Investors Sue Bakkt Over 73% Revenue Loss, 27% Share Price Drop

A group of investors in Bakkt Holdings, a cryptocurrency custody and trading firm, have initiated a class-action lawsuit against the company and its executives. The lawsuit alleges that Bakkt made false or misleading statements and failed to disclose crucial information regarding its revenue sources. The lead plaintiff, Guy Serge A. Franklin, has called for a jury trial in the US District Court for the Southern District of New York.

The investors claim that Bakkt's revenue was heavily dependent on a single contract with Webull, which accounted for 74% of its crypto services revenue through most of 2023 and 2024. Additionally, Bank of America contributed 17% of its loyalty services revenue from January to September 2024. The loss of these contracts is alleged to have resulted in a 73% loss in top-line revenue, significantly impacting the company's financial stability.

The lawsuit further alleges that Bakkt misrepresented the stability and diversity of its crypto services revenue, failing to disclose that this revenue was substantially dependent on Webull's contract. This lack of transparency is cited as a key factor in the investors' losses. The investors argue that Bakkt's actions and omissions led to a precipitous decline in the market value of the company's securities, resulting in significant losses and damages for the plaintiffs and other class members.

Bakkt disclosed on March 17 that Bank of America and Webull did not intend to renew their agreements with the firm, which are set to end in 2025. This announcement likely contributed to the company’s share price falling more than 27% in the following 24 hours. The investors allege that Bakkt's misrepresentations and lack of disclosure were intentional and caused significant financial harm to the investors.

The lawsuit also mentions that other law offices are investigating Bakkt for potential securities law violations, suggesting that additional class-action lawsuits may be forthcoming. The investors are seeking damages for the violations of US securities laws and the lack of transparency surrounding Bakkt's agreements with its clients.

The lawsuit highlights the importance of transparency and accurate disclosure in the financial sector, particularly for companies involved in the volatile cryptocurrency market. The investors' allegations underscore the risks associated with relying on a single revenue source and the potential consequences of misrepresenting financial information to investors. The outcome of this lawsuit could have significant implications for Bakkt and other companies in the cryptocurrency industry, as it sets a precedent for the standards of disclosure and transparency expected by investors.