The Smart Digital Group faced a brutal investor rebellion as NASDAQ-listed stock collapsed following a surprise announcement to establish a diverse cryptocurrency pool.
summary
- Smart Digital Group’s stock collapsed 87% after announcing plans for a diverse crypto asset pool targeted at Bitcoin and Ethereum.
- The move may have caused investor backlash due to vague details, unlike his peers who saw a surge in stock after a similar pivot.
- Meanwhile, regulators are investigating trading activities in companies employing cryptocurrency strategies, adding systemic risk to such movements.
On September 26, Smart Digital Group Limited (SDM) publicly announced its strategy to deploy capital into a pool of cryptocurrency assets, naming Bitcoin and Ethereum as the main targets of recognized “stability and transparency.”
“The move is designed to leverage the acceptance of cryptocurrency in global markets while strengthening the position of Smart Digital Group in the digital assets ecosystem. By allocating resources to established digital assets, the company aims to increase the diversification and value of its portfolio in the evolving digital economy.
The announcement aims to place businesses within a growing digital asset ecosystem, and instead caused immediate and catastrophic sales. By the end of the trading day on September 25th, prior to the official press release, SDM shares had collapsed 86.84% to $1.88 from the previous closing of $13.60.
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Pivoting against the playbook
The dramatic collapse of Smart Digital Group’s ratings is in stark contrast to the typical market response to such an announcement. According to the 2025 Animoca Brands report, companies publishing their cryptographic strategies have skyrocketed to an average of 150% within 24 hours of disclosure. This pattern has been unfolding over the past few months.
Brera Holdings, an investor at a small European football club, has soared 464% after revealing its rebranding plans as a Solmate and a transition to the Solana-based Digital Asset Treasury. Similarly, Chinese EV technology company Juizi Holdings enjoyed a 25% stock bump with approval of the $1 billion Bitcoin Treasury initiative.
The significant difference lies in the detailed market. The market is currently under scrutiny. Companies that are rewarded by investors offer clear funding mechanisms, well-known supporters, and specific operational roadmap.
By comparison, Smart Digital’s announcement did not have specific details regarding the size of the planned asset pool, its source of funding, or strategic partnerships. This ambiguity, coupled with the lack of business synergy from clear and crypto origins, has transformed the potential growth narrative into a red flag for shareholders who are concerned about uncalculated risks and the focus of diluted companies.
Regulators are wary of cryptocurrency companies
This escalating trend has not been noticed by regulators. The Securities and Exchange Commission and the Financial Industry Regulatory Authority have reportedly launched an extensive investigation into trading activities surrounding more than 200 companies that have announced cryptocurrency plans, according to the WSJ.
The core of the investigation revolves around the suspicious stock price increase in the days before its release. This is a potential indication of selective disclosure or insider trading that violates fair regulatory disclosure.
While Smart Digital’s pre-announcement trading was accompanied by a plunge rather than profit, the fierce regulatory spotlight creates crypto pivots and adds a systematic layer of risk to public companies that could attract institutional investors.
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