Alpharetta-based Bakkt launched nearly six years ago with an ambitious goal to take cryptocurrency mainstream, from payments to retirement funds, starting with a safe and stable trading platform.
But late Wednesday, the company that was founded by the Sandy Springs-based owner of the New York Stock Exchange and was once led by Kelly Loeffler before she was appointed to the U.S. Senate, raised doubts in a regulatory filing about its ability to stay in business.
The warning, known as a "going concern" notice, is contained in an amendment filed Wednesday with the Securities and Exchange Commission to Bakkt's third quarter earnings report. In it, Bakkt warned it does not believe it has readily available cash "sufficient to fund our operations for the (next) 12 months."
Bakkt was founded in 2018 as the bitcoin-trading exchange subsidiary of NYSE-owner Intercontinental Exchange (ICE), and was initially supported by blue-chip names like Microsoft and Starbucks. Loeffler left Bakkt in 2019 after she was appointed to the Senate by Gov. Brian Kemp. Bakkt later spun out of ICE and went public in 2021.
In the Wednesday filing, Bakkt said it is attempting to grow revenue to support its operations but "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 company said it is also seeking other sources of capital.
"If we cannot continue as a viable entity, our stockholders would likely lose most or all of their investment in us," Bakkt said in the filing.
An email seeking comment from the media departments of Bakkt and ICE were not immediately returned. At the end of 2022, Bakkt reported having 1,037 employees throughout the U.S.
In recent years, the crypto world has been rocked by a series of scandals, including fraud at the FTX exchange that led to its co-founder, Sam Bankman-Fried, being convicted and sentenced to prison. The turmoil has hurt operators across the industry as values of digital currencies, including bitcoin, have seen wild swings.
Bakkt stock ended trading Wednesday at $1.45 per share. At midday Thursday, shares were trading for less than $1.
Bakkt's share price peaked at more than $40 in 2021, the year Chicago-based Victory Park Capital acquired Bakkt through a special-purpose acquisition company and took it public. Following the spin, ICE retained a significant ownership stake in Bakkt, and the next year, ICE reported a more than $1 billion loss on its remaining holdings in the company.
In its most recent quarterly filing, Bakkt reported a loss of $147.1 million through the first nine months of 2023. The company previously reported a loss of $1.67 billion during the same nine-month period in 2022, according to an SEC filing. As of Sept. 30, Bakkt reported having less than $100 million in cash, cash equivalents and restricted cash on hand.
ICE is an owner and operator of various commodity and stock exchanges and one of the most powerful forces in global finance. ICE established Bakkt to create a futures exchange for bitcoin, making it something institutional investors would trade with mechanisms to curtail manipulation and fraud. ICE also saw promise for bitcoin in payments.
The Bakkt name, in fact, was a play on words, signaling to the cautious that, with the exchange, crypto was a safe place to trade. Loeffler, then an ICE executive, led the creation of Bakkt, including securing funding, and took on the CEO role after it launched as an ICE subsidiary, a spokeswoman for the former senator said. Loeffler also is the spouse of ICE CEO Jeff Sprecher.
In late 2019, Kemp chose Loeffler to fill the seat of U.S. Sen. Johnny Isakson and she stepped down from the company. Loeffler, a Republican, failed in her bid to win election to the seat, losing to Democrat Rev. Raphael Warnock in a runoff in January 2021.
Former Citigroup executive Gavin Michael has served as Bakkt CEO since 2021.