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What changed in Bakkt Holdings, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Bakkt Holdings, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+1257 added−1391 removedSource: 10-K (2026-03-19) vs 10-K (2025-03-20)

Top changes in Bakkt Holdings, Inc.'s 2025 10-K

1257 paragraphs added · 1391 removed · 801 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

132 edited+93 added−109 removed22 unchanged
Biggest changeNaheta will be entitled, in exchange for all of the DTR Equity, to a number of shares of our Class A Common Stock, par value $0.0001 per share (the “Class A Common Stock”) , representing at least 19.9% and no more than 31.5%, of the aggregate our common stock (which such total shall include the shares of the then outstanding and issued Class A Common Stock and the shares of Class A Common Stock then exchangeable for our paired interests represented by our Class V Common Stock, par value $0.0001 per share), plus the aggregate number of shares of our Class A Common Stock issuable upon full exercise or conversion of any options, warrants or other convertible or derivative securities then outstanding, on an as-converted basis, which shall not include our Public Warrants (as defined below) and any warrants to purchases of Class A Common Stock that are below the Bakkt Share Price (as defined below) (the “Bakkt Share Number”) subject to any DTR Adjustment (as defined below); provided that Mr.
Biggest changeNaheta and other beneficial owners of DTR shares an aggregate number of shares of its Common Stock equal to 31.5% of the aggregate number of shares of the Common Stock that are issued and outstanding immediately prior to the closing, plus the aggregate number of shares of the Company’s capital stock issuable upon full exercise or conversion of any options, warrants or other convertible derivative securities that are outstanding immediately prior to the closing, on an as-converted basis, but excluding any warrants to purchase shares of the Common Stock to the Mr.
We are subject in certain jurisdictions to licensing and regulatory requirements as a result of offering our clients the ability to aggregate, buy, sell, convert, and send virtual currency through our platform.
We are subject in certain jurisdictions to licensing and regulatory requirements as a result of offering clients the ability to aggregate, buy, sell, convert, and send virtual currency through our platform.
In order to assess the regulatory status of a crypto asset, we consider the applicable laws, rules and case law, and other factors relevant to the determination of the security status of a crypto asset, and the positions of the SEC as expressed in various crypto-related enforcement actions and lawsuits. We may also solicit the opinion of outside counsel.
In order to assess the regulatory status of a digital asset, we consider the applicable laws, rules and case law, and other factors relevant to the determination of the security status of a digital asset, and the positions of the SEC as expressed in various crypto-related enforcement actions and lawsuits. We may also solicit the opinion of outside counsel.
Business Overview In this section and elsewhere in this Form 10-K, we use the following terms, which are defined as follows: • “Client” means businesses with whom we contract to provide services to customers on our platform, and includes financial institutions, hedge funds, merchants, retailers, third party partners, and other businesses (except in the accompanying notes to the consolidated financial statements, where we refer to revenue earned from customers, instead of clients).
In this section and elsewhere in this Form 10-K, we use the following terms, which are defined as follows: • “Client” means businesses with whom we contract to provide services to customers on our platform, and includes financial institutions, hedge funds, merchants, retailers, third party partners, and other businesses (except in the accompanying notes to the consolidated financial statements, where we refer to revenue earned from customers, instead of clients).
The agreements do not have a set term and generally may be cancelled by either party for convenience on prior written notice of 30 to 60 days, with some agreements providing for no such notice obligations or a notice obligation of seven days. Settlement is conducted on a net basis on the blockchain supporting the crypto asset.
The agreements do not have a set term and generally may be cancelled by either party for convenience on prior written notice of 30 to 60 days, with some agreements providing for no such notice obligations or a notice obligation of seven days. Settlement is conducted on a net basis on the blockchain supporting the digital asset.
It is possible that the information we post on social media could be deemed to be material information. Accordingly, investors should monitor our investor relations website as well as the social media channels listed on our investor relations website. The information on our website or any other website is not incorporated by reference into this Form 10-K. -31-
It is possible that the information we post on social media could be deemed to be material information. Accordingly, investors should monitor our investor relations website as well as the social media channels listed on our investor relations website. The information on our website or any other website is not incorporated by reference into this Form 10-K. -29-
With respect to mode of storage, a small percentage of all crypto assets (generally not more than 2%) are held in warm or hot storage in order to facilitate daily settlement and customer withdrawals, while the vast majority of crypto assets are held in cold storage and accessed, as needed, to replenish the warm or hot wallets.
With respect to mode of storage, a small percentage of all digital assets (generally not more than 2%) are held in warm or hot storage in order to facilitate daily settlement and customer withdrawals, while the vast majority of digital assets are held in cold storage and accessed, as needed, to replenish the warm or hot wallets.
Listing-Related Policies We maintain crypto asset listing and delisting policies (the “Listing Policies”), which provide a framework for the review and approval of new crypto assets, and the continued offering of crypto assets for customer transactions. The Listing Policies were revised to accommodate new guidance issued by the NYDFS in November 2023, and were subsequently approved by the NYDFS.
Listing-Related Policies We maintain digital asset listing and delisting policies (the “Listing Policies”), which provide a framework for the review and approval of new digital assets, and the continued offering of digital assets for customer transactions. The Listing Policies were revised to accommodate new guidance issued by the NYDFS in November 2023, and were subsequently approved by the NYDFS.
Material revisions to the Listing Policies require prior written approval from the NYDFS. The Listing Policies require the covered entity to undertake and document a risk assessment for each new crypto asset, which considers a number of risks, including legal and regulatory risk, and entails a review of the regulatory status of the crypto asset.
Material revisions to the Listing Policies require prior written approval from the NYDFS. The Listing Policies require the covered entity to undertake and document a risk assessment for each new digital asset, which considers a number of risks, including legal and regulatory risk, and entails a review of the regulatory status of the digital asset.
We are required to monitor each of the crypto assets for material changes and for changes in the risk assessment conducted during the listing evaluation, and to ensure their offering remains consistent with our mission and values, general safety and soundness, and protection of customers.
We are required to monitor each of the digital assets for material changes and for changes in the risk assessment conducted during the listing evaluation, and to ensure their offering remains consistent with our mission and values, general safety and soundness, and protection of customers.
Available Information Our website is http://www.bakkt.com, and our investor relations website is located at https://investors.bakkt.com, where we make available, free of charge, our Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of -30- 1934, as amended (the “Exchange Act”), as well as proxy statements, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
Available Information Our website is http://www.bakkt.com, and our investor relations website is located at https://investors.bakkt.com, where we make available, free of charge, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current -28- Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well as proxy statements, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
The amounts of crypto assets held in warm/hot storage and cold storage are monitored daily by our custody operations team and reviewed by management on a monthly basis. Assets stored by Coinbase Custody and BitGo are held 100% in segregated cold storage.
The amounts of digital assets held in warm/hot storage and cold storage are monitored daily by our custody operations team and reviewed by management on a monthly basis. Assets stored by Coinbase Custody and BitGo are held 100% in segregated cold storage.
Other risks covered by the risk assessment include integrity and legitimacy risk (i.e., risks associated with the creation, governance, issuance, and design of the crypto asset); reputational risk; liquidity, pricing, and manipulation risk; operational risk; cyber security risk; and illicit finance risk.
Other risks covered by the risk assessment include integrity and legitimacy risk (i.e., risks associated with the creation, governance, issuance, and design of the digital asset); reputational risk; liquidity, pricing, and manipulation risk; operational risk; cyber security risk; and illicit finance risk.
Any actual or perceived failure to comply with these requirements may result in, among other things, revocation of required licenses or registrations, loss of approved status, regulatory or governmental investigations, administrative enforcement actions, sanctions, civil and criminal liability, private litigation, reputational harm, or constraints on our ability to continue to operate.
Any actual or perceived failure to comply with these requirements may result in, among other things, the revocation, suspension, or conditioning of required licenses or registrations, the loss of approved status, regulatory or governmental investigations, administrative enforcement actions, sanctions, civil and criminal liability, private litigation, reputational harm, or constraints on our ability to continue to operate.
Our platform enables transactions in certain supported crypto assets. For purposes of this Form 10-K, we use crypto assets, virtual currency, coins, and tokens interchangeably. • “Customer” means an individual user of our platform.
Our platform enables transactions in certain supported digital assets. For purposes of this Form 10-K, we use digital assets, virtual currency, coins, and tokens interchangeably. • “Customer” means an individual user of our platform.
In March 2025, we entered into an agreement with ICE, a significant stockholder of ours, whereby ICE agreed to purchase all of the outstanding equity interests of Bakkt Trust in exchange for $1.5 million plus the assumption of Bakkt Trust’s regulatory capital requirement, which was approximately $3.0 million as of signing, and certain operating costs of Bakkt Trust during the period between the signing of the purchase agreement and the closing of the transaction (subject to such closing).
Sale of Bakkt Trust On March 17, 2025, we entered into an agreement with ICE, a significant stockholder of ours, whereby ICE agreed to purchase all of the outstanding equity interests of Bakkt Trust in exchange for $1.5 million plus the assumption of Bakkt Trust’s regulatory capital requirement, which was approximately $3.0 million as of signing, and certain operating -10- costs of Bakkt Trust during the period between the signing of the purchase agreement and the closing of the transaction (subject to such closing).
Customers submit all purchase and sale orders through the user interface of the client with which they have opened an account. With respect to customer purchase and sale orders, Bakkt Crypto operates as a riskless principal and offsets each customer order it fills by routing a corresponding order to a liquidity provider on a one-to-one basis.
Customers submit all purchase and sale orders through the user interface of the client with which they have opened an account. With respect to customer purchase and sale orders, BFS operates as a riskless principal and offsets each customer order it fills by routing a corresponding order to a liquidity provider on a one-to-one basis.
The client’s user interface displays the estimated price or quantity, as applicable, as well as any transaction fees. Before sending a purchase order request, the client must verify that sufficient funds are available in the applicable customer funding source. If the customer account has sufficient funds, the client then sends the order to Bakkt Crypto.
The client’s user interface displays the estimated price or quantity, as applicable, as well as any transaction fees. Before sending a purchase order request, the client must verify that sufficient funds are available in the applicable customer funding source. If the customer account has sufficient funds, the client then sends the order to BFS.
As our partnerships go live, we will offer to retail clients marketing resources to drive consumer adoption and usage of our platform. The successful activation and implementation of these partnerships are expected to be a significant driver for our transaction growth and associated revenue, including crypto trading revenue.
As our partnerships go live, we will offer to retail clients marketing resources to drive consumer adoption and usage of our platform. The successful activation and implementation of these partnerships are expected to be a significant driver for our transaction growth and associated revenue, including digital asset trading revenue.
For market orders, the client displays the estimated price or estimated quantity, which is inclusive of any markup. If the client is charging any trade fees, those will be displayed and included in the total trade value. Once confirmed by the customer, the order is then sent to Bakkt Crypto by the client.
For market orders, the client displays the estimated price or estimated quantity, which is inclusive of any markup. If the client is charging any trade fees, those will be displayed and included in the total trade value. Once confirmed by the customer, the order is then sent to BFS by the client.
Self-custodying customer crypto assets through the use of Fireblocks third-party custody software involves risks related to our reliance on the third party for certain services.
Self-custodying customer digital assets through the use of Fireblocks third-party custody software involves risks related to our reliance on the third party for certain services.
After the liquidity provider accepts the order, it issues a transaction confirmation. The parties then are obligated to deliver fiat currency and crypto assets according to the terms of the transaction. The agreements contain customary representations and warranties and confidentiality, limitation of liability and indemnification -17- provisions.
After the liquidity provider accepts the order, it issues a transaction confirmation. The parties then are obligated to deliver fiat currency and digital assets according to the terms of the transaction. The agreements contain customary representations and warranties and confidentiality, limitation of liability and indemnification provisions.
See “Policies and Procedures Listing-Related Policies.” Crypto Asset Trading -12- Our client agreements entitle us to receive recurring revenues in the form of platform fees from clients for the use of our platforms by their customers.
See “Policies and Procedures Listing-Related Policies.” Digital Asset Trading Our client agreements entitle us to receive recurring revenues in the form of platform fees from clients for the use of our platforms by their customers.
Instead, Bakkt Crypto settles with liquidity providers on a daily basis; however, in instances where a liquidity provider’s settlement balance is less than an agreed upon notional dollar amount for a given token, Bakkt Crypto will settle with those liquidity providers on the last business day of the applicable month, or when the settlement balance exceeds those levels, if sooner.
Instead, BFS settles with liquidity providers on a daily basis; however, in instances where a liquidity provider’s settlement balance is less than an agreed upon notional dollar amount for a given -18- token, BFS will settle with those liquidity providers on the last business day of the applicable month, or when the settlement balance exceeds those levels, if sooner.
BitGo is required to use reasonable best efforts to keep all custodial coins received by BitGo in safe custody on behalf of Bakkt Crypto and to keep all keys to the custodial wallet held by BitGo secure and to maintain at least one backup key.
BitGo is required to use reasonable best efforts to keep all custodial coins received by BitGo in safe custody on behalf of BFS and to keep all keys to the custodial wallet held by BitGo secure and to maintain at least one backup key.
In October 2023, the governor of California signed into law the -27- Digital Financial Assets Law (“DFAL”), which establishes a required licensing framework administered by the California Department of Financial Protection and Innovation (“DFPI”) for entities engaged in digital financial asset business activity in the state of California.
In October 2023, the Governor of California signed into law the Digital Financial Assets Law (“DFAL”), which establishes a licensing framework administered by the California Department of Financial Protection and Innovation (“DFPI”) for entities engaged in digital financial asset business activity in California.
The term customers is in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers . • “Crypto” or “Crypto asset” means an asset that is built using blockchain technology, including virtual currencies (as used in the State of New York), coins, cryptocurrencies, stablecoins, and other tokens.
The term customers is in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers . • “Digital asset” means an asset that is built using blockchain technology, including virtual currencies (as used in the State of New York), coins, cryptocurrencies, stablecoins, and other tokens.
Such agencies have broad consumer protection mandates, and they promulgate, interpret, and enforce laws, rules and regulations, including with respect to unfair, deceptive, and abusive acts and practices that may impact or apply to our business.
Such agencies have broad consumer protection mandates, and they promulgate, interpret, and enforce laws, rules and regulations, including with respect to unfair, deceptive, or abusive acts or practices (“UDAAP”) and other consumer protection standards that may impact or apply to our business.
Custody-Related Policies Bakkt Crypto makes use of third-party providers of custodial services, including Coinbase Custody Trust Company, LLC and BitGo, to hold customer crypto assets as custodian in cold storage as well as in hot or warm wallets as necessary. Bakkt Crypto also self-custodies customer crypto assets using the Fireblocks Vault service.
Custody-Related Policies BFS makes use of third-party providers of custodial services, including Fireblocks Trust Company, LLC, Coinbase Custody Trust Company, LLC and BitGo, to hold customer digital assets as custodian in cold storage as well as in hot or warm wallets as necessary. BFS also self-custodies customer digital assets using the Fireblocks Vault service.
BitGo is also required to exercise all reasonable best efforts to prevent unauthorized access to or use of the keys held by BitGo to the custodial wallet. Bakkt Crypto does not have inspection rights under the BitGo Custody Agreement.
BitGo is also required to exercise all reasonable best efforts to prevent unauthorized access to or use of the keys held by BitGo to the custodial wallet. BFS does not have inspection rights under the BitGo Custody Agreement.
“Segregated” means that Bakkt Crypto customer assets are held in unique addresses on the respective blockchains and do not include assets of other BitGo or Coinbase clients, or of BitGo or Coinbase themselves. Both entities are SOC 1 certified.
“Segregated” means that BFS customer assets are held in unique addresses on the respective blockchains and do not include assets of other BitGo or Coinbase clients, or of BitGo or Coinbase themselves. Both entities are SOC 1 certified.
During the daily net settlement period fiat funds are transmitted from the for benefit of (“FBO”) account to the Bakkt Crypto transaction account. Fig. 1 Crypto Assets Purchase Through A Fiat Wallet If the customer’s funding source is a BaaS account, Bakkt Crypto sends a message to the client that a trade has been executed.
During the daily net settlement period fiat funds are transmitted from the for benefit of (“FBO”) account to the BFS transaction account. Fig. 1 Digital Assets Purchase Through A Fiat Wallet If the customer’s funding source is a BaaS account, BFS sends a message to the client that a trade has been executed.
During the daily batch settlement period, fiat funds are transmitted from the Bakkt Crypto transaction account to the FBO account. Fig. 4 Crypto Assets Sale with proceeds to the Customer’s Fiat Wallet Hosted by Bakkt Crypto If the customer’s funding source is a BaaS account, Bakkt Crypto sends a message to the client that a trade has been executed.
During the daily batch settlement period, fiat funds are transmitted from the BFS transaction account to the FBO account. Fig. 4 Digital Assets Sale with proceeds to the Customer’s Fiat Wallet Hosted by BFS If the customer’s funding source is a BaaS account, BFS sends a message to the client that a trade has been executed.
Coinbase Custody is required to keep timely and accurate records as to the deposit, disbursement, investment and reinvestment of crypto assets and maintain accurate books and records of the custody services in accordance with applicable law and its own internal document retention policies. Bakkt Crypto does not have inspection rights under the Coinbase Custody Agreement.
Coinbase Custody is required to keep timely and accurate records as to the deposit, disbursement, investment and reinvestment of digital assets and maintain accurate books and records of the custody services in accordance with applicable law and its own internal document retention policies. BFS does not have inspection rights under the Coinbase Custody Agreement.
Further, additional laws and regulations may apply to our businesses as we expand outside of the United States in the future. For more information, please see our risk factors described in “Item 1A. Risk Factors Risks Related to Crypto and Risks Related to Regulation, Taxation and Laws”. Regulation of Our Money Transmission Business.
Further, additional laws and regulations may apply to our businesses as we expand outside of the United States or into new jurisdictions in the future. For more information, please see our risk factors described in “Item 1A. Risk Factors Risks Related to Crypto and Risks Related to Regulation, Taxation and Laws”. Regulation of Our Money Transmission Business.
The client then instructs the BaaS provider to transfer the funds from the customer’s BaaS account to its BaaS FBO account. The BaaS provider will debit the customer’s fiat wallet on its internal ledger. During the daily batch settlement period, fiat funds are transmitted from the BaaS FBO account to the Bakkt Crypto transaction account.
