Bakkt Runs Low on Cash: Raises Concerns on Its Existence

Bakkt, a cryptocurrency platform backed by the New York Stock Exchange (NYSE) owner, warned about its future as it might go out of business due to insufficient cash for the next 12 months’ operations.

Bakkt’s Future In Jeopardy

“We might not be able to continue as a going concern,” the company stated in a document filed with the Securities and Exchange Commission yesterday (Wednesday). “We do not believe that our cash and restricted cash are sufficient to fund our operations for the 12 months following the date of [the filing].”

According to Coindesk, a Bakkt spokesperson confirmed that the company seeks to liquidate $150 million of securities to overcome the cash shortage.

Bakkt, set up by Intercontinental Exchange, was founded in 2018 with an initial goal of facilitating Starbucks customers to purchase coffee with Bitcoin. The company gradually moved to offer cryptocurrency trading, primarily with derivatives, and is now focusing on crypto custodian services. It even launched a digital wallet in 2021 but discontinued the services last year.

The American company went public in 2021, taking the reverse merger route with a blank-check company. The company is now trading at $1.45, shedding about 85 percent of its value since its public listing on the NYSE.

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A Cash Strapped Company

Now, in the latest filing, the company has raised serious concerns about its future operations.

“There is significant uncertainty associated with our expansion to new markets and the growth of our revenue base given the rapidly evolving environment associated with crypto assets,” the filing added.

“We cannot conclude it is probable we will be able to increase revenues substantially beyond levels that we have attained in the past in order to generate sustainable operating profit and sufficient cash flows to continue doing business without raising additional capital in the near future.”

The company expects “operating losses and cash burn” with recurring losses for the foreseeable future.

“If we are unable to raise sufficient capital through additional debt or equity arrangements, there will be uncertainty regarding our ability to maintain liquidity sufficient to operate our business effectively, which has raised substantial doubt as to our ability to continue as a going concern,” Bakkt added. “If we cannot continue as a viable entity, our stockholders would likely lose most or all of their investment in us.”