Why Is Stablecoin Development Stock Falling Monday?

Stablecoin Development Corp. (NYSE:SDEV) stock fell over 30% on Monday morning following a bearish report by Fugazi Research.

Fugazi Research warned that Stablecoin Development faces substantial potential dilution as warrants covering 167.5 million shares continue to unlock, with the next tranche due Oct. 16, compared with 50.6 million common shares outstanding as of June 30.

Stablecoin Development did not immediately respond to Benzinga’s request for comment.

Warrant Unlocks Raise Dilution Risk

Fugazi said the warrants unlock in three tranches, each subject to stockholder approval: 20% became exercisable July 16, another 30% unlocks Oct. 16 and the remaining 50% on Jan. 16, 2027.

After each unlock, each purchaser may sell up to 10% of the stock’s 30-day average daily volume per day.

The January private placement raised $134 million, including $25 million in cash, $51 million in stablecoins, and $58 million in SKY, in exchange for pre-funded warrants covering 167.5 million post-split shares.

SKY Accounts for Most of SDEV’s Assets

Fugazi highlighted SDEV’s concentration in SKY. As of June 30, the company held about 2.286 billion tokens worth $119.2 million, or roughly 94% of its $127.5 million in total assets.

The report noted that SDEV held $7 million in cash after spending $84.5 million on additional SKY in the first half. It also recorded a $28 million first-half unrealized loss on digital assets, as a $50.6 million second-quarter loss wiped out a first-quarter gain of about $22.6 million.

Fugazi argued that quoted SKY prices may not reflect what SDEV could realize from selling such a large position.

Flags Governance Concerns

Fugazi also raised governance concerns because CEO and Chairman Michael Kazley serves as managing member and general partner of R01 Fund LP, the largest purchaser in the financing, and signed the purchase agreement on behalf of both SDEV and R01.

R01, Framework Ventures and Sky Frontier Foundation received director nomination rights, while purchasers retaining at least half of their original position hold consent rights over material changes to SDEV’s digital-asset strategy for 24 months.

Fugazi said the combination of concentrated SKY exposure, potential dilution and investor ties to company leadership creates significant risk for common shareholders.

SDEV Announces Preliminary Digital Asset Holdings

Separately, Stablecoin Development reported preliminary Digital Asset NAV was ~$180.2 million as of Sept. 30, 2026, based on a SKY price of $0.07764.

That compares with Digital Asset NAV of approximately $119.2 million as of June 30.

The company held about 2.321 billion SKY tokens as of Sept. 30, with substantially all deployed in staking. Stablecoin Development earned about 34.6 million SKY in third-quarter staking rewards and retained all rewards earned to date.

As of Sept. 30, SDEV also held about $7.2 million in cash and cash equivalents and had no outstanding debt.

By Oct. 2, its holdings had increased to about 2.322 billion SKY, representing roughly 10% of SKY’s total supply.

SDEV Stock Slides Monday Morning

SDEV Stock Price Activity: Stablecoin Development shares are trading lower by 32.29% at $5.07 at the time of publication on Monday, according to Benzinga Pro data.

Photo: SWKStock via Shutterstock