A marketing firm for shark-repellent sunscreen, a producer of chocolate-flavored whiskey, and a vendor of drinks aimed at "rapidly lowering blood alcohol concentration"—these businesses once shared a commonality of massive losses and plummeting stock prices. However, they have now joined the ranks of publicly listed companies, contributing to one of the hottest trends in the cryptocurrency market this year.

Since the beginning of the year, billions of dollars have flowed into companies that are "redefining their positioning" by incorporating cryptocurrency purchasing and holding as their core business. Over 200 publicly traded companies have announced plans to integrate cryptocurrency into their balance sheets, becoming known as Digital Asset Treasury companies (DATs).

Previously, many of these companies were struggling niche businesses, including those engaged in lavender-flavored vodka production, indoor cannabis cultivation materials, and "nano-bubble" cleaning technology related to ozone water sales. Now, they are transforming into cryptocurrency enterprises.

This trend has attracted a diverse range of investors, from unknown individuals to well-known figures. "We are going to completely change the financial industry, plain and simple," said Eric Trump, son of former President Donald Trump, in August while attending a Nasdaq opening bell ceremony for a newly established DAT that focuses on a cryptocurrency launched by the Trump family. "This is an important milestone for our country."

However, the extent to which this DAT boom can drive transformative change remains uncertain, as skepticism about the sustainability of this trend increases. Many newly established DATs have seen their stock prices surge initially before entering a prolonged downturn.

"To be honest, we may have already passed the peak of DATs," stated Austin Campbell, founder of Zero Knowledge Consulting and a part-time professor at New York University Stern School of Business.

How do Digital Asset Treasury Companies (DATs) operate? Public companies raise funds by issuing stocks and subsequently use these funds to purchase various cryptocurrencies, thereby transitioning into DATs. The funds are often sourced from private investors, sometimes linked to the types of cryptocurrencies that the DAT plans to accumulate.

In 2020, technology firm MicroStrategy was the first to shift to a DAT, beginning to accumulate Bitcoin (the oldest and most popular cryptocurrency) in large quantities. Under the leadership of "Bitcoin super-enthusiast" Michael Saylor, MicroStrategy's stock became one of the best-performing stocks over the past five years (the company has since renamed itself "Strategy").

MicroStrategy's success led to the emergence of dozens of imitators. Initially, the first wave of cryptocurrency treasury companies predominantly focused on Bitcoin; recently, an increasing number of businesses have begun to invest substantially in lesser-known, unproven cryptocurrencies.

One reason for the explosive growth of DATs is that for novices, purchasing and managing cryptocurrency assets (especially new tokens) can be quite challenging. According to S.Y. Lee, founder of the cryptocurrency project Story, even seasoned investors approach managing digital wallets with caution. DATs simplify this process to "like buying stocks."

"You just log into your brokerage account... and buy the stock," Lee explained in an interview with CoinDesk.

Lee's cryptocurrency company focuses on monetizing intellectual property and has received support from the well-known venture capital fund a16z crypto. Recently, Story collaborated with Heritage Distilling (a producer of chocolate-flavored whiskey and lavender vodka) in Washington State to establish a new DAT.

For struggling companies, transitioning to a DAT not only provides a way to rebrand and leverage the growth trend in cryptocurrency markets but also serves as a means to secure new funding.

Furthermore, this transformation may yield high returns for some company executives and related personnel. For example, Mill City Ventures, which previously developed online poker games and offered high-interest loans, has shifted focus to a DAT centered on cryptocurrency Sui; it has agreed to pay a cryptocurrency management firm at least $1 million in management fees annually.

Cases of Companies Undergoing Multiple Transformations Justin Sun is one of the most watched figures in the cryptocurrency space. As founder of the Tron blockchain, Sun is a billionaire and key investor in the Trump family’s cryptocurrency project. Earlier this year, he was invited to a presidential dinner.

At the same time, Sun is mired in several legal disputes: former employees have accused him of misconduct; media mogul David Geffen has alleged fraud in a high-priced sculpture transaction; and the U.S. Securities and Exchange Commission (SEC) has accused him of market manipulation and making illegal payments to celebrities like Lindsay Lohan and Jake Paul to promote his cryptocurrency.

