightly recovered and is down 67.6%, trading at $10.55, at the time of publication.
Consenys’ general counsel Matt Corva said that the filing “doesn’t reflect anyone’s sales, which may or may not ever happen, I have no idea. But it’s a basic filing.”
Sharplink filing not a new announcement
Corva said the news was already revealed two weeks ago, and “this is the official statement saying yes, SBET sold those shares to investors, and they count.”
On May 30, Sharplink Gaming said that it plans to sell up to $1 billion in common shares, with most of the proceeds intended to acquire ETH, just days after it said it was taking on an Ethereum-focused treasury strategy.
Lubin clarified that neither he nor Consensys had sold any shares. Consenys recently led Sharplink Gaming’s $425 million funding round for the Ethereum treasury strategy.
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BTCS Inc. CEO Charles Allen commented that the filing understandably triggers panic among existing shareholders. “This creates a prisoner’s dilemma: everyone rushes to sell before the others do — a classic race to the bottom,” he said.
Allen suggested the firm could reverse those losses by announcing their anticipated $1 billion Ether purchase tomorrow. “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 said.
“They may have played it brilliantly,” he said.
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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
