Metaplanet Freezes Insider Share Dilution Amid Shareholder Criticism

Metaplanet, a Tokyo-listed Bitcoin treasury firm, has frozen its insider share dilution mechanism at an inflated size. The company's board made this decision instead of resetting it to pre-Bitcoin levels. This move has reignited shareholder anger as the stock trades near multi-month lows.

The issue started with a 2022 rescue plan for Red Planet Japan, a hotel operator that struggled financially. In February 2023, shareholders approved a stock-option program for seven staff members who paid ¥18 per unit for the right to buy shares at ¥10. However, the initial award of 46 million shares was not fixed and instead tied to 20% of every share the company could possibly issue.

The pivot to Bitcoin in April 2024 led to an explosion in Metaplanet's total share count from 153.9 million to 1.35 billion. The insider pool grew in lockstep, eventually reaching 319,464,000 shares, a scale the company acknowledged had gone too far.

Freezing the pool stopped further automatic growth but did not undo the existing dilution. Instead of resetting it, the board locked in the enlarged figure and removed the floating adjustment clause going forward. The move has created tension among shareholders who are demanding the cancellation of 273 million extra shares they claim were created by a flawed adjustment formula.

Metaplanet's CEO, Simon Gerovich, exercised 92,000 of his vested Series 10 rights on August 28, paying roughly ¥640 million for stock that was worth about ¥15.6 billion at the time. This has become a lightning rod for shareholder criticism as Gerovich now holds a significant stake in the company.

The company's Bitcoin holdings are valued at around $3.4 billion, while its market capitalization is approximately $2 billion. This mismatch has created concerns among shareholders who believe that every dilutive share issuance transfers value away from existing holders and toward whoever controls the newly created stock.