The client then instructs the BaaS provider to transfer the funds from the customer’s BaaS account to its BaaS FBO account. The BaaS provider will debit the customer’s fiat wallet on its internal ledger. During the daily batch settlement period, fiat funds are transmitted from the BaaS FBO account to the BFS transaction account.
Bakkt Crypto has written agreements with all of its liquidity providers. Under these agreements, Bakkt Crypto is granted access to proprietary trading platforms of the liquidity providers for the purpose of placing orders for purchase or sale of crypto assets. Bakkt Crypto acts as principal in such transactions with liquidity providers. Orders cannot be withdrawn, cancelled or amended.
BFS has written agreements with all of its liquidity providers. Under these agreements, BFS is granted access to proprietary trading platforms of the liquidity providers for the purpose of placing orders for purchase or sale of digital assets. BFS acts as principal in such transactions with liquidity providers. Orders cannot be withdrawn, cancelled or amended.
We believe we will benefit from a positive network effect, where the value of our network will generally increase as we add new clients, vendors, customers and crypto to our platform. Insurance Matters We maintain types and amounts of insurance coverage that we believe are appropriate and consistent with customary industry practices.
We believe we will benefit from a positive network effect, where the value of our network will generally increase as we add new clients, customers and digital assets to our platform. Insurance Matters We maintain types and amounts of insurance coverage that we believe are appropriate and consistent with customary industry practices.
Should a customer limit order become marketable as the aggregated best price changes, the Bakkt Crypto platform would, at that point, place an offsetting order for its own account with a liquidity provider.
Should a customer limit order become marketable as the aggregated best price changes, the BFS platform would, at that point, place an offsetting order for its own account with a liquidity provider.
Generally, the agreements also contain provisions giving Bakkt Crypto discretion in the choice of crypto assets offered to each client through its platform and, in some cases, exclusivity covenants pursuant to which clients have agreed not to refer their customers to other crypto asset trading platforms.
Generally, the agreements also contain provisions giving BFS discretion in the choice of digital assets offered to each client through its platform and, in some cases, exclusivity covenants pursuant to which clients have agreed not to refer their customers to other digital asset trading platforms.
These include the implementation of Secure Multi-Party Computation (MPC) key creation software, the provision of software that facilitates a Secure Transfer Environment for the transfer of crypto assets, and workflow authorization functionality ensuring that only Bakkt Crypto specified authorized persons are able to access the wallets for authorized purposes.
These include the implementation of Secure Multi-Party Computation (MPC) key creation software, the provision of software that facilitates a Secure Transfer Environment for the transfer of digital assets, and workflow authorization functionality ensuring that only BFS specified authorized persons are able to access the wallets for authorized purposes.
All wallets hosted by Bakkt Crypto are omnibus wallets, which may contain both crypto assets held for the benefit of customers and the limited quantity of crypto assets held by Bakkt Crypto in its own account as inventory. Bakkt Crypto does not, and historically did not, operate a proprietary trading business.
All wallets hosted by BFS are omnibus wallets, which may contain both digital assets held for the benefit of customers and the limited quantity of digital assets held by BFS in its own account as inventory. BFS does not, and historically did not, operate a proprietary trading business.
Fig. 3 Crypto Assets Purchase Through A Customer’s Brokerage Account For sales, customers submit an order request via the client with which they have a relationship to Bakkt Crypto to sell crypto assets by specifying the dollar value or quantity that they wish to sell.
Fig. 3 Digital Assets Purchase Through A Customer’s Brokerage Account For sales, customers submit an order request via the client with which they have a relationship to BFSto sell digital assets by specifying the dollar value or quantity that they wish to sell.
At settlement, fiat currency and crypto assets are exchanged to settle trading obligations from the previous period. In periods of heavy trading volumes, Bakkt Crypto and the liquidity providers may agree to perform more frequent settlements in order to decrease the exposure of unsettled transactions.
At settlement, fiat currency and digital assets are exchanged to settle trading obligations from the previous period. In periods of heavy trading volumes, BFS and the liquidity providers may agree to perform more frequent settlements in order to decrease the exposure of unsettled transactions.
Limit orders may be marketable when they are placed or may become marketable when the aggregated market price, as determined by Bakkt Crypto’s proprietary internal system, aligns with the limit price selected by the customer.
Limit orders may be marketable when they are placed or may become marketable when the aggregated market price, as determined by BFS’s proprietary internal system, aligns with the limit price selected by the customer.
Under the Coinbase Custody Agreement, Coinbase Custody provides Bakkt with a segregated custody account controlled and secured by Coinbase Custody to store certain crypto assets supported by Coinbase Custody on Bakkt Crypto’s behalf. Crypto assets in the custodial account are not treated as general assets of Coinbase Custody, and Coinbase Custody is a fiduciary and custodian on Bakkt Crypto’s behalf.
Under the Coinbase Custody Agreement, Coinbase Custody provides Bakkt with a segregated custody account controlled and secured by Coinbase Custody to store certain digital assets supported by Coinbase Custody on BFS’s behalf. Digital assets in the custodial account are not treated as general assets of Coinbase Custody, and Coinbase Custody is a fiduciary and custodian on BFS’s behalf.
Bakkt Crypto settles its transactions with liquidity providers on a net basis. For more information, see “ Crypto Assets and Services Offered by Bakkt Crypto Asset Trading Liquidity Providers ” below. Customers can submit an order request to purchase crypto assets by specifying the dollar value or coin quantity that they wish to purchase.
BFS settles its transactions with liquidity providers on a net basis. For more information, see “Digital Assets and Services Offered by BFS Asset Trading Liquidity Providers ” below. Customers can submit an order request to purchase digital assets by specifying the dollar value or coin quantity that they wish to purchase.
The Coinbase Custody Agreement remains effective until terminated by either party by providing at least 30 days’ prior written notice to the other party. -18- Pursuant to the License Agreement between Fireblocks and Bakkt Crypto, Fireblocks has granted Bakkt Crypto a non-exclusive, non-sub-licensable, non-transferable license to generate wallets through the Fireblocks Vault service.
The Coinbase Custody Agreement remains effective until terminated by either party by providing at least 30 days’ prior written notice to the other party. -19- Pursuant to the License Agreement between Fireblocks and BFS, Fireblocks has granted BFS a non-exclusive, non-sub-licensable, non-transferable license to generate wallets through the Fireblocks Vault service.
Upon receipt of a fill confirmation from the liquidity provider servicing one of Bakkt Crypto’s offsetting orders, Bakkt Crypto will fill the corresponding customer transaction out of its own account, as riskless principal. In other words, the Bakkt Crypto platform is structured to execute the offsetting order for Bakkt Crypto’s own account prior to executing the corresponding customer order.
Upon receipt of a fill confirmation from the liquidity provider servicing one of BFS’s offsetting orders, BFS will fill the corresponding customer transaction out of its own account, as riskless principal. In other words, the BFS platform is structured to execute the offsetting order for BFS’s own account prior to executing the corresponding customer order.
The client then instructs the BaaS provider to transfer the funds from its BaaS FBO account to the customer’s BaaS account. The BaaS will credit the customer’s fiat wallet on its internal ledger. During the daily batch settlement period, fiat funds are transmitted from the Bakkt Crypto transaction account to the BaaS FBO account.
The client then instructs the BaaS provider to transfer the funds from its BaaS FBO account to the customer’s -16- BaaS account. The BaaS will credit the customer’s fiat wallet on its internal ledger. During the daily batch settlement period, fiat funds are transmitted from the BFS transaction account to the BaaS FBO account.
The Bakkt Crypto platform holds customer limit orders that are not marketable at the time they are placed on Bakkt Crypto’s internal order book and evaluates such orders for marketability on an ongoing basis as liquidity providers change their best bid or offer prices.
The BFS platform holds customer limit orders that are not marketable at the time they are placed on BFS’s internal order book and evaluates such orders for marketability on an ongoing basis as liquidity providers change their best bid or offer prices.
Customers may purchase approved crypto assets directly through Bakkt Crypto utilizing: • the customer’s fiat wallet (see Fig. 1 below); • the customer’s Banking as a Service (“BaaS”) provider account (see Fig. 2 below); or • the customer’s brokerage account (see Fig. 3 below). Customers may sell crypto assets through Bakkt Crypto.
Customers may purchase approved digital assets directly through BFS utilizing: • the customer’s fiat wallet (see Fig. 1 below); • the customer’s Banking as a Service (“BaaS”) provider account (see Fig. 2 below); or • the customer’s brokerage account (see Fig. 3 below). Customers may sell digital assets through BFS.
Under the BitGo Custody Agreement, BitGo, at Bakkt Crypto’s direction, establishes and maintains wallets for the storage of crypto assets, including cold wallets where BitGo holds all of the keys, and all of those keys are held in an offline storage platform (a “Vault”). BitGo serves as custodian of crypto assets stored in these wallets.
Under the BitGo Custody Agreement, BitGo, at BFS’s direction, establishes and maintains wallets for the storage of digital assets, including cold wallets where BitGo holds all of the keys, and all of those keys are held in an offline storage platform (a “Vault”). BitGo serves as custodian of digital assets stored in these wallets.
Bakkt Crypto recognizes the revenue from markup and/or trade fees at this time in the flow using explicit journal types in the transaction ledgering. -13- If the customer’s funding source is a fiat wallet, Bakkt Crypto will debit the customer’s fiat wallet on its internal ledger.
BFS recognizes the revenue from markup and/or trade fees at this time in the flow using explicit journal types in the transaction ledgering. -14- If the customer’s funding source is a fiat wallet, BFS will debit the customer’s fiat wallet on its internal ledger.
Pursuant to the Coinbase Custody Agreement, Coinbase Custody securely stores crypto asset private keys in offline storage and has implemented and agreed to maintain a reasonable information security program with policies and procedures reasonably designed to safeguard its electronic systems and Bakkt Crypto’s confidential information.
Pursuant to the Coinbase Custody Agreement, Coinbase Custody securely stores digital asset private keys in offline storage and has implemented and agreed to maintain a reasonable information security program with policies and procedures reasonably designed to safeguard its electronic systems and BFS’s confidential information.
In those instances, those customers would utilize their BaaS account to purchase supported crypto assets from Bakkt Crypto, as depicted in Figure 2, below, and to deposit the proceeds of sales of supported crypto assets to Bakkt Crypto, as depicted in Figure 6, below.
In those instances, those customers would utilize their BaaS account to purchase supported digital assets from BFS, as depicted in Figure 2, below, and to deposit the proceeds of sales of supported digital assets to BFS, as depicted in Figure 6, below.
Fig. 5 Crypto Assets Sale with Proceeds to the Customer’s BaaS Account If the customer’s funding source is a brokerage account, Bakkt Crypto sends a message to ledger the funds from the Bakkt Crypto brokerage account at the brokerage’s clearing firm to the customer’s brokerage account at the brokerage’s clearing firm.
Fig. 5 Digital Assets Sale with Proceeds to the Customer’s BaaS Account If the customer’s funding source is a brokerage account, BFS sends a message to ledger the funds from the BFS brokerage account at the brokerage’s clearing firm to the customer’s brokerage account at the brokerage’s clearing firm.
Bakkt Crypto holds all crypto assets, including customer crypto assets and the immaterial inventory of crypto assets that Bakkt Crypto maintains for purposes such as facilitating blockchain fee payments and accommodating the impacts of rounding, in omnibus wallets.
BFS holds all digital assets, including customer digital assets and the immaterial inventory of digital assets that BFS maintains for purposes such as facilitating blockchain fee payments and accommodating the impacts of rounding, in omnibus wallets.
We are subject to AML laws and regulations in the United States, including the BSA, as amended, and its implemented regulations enforced by FinCEN, as well as laws designed to prevent the use of the financial systems to facilitate terrorist activities.
We are subject to AML laws and regulations in the United States, including the BSA, as amended, and its implemented regulations enforced by FinCEN, as well as other federal and state laws designed to prevent the use of the financial systems to facilitate terrorist activities and other illicit conduct.
Bakkt Crypto’s proprietary trading platform and relationships with liquidity providers provide access to a wide range of crypto assets and competitive pricing to our customers. Our agreements with clients provide for licensing of their front-end trading platforms by Bakkt Crypto and cooperation between the parties in facilitating customers’ transactions in crypto assets.
BFS’s proprietary trading platform and relationships with liquidity providers provide access to a wide range of digital assets and competitive pricing for our customers. Our agreements with clients provide for licensing of their front-end trading platforms by BFS and cooperation between the parties in facilitating customers’ transactions in digital assets.
The service allows Bakkt Crypto to access and use crypto asset wallets that store private and public keys, interact with various blockchains and monitor its balances of crypto assets.
The service allows BFS to access and use digital asset wallets that store private and public keys, interact with various blockchains and monitor its balances of digital assets.
As such, it is possible that current or future laws or regulations could be enacted, interpreted or applied in a manner that would support, prohibit, alter, or impair our existing or planned products and services, or that could require costly, time-consuming, or otherwise burdensome compliance measures, or could force us to change our business quickly to successfully compete with new or existing entrants in the industry.
Current or future laws or regulations could be enacted, interpreted or applied in a manner that would materially support, prohibit, alter, or impair our existing or planned products and services, or that could require costly, time-consuming, or otherwise burdensome compliance measures, or could force us to modify our business in a manner to successfully compete with new or existing entrants in the industry.
We believe that our business model provides us with significant competitive advantages, including: • Multi-faceted approach to security and compliance. We enable responsible and secure access to crypto for our clients. Our compliance measures, controls and risk management practices are at the core of how we operate. Our infrastructure provides multiple layers of protection and provides heightened security and compliance.
We believe that our business model provides us with significant competitive advantages, including: • Multi-faceted approach to security and compliance. We enable responsible and secure access to digital assets for our clients. Our compliance measures, controls and risk management practices are at the core of how we operate.
Clients may choose to market our crypto asset services to customers. In order to ensure we comply with applicable laws and regulations, we retain the right to review customer-facing marketing materials proposed to be used by clients. In specific instances, we require clients to disclose the services we provide and the related risks in such materials.
In order to ensure we comply with applicable laws and regulations, we retain the right to review customer-facing marketing materials proposed to be used by clients. In specific instances, we require clients to disclose the services we provide and the related risks in such materials.
Our program is also designed to prevent our platform from being used to facilitate business in countries, or with persons or entities, included on designated lists promulgated by OFAC and equivalent authorities in other countries.
Our program is also designed to prevent our platform from being used to facilitate business in countries, or with persons or entities, included on designated sanctions lists promulgated by OFAC and comparable foreign sanction authorities.
These services are provided through our clients which have a direct relationship with such customers and utilize our trading platform and custody services. • crypto asset trading; • custody services for the crypto assets supported for trading; and • external transfers of crypto assets in jurisdictions where transfers are allowed.
These services are provided through our clients which have a direct relationship with such customers and utilize our trading platform and custody services. • digital asset trading; • fiat funding and payments via stablecoins; • custody services for the digital assets supported for trading; and • external transfers of digital assets in jurisdictions where transfers are allowed.
Upon receipt of the order, Bakkt Crypto accepts and processes the sale order and records the order fill transaction on Bakkt Crypto’s internal ledger by recording a debit to the customer’s crypto asset account. -15- If the customer’s funding source is a fiat wallet, Bakkt Crypto will credit the customer’s fiat wallet on its internal ledger.
Upon receipt of the order, BFS accepts and processes the sale order and records the order fill transaction on BFS’s internal ledger by recording a debit to the customer’s digital asset account. If the customer’s funding source is a fiat wallet, BFS will credit the customer’s fiat wallet on its internal ledger.
Our AML compliance program is comprised of policies, procedures, reporting protocols, including reporting requirements for suspicious transactions, and internal controls, including the designation of a compliance officer, training for employees, and a regular independent review of the program.
Our AML compliance program is comprised of policies, procedures, reporting protocols, and internal controls, including including reporting requirements for suspicious transactions, the designation of a compliance officer, employee -27- training, and periodic independent testing and review of the program.
During the daily batch settlement period, fiat funds are transmitted from the Bakkt Crypto transaction account to the Bakkt Crypto brokerage account. -16- Fig. 6 Crypto Assets Sale with Proceeds to the Customer’s Brokerage Account Liquidity Providers Bakkt Crypto currently has relationships with several liquidity providers, with at least two providers servicing each supported crypto asset in order to provide consistent liquidity.
During the daily batch settlement period, fiat funds are transmitted from the BFS transaction account to the BFS brokerage account. -17- Fig. 6 Digital Assets Sale with Proceeds to the Customer’s Brokerage Account Liquidity Providers BFS currently has relationships with several liquidity providers, with at least one provider servicing each supported digital asset in order to provide consistent liquidity.
Using Bakkt Crypto’s platform, customers can purchase approved crypto assets, store crypto assets in custodial wallets, liquidate their holdings, -5- and transfer supported crypto assets between a custodial wallet maintained by Bakkt Crypto and external wallets in certain jurisdictions, if enabled by the client.
Using BFS’s platform, customers can purchase approved digital assets, store digital assets in custodial wallets, liquidate their holdings, and transfer supported digital assets between a custodial wallet maintained by BFS and external wallets in certain jurisdictions, if enabled by the client.
Custody Services for the Crypto Assets Supported for Trading Bakkt Crypto has third-party custodial relationships with Coinbase Custody Trust Company (“Coinbase Custody”) and BitGo Trust Company (“BitGo”), which are currently used for custody and crypto asset transfers, where applicable.
Custody Services for the Digital Assets Supported for Trading BFS has third-party custodial relationships with Fireblocks Trust Company, LLC (“Fireblocks Custody”), Coinbase Custody Trust Company (“Coinbase Custody”), and BitGo Trust Company (“BitGo”), which are currently used for custody and digital asset transfers, where applicable.
Our Corporate Structure We operate primarily through the following entities: Bakkt Crypto: Bakkt Crypto Solutions, LLC (“Bakkt Crypto”), through business partnerships with clients, offers customers of those clients the ability to purchase, sell, store and, in approved jurisdictions, deposit and withdraw approved crypto assets, all from within the applications of our clients with whom customers already have a relationship.
