Crypto company Bakkt, launched in 2019 and backed by the Intercontinental Exchange (ICE), has recently issued a warning regarding its financial viability over the next 12 months.
On Feb. 7, Bakkt filed an amendment to its quarterly report with the United States Securities and Exchange Commission (SEC), revealing potential financial challenges. In a section on risk factors, the company warned that it may “not be able to continue as a going concern.”
Founded in 2018 by Intercontinental Exchange, owner of the New York Stock Exchange, Bakkt was initially anticipated to provide institutional investors with access to Bitcoin amid a bearish market sentiment.
Bitcoin investor “juthica” expressed surprise at Bakkt’s financial struggles, particularly given the significant growth in crypto markets. With the crypto market experiencing substantial increases, the reasons behind Bakkt’s difficulties raise questions among investors.
Bakkt acknowledges its insufficient cash reserves to sustain operations over the next year. The company admits its inability to generate sustainable operating profit and cash flows, stressing the importance of raising capital for its future prospects.
To address its financial challenges, Bakkt plans to raise additional capital by issuing registered securities in the public markets. The company aims to secure up to $150 million through this initiative to fund its long-term vision and ensure ongoing operations.
While Bakkt has not specified the exact use of proceeds from the securities sale, it intends to retain discretion over their allocation. However, the company indicates that funds will primarily support working capital and general corporate purposes.
Bakkt operates as a digital asset platform and payment app, facilitating the buying, selling, storage, and spending of crypto assets for institutions. The company has forged strategic partnerships with entities like Starbucks and Amazon Web Services to enhance digital asset transactions and services.
Despite going public in 2021 with shares initially trading at over $40, Bakkt’s stock has faced a downturn, dropping 7.6% in after-hours trading on Wednesday and experiencing a 37% decline since the start of 2024.
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