Digital asset firm Bakkt told regulators this week that it is short on funding, citing the “rapidly evolving environment” of the crypto industry.
The company, which once boasted major partners such as Starbucks and Mastercard and traces its lineage to the same company that owns the New York Stock Exchange, said in an SEC filing Tuesday that it has enough cash to continue operating for the next 12 months. It has become clear that there is a high possibility that there will be no such thing. .
Bakkt amended its quarterly reports starting in November to update risk disclosures. The company had just announced that it was embarking on a major international expansion.
“Given the rapidly evolving environment related to crypto assets, there are significant uncertainties regarding our expansion into new markets and the growth of our revenue base,” the company said. As a result, Bakkt said it “cannot conclude that it is likely to be able to significantly increase its earnings” without raising further capital in the near future.
Bakkt started in 2018 as a crypto platform developed by Intercontinental Exchange, which also owns the New York Stock Exchange. Initially, the focus was on making digital assets available to consumers through partnerships with major brands.
The company went public in 2021 through a SPAC (a special purpose acquisition company created specifically to obtain public status through a merger) and hit the stock market at a valuation of $2.1 million. The company launched a digital wallet that promotes “leading brands” like Best Buy and says it “brings Bitcoin and other forms of digital assets together on one platform.”
However, Bakkt has since changed its strategy and instead of serving consumers directly, it now offers crypto trading and custody services to financial institutions and fintech companies. The company explained that its new “business-to-business business-to-consumer approach” focuses on enhancing commerce by embedding encryption solutions into client environments.
However, the company had not finished its relationship with consumers yet.
Last April, Bakkt acquired another crypto platform called Apex Crypto and renamed it Bakkt Crypto Solutions. At the time, the company promoted it as a “B2B2C” business and said it expected Bakkt Crypto’s trading platform and relationships with liquidity providers to strengthen its product lineup. But Bakkt has since delisted dozens of crypto assets, including Solana and Cardano, from the platforms it acquired amid regulatory scrutiny over whether certain tokens count as unregistered securities.
And late last month, Bakkt announced it was expanding its international footprint, with a focus on Latin America and Asia.
That expansion brings uncertainty, Buck said. And the overall crypto market downturn and collapse of major industry players like FTX are also creating headwinds.
Mr. Bakkt told the SEC that the business conversion filing increased risks and uncertainties. He also mentioned the possibility that there would not be enough revenue to avoid a cash shortage. The company said it is currently seeking additional funding to meet its needs next year.
Bakkt stock (BAKKT/NYSE), which has fallen nearly 90% over the past year, fell further from the day’s high of $1.47 to $1.29 shortly after the quarterly SEC filing.