Our Corporate Structure We operate primarily through Bakkt Financial Solutions I, LLC (formally Bakkt Crypto Solutions, LLC) (“BFS”). BFS, through business partnerships with clients, offers customers of those clients the ability to purchase, sell, store and, in approved jurisdictions, deposit and withdraw approved digital assets, all from within the applications of our clients with whom customers already have a relationship.
We maintain a comprehensive cyber security program, managed by a dedicated team of security professionals, leveraging multiple layers of defenses to protect our loyalty and crypto clients’ consumer data, as well as crypto wallets, including crypto that is kept in custody.
We maintain a comprehensive cyber security program, managed by a dedicated team of security professionals, leveraging multiple layers of defenses to protect our clients’ consumer data, as well as digital asset wallets, including digital assets that are kept in custody.
Bakkt Crypto is not required to pre-fund any transactions with liquidity providers.
BFS is not required to pre-fund any transactions with liquidity providers.
In addition, Bakkt Crypto also self-custodies select crypto assets (approximately 47% of total customer crypto assets were self-custodied as of December 31, 2024) to facilitate customer withdrawals utilizing the Fireblocks Vault service offered by Fireblocks Inc. (“Fireblocks”).
In addition, BFS also self-custodies select digital assets (approximately 5% of total customer digital assets were self-custodied as of December 31, 2025) to facilitate customer withdrawals utilizing the Fireblocks Vault service offered by Fireblocks Inc. (“Fireblocks”).
The DFAL provides that the DFPI may issue a conditional license to companies, such as our subsidiaries, that maintain licenses to conduct virtual currency business activity in New York or hold a charter as a New York limited purpose trust company with approval to conduct a virtual currency business under New York law.
The DFAL provides that the DFPI may issue a conditional license to entities that maintain a BitLicense or hold charter as a New York limited purpose trust company with approval to conduct virtual currency business under New York law.
The Consumer Financial Protection Bureau and other federal and state regulatory agencies, including the Federal Trade Commission, broadly regulate financial products, enforce consumer protection laws applicable to credit, deposit, prepaid products, and payments, and other similar products.
The Consumer Financial Protection Bureau and other federal and state regulatory agencies, including the Federal Trade Commission, broadly regulate financial products, enforce consumer protection laws applicable to credit, deposit, prepaid products, and payments, and other similar products, and possess supervisory and enforcement authority with respect to such activities.
Upon receipt of the purchase order, Bakkt Crypto accepts and processes the purchase order and records any order fill transactions on Bakkt Crypto’s internal ledger.
Upon receipt of the purchase order, BFS accepts and processes the purchase order and records any order fill transactions on BFS’s internal ledger.
We compete with a wide range of parties, including crypto exchanges, custodians, payment systems, and loyalty program redemption solutions, for similar services. This market is growing and changing rapidly, so we expect that we will continue to see increased competition with new entrants into the space or existing competitors expanding their product offerings.
We compete with a wide range of parties, including digital asset exchanges and other digital asset infrastructure system providers for similar services. This market is growing and changing rapidly, so we expect that we will continue to see increased competition with new entrants into the space or existing competitors expanding their product offerings.
We believe that we are well-positioned given our unique ability to provide all of our capabilities under one platform, combined with our institutional-grade, secure and licensed infrastructure. We believe this provides a competitive differentiation that would be difficult to replicate.
We believe that we are well-positioned given our unique ability to provide all of our capabilities under one platform, combined with our institutional-grade, secure and licensed infrastructure. We continue to improve and refine these offerings through our deployment of AI within approved risk and AI frameworks. We believe this provides a competitive differentiation that would be difficult to replicate.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to Crypto • Disruptions in the crypto market subject us to additional risks, including the risk that banks may not provide banking services to us. -32- • There may be a perception among regulators and others that crypto is used to facilitate illegal activity such as fraud, money laundering, tax evasion and ransomware scams. • Crypto custodial solutions and related technology, including our systems and custodial arrangements, are subject to risks related to a loss of funds due to theft, employee or vendor sabotage, security and cybersecurity risks, system failures and other operational issues the loss, destruction or other compromise of our private keys and a lack of sufficient insurance. • Our failure to safeguard and manage our customers’ crypto could adversely impact our business, operating results, and financial condition. • Crypto does not have extensive historical precedent and distributed ledger technology continues to rapidly evolve. • We may encounter technical issues in connection with the integration of supported crypto assets and changes and upgrades to their underlying networks, which could adversely affect our business.
Biggest changeWe may not realize the anticipated benefits of past or future investments, strategic transactions or acquisitions, including our proposed acquisition of DTR, and integration of these acquisitions may pose integration challenges, divert the attention of management, disrupt our business, dilute stockholder value or otherwise adversely affect our business, financial condition and results of operations Risks Related to Our Investment Policy • A significant decrease in the market value of our digital asset holdings could adversely affect our ability to satisfy financial obligations, including any debt financings. • Our financial results and the market price of our securities may be affected by fluctuations in the price of digital assets, including Bitcoin, which are highly volatile assets. • Investing in digital assets increases our exposure to risks associated with those assets, including Bitcoin. -30- Risks Related to Digital Assets • Disruptions in the digital asset market subject us to additional risks, including the risk that banks may not provide banking services to us. • There may be a perception among regulators and others that crypto is used to facilitate illegal activity such as fraud, money laundering, tax evasion and ransomware scams. • Digital asset custodial solutions and related technology, including our systems and custodial arrangements, are subject to risks related to a loss of funds due to theft digital assets , e mployee or vendor sabotage, security and cybersecurity risks, system failures and other operational issues the loss, destruction or other compromise of our private keys and a lack of sufficient insurance. • Digital assets do not have extensive historical precedent and distributed ledger technology continues to rapidly evolve.
Our Class 1 Warrants and Class 2 Warrants may be exercised by way of a cashless exercise, meaning that the holder may not pay a cash purchase price upon exercise, but instead would receive upon such exercise the net number of shares of the Class A Common Stock as determined according to the formulas set forth in the Warrant.
Our Class 1 Warrants and Class 2 Warrants may be exercised by way of a cashless exercise, meaning that the holder may not pay a cash purchase price upon exercise, but instead would receive upon such exercise the net number of shares of the common stock as determined according to the formulas set forth in the Warrant.
Among other things, the Certificate of Incorporation and By-Laws include provisions regarding: • a classified Board with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of the Board; • the ability of the Board to issue shares of Preferred Stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • the limitation of the liability of, and the indemnification of, our directors and officers; • the right of the Board to elect a director to fill a vacancy created by the expansion of the Board or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on the Board; • the requirement that directors may only be removed from the Board for cause and upon the affirmative vote of the holders of at least 66 2/3% of the total voting power of then outstanding Class A Common Stock; • a prohibition on stockholder action by written consent (except for actions by the holders of Class V Common Stock or as required for holders of future series of Preferred Stock), which forces stockholder action to be taken at an annual or special meeting of stockholders and could delay the ability of stockholders to force consideration of a stockholder proposal or to take action, including the removal of directors; • the requirement that a special meeting of stockholders may be called only by the Board, the Chairman of the Board or our Chief Executive Officer, which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors; • controlling the procedures for the conduct and scheduling of the Board and stockholder meetings; • the requirement for the affirmative vote of holders of at least 66 2/3% of the total voting power of all of the then outstanding shares of the voting stock, voting together as a single class, to amend, alter, change or repeal certain provisions in the Certificate of Incorporation which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in the Board and also may inhibit the ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt; • the ability of the Board to amend the By-Laws, which may allow the Board to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the By-Laws to facilitate an unsolicited takeover attempt; and • advance notice procedures with which our stockholders must comply to nominate candidates to the Board or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in the Board and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control.
Among other things, the Certificate of Incorporation and By-Laws include provisions regarding: • a classified Board with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of the Board; • the ability of the Board to issue shares of Preferred Stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • the limitation of the liability of, and the indemnification of, our directors and officers; • the right of the Board to elect a director to fill a vacancy created by the expansion of the Board or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on the Board; • the requirement that directors may only be removed from the Board for cause and upon the affirmative vote of the holders of at least 66 2/3% of the total voting power of then outstanding common stock; • a prohibition on stockholder action by written consent (except as required for holders of future series of Preferred Stock), which forces stockholder action to be taken at an annual or special meeting of stockholders and could delay the ability of stockholders to force consideration of a stockholder proposal or to take action, including the removal of directors; • the requirement that a special meeting of stockholders may be called only by the Board, the Chairman of the Board or our Chief Executive Officer, which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors; • controlling the procedures for the conduct and scheduling of the Board and stockholder meetings; • the requirement for the affirmative vote of holders of at least 66 2/3% of the total voting power of all of the then outstanding shares of the voting stock, voting together as a single class, to amend, alter, change or repeal certain provisions in the Certificate of Incorporation which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in the Board and also may inhibit the ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt; • the ability of the Board to amend the By-Laws, which may allow the Board to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the By-Laws to facilitate an unsolicited takeover attempt; and -72- • advance notice procedures with which our stockholders must comply to nominate candidates to the Board or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in the Board and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control.
Our Certificate of Incorporation provides that ICE and its affiliates (including any non-employee directors of ours appointed by ICE) have no duty to refrain from (1) engaging in and possessing interests in other business ventures of every type and description, including those engaged in the same or similar business activities or lines of business in which we now engage or propose to engage or (2) otherwise competing with us, on their own account, in partnership with, or as an employee, officer, director or shareholder of any other individual, corporation, general or limited partnership, limited liability company, joint venture, trust, association or any other entity.
Our -73- Certificate of Incorporation provides that ICE and its affiliates (including any non-employee directors of ours appointed by ICE) have no duty to refrain from (1) engaging in and possessing interests in other business ventures of every type and description, including those engaged in the same or similar business activities or lines of business in which we now engage or propose to engage or (2) otherwise competing with us, on their own account, in partnership with, or as an employee, officer, director or shareholder of any other individual, corporation, general or limited partnership, limited liability company, joint venture, trust, association or any other entity.
These risks include the following, among others: • difficulty in assimilating the operations, systems, and personnel of the acquired business; • difficulty in effectively integrating the acquired technologies or products with our current products and technologies; • difficulty in maintaining controls, procedures and policies during the transition and integration; • disruption of our ongoing business and distraction of our management and employees from other opportunities and challenges due to integration issues; • difficulty integrating the acquired business’s accounting, management information and other administrative systems; • inability to retain key technical and managerial personnel of the acquired business; • inability to retain key customers, vendors and other business clients of the acquired business; • inability to achieve the financial and strategic goals for the acquired and combined businesses; • incurring acquisition-related costs or amortization costs for acquired intangible assets that could impact our results of operations; • regulatory changes that affect the value of the businesses we acquire or our plans for integration of those businesses, or that expose us to additional regulation or litigation in connection with the acquired businesses; • significant post-acquisition investments which may lower the actual benefits realized through the acquisition; • potential failure of the due diligence process to identify significant issues with product quality, legal, and financial liabilities among other things; and -42- • potential inability to assert that internal controls over financial reporting are effective.
These risks include the following, among others: • difficulty in assimilating the operations, systems, and personnel of the acquired business; • difficulty in effectively integrating the acquired technologies or products with our current products and technologies; • difficulty in maintaining controls, procedures and policies during the transition and integration; • disruption of our ongoing business and distraction of our management and employees from other opportunities and challenges due to integration issues; -39- • difficulty integrating the acquired business’s accounting, management information and other administrative systems; • inability to retain key technical and managerial personnel of the acquired business; • inability to retain key customers, vendors and other business clients of the acquired business; • inability to achieve the financial and strategic goals for the acquired and combined businesses; • incurring acquisition-related costs or amortization costs for acquired intangible assets that could impact our results of operations; • regulatory changes that affect the value of the businesses we acquire or our plans for integration of those businesses, or that expose us to additional regulation or litigation in connection with the acquired businesses; • significant post-acquisition investments which may lower the actual benefits realized through the acquisition; • potential failure of the due diligence process to identify significant issues with product quality, legal, and financial liabilities among other things; and • potential inability to assert that internal controls over financial reporting are effective.
Any allegations or violation of the FCPA or other applicable anti-bribery and anti-corruption laws could result in whistleblower complaints, sanctions, settlements, prosecution, enforcement actions, fines, damages, adverse -63- media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, or suspension or debarment from government contracts, all of which may have an adverse effect on our reputation, business, results of operations, and prospects.
Any allegations or violation of the FCPA or other applicable anti-bribery and anti-corruption laws could result in whistleblower complaints, sanctions, settlements, prosecution, enforcement actions, fines, damages, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, or suspension or debarment from government contracts, all of which may have an adverse effect on our reputation, business, results of operations, and prospects.
Non-compliance with those requirements may lead to injunctions, penalties and sanctions against us as well as the person seeking to hold, acquire or increase a controlling interest, may subject the relevant transactions to cancellation or forced sale, and may result in increased regulatory compliance requirements or other potential regulatory restrictions on our business (including in respect of matters such as corporate governance, restructurings, mergers and acquisitions, financings and distributions).
Non-compliance with those requirements may lead to injunctions, penalties and sanctions against us as well as the person seeking to hold, acquire or increase a controlling interest, may subject the relevant transactions to -62- cancellation or forced sale, and may result in increased regulatory compliance requirements or other potential regulatory restrictions on our business (including in respect of matters such as corporate governance, restructurings, mergers and acquisitions, financings and distributions).
For example, under the Telephone Consumer Protection Act (“TCPA”), in the U.S., plaintiffs may seek actual monetary loss or statutory damages of $500 per violation, whichever is greater, and courts may triple the damage -65- award for willful or knowing violations. We could be subject to lawsuits (including class-action lawsuits) containing allegations that our business violated the TCPA.
For example, under the Telephone Consumer Protection Act (“TCPA”), in the U.S., plaintiffs may seek actual monetary loss or statutory damages of $500 per violation, whichever is greater, and courts may triple the damage award for willful or knowing violations. We could be subject to lawsuits (including class-action lawsuits) containing allegations that our business violated the TCPA.
Laws outside of the United States often impose different, more specific, or even conflicting obligations on companies, as well as broader -53- liability. For example, certain transactions that may be permissible in a local jurisdiction may be prohibited by regulations of U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) or U.S. anti-money laundering or counter-terrorist financing regulations.
Laws outside of the United States often impose different, more specific, or even conflicting obligations on companies, as well as broader liability. For example, certain transactions that may be permissible in a local jurisdiction may be prohibited by regulations of U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) or U.S. anti-money laundering or counter-terrorist financing regulations.
This has been reflected in certain CFTC enforcement actions, including those against Coinflip, Inc. and certain informal CFTC guidance, such as the LabCFTC’s Primer on Virtual Currencies. • In June 2023, the CFTC won a default judgment against Ooki DAO, a decentralized autonomous organization that the CFTC charged with operating an illegal trading platform and unlawfully offering leveraged and margined retail commodity transactions in crypto assets outside of a registered exchange, unlawfully acting as a Futures Commission Merchant (FCM), and unlawfully failing to comply with BSA obligations applicable to FCMs. • In July 2023, a court in the Southern District of New York held that Ripple Labs, Inc.’s (“Ripple”) sales of XRP to sophisticated investors pursuant to written contracts did constitute the unregistered offer and sale of investment contracts while sales of XRP to purchasers through blind bid/ask transactions on crypto asset exchanges did not constitute the sale of unregistered securities.
This has been reflected in certain CFTC enforcement actions, including those against Coinflip, Inc. and certain informal CFTC guidance, such as the LabCFTC’s Primer on Virtual Currencies. • In June 2023, the CFTC won a default judgment against Ooki DAO, a decentralized autonomous organization that the CFTC charged with operating an illegal trading platform and unlawfully offering leveraged and margined retail commodity transactions in digital assets outside of a registered exchange, unlawfully acting as a Futures Commission Merchant (FCM), and unlawfully failing to comply with BSA obligations applicable to FCMs. • In July 2023, a court in the Southern District of New York held that Ripple Labs, Inc.’s (“Ripple”) sales of XRP to sophisticated investors pursuant to written contracts did constitute the unregistered offer and sale of investment contracts while sales of XRP to purchasers through blind bid/ask transactions on digital asset exchanges did not constitute the sale of unregistered securities.
Numerous and evolving cybersecurity threats, including advanced and persistent cyberattacks, cyberextortion, ransomware, denial-of-service attacks, spear phishing and -69- social engineering schemes, the introduction of computer viruses, ransomware or other malware, and the physical destruction of all or portions of our information technology and infrastructure could compromise the confidentiality, availability and integrity of the information (including consumers’ personal information) in and being processed by our systems.
Numerous and evolving cybersecurity threats, including advanced and persistent cyberattacks, cyberextortion, ransomware, denial-of-service attacks, spear phishing and social engineering schemes, the introduction of computer viruses, ransomware or other malware, and the physical destruction of all or portions of our information technology and infrastructure could compromise the confidentiality, availability and integrity of the information (including consumers’ personal information) in and being processed by our systems.
If we experience rapid growth, we could face significant challenges in: • maintaining and developing relationships with existing and new clients; • securing funding to maintain our operations and future growth; • maintaining adequate financial, business and risk controls; • implementing new or updated information and financial risk controls and procedures; -46- • navigating complex and evolving regulatory and competitive environments; • attracting, integrating and retaining an appropriate number of qualified, skilled employees; • training, managing and appropriately sizing our workforce and other components of our business on a timely and cost-effective basis; • expanding within existing markets; • entering new markets and introducing new solutions; • continuing to develop, maintain, protect and scale our platform; • effectively using limited personnel and technology resources; and • maintaining the security of our platform and the confidentiality of the information, including personally identifiable information, provided and utilized across our platform.
If we experience rapid growth, we could face significant challenges in: • maintaining and developing relationships with existing and new clients; • securing funding to maintain our operations and future growth; • maintaining adequate financial, business and risk controls; • implementing new or updated information and financial risk controls and procedures; • navigating complex and evolving regulatory and competitive environments; • attracting, integrating and retaining an appropriate number of qualified, skilled employees; • training, managing and appropriately sizing our workforce and other components of our business on a timely and cost-effective basis; -43- • expanding within existing markets; • entering new markets and introducing new solutions; • continuing to develop, maintain, protect and scale our platform; • effectively using limited personnel and technology resources; and • maintaining the security of our platform and the confidentiality of the information, including personally identifiable information, provided and utilized across our platform.
