Investors Allege Misleading Revenue Disclosures
A group of investors has filed a class-action lawsuit against crypto custody and trading platform Bakkt Holdings, accusing the company of issuing misleading statements and failing to disclose key business risks. The complaint, filed on April 2 in the U.S. District Court for the Southern District of New York, names several top executives including former CEO Gavin Michael, current CEO Andrew Main, and interim CFO Karen Alexander.
According to the lawsuit, lead plaintiff Guy Serge A. Franklin is seeking a jury trial, claiming the company violated U.S. securities laws. The case centers on Bakkt’s reliance on contracts with Webull and Bank of America (BoA), which the plaintiffs argue made up a large portion of the company’s revenue.
Heavy Reliance on Webull and BoA Sparked Concerns
The filing reveals that Webull contributed approximately 74% of Bakkt’s crypto services revenue throughout most of 2023 and 2024. BoA, meanwhile, accounted for about 17% of the company’s loyalty services revenue from January to September 2024.
On March 17, Bakkt disclosed that both Webull and BoA would not renew their agreements set to expire in 2025. This announcement triggered a steep sell-off, with Bakkt’s stock price dropping more than 27% within 24 hours.
- The lawsuit claims the firm misrepresented the “stability and/or diversity” of its revenue streams.
- Investors argue Bakkt failed to inform them that its crypto services income was largely tied to a single contract with Webull.
- The loss of both contracts could cause a projected 73% drop in top-line revenue, according to the plaintiffs.
“As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages,” the suit stated.
Additional Lawsuits Could Be on the Horizon
Several law firms are reportedly investigating Bakkt for potential securities law violations, which could lead to more class-action suits. As of now, Bakkt has not responded publicly to the current lawsuit.
This legal challenge comes just months after Bakkt’s stock surged 162% in November 2024 amid speculation that Trump Media, linked to then-President-elect Donald Trump, was eyeing an acquisition of the company. However, no formal announcement has followed.
Bakkt’s stock (BKKT) is currently trading at $8.15, reflecting a more than 36% decline over the past month.
