AI Crypto Startup Lost 97% of Cash, Then Put $12M Into EVs

A Startup With No Revenue and a Shrinking Treasury

An AI-focused crypto startup with no revenue on the books made headlines after a pair of damaging financial disclosures: aggressive cryptocurrency trading erased 97% of the company's cash reserves in roughly six months, and the same company then moved $12 million into the electric vehicle sector. The original reporting comes from CryptoSlate.

The back-to-back decisions paint a striking picture of a pre-revenue firm taking on substantial risk across two volatile industries at once. With no income stream to cushion losses, the startup was left highly exposed after its crypto bets collapsed in value.

The scale of the drawdown is hard to overstate. Losing 97% of available cash inside six months leaves almost no operational runway, raising immediate questions about how the company planned to fund day-to-day operations, let alone a multi-million-dollar pivot into a capital-heavy industry like electric vehicles.

Bad Crypto Trades Did Most of the Damage

The 97% cash erosion was tied directly to cryptocurrency trading activity that went wrong. The company had apparently deployed a significant portion of its treasury into crypto positions, a practice that has become more common among smaller tech-adjacent firms looking to grow their balance sheets. In this case, the strategy backfired severely.

Crypto markets are notoriously unforgiving for undiversified or leveraged positions, and a pre-revenue company has little ability to absorb that kind of loss. Unlike a profitable business that can draw on operating income, a startup burning through a finite treasury faces a hard stop once those funds are gone.

The timeline, six months from a functioning cash position to near-zero, suggests the losses accumulated quickly rather than through a gradual decline.

$12 Million Redirected to Electric Vehicles

Despite the depleted treasury, the startup committed $12 million to the electric vehicle space. The decision to funnel that capital into EVs, a sector with its own cost pressures and competitive intensity, came as the company's crypto-derived losses were becoming clear.

The move raises practical questions about the source of that $12 million. If 97% of cash had already been wiped out, the EV investment either predated the full extent of the losses, came from a separate capital raise, or drew on funds held outside the affected trading accounts. CryptoSlate's reporting does not specify the exact sequencing, but the figures together suggest the company was managing multiple financial decisions at the same time rather than sequentially.

For investors or stakeholders watching a pre-revenue AI company, the combination of crypto trading losses and a large sectoral bet in EVs introduces layered risk that goes well beyond the startup's core business proposition.

What This Signals for Crypto Treasury Strategies

The case is a cautionary data point for the growing trend of startups holding crypto on their balance sheets. Holding digital assets as treasury reserves can amplify upside during bull markets, but it creates severe vulnerability during downturns, particularly for companies that have not yet established a revenue base to absorb shocks.

Regulators and auditors have increasingly scrutinized this practice, and stories like this one give them concrete examples of what can go wrong. A company that markets itself around AI and crypto credibility, then loses nearly all its liquid assets through trading, faces a credibility problem that goes beyond the balance sheet.

The EV investment adds another layer of complexity. Electric vehicle companies are capital-intensive by nature, and the sector has seen its own share of high-profile failures in recent years. Whether the $12 million allocation produces a return, or compounds the startup's financial difficulties, remains to be seen.