Significant estimates and judgments involve those related to going concern, revenue recognition, internal-use software development costs, valuation of our stock-based compensation awards, including the determination of fair value of our common stock, accounting for income taxes, the carrying value of operating lease right-of-use assets and useful lives of long-lived assets, among others.
Significant estimates and judgments involve those related to going concern, revenue recognition, internal-use software development costs, valuation of our stock-based compensation awards, including the determination of fair value of our common stock, accounting for income taxes, the carrying value of operating lease right-of-use assets and useful lives of long-lived -69- assets, among others.
Our employees’ or third parties’ intentional, unintentional or inadvertent actions may increase our vulnerability or expose us to security threats, such as -70- ransomware or other malware or phishing attacks, and we may remain responsible for unauthorized access to, or loss, unavailability, alteration, destruction, acquisition, disclosure or other processing of information we or our vendors process or otherwise maintain.
Our employees’ or third parties’ intentional, unintentional or inadvertent actions may increase our vulnerability or expose us to security threats, such as ransomware or other malware or phishing attacks, and we may remain responsible for unauthorized access to, or loss, unavailability, alteration, destruction, acquisition, disclosure or other processing of information we or our vendors process or otherwise maintain.
Moreover, clients may choose to contract with other providers of services that are competitive with ours. If we fail to retain existing clients, attract new clients, or continually expand usage and transaction volume on our platform, our business, financial condition, results of operations and prospects will be materially and adversely affected.
Moreover, clients may choose to contract with other providers of services that are competitive with ours. If we fail to retain existing clients, attract new clients, or continually expand usage and transaction volume on our -32- platform, our business, financial condition, results of operations and prospects will be materially and adversely affected.
Examples of recent and anticipated developments that have or could impact our business include the following: • The California Consumer Privacy Act (“CCPA”), as amended and supplemented by the California Privacy Rights Act (“CPRA”), provides California residents with certain privacy rights and protections with respect to certain sensitive personal information, including the ability to opt out of sales of their personal information.
Examples of recent and anticipated developments that have or could impact our business include the following: -60- • The California Consumer Privacy Act (“CCPA”), as amended and supplemented by the California Privacy Rights Act (“CPRA”), provides California residents with certain privacy rights and protections with respect to certain sensitive personal information, including the ability to opt out of sales of their personal information.
These and other new and evolving laws could have potentially conflicting requirements that would make compliance challenging. • The United States government is considering regulating artificial intelligence and machine learning, and legislation regulating certain aspects of artificial intelligence and machine learning has been proposed, and in certain cases adopted, in U.S. states. • The certifications we maintain and the standards we comply with, including the Payment Card Industry Data Security Standard, among others, are becoming more stringent. • More recently, the DOJ recently issued a final rule which takes effect in April 2025 that places limitations, and in some cases prohibitions, on certain transfers of sensitive personal data to data and business partners located in China or with other specified links to China (and other designated countries).
These and other new and evolving laws could have potentially conflicting requirements that would make compliance challenging. • The United States government is considering regulating artificial intelligence and machine learning, and legislation regulating certain aspects of artificial intelligence and machine learning has been proposed, and in certain cases adopted, in U.S. states. • The certifications we maintain and the standards we comply with, including the Payment Card Industry Data Security Standard, among others, are becoming more stringent. • More recently, the DOJ recently issued a final rule which took effect in April 2025 that places limitations, and in some cases prohibitions, on certain transfers of sensitive personal data to data and business partners located in China or with other specified links to China (and other designated countries).
Accordingly, ICE is able to exert significant influence over the election and removal of our directors and thereby significantly influence corporate and management policies, including potential mergers or acquisitions, payment of dividends, asset sales, amendments of our Certificate of Incorporation and By-Laws and other significant corporate transactions for so long as it retains significant ownership.
ICE is able to exert significant influence over the election and removal of our directors and thereby significantly influence corporate and management policies, including potential mergers or acquisitions, payment of dividends, asset sales, amendments of our Certificate of Incorporation and By-Laws and other significant corporate transactions for so long as it retains significant ownership.
Pursuant to the terms of the Bakkt Trust purchase agreement, we may be subject to liabilities such as legal claims, including but not limited to third-party liability and other tort claims, claims for breach of contract, employment-related claims, regulatory or other compliance with law issues, tax liabilities, or liabilities we agree to retain pursuant to the Bakkt Trust purchase agreement.
Pursuant to the terms of the Bakkt Trust purchase agreement, we may be subject to liabilities such as legal claims, including but not limited to third-party liability and other tort claims, claims for breach of contract, employment-related claims, regulatory or other compliance with law issues, tax liabilities, or liabilities we agree to retain pursuant to the Bakkt Trust purchase -38- agreement.
These rulings are under appeal and the future of the litigation is uncertain. • On July 31, 2023, a different court in the Southern District of New York held that the SEC had asserted a plausible claim that certain inter-related crypto assets offered by Terraform Labs qualified as investment contracts. • In September 2023, the CFTC issued orders and simultaneously filed and settled charges against Opyn, Inc., ZeroEx, Inc., and Deridex, Inc., alleging that each had offered users the ability to trade crypto asset derivatives without registering with the CFTC as one or more regulated entities. • Congress has expressed the need for both greater federal oversight of the crypto industry and comprehensive crypto asset legislation.
These rulings are under appeal and the future of the litigation is uncertain. • On July 31, 2023, a different court in the Southern District of New York held that the SEC had asserted a plausible claim that certain inter-related digital assets offered by Terraform Labs qualified as investment contracts. • In September 2023, the CFTC issued orders and simultaneously filed and settled charges against Opyn, Inc., ZeroEx, Inc., and Deridex, Inc., alleging that each had offered users the ability to trade digital assets asset derivatives without registering with the CFTC as one or more regulated entities. • Congress has expressed the need for both greater federal oversight of the digital asset industry and comprehensive digital asset legislation.
All of these risks are heightened by the fact that the ownership of open source software can be uncertain, leading to litigation, and many of the licenses applicable to open source software have not been interpreted by courts, and these licenses could be construed to impose unanticipated conditions or restrictions on our ability to commercialize our products.
All of these risks are heightened by the fact that the ownership of open source software can be uncertain, leading to litigation, and many of the licenses applicable to open source software have not been interpreted by courts, and these licenses could be construed to impose unanticipated conditions or restrictions on our ability to commercialize our -68- products.
The termination of one or more of our agreements with a client would result in a reduction in a loss of transacting accounts, transaction volume and revenue attributable to customers generated from that client relationship, and our business, financial condition, results of operations and future prospects would be materially and adversely affected.
The termination of one or more of our agreements with a client would result in a loss of transacting accounts, transaction volume and revenue attributable to customers generated from that client relationship, and our business, financial condition, results of operations and future prospects would be materially and adversely affected.
For more information about the regulatory risks to which our business is subject, see “— A crypto asset’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty, and if crypto assets on our platform are later determined to be securities, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, which may adversely affect our business, operating results, and financial condition, ” “— Regulatory regimes governing blockchain technologies and crypto are evolving and uncertain, and new legislation, regulations, guidance and enforcement actions have in the past required, and may in the future require, us to alter our business -59- practices ” and “— Our business is subject to extensive government regulation, oversight, licensure and approvals.
For more information about the regulatory risks to which our business is subject, see “— A digital asset’s status as a “security” in any relevant jurisdiction may be subject to a high degree of uncertainty, and if digital assets on our platform are later determined to be securities, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, which may adversely affect our business, operating results, and financial condition, ” “— Regulatory regimes governing blockchain technologies and crypto are evolving and uncertain, and new legislation, regulations, guidance and enforcement actions have in the past required, and may in the future require, us to alter our business practices ” and “— Our business is subject to extensive government regulation, oversight, licensure and approvals.
Customers that traded such supported assets on our platform and suffered -58- trading losses could also seek to rescind a transaction that we facilitated on the basis that it was conducted in violation of applicable law, which could subject us to significant liability.
Customers that traded such supported assets on our platform and suffered trading losses could also seek to rescind a transaction that we facilitated on the basis that it was conducted in violation of applicable law, which could subject us to significant liability.
Pursuant to the Sarbanes-Oxley Act we are required to make a formal assessment of the effectiveness of our internal control over financial reporting and we will also be -72- required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm.
Pursuant to the Sarbanes-Oxley Act we are required to make a formal assessment of the effectiveness of our internal control over financial reporting and we will also be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm.
We face operational risk because we rely on third party vendors to provide us with financial, technology and other services and to facilitate certain of our business activities, including, for example, marketing services, fulfillment services, cloud-based computer and data storage and other IT solutions and payment processing. -39- These third parties may be subject to financial, legal, regulatory and labor issues, cyberattacks, security incidents, privacy breaches, service terminations, disruptions or interruptions, or other problems, which may impose additional costs or requirements on us or prevent these third parties from providing services to us or our customers on our behalf, which could harm our business.
We face operational risk because we rely on third party vendors to provide us with financial, technology and other services and to facilitate certain of our business activities, including, for example, marketing services, fulfillment services, cloud-based computer and data storage and other IT solutions and payment processing. -37- These third parties may be subject to financial, legal, regulatory and labor issues, cyberattacks, security incidents, privacy breaches, service terminations, disruptions or interruptions, or other problems, which may impose additional costs or requirements on us or prevent these third parties from providing services to us or our customers on our behalf, which could harm our business.
Shortages with respect to certain of our compliance personnel may limit our ability to comply with evolving and uncertain laws and other regulations. For additional information, see “— Risks Related to Regulation, Taxation and Laws .” Shortages with respect to certain of our accounting personnel may limit our ability to maintain internal control over financial reporting.
Shortages with respect to certain of our compliance personnel may limit our ability to comply with evolving and uncertain laws and other regulations. For additional information, see “— Risks Related to Regulation, Taxation and Laws .” Shortages with respect to certain of our accounting personnel may limit our ability -42- to maintain internal control over financial reporting.
The CPRA also creates a new state agency that, along with the California Attorney General, has authority to implement and enforce the CCPA and the CPRA. -64- • Numerous other U.S. states are considering, and in certain cases have adopted, laws similar to the CCPA.
The CPRA also creates a new state agency that, along with the California Attorney General, has authority to implement and enforce the CCPA and the CPRA. • Numerous other U.S. states are considering, and in certain cases have adopted, laws similar to the CCPA.
Because there are no current plans to pay cash dividends on the Class A Common Stock for the foreseeable future, you may not receive any return on investment unless you sell your Class A Common Stock at a price greater than what you paid for it.
Because there are no current plans to pay cash dividends on the common stock for the foreseeable future, you may not receive any return on investment unless you sell your common stock at a price greater than what you paid for it.
They may devote greater resources to the development, promotion and sale of products and services, and offer lower prices or more effectively offer their own innovative programs, products and services. We also compete against a large number of decentralized and noncustodial platforms.
They may devote greater resources to the development, promotion and sale of products and services, and offer lower prices or more effectively offer their own innovative programs, products and services. -36- We also compete against a large number of decentralized and noncustodial platforms.
Our ability to manage our business and conduct our operations internationally will require considerable management attention and resources, particularly as we have no operating history outside the United States and limited experience with international regulatory environments and market practices.
Our ability to manage our business and conduct our operations internationally will require considerable management attention and resources, particularly as we have no operating history outside the United States and limited experience with international regulatory environments and market -51- practices.
These provisions could also make it difficult for stockholders to take certain actions, including electing directors who are not nominated by -75- the current members of the Board or taking other corporate actions, including effecting changes in management.
These provisions could also make it difficult for stockholders to take certain actions, including electing directors who are not nominated by the current members of the Board or taking other corporate actions, including effecting changes in management.
New regulations or policies may alter or significantly adversely affect our business practices with respect to crypto assets, and we may need to adapt our business to regulatory change quickly to succeed. • A crypto asset’s status as a “security” in any relevant jurisdiction is currently subject to a high degree of uncertainty, and if crypto assets on our platform are later determined to be securities, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, which may adversely affect our business, operating results, and financial condition. • We are subject to significant litigation risk and risk of regulatory liability and penalties.
New regulations or policies may alter or significantly adversely affect our business practices with respect to digital assets, and we may need to adapt our business to regulatory change quickly to succeed. • A digital asset’s status as a “security” in any relevant jurisdiction is currently subject to a high degree of uncertainty, and if digital assets on our platform are later determined to be securities, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, which may adversely affect our business, operating results, and financial condition. • We are subject to significant litigation risk and risk of regulatory liability and penalties.
Our decision to issue securities in the future will depend on numerous considerations, including factors beyond our control, thus we cannot predict or -43- estimate the amount, timing, or nature of any future issuances of debt or equity securities.
Our decision to issue securities in the future will depend on numerous considerations, including factors beyond our control, thus we cannot predict or estimate the amount, timing, or nature of any future issuances of debt or equity securities.
If a financial institution in which we hold such funds fails or is subject to significant adverse conditions in the financial or credit markets, we could be subject to a risk of loss of all or a portion of such uninsured funds or be subject to a delay in accessing all or a portion of such uninsured funds.
If a financial institution in which we hold such funds -41- fails or is subject to significant adverse conditions in the financial or credit markets, we could be subject to a risk of loss of all or a portion of such uninsured funds or be subject to a delay in accessing all or a portion of such uninsured funds.
If we are deemed to be an investment company under the Investment Company Act, we would be required to institute burdensome compliance requirements and our activities -62- would be restricted, which would adversely affect our business, financial condition and results of operations.
If we are deemed to be an investment company under the Investment Company Act, we would be required to institute burdensome compliance requirements and our activities would be restricted, which would adversely affect our business, financial condition and results of operations.
For example, an asset that is a security in the United States may generally only be offered or sold in the United States pursuant to a registration -57- statement filed with the SEC or in an offering that qualifies for an exemption from registration.
For example, an asset that is a security in the United States may generally only be offered or sold in the United States pursuant to a registration statement filed with the SEC or in an offering that qualifies for an exemption from registration.
If the SEC, foreign regulatory authority, or a court were to determine that bitcoin or any other crypto asset to be offered, sold, or traded on our platform in the future is a security, we would not be able to offer such crypto asset for trading until we are able to do so in a compliant manner, such as through an alternative trading system approved to trade crypto assets that constitute securities, and such determination may have adverse consequences for such supported crypto assets.
If the SEC, foreign regulatory authority, or a court were to determine that bitcoin or any other digital asset to be offered, sold, or traded on our platform in the future is a security, we would not be able to offer such digital asset for trading until we are able to do so in a compliant manner, such as through an alternative trading system approved to trade digital assets that constitute securities, and such determination may have adverse consequences for such supported digital assets.
Some states, such as New Hampshire, North Carolina and Washington, have amended their state’s statutes to clarify the treatment of virtual currencies within existing licensing regimes, while others have interpreted their existing statutes as requiring a money transmitter license to conduct certain virtual currency business activities. • FinCEN has released guidance regarding how it considers its regulations to apply to crypto businesses. -55- • The IRS released guidance treating crypto as property that is not currency for U.S. federal income tax purposes. • In October 2023, the governor of California signed into law the DFAL, which establishes a required licensing framework administered by the DFPI for entities engaged in digital financial asset business activity in the state of California.
Some states, such as New Hampshire, North Carolina and Washington, have amended their state’s statutes to clarify the treatment of virtual currencies within existing licensing regimes, while others have interpreted their existing statutes as requiring a money transmitter license to conduct certain virtual currency business activities. • FinCEN has released guidance regarding how it considers its regulations to apply to digital asset businesses. • The IRS released guidance treating digital assets as property that is not currency for U.S. federal income tax purposes. • In October 2023, the governor of California signed into law the DFAL, which establishes a required licensing framework administered by the DFPI for entities engaged in digital financial asset business activity in the state of California.
While we continue to negotiate client agreement terms, we may be unable to agree to terms with such clients on commercially advantageous terms or at all, which may adversely affect our business and prospects.
While we continue to negotiate -35- client agreement terms, we may be unable to agree to terms with such clients on commercially advantageous terms or at all, which may adversely affect our business and prospects.
There also remains a significant lack of clarity over whether individual crypto assets that purport to maintain a fixed or “stable” value relative to a fiat currency or other underlying asset, known as “stablecoins,” will be deemed to be “securities.” The classification of an asset as a security under applicable law has wide-ranging implications for the regulatory obligations that flow from the offer, sale, trading and clearing of such assets.
There also remains a significant lack of clarity over whether individual digital assets that purport to maintain a fixed or “stable” value relative to a fiat currency or other underlying asset, known as “stablecoins,” will be deemed to be “securities.” The classification of an asset as a security under applicable law has wide-ranging implications for the regulatory obligations that flow from the offer, sale, trading and clearing of such assets.
We also are subject to requirements to obtain regulatory approvals, including, for example, to add new crypto assets, products, and functionalities to our platform, and may be required to obtain additional licenses and/or consultation with or approval of regulators to add, modify or discontinue certain aspects of our business model, which could lead to delays or other complexities in effectuating such changes and have a material adverse effect on our business and plan of operations.
We also are subject to requirements to obtain regulatory approvals, including, for example, to add new digital assets, products, and functionalities to our platform, and may be required to obtain additional licenses and/or consultation with or approval of regulators to add, modify or discontinue certain aspects of our business model, which could lead to delays or other complexities in effectuating such changes and have a material adverse effect on our business and plan of operations.
Our ability to realize the intended benefits of these partnerships will depend on our ability to finalize such -37- agreements, for such products and services, and to do so on terms sufficiently favorable to us.
Our ability to realize the intended benefits of these partnerships will depend on our ability to finalize such agreements, for such products and services, and to do so on terms sufficiently favorable to us.
Legislation, regulations and enforcement actions applicable to crypto in the United States include, but are not limited to the following: • In 2023, the SEC initiated lawsuits against certain crypto asset exchanges, including Bittrex, Coinbase, Binance, and Kraken alleging among other things that those entities operated as unregistered national securities exchanges, unregistered broker-dealers and unregistered clearing agencies and alleging that certain crypto assets available on their platforms are securities.
