Bakkt to Sell $150 Million Holdings in Shelf Offering

Key Takeaways

• Bakkt has been granted regulatory approval for a type of security issuance known as shelf offering.
• The news follows a recent earnings statement in which Bakkt acknowledged that it was in bad financial shape.
• Bakkt will now be able to raise an additional $150 million to help stave off bankruptcy.

The crypto custody and trading platform Bakkt has received approval from the Securities and Exchange Commission (SEC) for a $150 million shelf offering.

The firm, which went public in 2021, will now be able to raise up to $150 million of capital in one or more offerings over the next three years, it announced in a statement on Wednesday, February 14.

What is a Shelf Offering? 

A shelf offering is a kind of security issuance that lets a company sell shares over multiple events, without needing to gain additional approval each time, and without committing to the full amount.

Compared to other forms of security issuance, shelf offerings provide the advantage that companies can issue their securities when market conditions are optimal and don’t have to wait for another extensive SEC review after they file their core prospectus.

A Lifeline for Cash-Strapped Bakkt

For Bakkt, receiving the green light from the SEC to raise additional capital could help to alleviate some of its financial concerns.

Earlier this month, an updated quarterly financial statement implied that Bakkt’s cash reserves were running dangerously low. 

Facing a potential insolvency, the firm said it was unlikely that it would be able to generate “sufficient cash flows to continue doing business without raising additional capital.”

The statement even went as far as anticipating the challenges it would face should it be forced into bankruptcy.

Bakkt Seeks to Reassure Customers Their Crypto is Safe

In 2023, Bakkt made a strategic decision to focus more on crypto custody services, deemphasizing its trading business. However, with the company’s financial situation as it is, can customers be sure their assets are secure? Unfortunately, crypto custodians don’t have a great record when it comes to bankruptcies.

According to Bakkt’s amended SEC filing, they “ regard the crypto assets that we hold in custody for customers as the property of those customers.” The company said it believed customers’ crypto “would not be made available to satisfy the claims of our general creditors in the event of our bankruptcy.”

However, FTX and Circle have also offered similar promises. 

Bakkt acknowledged that the use of omnibus wallets could “complicate” the treatment of customer crypto assets in the event of bankruptcy, “including by increasing the risk that crypto assets held in the omnibus wallets are considered to be the property of our bankruptcy estate”.