Shortly after Trump's inauguration, the SEC’s case against Sun was paused. In July, Sun appeared on Wall Street in a tuxedo, helping to ring the Nasdaq opening bell for a new "Tron-based DAT," showcasing his prominence.

The parent company of this "Tron-based DAT" is SRM Entertainment, which has a long history of losses and primarily sells theme park trinkets. The company's CEO, Richard Miller, has had a tumultuous career that eventually led him to become an executive at a cryptocurrency company. Regulatory documents show that early in his career, Miller worked as a broker at the infamous Stratton Oakmont, a "high-pressure sales brokerage" featured in the movie "Wolf of Wall Street;" he agreed to pay $125,000 to settle complaints of misconduct from clients.

Miller later ventured into the skincare industry and helped operate the company that acquired SRM Entertainment, which was then marketing a sunscreen that was "both sunscreen and a shark and jellyfish repellent."

A few days after SRM Entertainment announced its transformation into a "Tron-based DAT," Miller exercised stock options, purchasing shares at $0.56 each and selling them when the price climbed above $10. Reports indicate Miller earned over $1 million from this stock sale, after which the company's stock price fell sharply.

Notably, SRM Entertainment was previously spun off from another company, which has also recently transitioned into a DAT. That parent company, Safety Shot, specializes in drinks that claim to "lower blood alcohol concentration by up to 50% in 30 minutes;" earlier this year, it transitioned into a DAT focused on the Dogecoin-themed meme coin Bonk, similarly with a checkered business history.

Safety Shot's products, both from its and its predecessor's offerings, include various health-related items for treating herpes, hair loss, and "women's sexual health." Additionally, the company has been accused of employing unethical tactics to try to boost its depressed stock price.

Last year, the organizers of the Coachella Valley Music and Arts Festival lawsuit Safety Shot, claiming the company issued "false press releases," falsely stating it was a sponsor of the festival. Subsequently, a judge issued an injunction against Safety Shot.

A Tumultuous History for the DAT Associated with the Trump Family Alt5 Sigma was once an obscure fintech company. In August, it committed to purchasing $1.5 billion worth of the Trump family's World Liberty Financial tokens.

The company's history has been similarly tumultuous, having previously operated an appliance recycling business and developed pain relievers. Its predecessor company, JanOne, was sued by the SEC in 2021, accused of conspiring to publish false financial statements. JanOne ultimately reached a settlement without admitting wrongdoing. Currently, the SEC is still pursuing a lawsuit against JanOne’s former CEO Jon Isaac, whose father now serves as the president of Alt5 Sigma.

Additionally, SEC documents reveal that Alt5 Sigma’s Canadian subsidiary was recently convicted of money laundering in Rwanda, and the company has also been accused of colluding with a former CFO to conceal stock from creditors. Alt5 Sigma has denied these allegations.

Eric Trump initially planned to join Alt5 Sigma's board of directors, but the company indicated that to "comply with Nasdaq listing rules," he would instead serve as an "observer."

Will History Repeat Itself? The trend of publicly listed companies pivoting into the cryptocurrency sector is not unprecedented. During the cryptocurrency boom of 2017 to 2018, numerous companies rebranded to focus on blockchain, the underlying technology supporting cryptocurrency transactions.

For instance, photography company Kodak launched a cryptocurrency called KodakCoin, and Long Island Iced Tea rebranded as Long Blockchain Corp. At that time, several companies that transitioned to cryptocurrency saw brief stock price increases but did not achieve long-term success.

For example, Long Island Iced Tea's transformation into cryptocurrency ultimately led to the company's delisting from Nasdaq, and several individuals were prosecuted for insider trading. For enterprises recently transitioning to cryptocurrency, the SEC plans to simplify the issuance process for exchange-traded funds (ETFs) related to niche cryptocurrencies, which may pose challenges for them.

Nevertheless, Jason Rozovsky, policy director at cryptocurrency company Axelar, stated that the SEC's move "might not be bad news."

"Even if ETFs and other compliant investment options have been launched, investor interest in Bitcoin DATs remains strong—indicating that such a model may still be a lasting part of the market."