Legislation, regulations and enforcement actions applicable to digital assets in the United States include, but are not limited to the following: • In 2023, the SEC initiated lawsuits against certain digital asset exchanges, including Bittrex, Coinbase, Binance, and Kraken alleging among other things that those entities operated as unregistered national securities exchanges, unregistered broker-dealers and unregistered clearing agencies and alleging that certain digital assets available on their platforms are securities.
Because our platform is not yet registered or licensed with the SEC or foreign authorities as a broker-dealer, national securities exchange, or ATS (or foreign equivalents), and we do not seek to register or rely on an exemption from such registration or license to facilitate the offer and sale of crypto assets on our platform, we currently only permit transactions in crypto assets that we have determined are not securities.
Because our platform is not yet registered or licensed with the SEC or foreign authorities as a broker-dealer, national securities exchange, or ATS (or foreign equivalents), and we do not seek to register or rely on an exemption from such registration or license to facilitate the offer and sale of digital assets on our platform, we currently only permit transactions in digital assets that we have determined are not securities.
If we are unable to identify, troubleshoot and resolve any such issues successfully, we may no longer be able to support such crypto assets, our customers’ assets may be frozen or lost, the security hot, warm, or cold wallets established at our direction by third-party vendors may be compromised, and our platform and technical infrastructure may be affected, all of which could adversely impact our business.
If we are unable to identify, troubleshoot and resolve any such issues successfully, we may no longer be able to support such digital assets, our customers’ assets may be frozen or lost, the security hot, warm, or cold wallets established at our direction by third-party vendors may be compromised, and our platform and technical infrastructure may be affected, all of which could adversely impact our business.
This could also allow and encourage new entrants into the market, which would increase competition and potentially detract from our market share and therefore our trading volume. In addition, certain entrants may choose to list crypto assets that we believe are properly deemed securities based on a perception that regulators are less likely to pursue enforcement or other penalties.
This could also allow and encourage new entrants into the market, which would increase competition and potentially detract from our market share and therefore our trading volume. In addition, certain entrants may choose to list digital assets that we believe are properly deemed securities based on a perception that regulators are less likely to pursue enforcement or other penalties.
If these entities suffer from cyberattacks or other security incidents (whether from hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, the inadvertent transmission of computer viruses, ransomware or other malware, other forms of malicious attacks, malfeasance or negligent acts of its personnel, or via other means, including phishing attacks and other forms of social engineering), of for financial or other reasons cease to perform these functions, the functioning of the blockchains on which the ownership of a crypto asset is recorded and the valuation based may be jeopardized.
If these entities suffer from cyberattacks or other security incidents (whether from hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, the inadvertent transmission of computer viruses, ransomware or other malware, other forms of malicious attacks, malfeasance or negligent acts of its personnel, or via other means, including phishing attacks and other forms of social engineering), or for financial or other reasons cease to perform these functions, the functioning of the blockchains on which the ownership of a digital assest asset is recorded and the valuation based may be jeopardized.
New interpretations of, or changes to, existing laws, regulations and guidance, and new enforcement actions, may impact, either positively or negatively, the development of the crypto industry as a whole and our legal and regulatory status in particular by changing how we operate our business, how our products and services are regulated, and what products or services we and our competitors can offer, requiring changes to our compliance and risk mitigation programs and other policies and procedures, imposing new licensing or registration requirements and associated compliance, imposing a total ban on certain crypto transactions, or opening up regulatory paths for additional transactions or activities, as has occurred in certain jurisdictions in the past.
New interpretations of, or changes to, existing laws, regulations and guidance, and new enforcement actions, may impact, either positively or negatively, the development of the digital asset industry as a whole and our legal and regulatory status in particular by changing how we operate our business, how our products and services are regulated, and what products or services we and our competitors can offer, requiring changes to our compliance and risk mitigation programs and other policies and procedures, imposing new licensing or registration requirements and associated compliance, imposing a total ban on certain digital asset transactions, or opening up regulatory paths for additional transactions or activities, as has occurred in certain jurisdictions in the past.
Our business is subject to laws, rules, regulations, policies and legal interpretations in the markets in which we operate, including, but not limited to, those governing money transmission, crypto asset business activity, consumer protection, anti-money laundering, counter-terrorist financing, privacy and data protection, cybersecurity, economic and trade sanctions, commodities, derivatives, and securities.
Our business is subject to laws, rules, regulations, policies and legal interpretations in the markets in which we operate, including, but not limited to, those governing money transmission, digital asset business activity, consumer protection, anti-money laundering, counter-terrorist financing, privacy and data protection, cybersecurity, economic and trade sanctions, commodities, derivatives, and securities.
There can be no assurances that we will properly characterize any given crypto asset as a security or non-security for purposes of determining if that crypto asset is allowed to be offered through our platform, or that the SEC, foreign regulatory authority, or a court, if the question was presented to it, would agree with our assessment.
There can be no assurances that we will properly characterize any given digital asset as a security or non-security for purposes of determining if that digital asset is allowed to be offered through our platform, or that the SEC, foreign regulatory authority, or a court, if the question was presented to it, would agree with our assessment.
In addition, we could be subject to judicial or administrative sanctions for failing to offer or sell the asset in compliance with the registration requirements, or for acting as a broker, dealer, or national securities exchange without appropriate registration. Similarly, the SEC has recently alleged that certain crypto asset exchanges have acted without appropriate registration as clearing agencies.
In addition, we could be subject to judicial or administrative sanctions for failing to offer or sell the asset in compliance with the registration requirements, or for acting as a broker, dealer, or national securities exchange without appropriate registration. Similarly, the SEC has recently alleged that certain digital asset exchanges have acted without appropriate registration as clearing agencies.
Furthermore, our ability to retain existing, or obtain new, clients and customers may be impacted to the extent that clients choose not to partner with us, or customers choose not to transact or to engage in fewer transactions on our platform, in each case, because we do not currently offer or plan to cease offering certain crypto assets.
Furthermore, our ability to retain existing, or obtain new, clients and customers may be impacted to the extent that clients choose not to partner with us, or customers choose not to transact or to engage in fewer transactions on our platform, in each case, because we do not currently offer or plan to cease offering certain digital assets.
For certain crypto assets, a significant amount of development work is required, and there is no guarantee that we will be able to integrate successfully with any existing or future crypto asset. In addition, integration may introduce software errors or weaknesses into our platform, including our existing infrastructure.
For certain digital assets, a significant amount of development work is required, and there is no guarantee that we will be able to integrate successfully with any existing or future digital asset. In addition, integration may introduce software errors or weaknesses into our platform, including our existing infrastructure.
On July 13, 2023, a court in the Southern District of New York held that Ripple’s sales of XRP to sophisticated investors pursuant to written contracts did constitute the unregistered offer and sale of investment contracts while sales of XRP to purchasers through blind bid/ask transactions on crypto asset exchanges did not constitute the sale of unregistered securities.
On July 13, 2023, a court in the Southern District of New York held that Ripple’s sales of XRP to sophisticated investors pursuant to written contracts did constitute the unregistered offer and sale of investment contracts while sales of XRP to purchasers through blind bid/ask transactions on digital asset exchanges did not constitute the sale of unregistered securities.
While we have policies that are designed to help us analyze whether a particular crypto asset is a “security”, our policies and procedures are not a legal standard, but rather a framework for analysis that permits us to make a risk-based assessment regarding the likelihood that a particular crypto asset could be deemed a “security” under applicable laws.
While we have policies that are designed to help us analyze whether a particular digital asset is a “security”, our policies and procedures are not a legal standard, but rather a framework for analysis that permits us to make a risk-based assessment regarding the likelihood that a particular digital asset could be deemed a “security” under applicable laws.
Other factors that may cause fluctuations in our quarterly results include: • our ability to attract and retain clients and generate transaction volume from customers; • market sentiment regarding cryptocurrencies; • our ability to negotiate agreements with vendors, partners and service providers on terms that are favorable to us, if at all; • transaction volume and mix; • rates of repeat transaction and fluctuations in usage of our platform, including seasonality; • the amount and timing of our expenses related to acquiring clients and customers and the maintenance and expansion of our business, operations and infrastructure; • changes to our relationships with our clients; • general economic, industry and market conditions; • competitive dynamics in the industry in which we operate; • the amount and timing of stock-based compensation expenses; • network outages, cyberattacks, or other actual or perceived security incidents or breaches or data privacy violations; -36- • changes in laws and regulations that impact our business; • the cost and outcomes of existing or potential claims or litigation; and • the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment of goodwill from acquired technologies or businesses.
Other factors that may cause fluctuations in our quarterly results include: • our ability to attract and retain clients and generate transaction volume from customers; • market sentiment regarding digital assets; • our ability to negotiate agreements with vendors, partners and service providers on terms that are favorable to us, if at all; • transaction volume and mix; • rates of repeat transaction and fluctuations in usage of our platform, including seasonality; • the amount and timing of our expenses related to acquiring clients and customers and the maintenance and expansion of our business, operations and infrastructure; • changes to our relationships with our clients; • general economic, industry and market conditions; • competitive dynamics in the industry in which we operate; • network outages, cyberattacks, or other actual or perceived security incidents or breaches or data privacy violations; • changes in laws and regulations that impact our business; -34- • the amount and timing of stock-based compensation expenses; • the cost and outcomes of existing or potential claims or litigation; and • the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment of goodwill from acquired technologies or businesses.
Any problems or delays that we encounter with the development or operation of our platform, including technical, legal and regulatory problems, could have a material adverse effect on our business, financial condition and results of operations. We have a limited operating history and a history of operating losses, which make it difficult to forecast our future results of operations.
Any problems or delays that we encounter with the development or operation of our platform, including technical, legal and regulatory problems, could have a material adverse effect on our business, financial condition and results of operations. We have a limited operating history and a history of operating losses, which makes it difficult to forecast our future results of operations.
The price of our securities may fluctuate due to a variety of factors, including: • changes in the crypto industry; • changes in laws and regulations affecting our business; • developments involving our competitors or other companies in our industries; • variations in our operating performance and the performance of our competitors in general; • actual or anticipated fluctuations in our quarterly or annual operating results; -78- • publication of research reports by securities analysts about us or our competitors or our industry; • the public’s reaction to our press releases, our other public announcements and our filings with the SEC; • rumors and market speculation involving crypto assets and the regulation thereof, or us or other companies in our industry; • actions by stockholders; • the exercise of warrants to purchase our securities; • additions and departures of key personnel or members of the Board; • changes in our capital structure, such as future issuances of securities or the incurrence of debt; • the volume of our Class A Common Stock available for public sale; and • general economic and political conditions, such as recessions, inflation, volatility in the markets, increases in interest rates, local and national elections, fuel prices, international currency fluctuations, corruption, political instability, pandemics or other public health emergencies and the wars in Ukraine and the Middle East, resulting sanctions imposed by the U.S. and other countries, and retaliatory actions taken by Russia in response to such sanctions.
The price of our securities may fluctuate due to a variety of factors, including: • changes in the digital asset industry; • changes in laws and regulations affecting our business; • developments involving our competitors or other companies in our industries; • variations in our operating performance and the performance of our competitors in general; • actual or anticipated fluctuations in our quarterly or annual operating results; • publication of research reports by securities analysts about us or our competitors or our industry; • the public’s reaction to our press releases, our other public announcements and our filings with the SEC; • rumors and market speculation involving digital assets and the regulation thereof, or us or other companies in our industry; • actions by stockholders; • the exercise of warrants to purchase our securities; • additions and departures of key personnel or members of the Board; • changes in our capital structure, such as future issuances of securities or the incurrence of debt; -74- • the volume of our common stock available for public sale; and • general economic and political conditions, such as recessions, inflation, volatility in the markets, increases in interest rates, local and national elections, fuel prices, international currency fluctuations, corruption, political instability, pandemics or other public health emergencies and the wars in Ukraine and the Middle East, resulting sanctions imposed by the U.S. and other countries, and retaliatory actions taken by Russia in response to such sanctions.
We intend to retain future earnings, if any, for future operations, expansion and debt repayment and there are no current plans to pay any cash dividends for the foreseeable future. The declaration, amount and payment of any future dividends on shares of Class A Common Stock will be at the sole discretion of the Board.
We intend to retain future earnings, if any, for future operations, expansion and debt repayment and there are no current plans to pay any cash dividends for the foreseeable future. The declaration, amount and payment of any future dividends on shares of common stock will be at the sole discretion of the Board.
Unauthorized parties have attempted, and we expect that they will continue to attempt, to gain access to our systems or facilities through various means, including, but not limited to, hacking into our systems or facilities or those of our customers or vendors, and attempting to fraudulently induce users of our systems (including employees and customers) into disclosing customer names, passwords, payment card information, or other sensitive information, which may in turn be used to access our information technology systems, or to steal crypto stored by our customers.
Unauthorized parties have attempted, and we expect that they will continue to attempt, to gain access to our systems or facilities through various means, including, but not limited to, hacking into our systems or facilities or those of our customers or vendors, and attempting to fraudulently induce users of our systems (including employees and customers) into disclosing customer names, passwords, payment card information, or other sensitive information, which may in turn be used to access our information technology systems, or to steal digital assets stored by our customers.
Future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses, incremental expenses or the write-off of goodwill, any of which could harm our financial condition or results of operations, and the trading price of our Class A Common Stock could decline.
Future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses, incremental expenses or the write-off of goodwill, any of which could harm our financial condition or results of operations, and the trading price of our common stock could decline.
Regardless of our conclusions, we could be subject to legal or regulatory action in the event the SEC, a state or foreign regulatory authority, or a court, were to determine that a crypto asset currently offered, sold or traded on our platform is a “security” under applicable laws.
Regardless of our conclusions, we could be subject to legal or regulatory action in the event the SEC, a state or foreign regulatory authority, or a court, were to determine that a digital asset currently offered, sold or traded on our platform is a “security” under applicable laws.
On January 25, 2023, NYDFS released guidance regarding crypto custody practices, providing that a “virtual currency entity custodian” must: (1) separately account for and segregate customer assets from proprietary assets, (2) take possession of customer assets only for the limited purpose of carrying out custody and safekeeping services, (3) request approval before implementing any sub-custody arrangements, and (4) provide adequate disclosure to customers.
On January 25, 2023, NYDFS released guidance regarding digital asset custody practices, providing that a “virtual currency entity custodian” must: (1) separately account for and segregate customer assets from proprietary assets, (2) take possession of customer assets only for the limited purpose of carrying out custody and safekeeping services, (3) request approval before implementing any sub-custody arrangements, and (4) provide adequate disclosure to customers.
The ultimate impact of any volatility or distress in the crypto market will depend on future developments, including, but not limited to, the downstream effects of bankruptcies filed by crypto market participants, their severity, and the actions taken by regulators to address its impact.
The ultimate impact of any volatility or distress in the digital assets market will depend on future developments, including, but not limited to, the downstream effects of bankruptcies filed by crypto market participants, their severity, and the actions taken by regulators to address its impact.
We could be subject to legal or regulatory action in the event the SEC, a foreign regulatory authority, or a court were to determine that a supported crypto asset bought, sold, converted, spent or sent through our platform is a “security” under applicable laws.
We could be subject to legal or regulatory action in the event the SEC, a foreign regulatory authority, or a court were to determine that a supported digital asset bought, sold, converted, spent or sent through our platform is a “security” under applicable laws.
Finally, it is possible that the SEC’s approach to whether particular crypto assets are securities will change, perhaps significantly. If so, that could change the scope of the crypto assets that may be traded on our platform, and we may be required to adapt quickly.
Finally, it is possible that the SEC’s approach to whether particular digital assets are securities will change, perhaps significantly. If so, that could change the scope of the digital assets that may be traded on our platform, and we may be required to adapt quickly.
The issuance of additional Class A Common Stock or other equity securities could have, among other things, one or more of the following effects: • our existing stockholders’ proportionate ownership interest will decrease; • the amount of cash available per share, including for payment of dividends in the future, may decrease; -74- • the relative voting strength of each previously outstanding share of our common stock may be diminished; and • the market price of our Class A Common Stock and/or Warrants may decline.
The issuance of additional common stock or other equity securities could have, among other things, one or more of the following effects: • our existing stockholders’ proportionate ownership interest will decrease; • the amount of cash available per share, including for payment of dividends in the future, may decrease; • the relative voting strength of each previously outstanding share of our common stock may be diminished; and • the market price of our common stock and/or Warrants may decline.
If we are not able to continue to grow our base of clients, we will not be able to continue to grow our customer base, our revenues or our business, which could negatively impact our financial condition and results of operations and may cause us to be unable to continue as a going concern.
If we are not able to continue to grow our customer base, our revenues or our business, which could negatively impact our financial condition and results of operations and may cause us to be unable to continue as a going concern.
Further adverse changes to the timing for expected crypto product activations and declines in market capitalization could lead to additional goodwill or intangible asset impairment charges in future periods, which could be material to our results of operations.
Further adverse changes to the timing for expected digital asset product activations and declines in market capitalization could lead to additional goodwill or intangible asset impairment charges in future periods, which could be material to our results of operations.
For example, in December 2020, the SEC initiated a lawsuit against Ripple and two of its executives, alleging that they engaged in the unlawful offer and sale of unregistered securities through sales of XRP, Ripple’s crypto asset, since 2012.
For example, in December 2020, the SEC initiated a lawsuit against Ripple and two of its executives, alleging that they engaged in the unlawful offer and sale of unregistered securities through sales of XRP, Ripple’s digital asset, since 2012.
Actions may also be brought by private individuals or entities alleging illegal transactions involving crypto assets that they claim are securities, and seeking rescission of those transactions, and/or other legal and equitable relief under federal or state securities laws.
Actions may also be brought by private individuals or entities alleging illegal transactions involving digital assets that they claim are securities, and seeking rescission of those transactions, and/or other legal and equitable relief under federal or state securities laws.
For instance, financial regulators outside the United States have increased scrutiny of crypto asset platforms over time, such as by requiring crypto asset platforms operating in their local jurisdictions to be regulated and licensed under local laws.
For instance, financial regulators outside the United States have increased scrutiny of digital asset platforms over time, such as by requiring digital asset platforms operating in their local jurisdictions to be regulated and licensed under local laws.
The cost of compliance with the ever-changing legal and regulatory environment may be significant, including for Bakkt Crypto, which is subject to various obligations pursuant to its licenses. Our failure to comply with existing or future laws, rules and regulations could subject us to fines, civil liability, mandatory injunctions that change how we operate or cessation of operations.
