Smart Digital Stock Plummets 87% Following Controversial Crypto Fund Announcement – Anatomy of a Catastrophe

Digital asset firm faces brutal market reckoning after fund strategy backfires spectacularly.

The Unraveling

Smart Digital's valuation evaporated nearly nine-tenths of its worth in a single trading session—investors fled en masse when the company unveiled what markets immediately labeled a 'crypto fantasy fund.' The 87% collapse represents one of the most severe single-day corrections in fintech history.

Contagion Effect

Market analysts point to fundamental flaws in the fund's architecture—overleveraged positions in speculative altcoins combined with questionable custody solutions. Regulatory scrutiny intensifies as the Financial Services Agency launches preliminary investigation into disclosure practices.

Broader Implications

The debacle highlights persistent vulnerabilities in traditional finance's attempts to embrace digital assets—yet another case of legacy players thinking they understand crypto better than the ecosystem itself. As one trader quipped: 'Wall Street still tries to fit decentralized finance into centralized boxes—and wonders why it keeps breaking.'

Smart Digital now faces existential questions about its future direction while the crypto community watches with mixed reactions—some seeing validation of decentralization principles, others fearing renewed regulatory crackdowns.

Smart Digital Group, a digital marketing services provider, recently announced plans to create a diversified cryptocurrency fund focused on established digital assets like Bitcoin and Ethereum. 

While the MOVE aimed to strengthen the company’s role in the digital asset space and tap into the growing adoption of cryptocurrencies, the market reaction was far from what the company expected.

Smart Digital Group’s Crypto Fund

Smart Digital Group, in a recent press release, revealed plans to build a diversified cryptocurrency fund to capture opportunities. The company promised a structured approach to manage and protects its crypto holding, emphasizing strong risk controls and compliance measures. 

Smart Digital also stated that details on the fund’s size and allocation WOULD be shared based on regulatory requirements and market conditions. On paper, it appeared to be a well-planned move into the world of digital assets.

Shares Plummet 87%

However, Smart Digital Group’s move to enter the digital asset space didn’t go as planned. Contrary to what market trends might suggest, SDM’s stock didn’t follow the usual crypto-boom pattern. Instead, investors were rattled with the move and SDM’s shares plummeted more than 86%, dropping from $13.60 to $1.88 on September 25, 

Animoca Brands’ 2025 report shows that companies unveiling crypto-treasury plans typically see a 150% jump within 24 hours. Brera Holdings saw its stock soar 464% after rebranding as Solmate and launching a Solana-backed treasury with backing from ARK Invest and the Solana Foundation. Similarly, Juizi Holdings gained 25% after greenlighting a $1 billion Bitcoin treasury.

What Went Wrong? 

Investors generally reward clarity and preparation. Companies that succeed generally have clear funding, strong backers, and detailed roadmaps. 

However, Smart Digital left key details, like the fund’s size, financing, and partners, unclear. Without a clear crypto strategy, what could have been an opportunity instead turned into a warning sign for investors.

Rising Risks for Corporate Crypto

This comes as regulators intensify scrutiny on companies venturing into crypto.

According to a report from the Wall Street Journal, U.S. regulators are investigating companies whose stock prices spiked before announcing cryptocurrency plans, looking for signs of possible insider trading or disclosure violations.

Notably, the SEC and FINRA have reached out to some of the more than 200 firms with crypto-treasury strategies this year. A recent report also reveals that corporate crypto investment is cooling off sharply.

These moves highlight the risks for public companies entering crypto. Investors and regulators are now watching closely, which shows that preparation and transparency really matter.