DeFi Technologies finds itself navigating turbulent waters as it pursues international growth. The company is now confronting a significant legal hurdle in the United States, where a class action lawsuit alleging securities fraud has been filed. This development arrives alongside a sharp reduction in revenue guidance and a substantial single-day share price decline, prompting investor concern over the crypto service provider’s near-term prospects.
Share Price Plunge and Revised Outlook
Market reaction to recent news was severe. On Friday, shares closed at $1.29, marking a one-day drop of approximately 15%. The stock has retreated significantly from its 52-week high of $4.95 and currently trades below its key 50- and 200-day moving averages. The sell-off was triggered by a dual announcement in November: the company reported a nearly 20% revenue decline for the third quarter and, more strikingly, slashed its 2025 revenue forecast.
Management’s projection for 2025 has been dramatically reduced to approximately $116.6 million, a stark contrast to the previously anticipated $218.6 million. This halving of expectations has amplified investor unease, which was already present due to a CEO transition from Olivier Roussy Newton to Johan Wattenström and reported margin compression in the arbitrage business from increasing competition.
Class Action Lawsuit Details
The legal pressure intensified on December 5th, when the law firm Kahn Swick & Foti filed a class action complaint in the U.S. District Court for the Southern District of New York. The core allegation centers on an inadequate disclosure policy concerning challenges within the company’s “DeFi Alpha” arbitrage trading operations. The lawsuit claims investors were caught off guard by the November disclosures regarding these business difficulties.
The scale of the forecast revision has drawn additional legal scrutiny, with other firms now joining the investigation. The lead plaintiff in the class action proceeding has until January 30, 2026, to proceed.
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Operational Expansion and Financial Position
Despite these headwinds, the company’s subsidiary, Valour, continues to drive operational expansion. In a strategically positive move, Brazil’s B3 exchange has approved the listing of four cryptocurrency exchange-traded products (ETPs) tracking Bitcoin, Ethereum, XRP, and SUI. Trading is scheduled to commence on December 17th. This step is notable given Brazil’s position as the fifth-largest nation globally for crypto adoption.
Financially, DeFi Technologies maintains a solid balance sheet despite operational weakness. At the end of the third quarter, the company held $119.5 million in cash and cash equivalents alongside crypto holdings valued at $46.2 million. Valour’s assets under management (AUM) were also robust, nearing $1 billion.
Divergent Analyst Perspectives
Wall Street analysts are deeply divided on the stock’s outlook. In response to the recent developments, Benchmark drastically lowered its price target from $8.00 to $3.00. Conversely, HC Wainwright has maintained a $5.50 price target. The average analyst rating continues to be a “Moderate Buy,” albeit with significantly tempered expectations.
Investors now face two critical near-term dates. The launch of Valour’s products on the Brazilian exchange on December 17th represents a key test for growth execution. Simultaneously, the company’s leadership must demonstrate its ability to manage the dual challenge of mounting a legal defense while continuing to penetrate new international markets.
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