The cost of compliance with the ever-changing legal and regulatory environment may be significant, including for BFS, which is subject to various obligations pursuant to its licenses. Our failure to comply with existing or future laws, rules and regulations could subject us to fines, civil liability, mandatory injunctions that change how we operate or cessation of operations.
Sales of substantial numbers of such shares in the public market or the fact that such warrants may be exercised could adversely affect the market price of Class A Common Stock. We may not receive any additional funds upon the exercise of the Warrants.
Sales of substantial numbers of such shares in the public market or the fact that such warrants may be exercised could adversely affect the market price of common stock. We may not receive any additional funds upon the exercise of the Warrants.
Moreover, we cannot provide any assurance that our employees, contractors, or agents will not violate such laws and regulations. Regulatory regimes governing blockchain technologies and crypto are evolving and uncertain, and new legislation, regulations, guidance and enforcement actions have in the past required, and may in the future require, us to alter our business practices.
Moreover, we cannot provide any assurance that our employees, contractors, or agents will not violate such laws and regulations. Regulatory regimes governing blockchain technologies and digital assets are evolving and uncertain, and new legislation, regulations, guidance and enforcement actions have in the past required, and may in the future require, us to alter our business practices.
Actual or perceived breaches of, or incidents impacting our or our vendors’ security could, among other things: • interrupt our operations; • result in our systems or services being unavailable, disrupted or degraded; • result in loss or unavailability of, or improper acquisition, use, disclosure or other processing of information (including consumers’ personal information) and actual or perceived violations of applicable laws, regulations, or other actual or asserted legal or contractual obligations; • materially harm our reputation; • result in significant liability claims, litigation, regulatory scrutiny, investigations and other proceedings, fines, penalties and other legal and financial exposure; • cause us to incur significant remediation costs; • lead to loss or theft of customer crypto or loyalty points and other harm to customers; • lead to loss or theft of intellectual property; • lead to loss of customer confidence in, or decreased use of, our products and services; • divert the attention of management from the operation of our business; • result in significant compensation or contractual penalties from us to our customers as a result of losses to them or claims by them; and • adversely affect our business and results of operations.
Actual or perceived breaches of, or incidents impacting our or our vendors’ security could, among other things: • interrupt our operations; • result in our systems or services being unavailable, disrupted or degraded; -66- • result in loss or unavailability of, or improper acquisition, use, disclosure or other processing of information (including consumers’ personal information) and actual or perceived violations of applicable laws, regulations, or other actual or asserted legal or contractual obligations; • materially harm our reputation; • result in significant liability claims, litigation, regulatory scrutiny, investigations and other proceedings, fines, penalties and other legal and financial exposure; • cause us to incur significant remediation costs; • lead to loss or theft of customer digital assets and other harm to customers; • lead to loss or theft of intellectual property; • lead to loss of customer confidence in, or decreased use of, our products and services; • divert the attention of management from the operation of our business; • result in significant compensation or contractual penalties from us to our customers as a result of losses to them or claims by them; and • adversely affect our business and results of operations.
In addition, as a provider of payments solutions and crypto trading and custody solutions, we are subject to heightened scrutiny by regulators that may require specific business continuity, resiliency and disaster recovery plans and more rigorous testing of such plans, which may be costly and time-consuming to implement, and may divert our resources from other business priorities.
In addition, as a provider of payments solutions and digital asset trading and custody solutions, we are subject to heightened scrutiny by regulators that may require specific business continuity, resiliency and disaster recovery plans and more rigorous testing of such plans, which may be costly and time-consuming to implement, and may divert our resources from other business priorities.
While the distributed ledgers require a public key relating to a crypto asset to be published when used in a transaction, private keys must be safeguarded and kept private in order to prevent a third party from accessing the crypto asset.
While the distributed ledgers require a public key relating to a digital asset to be published when used in a transaction, private keys must be safeguarded and kept private in order to prevent a third party from accessing the digital asset.
GAAP is subject to standard setting or interpretation by the FASB, the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported financial results. For example, the accounting treatment for revenues from crypto transactions is under review and subject to change.
GAAP is subject to standard setting or interpretation by the FASB, the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported financial results. For example, the accounting treatment for revenues from digital asset transactions is under review and subject to change.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeMembers of the Board are also encouraged to regularly engage in ad hoc conversations with management on cybersecurity-related news events and discuss any updates to our cybersecurity risk management and strategy programs.
Biggest changeMembers of the Board are also encouraged to regularly engage in ad hoc conversations with management on cybersecurity-related news events and discuss any updates to our cybersecurity risk management and strategy programs. Item 2. Properties Facilities We lease a facility in New York, New York. This facility is our satellite corporate office, and our lease expires May 2026.
Particularly in light of the extensive cybersecurity risks facing our company and the fact that we provide crypto digital asset products to our clients, we recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures to protect our internal systems and our clients’ data.
Particularly in light of the extensive cybersecurity risks facing our company and the fact that we provide digital asset products to our clients, we recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures to protect our internal systems and our clients’ data.
Our CISO, who joined us in 2022, has over 25 years of prior work experience in various roles managing enterprise risk and information security, developing cybersecurity strategy, and implementing effective information and cybersecurity programs, as well as several relevant degrees and certifications, including Certified Information Security Manager, Certified Information Systems Auditor, and Certified -80- Information Systems Security Professional.
Our CISO, who joined us in 2022, has over 25 years of prior work experience in various roles managing enterprise risk and information security, developing cybersecurity strategy, and implementing effective information and cybersecurity programs, as well as several relevant degrees and certifications, including Certified Information Security Manager, Certified Information Systems Auditor, and Certified -76- Information Systems Security Professional.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFor additional information on our ongoing legal proceedings, refer to Note 14 in our audited consolidated financial statements included in this Form 10-K. Item 4. Mine Safety Disclosure Not applicable. -81- PART II
Biggest changeFor additional information on our ongoing legal proceedings, refer to Note 16, Commitments and Contingencies , in our audited consolidated financial statements included in this Form 10-K. Item 4. Mine Safety Disclosure Not applicable.
Removed
Prior to its acquisition by the Company, Bakkt Crypto received requests from the SEC for documents and information about certain aspects of its business, including the operation of its trading platform, processes for listing assets, the classification of certain listed assets, and relationships with customers and service providers, among other topics.
Added
On December 15, 2025, the Company filed a complaint in Delaware state court against Project Labrador Holdco, LLC (“Roman”) in connection with the closing of Roman’s acquisition of the Company’s Loyalty business. On February 6, 2026, the Company amended its complaint following additional amounts becoming due.
Removed
The SEC made a number of follow-up requests for additional documents and information, and the Company responded to those requests on a timely basis. On March 3, 2025, the SEC advised the Company that it had concluded its inquiry and did not intend to recommend an enforcement action against Bakkt Crypto.
Added
The Company is seeking approximately $10 million and attorneys’ fees in connection with breaches of the Loyalty business purchase agreement. On February 27, 2026, Roman filed counterclaims alleging its entitlement to indemnification. We disagree with Roman’s allegations, and intend to continue to vigorously defend ourselves in this matter.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosure 81 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities 82 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 82 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 105
Biggest changeItem 4. Mine Safety Disclosure 77 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities 77 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 79 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 100

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs of March 7, 2025, we had 6,532,626 shares of Class A Common Stock issued and outstanding held of record by 162 holders, 7,177,774 shares of Class V Common Stock issued and outstanding held of record by three holders, 7,140,383 Public Warrants issued and outstanding, held of record by one holder, and Class 1 Warrants exercisable for up to 1,153,200 shares of Class A Common Stock held of record by four holders and Class 2 Warrants exercisable for up to 864,650 shares of Class A Common Stock held of record by four holders.
Biggest changeAs of March 11, 2026, we had 30,562,096 shares of Class A Common Stock issued and outstanding held of record by 161 holders, 7,140,383 Public Warrants issued and outstanding, held of record by one holder, Class 1 Warrants exercisable for up to 1,153,200 shares of Class A Common Stock held of record by four holders and Class 2 Warrants exercisable for up to 864,650 shares of Class A Common Stock held of record by four holders, and Pre-Funded Warrants to -77- acquire 2,475,201 shares of Class A Common Stock held of record by one holder.
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters, And Issuer Purchases Of Equity Securities Market Information and Holders Our Class A Common Stock and Public Warrants trade on NYSE under the trading symbols “BKKT” and “BKKT WS,” respectively. Our Class 1 Warrants and Class 2 Warrants are privately held.
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters, And Issuer Purchases Of Equity Securities Market Information and Holders Our Class A Common Stock and Public Warrants trade on New York Stock Exchange (the “NYSE”) under the trading symbols “BKKT” and “BKKT WS,” respectively. Our Class 1 Warrants, Class 2 Warrants and Pre-Funded Warrants are privately held.
Recent Sales of Unregistered Securities None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None.
Recent Sales of Unregistered Securities None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. -78- PART II
Holders of the Public Warrants can exercise 25 Public Warrants to purchase one share of Class A common stock at an exercise price of $287.50 per share. There is no public market for our Class V Common Stock. There is no public market for our Class V Common Stock.
Holders of the Public Warrants can exercise 25 Public Warrants to purchase one share of Class A common stock at an exercise price of $287.50 per share.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAssets under custody were $2,301.9 million and $701.6 million as of December 31, 2024 and December 31, 2023, respectively. -89- Results of Operations The following table is our consolidated statements of operations for the years ended December 31, 2024, December 31, 2023, and December 31, 2022, respectively (in thousands): Year Ended December 31, 2024 Year Ended December 31, 2023 Year Ended December 31, 2022 Revenues: Crypto services $ 3,441,056 $ 726,988 $ 1,745 Loyalty services, net 49,164 53,148 54,479 Total revenues 3,490,220 780,136 56,224 Operating expenses: Crypto costs 3,403,207 718,511 1,657 Execution, clearing and brokerage fees 24,024 3,772 — Compensation and benefits 83,164 102,042 139,049 Professional services 16,804 10,382 11,483 Technology and communication 17,714 20,837 17,079 Selling, general and administrative 26,553 33,385 35,414 Acquisition-related expenses 128 4,299 5,675 Depreciation and amortization 343 13,932 25,350 Related party expenses 600 3,902 1,168 Goodwill and intangible assets impairments — 60,499 1,822,089 Impairment of long-lived assets 889 30,265 11,494 Restructuring expenses 8,194 4,608 2,336 Other operating expenses 1,516 1,592 2,343 Total operating expenses 3,583,136 1,008,026 2,075,137 Operating loss (92,916) (227,890) (2,018,913) Interest income, net 4,318 4,338 1,877 (Loss) gain from change in fair value of warrant liability (17,186) (1,571) 16,638 Other income (expense), net 2,507 (245) (856) Loss before income taxes (103,277) (225,368) (2,001,254) Income tax (expense) benefit (170) (444) 11,320 Net loss (103,447) (225,812) (1,989,934) Less: Net loss attributable to noncontrolling interest (56,788) (150,958) (1,411,829) Net loss attributable to Bakkt Holdings, Inc. $ (46,659) $ (74,854) $ (578,105) Net loss per share attributable to Class A common stockholders: Basic $ (7.97) $ (21.01) $ (203.08) Diluted $ (7.97) $ (21.01) $ (203.08) Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Financial Summary The year ended December 31, 2024 included the following notable items relative to the year ended December 31, 2023 : • Revenue increased $2,710.1 million primarily driven by a significant increase in Crypto services revenue resulting from an increase in trading volume; and -90- • Operating expenses increased $2,575.1 million primarily driven by increased crypto trading costs as a result in increased crypto service revenue.
Biggest changeAssets under custody were $911.5 and $2,301.9 million as of December 31, 2025 and December 31, 2024, respectively. -86- Results of Continuing Operations The following table sets forth our consolidated statements of operations for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively (in thousands): Year Ended December 31, 2025 Year Ended December 31, 2024 Year Ended December 31, 2023 Revenues: Crypto services $ 2,335,243 $ 3,441,056 $ 726,988 Total revenues 2,335,243 3,441,056 726,988 Operating expenses: Crypto costs (See Note 2) 2,308,390 3,403,207 718,511 Execution, clearing and brokerage fees 18,436 24,024 3,772 Compensation and benefits 77,336 36,071 45,494 Professional services 25,256 16,445 10,164 Technology and communication 7,307 9,476 12,488 Selling, general and administrative 12,666 24,380 30,887 Acquisition-related expenses 53 128 4,299 TRA settlement expense 26,875 — — Depreciation and amortization 607 343 12,334 Related party expenses — 600 3,902 Goodwill and intangible assets impairments — — 12,660 Impairment of long-lived assets 733 744 24,103 Restructuring expenses 5,335 8,194 4,249 Other operating expenses 84 30 369 Total operating expenses 2,483,078 3,523,642 883,232 Operating loss from continuing operations (147,835) (82,586) (156,244) Interest income, net 791 4,318 4,338 Gain (loss) from change in fair value of warrant liability 30,191 (17,186) (1,571) Other income, net 19,469 1,153 179 Loss from continuing operations before income taxes and equity in earnings of affiliates (97,384) (94,301) (153,298) Income tax (benefit) expense (49) 110 355 Net loss from continuing operations before equity in net earnings of affiliates $ (97,335) $ (94,411) $ (153,653) Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Financial Summary The year ended December 31, 2025 included the following notable items relative to the year ended December 31, 2024: • Revenue decreased $1,105.8 million primarily driven by a decrease in Crypto services revenue resulting from a decrease in trading volume, including the loss of Webull Pay LLC (“Webull”) as a client in June 2025 and Public Platform LLC (“Public”) in October 2025 ; and • Operating expenses decreased $1,040.6 million primarily driven by decreased crypto trading costs as a result in decreased Crypto services revenue. -87- Revenue Revenues consist of digital asset services.
Net cash inflows from changes in our operating assets and liabilities for the year ended December 31, 2023 resulted -97- primarily from a $32.3 million increase in customer funds, a non-recurring return of a $15.2 million deposit with ICE Clear US, Inc., a decrease in prepaid insurance of $9.8 million, and an increase in amounts due to related parties of $2.1 million, which were partially offset by an increase in accounts payable and accrued liabilities of $8.0 million, an increase in operating lease liabilities of $3.0 million, and an increase in accounts receivable of $10.0 million.
Net cash inflows from changes in our operating assets and liabilities for the year ended December 31, 2023 resulted primarily from a $32.3 million increase in customer funds, a non-recurring return of a $15.2 million deposit with ICE Clear US, Inc., a decrease in prepaid insurance of $9.8 million , and an increase in amounts due to related parties of $2.1 million , which were partially offset by an increase in accounts payable and accrued liabilities of $8.0 million , an increase in operating lease liabilities of $3.0 million , and an increase in accounts receivable of $10.0 million .
The non-cash charges for the year ended December 31, 2024 primarily consisted of share-based compensation of $15.8 million, the change in fair value of our warrant liability of $17.2 million, non-cash lease expense of $1.7 million, intangible and long-lived asset impairments of $0.9 million, depreciation and amortization of $0.3 million, partially offset by other adjustments of $0.1 million.
The non-cash charges for the year ended December 31, 2024 primarily consisted of share-based -92- compensation of $15.8 million, the change in fair value of our warrant liability of $17.2 million, non-cash lease expense of $1.7 million, intangible and long-lived asset impairments of $0.9 million, depreciation and amortization of $0.3 million, partially offset by other adjustments of $0.1 million.
In our notes to the audited consolidated financial statements, we describe the significant accounting policies used in preparing the consolidated financial statements. Our -100- management has discussed the development, selection, and disclosure of our critical accounting policies and estimates with the Audit Committee of the Board.
In our notes to the audited consolidated financial statements, we describe the significant accounting policies used in preparing the consolidated financial statements. Our management has discussed the development, selection, and disclosure of our critical accounting policies and estimates with the Audit Committee of the Board.
Net cash flows provided by investing activities of $66.0 million for the year ended December 31, 2023 primarily consisted of the receipt of $185.8 million of proceeds from the sale of available-for-sale securities, partially offset by the purchase of $61.8 million of available-for-sale debt securities, $47.9 million net cash used to acquire Bakkt Crypto, $0.6 million cash used to acquire Bakkt Brokerage and $9.4 million of capitalized costs of internally developed software for our technology platforms.
Net cash flows provided by investing activities of $66.0 million for the year ended December 31, 2023 primarily consisted of the receipt of $185.8 million of proceeds from the sale of available-for-sale securities, partially offset by the purchase of $61.8 million of available-for-sale debt securities, $47.9 million net cash used to acquire BFS, $0.6 million cash used to acquire Bakkt Brokerage and $9.4 million of capitalized costs of internally developed software for our technology platforms.
The significant estimates and assumptions that affect the financial statements may include, but are not limited to, going concern, those that are related to income tax valuation allowances, useful lives of intangible assets and property, equipment and software, fair value of financial assets and liabilities, determining provision for credit losses, valuation of acquired tangible and intangible assets, the impairment of intangible assets and goodwill, and fair market value -104- of Bakkt common units, incentive units and participation units.
The significant estimates and assumptions that affect the financial statements may include, but are not limited to, going concern, those that are related to income tax valuation allowances, useful lives of intangible assets and property, equipment and software, fair value of financial assets and liabilities, determining provision for credit losses, -99- valuation of acquired tangible and intangible assets, the impairment of intangible assets and goodwill, and fair market value of Bakkt common units, incentive units and participation units.
The following items require significant estimation or judgement: Going Concern At each reporting period, in accordance with ASC 205-40, Going Concern (“ASC 205-40”), we evaluate whether there are conditions or events that raise substantial doubt about our ability to continue as a going concern within one year after the date the financial statements are issued.
The following items require significant estimation or judgment: Going Concern At each reporting period, in accordance with ASC 205-40, Going Concern (“ASC 205-40”), we evaluate whether there are conditions or events that raise substantial doubt about our ability to continue as a going concern within one year after the date the financial statements are issued.
The consideration allocated to the custody and material right performance obligations is estimated on the basis of a cost plus a margin approach and was not material to the year ended December 31, 2024. Judgment is required in determining whether the Company is the principal or the agent in our contracts with customers.
