Bakkt Holdings, Inc. ($BKKT) is under pressure after investors filed a lawsuit on April 2, 2025. The issue centers around Bakkt's strong dependence on one major client, Webull Pay LLC, which brought in 74% of its crypto services revenue during the first nine months of 2024.
On March 17, Bakkt announced it would be ending its agreement with Webull in June. Around the same time, Bank of America also backed out of a separate deal that made up 17% of Bakkt's loyalty services revenue — raising more questions about the company's future.
These statements triggered investor panic, causing Bakkt stock to plunge by 27.3% over one day, a loss of $3.50 a share that erased tens of millions of dollars from market capitalization.
With an expected 73% loss in revenues from these contract cancellations, leadership transition under way, and uncertainty surrounding the unstable cryptocurrency market, Bakkt is facing some serious questions regarding its future.
Lawsuits like this are often seen as serious threats to a company's reputation and financial health — but are they always as damaging as they appear? In some cases, legal pressure can spark much-needed change. As Bakkt faces new challenges, it's worth asking: could this be less of a setback and more of a turning point — and is the financial impact really as severe as it seems? Let's take a closer look at the numbers to see what's truly at stake.
How Bakkt's Financials Stack Up Amid the Lawsuit Drama
Bakkt's financial status is now a focal point amid the unfolding of the suit, revealing both vulnerabilities and areas in which the company could still have a fighting chance. Bakkt recorded a whopping $1.79 billion in Q4 2024, a 737.9% jump on a year-over-year basis.
Its growth was dominated by its crypto services unit. But what that number hides is a significant problem: 74% of that crypto revenue was from a single client, Webull, with 17% from loyalty services from Bank of America.
Both partnerships expire mid-2025, leaving Bakkt facing a possible 73% decline in revenue, which puts in question whether it can diversify its sources of income.
The company's net loss for Q4 2024 was 48.7% better than last year's quarter at $40.4 million, which is a step in a good direction. Bakkt's cash reserves at June 2024 stood at $136.5 million but are being eroded by a first-half cash burn of $27.54 million.
Simultaneously, its negative price-to-earnings ratio (-1.14 through April 2025) also points to persistent profitability issues, despite cost-saving steps such as disposing of its Trust custody unit.
In addition to its broader financial obligations, Bakkt has allocated $3 million to an escrow pool to cover investor claims — a proactive step in addressing the lawsuit. While this amount represents roughly 7.7% of its $39 million cash reserves as of December 31, 2024, it remains a manageable short-term expense.
More importantly, the company's Q1 2025 guidance of $1.03 to $1.28 billion already factors in the impact of ending partnerships with Webull and Bank of America, suggesting Bakkt is planning ahead and adapting its strategy accordingly.
A greater test is achieving stability in Bakkt's revenue base, which is almost exclusively derived from crypto services for 98% of its overall income. Investors have been cautious since Bakkt's stock price lost 27.3% after rumors of contract cancellations surfaced.
Lawsuit Impact Analysis: What's at Stake for Bakkt
Based on historical securities litigation data, Bakkt faces approximately a 46-50% probability of reaching a settlement in this investor lawsuit. This statistical likelihood is supported by the fact that nearly half of all securities class actions between 1997-2022 ended in settlements, with only 43% being dismissed.
If Bakkt does settle, recent market data provides a framework for estimating the potential amount. The median securities class action settlement in 2024 was $14 million, while the average was significantly higher at $42.4 million. For companies with characteristics similar to Bakkt's situation, such as SPAC-related cases, settlements averaged $16.7 million in 2024.
Given Bakkt's market capitalization, the scale of investor losses (27.3% stock drop representing millions in market value), and the severity of allegations (misrepresenting 74% revenue dependency on Webull), a settlement could reasonably fall between $14-20 million. This estimate also considers that settlements typically represent about 7.3% of "plaintiff-style damages" according to 2024 data.
Using probability-weighted analysis, the expected value of the litigation outcome would be approximately:
- 50% chance of settlement at $17 million (mid-range estimate) = $8.5 million expected cost
- 43% chance of dismissal at minimal cost = $0
- 7% chance of other outcomes (including trial) = ~$1.5 million expected cost
This creates a total expected liability of approximately $10 million, representing roughly 25.6% of Bakkt's $39 million cash reserves (as of December 2024). This is significantly more concerning than the previously mentioned $3 million figure, especially considering Bakkt's already precarious financial situation with:
- 73% projected revenue decline from client losses
- $27.54 million cash burn in the first half of 2024
- Negative P/E ratio of -1.14 (as of April 2025)
Additionally, securities class actions typically take 2-3 years to resolve, creating prolonged uncertainty during a critical restructuring period when Bakkt needs to focus on rebuilding its client base.
Overall Conclusion: Lawsuit Impact on Bakkt's Future
The lawsuit arrives as Bakkt is already under severe financial strain, with a projected 73% drop in revenue following the loss of Webull and Bank of America clients that comprised 91% of its core business. If the expected settlement reaches $10 million, this would consume over a quarter of Bakkt's $39 million cash reserves as of December 2024, at a time when the company is burning through $27.54 million in just the first half of the year.
Leadership is now split between urgent legal defense and the need to execute a risky pivot toward stablecoin payments and institutional crypto services. The allegations of misleading investors have further damaged Bakkt's credibility, making attracting new enterprise clients or capital more difficult.
Since the March 2025 disclosures, Bakkt's stock price has dropped 27.3%, compounding the challenge of raising funds. While management's restructuring moves, such as the $1.5 million sale of its Trust custody business and the appointment of Akshay Naheta as co-CEO, show decisive action, the timing of this lawsuit increases both financial and operational risks.
Unless Bakkt can resolve the litigation quickly and deliver tangible results from its new strategy, the company faces a real risk of running out of cash and being forced into even deeper restructuring.
