Bakkt's Fragile Foundation: Why Overreliance on Key Clients Spells Danger for Investors

The story of Bakkt Holdings is a cautionary tale of corporate governance failures and the perils of overreliance on a handful of clients. Once hailed as a pioneer in the crypto space, Bakkt now finds itself teetering on the edge of financial instability due to its dependence on two major partners: Webull and Bank of America. The abrupt termination of these relationships in 2025 has exposed fatal flaws in Bakkt's business model, triggered a catastrophic stock collapse, and ignited a class-action lawsuit alleging securities fraud. For investors, the message is clear: Bakkt's lack of diversification and transparency demands a hands-off approach until regulatory and operational risks are resolved.

The Domino Effect of Client Losses

Bakkt's vulnerability became starkly apparent in early 2025 when Webull and Bank of America announced they would not renew their agreements. Webull, which accounted for 74% of Bakkt's crypto services revenue—the lifeblood of its operations—ended its partnership on June 14, 2025. Bank of America, representing 16% of loyalty services revenue, terminated its deal on April 22, 2025. These departures were not mere speed bumps; they were seismic shifts.

The financial fallout was immediate. Crypto services, which make up 98% of Bakkt's total revenue, now face a projected 73% revenue decline without Webull. Meanwhile, loyalty services, which had already seen a 26.5% year-over-year drop in Q4 2024, are further destabilized by Bank of America's exit. The stock price reacted violently: shares plummeted 27.3% on March 18, 2025, closing at $9.33—a 96% decline from its 2021 peak—amid record trading volume.

Governance Failures: A Recipe for Disaster

Corporate governance missteps lie at the heart of Bakkt's crisis. Leadership allowed the company to become a one-trick pony, with crypto revenue concentrated in a single client. This lack of diversification is a red flag in any industry, but it's especially perilous in crypto, where volatility and regulatory uncertainty are constants.

Worse, Bakkt's disclosures appear to have misled investors. The sudden revelation of client terminations in a March 17, 2025 SEC filing suggests a failure to proactively address risks or disclose dependencies. This opacity has fueled a class-action lawsuit alleging securities fraud, with plaintiffs claiming Bakkt misrepresented its financial stability and client relationships.

The Legal and Liquidity Crossroads

The lawsuit, combined with Bakkt's precarious cash position, adds layers of risk. The company projects Q1 2025 cash reserves of just $22–$26 million, a fraction of what it needs to sustain operations. Meanwhile, regulatory hurdles loom: its BakktX platform awaits approvals in New York, and a partnership with Distributed Technologies Research (DTR) hinges on uncertain stablecoin regulations.

Investors should also note Bakkt's “going concern” warning from February 2024, which suggested it might not survive without additional funding. The recent client losses have only amplified this concern.

Why Investors Should Proceed with Caution

Bakkt's path forward is fraught with obstacles:
1. Revenue Diversification: Without Webull, Bakkt must rebuild its crypto revenue from scratch—a daunting task in a competitive space.
2. Regulatory Hurdles: Delays in approvals for BakktX and DTR's stablecoin integration could stifle growth.
3. Legal Uncertainty: The securities fraud lawsuit could result in costly settlements or sanctions.
4. Market Sentiment: The stock's freefall reflects investor skepticism, which will be hard to reverse without concrete turnaround evidence.

The Bottom Line: Avoid Until Risks Are Mitigated

Bakkt's overreliance on key clients and opaque disclosures paint a picture of poor governance and investor protection. Until the company diversifies its revenue streams, secures regulatory approvals, and resolves legal challenges, the risks far outweigh any potential rewards. For now, Bakkt is a stock to avoid—its foundation is too fragile to bet on a recovery.

Investors seeking exposure to crypto should look elsewhere—toward firms with robust diversification, transparent leadership, and sustainable business models. Bakkt's story is a reminder that in volatile markets, overreliance on a single pillar can topple even the sturdiest-looking edifice.