The consideration allocated to the custody and material right performance obligations is estimated on the basis of a cost plus a margin approach and was not material to the year ended December 31, 2025. Judgment is required in determining whether the Company is the principal or the agent in our contracts with customers.
Customers have a material right to obtain additional custody services at no cost by not selling the purchased crypto, which is recognized over the period that the assets are held on our platform.
Customers have a material right to obtain additional custody services at no cost by not selling the purchased digital assets, which is recognized over the period that the assets are held on our platform.
Risk Factors.” Overview In this section and elsewhere in this Form 10-K, we use the following terms, which are defined as follows: • “Client” means businesses with whom we contract to provide services to customers on our platform, and includes financial institutions, hedge funds, merchants, retailers, third party partners, and other businesses (except in the accompanying notes to the consolidated financial statements, where we refer to revenue earned from customers, -82- instead of clients.
Overview In this section and elsewhere in this Form 10-K, we use the following terms, which are defined as follows: • “Client” means businesses with whom we contract to provide services to customers on our platform, and includes financial institutions, hedge funds, merchants, retailers, third party partners, and other businesses (except in the accompanying notes to the consolidated financial statements, where we refer to revenue earned from customers, instead of clients.
Our platform enables transactions in certain supported crypto assets. For purposes of this Form 10-K, we use crypto assets, virtual currency, coins, and tokens interchangeably. • “Customer” means an individual user of our platform.
Our platform enables transactions in certain supported digital assets. For purposes of this Form 10-K, we use digital assets, virtual currency, coins, and tokens interchangeably. • “Customer” means an individual user of our platform.
The term customers is in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”)). • “Crypto” or “Crypto asset” means an asset that is built using blockchain technology, including virtual currencies (as used in the State of New York), coins, cryptocurrencies, stablecoins, and other tokens.
The term customers is in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”)). • “Digital Asset” means an asset that is built using blockchain technology, including virtual currencies (as used in the State of New York), coins, cryptocurrencies, stablecoins, and other tokens.
In December 2023, we agreed to amend the cloud computing arrangement and extended the payment period for an additional year. (2) Represents rental payments under operating leases with remaining non-cancellable terms in excess of one year.
In December 2023, we agreed to amend the cloud computing arrangement and extended the payment period for an additional year. (2) Represents rental payments under operating leases with remaining non-cancellable terms of less than one year.
We own the crypto during the period of time between the customer transaction and the liquidity provider settlement and accordingly act as a principal in the arrangement. We report the gross proceeds of a sale to a customer or liquidity provider, including a spread on the market price of the crypto as revenue.
We own the digital assets during the period of time between the customer transaction and the liquidity provider settlement and accordingly act as a principal in the arrangement. We report the gross proceeds of a sale to a customer or liquidity provider, including a spread on the market price of the digital assets as revenue.
References in this section to “we,” “us,” “our,” “Bakkt” or the “Company” and like terms refer to Bakkt Holdings, Inc. and its subsidiaries for the years ended December 31, 2024, December 31, 2023, and December 31, 2022, unless the context otherwise requires.
References in this section to “we,” “us,” “our,” “Bakkt” or the “Company” and like terms refer to Bakkt, Inc. and its subsidiaries for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, unless the context otherwise requires.
We are seeking to bring trust and transparency to crypto . We are and will continue to be subject to laws and regulations relating to the collection, use, retention, security, and transfer of information, including the personally identifiable information of our clients and all of the users in the information chain.
We are seeking to bring trust and transparency to digital assets. We are and will continue to be subject to laws and regulations relating to the collection, use, retention, security, and transfer of information, including the personally identifiable information of our clients and all of the users in the information chain.
Each customer purchase and sale transaction only has a single performance obligation which is execution of the trade. We consider the sale of customer crypto associated with delisted crypto to be revenue in the context of our contracts with customers.
Each customer purchase and sale transaction only has a single performance obligation which is execution of the trade. We consider the sale of customer digital assets associated with delisted digital assets to be revenue in the context of our contracts with customers.
Product Expansion and Innovation The crypto marketplace is rapidly evolving. We believe our ability to continue innovating our platform will increase the attractiveness of our platform to clients. Our ability to meet the capability demands of our clients will allow us to continue to grow revenue.
Product Expansion and Innovation The digital asset marketplace is rapidly evolving. We believe our ability to continue innovating our platform will increase the attractiveness of our platform to clients. Our ability to meet the capability demands of our clients will allow us to continue to grow revenue.
Financing Activities Net cash flows provided by financing activities of $43.8 million for the year ended December 31, 2024 consist of $46.5 million in proceeds from our Concurrent Offerings, partially offset by the repurchase and retirement of $2.7 million of Class A Common Stock that was withheld from vested equity grants.
Net cash flows provided by financing activities of $43.8 million for the year ended December 31, 2024 consist of $46.5 million in proceeds from our Concurrent Offerings, partially offset by the repurchase and retirement of $2.7 million of Class A Common Stock that was withheld from vested equity grants. -93- Net cash flows used in financing activities of $2.6 million for the year ended December 31, 2023 resulted from proceeds from the repurchase and retirement of $2.6 million of Class A Common Stock that was withheld from vested equity grants.
To date, management has been focused on building through clients within a business-to-business-to-consumer (“B2B2C”) model. Our goal is to provide these clients opportunities to leverage our capabilities either through their existing environment or by leveraging our platform. Our acquisition of Bakkt Crypto complements our B2B2C growth strategy by broadening our business partnerships to fintechs and neobanks.
To date, management has been focused on building through clients within a business-to-business-to-consumer (“B2B2C”) model. Our goal is to provide these clients opportunities to leverage our capabilities either through their existing environment or by leveraging our platform. Our acquisition of BFS complemented our B2B2C growth strategy by broadening our business partnerships to fintechs and neobanks.
Actual results and outcomes may differ from management’s estimates and assumptions and such differences may be material to our audited consolidated financial statements. Recently Issued and Adopted Accounting Pronouncements Recently issued and adopted accounting pronouncements are described in Note 2 to our audited consolidated financial statements .
Actual results and outcomes may differ from management’s estimates and assumptions and such differences may be material to our audited consolidated financial statements. Recently Issued and Adopted Accounting Pronouncements Recently issued and adopted accounting pronouncements are described in Note 2, Summary of Significant Accounting Policies , to our audited consolidated financial statements .
Bakkt Crypto partners with a number of liquidity providers to provide customers with immediate liquidity and access to crypto. Bakkt Crypto settles with the liquidity partners on a daily basis. The contract with a customer is created when a customer agrees to execute a trade on our platform.
BFS partners with a number of liquidity providers to provide customers with immediate liquidity and access to digital assets. BFS settles with the liquidity partners on a daily basis. The contract with a customer is created when a customer agrees to execute a trade on our platform.
We believe that the presentation of the following non-GAAP financial measures, when considered together with the corresponding GAAP financial measures and the reconciliations to those measures provided herein, provides investors with an additional understanding of the factors and trends affecting our business that could not be obtained absent these disclosures. -99- Adjusted EBITDA We present Adjusted EBITDA as a non-GAAP financial measure.
We believe that the presentation of the following non-GAAP financial measures, when considered together with the corresponding GAAP financial measures and the reconciliations to those measures provided herein, provides investors with an additional understanding of the factors and trends affecting our business that could not be obtained absent these disclosures.
Since the risk of loss related to the obligation to safeguard crypto assets for users of its platform is remote, the Company did not record a liability for such risk of loss as of December 31, 2024 and 2023 in the Company’s consolidated balance sheets.
Since we believe the risk of loss related to the obligation to safeguard digital assets for users of its platform is remote, the Company did not record a liability for such risk of loss as of December 31, 2025 and 2024 in the Company’s consolidated balance sheets.
We have determined that we are the principal in transactions with customers as we control the crypto prior to its -102- delivery to the customer and we are primarily responsible for the delivery of the crypto to the customer. Accordingly, revenue and costs associated with Bakkt Crypto’s services are presented gross in our consolidated statement of operations.
We have determined that we are the principal in transactions with customers as we control the digital assets -98- prior to its delivery to the customer and we are primarily responsible for the delivery of the digital assets to the customer. Accordingly, revenue and costs associated with BFS’s services are presented gross in our consolidated statement of operations.
Key Factors Affecting Our Performance Growing Our Client Base Our ability to increase our revenue stream depends on our ability to grow clients on our platform. We collaborate with leading brands and have built an extensive network across numerous industries including financial institutions, merchants and travel and entertainment.
Key Factors Affecting Our Performance Growing Our Client Base Our ability to increase our revenue stream depends on our ability to grow clients on our platform. We collaborate with leading brands and have built an extensive network across numerous industries including financial institutions, wealth management, payments and digital asset exchanges.
Adjusted EBITDA is not a measure of our financial performance under GAAP and should not be considered as an alternative to net income (loss) or other performance measures derived in accordance with GAAP. Our definition of Adjusted EBITDA may not be comparable to similarly titled measures used by other companies.
Adjusted EBITDA is not a measure of our financial performance under GAAP and should not be considered as an alternative to net income (loss) or other performance measures derived in accordance with GAAP.
Investing Activities Net cash flows provided by investing activities of $14.1 million for the year ended December 31, 2024 primarily consisted of the receipt of $35.2 million of proceeds from the sale of available-for-sale securities, partially offset by the purchase of $18.0 million of available-for-sale debt securities and $3.1 million in capital expenditures.
Net cash flows provided by investing activities of $14.1 million for the year ended December 31, 2024 primarily consisted of the receipt of $35.2 million of proceeds from the sale of available-for-sale securities, partially offset by the purchase of $18.0 million of available-for-sale debt securities, and $3.1 million of capitalized costs of internally developed software for our technology platforms.
We believe that Adjusted EBITDA provides relevant and useful information, which is used by management in assessing the performance of our business.
Adjusted EBITDA We present Adjusted EBITDA as a non-GAAP financial measure. We believe that Adjusted EBITDA provides relevant and useful information, which is used by management in assessing the performance of our business.
The following table summarizes our cash flows for the periods presented: Year Ended December 31, 2024 Year Ended December 31, 2023 Year Ended December 31, 2022 Net cash used in operating activities $ (21,203) $ (60,697) $ (117,597) Net cash provided by (used in) investing activities: $ 14,134 $ 65,970 $ (171,961) Net cash provided by (used in) financing activities: $ 43,818 $ (2,634) $ (2,584) Operating Activities Since our inception, we have yet to achieve positive cash flow from operations.
The following table, inclusive of discontinued operations, summarizes our cash flows for the periods presented: Year Ended December 31, 2025 Year Ended December 31, 2024 Year Ended December 31, 2023 Net cash used in operating activities $ (153,399) $ (21,203) $ (60,697) Net cash provided by (used in) investing activities: $ (38,122) $ 14,134 $ 65,970 Net cash provided by (used in) financing activities: $ 82,084 $ 43,818 $ (2,634) Operating Activities Since our inception, we have yet to achieve positive cash flow from operations.
Where applicable, we make payments to introducing brokers based on the transaction volume from resulting customer volume. These payments are expensed in the period they are incurred and are included in “Clearing, Execution and Brokerage Fees” on the consolidated statement of operations.
Where applicable, we make payments to introducing brokers based on the transaction volume from resulting customer volume. These payments are expensed in the period they are incurred and are included in “Clearing, Execution and Brokerage Fees” on the consolidated statement of operations. Deferred Revenue Deferred revenue includes amounts invoiced prior to us meeting the criteria for revenue recognition.
The decrease was primarily due to a $4.0 million reduction in insurance cost and a $2.1 million reduction in marketing and promotions.
The decrease was primarily due to a $8.0 million reduction in insurance cost, a $1.5 million reduction in marketing and promotions, and a $1.5 million in other operating cost.
We believe this significant and expedient market adoption of crypto assets reflect a maturing cryptocurrency market. -83- Recent Developments Bakkt Trust Exit On March 17, 2025, we entered into an agreement with ICE whereby ICE has agreed to purchase all of the outstanding equity interests of Bakkt Trust in exchange for $1.5 million plus the assumption of Bakkt Trust’s regulatory capital requirement, which was approximately $3.0 million as of signing, and certain operating costs of Bakkt Trust during the period between the signing of the purchase agreement and the closing of the transaction (subject to such closing).
In March 2025, we entered into an agreement with ICE, a significant stockholder of ours, whereby ICE agreed to purchase all of the outstanding equity interests of Bakkt Trust in exchange for $1.5 million plus the assumption of Bakkt Trust’s regulatory capital requirement, which was approximately $3.0 million as of signing, and certain operating costs of Bakkt Trust during the period between the signing of the purchase agreement and the closing of the transaction (subject to such closing).
Related party expenses decreased by $3.3 million, or 84.6%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The decrease was primarily due to the expiration of the ICE transition services agreement in December 2023.
Related party expenses decreased by $0.6 million, or 100.0%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. The decrease was primarily due to the expiration of a transition services agreement in 2024 related to the purchase of BFS.
We have developed and frequently evaluate and update our compliance models to ensure that we are complying with applicable restrictions. As investment continues, the intersection of technology and finance will require ongoing engagement as new applications emerge.
We have developed and frequently evaluate and update our compliance models to ensure that we are complying with applicable restrictions. As investment continues, the intersection of technology and finance will require ongoing engagement as new applications emerge. We believe digital assets and distributed ledger technology have significant, positive potential with proper collaboration between industry and regulators.
Technology and communications expense decreased by $3.1 million, or 15.0%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The decrease was primarily due to lower software license fees.
Technology and communications expense decreased by $2.2 million, or 22.9%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. The decrease was primarily due to lower software license fees and hosting fees.
Negative market conditions hinder client activity, including extended decision timelines around implementing crypto strategies. See “Crypto Market Developments” above. Regulations in U.S. & International Markets We are subject to many complex, uncertain and overlapping local, state and federal laws, rules, regulations, policies and legal interpretations (collectively, “laws and regulations”) in the markets in which we operate.
See “Crypto Market Developments” above. -85- Regulations in U.S. & International Markets We are subject to many complex, uncertain and overlapping local, state and federal laws, rules, regulations, policies and legal interpretations (collectively, “laws and regulations”) in the markets in which we operate.
Execution, Clearing and Brokerage Fees ($ in thousands) Year Ended December 31, 2024 Year Ended December 31, 2023 $ Change % Change Execution, clearing and brokerage fees $ 24,024 $ 3,772 $ 20,252 n/m Execution, clearing and brokerage fees primarily represent payments to clients in exchange for driving order flow to our platform.
Execution, Clearing and Brokerage Fees ($ in thousands) Year Ended December 31, 2025 Year Ended December 31, 2024 $ Change % Change Execution, clearing and brokerage fees $ 18,436 $ 24,024 $ (5,588) (23.3 %) Execution, clearing and brokerage fees primarily represent payments to clients in exchange for driving order flow to our platform.
Income Tax (Expense) Benefit ($ in thousands) Year Ended December 31, 2024 Year Ended December 31, 2023 $ Change % Change Income tax (expense) benefit $ (170) $ (444) $ 274 (61.7 %) Income tax expense in the years ended December 31, 2024 and 2023 primarily consist of current state tax expense related to certain state jurisdictions wherein we are required to file income tax returns.
Income Tax (Expense) Benefit ($ in thousands) Year Ended December 31, 2025 Year Ended December 31, 2024 $ Change % Change Income tax (benefit) expense $ (49) $ 110 $ (159) (144.5 %) Income tax expense in the years ended December 31, 2025 and 2024 primarily consist of current foreign and state tax expense related to certain state jurisdictions wherein we are required to file income tax returns.
We recorded impairment of goodwill and other intangible assets of $0.0 million and $60.5 million during the years ended December 31, 2024 and December 31, 2023, respectively . See Note 5 to our audited consolidated financial statements for additional disclosures related to the impairment of goodwill and other intangible assets.
We recorded impairment of long-lived assets of $0.7 million and $0.7 million during the years ended December 31, 2025 and December 31, 2024, respectively . See Note 6, Goodwill and Intangible Assets, Net , and Note 7, Consolidated Balance Sheet Components , to our audited consolidated financial statements for additional disclosures related to impairment of long-lived assets.
Therefore if there are further delays in our ability to execute on our strategy, negative deviations from the budgets utilized in these analyses or further declines in our market capitalization further impairment of our assets is possible.
Therefore if there are further delays in our ability to execute on our strategy, negative deviations from the budgets utilized in these analyses or further declines in our market capitalization further impairment of our assets is possible. Crypto Services Revenue Recognition BFS offers customers the ability to purchase or sell certain digital assets on its platform.
Related Party Expenses ($ in thousands) Year Ended December 31, 2024 Year Ended December 31, 2023 $ Change % Change Related party expenses $ 600 $ 3,902 $ (3,302) (84.6 %) Related party expenses consist of fees for transition services agreements.
Related Party Expenses ($ in thousands) Year Ended December 31, 2025 Year Ended December 31, 2024 $ Change % Change Related party expenses $ — $ 600 $ (600) (100.0 %) Related party expenses consist of fees for transition services agreements.
The figures we use represent gross values recorded as of the order date. Notional traded volumes were $4,183.2 million, $1,531.7 million, and $832.3 million during the years ended December 31, 2024, December 31, 2023, and December 31, 2022, respectively. • Assets under custody.
The figures we use represent gross values recorded as of the order date. Notional traded volumes from digital asset transactions were $2,323.0 million, $3,446.6 million , and $727.1 million during the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively. • Assets under custody.
Contractual Obligations and Commitments The following is a summary of our significant contractual obligations and commitments as of December 31, 2024 (in thousands): Payments Due by Period Less than 1 year 1-3 years 3-5 years More than 5 years Total Purchase obligations (1) $ 4,500 $ 12,000 $ — $ — $ 16,500 Future minimum operating lease payments (2) 5,427 7,911 7,763 6,776 27,877 Total contractual obligations 9,927 19,911 7,763 6,776 44,377 (1) Represents minimum commitment payments under a four-year cloud computing arrangement.
Contractual Obligations and Commitments The following is a summary of our significant contractual obligations and commitments as of December 31, 2025 (in thousands): Payments Due by Period Less than 1 year 1-3 years 3-5 years More than 5 years Total Purchase obligations (1) $ 4,050 $ — $ — $ — $ 4,050 Future minimum operating lease payments (2) 554 — — — 554 Total contractual obligations 4,604 — — — 4,604 (1) Represents minimum commitment payments under a four-year cloud computing arrangement.
