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Crypto custodian Bakkt discloses to the SEC it is facing liquidity issues

The platform Bakkt said that if it fails to raise money through debt financing or equity dilution, it will not have enough funds to continue operations.

In disclosing risks to the U.S. Securities and Exchange Commission (SEC), platform Bakkt questioned whether it could ensure its financial stability next year. Current reserves, including restricted cash, may need to be increased to support operations through 2025.

Founded in 2018, the company provides custodial services for institutional and retail investors interested in exposure the crypto, operating under the Bakkt Trust Company LLC, functioning under the oversight of the New York State Department of Financial Services (NYDFS) as a Qualified Custodian.

The uncertainty arose due to the company’s ambitious plans to enter new markets. The company acknowledged that it can only guarantee significant revenue growth by its historical levels. Bakkt management noted that this could prevent it from achieving sustainable profitability and generating sufficient cash flow without securing additional capital shortly.

“We have limited accounting and finance personnel and other resources and must develop our internal controls and procedures consistent with SEC regulations.”

Bakkt statement

Bakkt also expects some operating losses along with its current debt load to continue. If the company is depleted of funds through debt or equity agreements, Bakkt may be unable to maintain sufficient liquidity and effectively manage the business.

The Bakkt crypto platform was founded by InterContinental Exchange (ICE), which owns large derivatives exchanges, and the New York Stock Exchange (NYSE). Bakkt went public three years ago, in 2021. Following its recent SEC filing, Bakkt shares faced intense selling pressure, falling 7.5% to $1.34.

In 2020, Bakkt began testing payments using cryptocurrencies in the Starbucks coffee chain app. In 2023, Bakkt reported revenue of $348 million for the second quarter, while revenue for the second quarter of the year before was much less – $14 million.

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