We recorded a loss of $1.6 million during the year ended December 31, 2023 for the change in fair value on the revaluation of our warrant liability associated with our Public Warrants.
We recorded a loss of $17.2 million during the year ended December 31, 2024 for the change in fair value on the revaluation of our warrant liabilities.
Non-GAAP financial measures like Adjusted EBITDA have limitations, should be considered as supplemental in nature and are not meant as a substitute for the related financial information prepared in accordance with GAAP. The non-GAAP financial measures should be considered alongside other financial performance measures, including net loss and our other financial results presented in accordance with GAAP.
Our definition of Adjusted EBITDA may not be comparable to similarly titled measures used by other companies. -94- Non-GAAP financial measures like Adjusted EBITDA have limitations, should be considered as supplemental in nature and are not meant as a substitute for the related financial information prepared in accordance with GAAP.
Compensation and Benefits ($ in thousands) Year Ended December 31, 2024 Year Ended December 31, 2023 $ Change % Change Compensation and benefits $ 83,164 $ 102,042 $ (18,878) (18.5 %) Compensation and benefits expense include all salaries and benefits, compensation for contract labor, incentive programs for employees, payroll taxes, share-based and unit-based compensation and other employee related costs.
Compensation and Benefits ($ in thousands) Year Ended December 31, 2025 Year Ended December 31, 2024 $ Change % Change Compensation and benefits $ 77,336 $ 36,071 $ 41,265 114.4 % -88- Compensation and benefits expense include all salaries and benefits, compensation for contract labor, incentive programs for employees, payroll taxes, share-based and unit-based compensation and other employee related costs.
Once the measurement period ends, which in no case extends beyond one year from the acquisition date, revisions to the accounting for the business combination are recorded in earnings. All acquisition-related costs, other than the costs to issue debt or equity securities, are accounted for as expenses in the period in which they are incurred.
Once the measurement period ends, which in no case extends beyond one year from the acquisition date, revisions to the accounting for the business combination are recorded in earnings.
During the year ended December 31, 2024, we recorded $1.3 million related to foreign currency transaction gains, $0.9 million in sub-lease income, and $0.3 million related to general miscellaneous income and expenses. During the year ended December 31, 2023, we recorded expense of $0.4 million related to foreign currency transaction loss.
During the year ended December 31, 2024 , we recorded $0.9 million in sublease income, and $0.3 million related to general miscellaneous income and expenses.
Selling, General and Administrative ($ in thousands) Year Ended December 31, 2024 Year Ended December 31, 2023 $ Change % Change Selling, general and administrative $ 26,553 $ 33,385 $ (6,832) (20.5 %) Selling, general and administrative expenses include marketing, advertising, business insurance, rent and occupancy, bank service charges, dues and subscriptions, travel and entertainment, and other general and administrative costs.
Selling, General and Administrative ($ in thousands) Year Ended December 31, 2025 Year Ended December 31, 2024 $ Change % Change Selling, general and administrative $ 12,666 $ 24,380 $ (11,714) (48.0 %) Selling, general and administrative expenses include marketing, advertising, business insurance, rent and occupancy, bank service charges, dues and subscriptions, travel and entertainment, and other general and administrative costs.
Goodwill and indefinite-lived intangible assets are tested at least annually or more frequently when events or circumstances occur that indicate that it is more likely than not that an impairment has occurred. In assessing goodwill and intangible assets for impairment, we first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test.
Goodwill is tested for impairment at the reporting unit level, and we are organized and operate as a single reporting unit. Goodwill and indefinite-lived intangible assets are tested at least annually or more frequently when events or circumstances occur that indicate that it is more likely than not that an impairment has occurred.
(Loss) from Change in Fair Value of Warrant Liability ($ in thousands) Year Ended December 31, 2024 Year Ended December 31, 2023 $ Change % Change (Loss) gain from change in fair value of warrant liability $ (17,186) $ (1,571) $ (15,615) 994.0 % We recorded a loss of $17.2 million during the year ended December 31, 2024 for the change in fair value on the revaluation of our warrant liability associated with our public warrants to purchase shares of our Class A Common Stock (“Public Warrants”), Class 1 Warrants to purchase shares of our Class A Common Stock (“Class 1 Warrants”) and Class 2 Warrants to purchase Class A Common Stock (“Class 2 Warrants”).
Gain (Loss) from Change in Fair Value of Warrant Liability ($ in thousands) Year Ended December 31, 2025 Year Ended December 31, 2024 $ Change % Change Gain (loss) from change in fair value of warrant liability $ 30,191 $ (17,186) $ 47,377 (275.7 %) We recorded a gain of $30.2 million during the year ended December 31, 2025 for the change in fair value on the revaluation of our warrant liabilities associated with our public warrants and Class 1 and Class 2 warrants from the Concurrent Offerings.
Crypto Services Revenue ($ in thousands) Year Ended December 31, 2024 Year Ended December 31, 2023 $ Change % Change Crypto services $ 3,441,056 $ 726,988 $ 2,714,068 373.3 % Crypto services revenue increased by $2,714.1 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Crypto Services Revenue ($ in thousands) Year Ended December 31, 2025 Year Ended December 31, 2024 $ Change % Change Crypto services $ 2,335,243 $ 3,441,056 $ (1,105,813) (32.1 %) Crypto services revenue decreased by $1,105.8 million for the year ended December 31, 2025 compared to the year ended December 31, 2024.
Professional Services ($ in thousands) Year Ended December 31, 2024 Year Ended December 31, 2023 $ Change % Change Professional services $ 16,804 $ 10,382 $ 6,422 61.9 % Professional services expense includes fees for accounting, legal and regulatory fees.
Professional Services ($ in thousands) Year Ended December 31, 2025 Year Ended December 31, 2024 $ Change % Change Professional services $ 25,256 $ 16,445 $ 8,811 53.6 % Professional services expense includes fees for accounting, legal and regulatory fees.
Compensation and benefits decreased by $18.9 million, or 18.5%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Compensation and benefits increased by $41.3 million, or 114.4%, for the year ended December 31, 2025 compared to the year ended December 31, 2024.
Competition The crypto marketplace is highly competitive with numerous participants competing for the same clients. Additionally, some of our clients may seek to develop their own technology to replace their need for our platform.
Competition The digital asset marketplace is highly competitive with numerous participants competing for the same clients. Additionally, some of our clients may seek to develop their own technology to replace their need for our platform. We believe we are well positioned with our ability to provide capabilities around emerging digital assets on a single, highly secure, institutional-grade technology platform.
Execution, clearing and brokerage fees were $24.0 million during the year ended December 31, 2024 . The increase reflects increased volume in Crypto services revenue.
Execution, clearing and brokerage fees were $18.4 million during the year ended December 31, 2025, a decrease of $5.6 million compared to the year ended December 31, 2024 . The decrease reflects decreased volume in Crypto services revenue.
The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that these consolidated financial statements are issued.
The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that these consolidated financial statements are issued. -96- Business Combinations We account for our business combinations using the acquisition accounting method, which requires us to determine the fair value of identifiable assets acquired and liabilities assumed, including any contingent consideration, to properly allocate the purchase price to the individual assets acquired and liabilities assumed and record any residual purchase price as goodwill in accordance with ASC 805, Business Combinations .
The decrease was primarily due to a $15.8 million decrease in compensation and benefits expense and a $6.8 million reduction of selling, general and administrative expenses. Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with GAAP, which requires us to make estimates and apply judgments that affect the reported amounts.
The decrease was primarily due to a $14.9 million increase in other income primarily from a derivative asset, a $11.7 million reduction in selling, general and administrative expense, a $10.2 million decrease in compensation and benefits and a $2.2 million decrease in in technology and communications expense, partially offset by a $8.8 million increase in professional expense and a $5.4 million decrease in crypto services revenue net of crypto costs and execution, clearing and brokerage fees. -95- Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with GAAP, which requires us to make estimates and apply judgments that affect the reported amounts.
In accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 122, these assets are not recorded in the Company’s Consolidated balance sheets. Similarly, as the Company has an obligation to securely store cryptocurrency on its platform, it has a corresponding unrecorded liability of $2,301.9 million and $701.6 million as of December 31, 2024 and 2023, respectively.
Digital Assets Held on Platform The Company held digital assets in custodial products on its platform for client customers totaling $911.5 million and $2,301.9 million at fair value as of December 31, 2025 and 2024, respectively. In accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 122, these assets are not recorded in the Company’s Consolidated balance sheets.
The portion of deferred revenue to be recognized in the succeeding twelve-month period is recorded as current deferred revenue, and the remaining portion is recorded as non-current deferred revenue. We have determined that these arrangements do not contain a significant financing component, and therefore the transaction price is not adjusted.
We have determined that these arrangements do not contain a significant financing component, and therefore the transaction price is not adjusted.
Operating Expenses Operating expenses consist of crypto costs, execution, clearing and brokerage fees, compensation and benefits, professional services, technology and communication expenses, selling, general and administrative expenses, acquisition-related expenses, depreciation and amortization, related party expenses, goodwill and intangible assets impairments, impairment of long-lived assets, restructuring charges, and other operating expenses. -91- Crypto Costs ($ in thousands) Year Ended December 31, 2024 Year Ended December 31, 2023 $ Change % Change Crypto costs $ 3,403,207 $ 718,511 $ 2,684,696 373.6 % Crypto costs represent the gross value of crypto sold by our customers on our platform.
Operating Expenses Operating expenses consist of crypto costs, execution, clearing and brokerage fees, compensation and benefits, professional services, technology and communication expenses, selling, general and administrative expenses, acquisition-related expenses, depreciation and amortization, related party expenses, goodwill and intangible assets impairments, impairment of long-lived assets, restructuring charges, and other operating expenses.
Intangible assets subject to amortization consist primarily of acquired technology and client relationships from completed acquisitions, including our acquisition of Bakkt Crypto. Depreciation and amortization decreased by $13.6 million, or 97.5%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Intangible assets subject to amortization consist primarily of acquired technology and client relationships from completed acquisitions. Depreciation and amortization increased by $0.3 million, or 77.0%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. The increase was primarily due to increases in software development cost.
Deferred Revenue Deferred revenue includes amounts invoiced prior to us meeting the criteria for revenue recognition. We invoice clients for service fees at the time the service is performed, and such fees are recognized as revenue over time as we satisfy -103- our performance obligation.
We invoice clients for service fees at the time the service is performed, and such fees are recognized as revenue over time as we satisfy our performance obligation. The portion of deferred revenue to be recognized in the succeeding twelve-month period is recorded as current deferred revenue, and the remaining portion is recorded as non-current deferred revenue.
We intend to use our unrestricted cash, inclusive of any potential borrowings under the ICE Credit Facility, to fund our day-to-day operations, including, but not limited to funding our regulatory capital requirements, compensating balance arrangements and other similar commitments, each of which is subject to change, and as available (i) activate new crypto clients, (ii) maintain our product development efforts, and (iii) optimize our technology infrastructure and operational support.
The Investor converted $17.5 million of the Convertible Debenture into 1,746,552 shares of Class A Common Stock in the third quarter of 2025 and the Company elected to redeem the remaining $7.5 million of Convertible Debentures for cash, including a redemption premium of $0.4 million, in September 2025. -91- We intend to use our unrestricted cash, inclusive of the proceeds from the Private Placement and Offering, to fund our day-to-day operations, including, but not limited to funding our regulatory capital requirements, compensating balance arrangements and other similar commitments, each of which is subject to change, and as available (i) activate new digital asset clients, (ii) maintain our product development efforts, and (iii) optimize our technology infrastructure and operational support.
Goodwill and Other Intangible Assets Goodwill and intangible assets that have indefinite useful lives are accounted for in accordance with ASC 350, Intangibles — Goodwill and Other . We allocate the cost of an acquired entity to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition.
We allocate the cost of an acquired entity to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess of the acquisition consideration transferred over the fair value of the net assets acquired, including other intangible assets, is recorded as goodwill.
Net cash flows used in financing activities of $2.6 million for the year ended December 31, 2023 resulted from proceeds from the repurchase and retirement of $2.6 million of Class A Common Stock that was withheld from vested equity grants.
Financing Activities Net cash flows provided by financing activities of $82.1 million for the year ended December 31, 2025 consist of $70.4 million in proceeds from Common Stock issuance and exercise of pre-funded warrants, $23.8 million in proceeds from the issuance of Convertible Debentures, net of issuance costs, partially offset by $7.5 million used to repay the Convertible Debentures, the repurchase and retirement of $3.1 million of Class A Common Stock that was withheld from vested equity grants and $1.5 million of financing fees.
The following table presents a reconciliation of net loss, the most directly comparable GAAP operating performance measure, to our Adjusted EBITDA for each of the periods indicated (in thousands): Year Ended December 31, 2024 Year Ended December 31, 2023 Net loss $ (103,447) $ (225,812) Depreciation and amortization 343 13,932 Interest income, net (4,318) (4,338) Income tax expense (benefit) 170 444 EBITDA (107,252) (215,774) Acquisition-related expenses 128 4,299 Share-based and unit-based compensation expense 15,841 16,761 Cancellation of common units — (13) Loss (gain) from change in fair value of warrant liability 17,186 1,571 Goodwill and intangible assets impairments — 60,499 Impairment of long-lived assets 889 30,265 Restructuring expenses 8,194 4,608 Shelf registration expenses 200 — Transition services expense 600 3,902 Adjusted EBITDA loss $ (64,214) $ (93,882) Adjusted EBITDA loss for the year ended December 31, 2024 decreased by $29.7 million, or 31.6%, as compared to the year ended December 31, 2023.
The following table presents a reconciliation of net loss from continuing operations, the most directly comparable GAAP operating performance measure, to our Adjusted EBITDA for each of the periods indicated (in thousands): Year Ended December 31, 2025 Year Ended December 31, 2024 Net loss from continuing operations $ (97,658) $ (94,411) Depreciation and amortization 607 343 Interest income, net (791) (4,318) Income tax (benefit) expense (49) 110 EBITDA (97,891) (98,276) Acquisition-related expenses 53 128 Share-based and unit-based compensation expense 65,418 13,941 Loss (gain) from change in fair value of warrant liability (30,191) 17,186 Impairment of long-lived assets 733 744 Restructuring expenses 5,335 8,194 Shelf registration expenses — 200 Transition services expense — 600 Gain on lease assignments (8,884) — Loss on sale of Bakkt Trust 2,301 — Loss on extinguishment of convertible debenture 2,617 — TRA Settlements 26,875 — Adjusted EBITDA loss $ (33,634) $ (57,283) Adjusted EBITDA loss for the year ended December 31, 2025 decreased by $23.6 million, or 41.3%, as compared to the year ended December 31, 2024.
Acquisition-related expenses for the year ended December 31, 2023 primarily consisted of fees for investment banking advisors, lawyers, accountants, tax advisors and public relations firms related to the acquisitions of Bakkt Crypto and Bakkt Brokerage. -93- Depreciation and Amortization ($ in thousands) Year Ended December 31, 2024 Year Ended December 31, 2023 $ Change % Change Depreciation and amortization $ 343 $ 13,932 $ (13,589) (97.5 %) Depreciation and amortization expense consists of amortization of intangible assets from business acquisitions, internally developed software and depreciation of purchased software and computer and office equipment over their estimated useful lives.
Depreciation and Amortization ($ in thousands) Year Ended December 31, 2025 Year Ended December 31, 2024 $ Change % Change Depreciation and amortization $ 607 $ 343 $ 264 77.0 % Depreciation and amortization expense consists of amortization of intangible assets from business acquisitions, internally developed software and depreciation of purchased software and computer and office equipment over their estimated useful lives.
Our marketing activities primarily consist of web-based promotional campaigns, promotional activities with clients, conferences and user events, and brand-building activities. Selling, general and administrative expenses do not include any headcount cost, which is reflected in Compensation and benefits in the Consolidated Statements of Operations.
Our marketing activities primarily consist of web-based promotional campaigns, promotional activities with clients, conferences and user events, and brand-building activities.
The decrease was primarily due to decreases of $13.2 million in salaries, wages and benefits, $3.3 million in contract labor, $3.1 million in severance charges and $1.1 million in non cash compensation, partially offset by a $2.5 million reduction in capitalized software development costs.
The increase was primarily due to increases of $47.1 million in non-cash compensation mostly related to the Option Plan, and increases of $1.9 million in severance charges slightly offset by decreases of $10.3 million in salaries, wages and benefits, and $1.6 million in contract labor. See Note 13, Share-Based and Unit-Based Compensation, for further details regarding the Option Plan.
We generate transaction revenue from crypto buy/sell trades where we earn a spread on both legs of the transaction (reported gross) and through loyalty redemption volumes where we receive a percentage fee based on the volume (reported net of associated costs).
We earn revenue when consumers use our services to buy, sell, and store digital assets. Substantially all of our Crypto services revenue is transaction revenue from digital asset buy/sell trades where we earn a spread on both legs of the transaction (reported gross).
The increase was primarily due to increases of $3.1 million in legal fees, $2.6 million in audit and tax fees, and $0.7 million in other professional fees. -92- Technology and Communication ($ in thousands) Year Ended December 31, 2024 Year Ended December 31, 2023 $ Change % Change Technology and communication $ 17,714 $ 20,837 $ (3,123) (15.0 %) Technology and communication costs represent all non-headcount related costs to deliver technological solutions.
Technology and Communication ($ in thousands) Year Ended December 31, 2025 Year Ended December 31, 2024 $ Change % Change Technology and communication $ 7,307 $ 9,476 $ (2,169) (22.9 %) Technology and communication costs represent all non-headcount related costs to deliver technological solutions.
These costs are measured at the executed price at the time of the trade. Crypto costs increased by $2,684.7 million for the year ended December 31, 2024 compared to the year ended December 31, 2023, This increase was primarily driven by increased crypto service volume.
Crypto costs decreased by $1,094.8 million for the year ended December 31, 2025, compared to the year ended December 31, 2024, This decrease was primarily driven by decreased crypto service volume, primarily due to the loss of Webull in June 2025 and Public in October 2025 ..
We recorded impairment of long-lived assets of $0.9 million and $30.3 million during the years ended December 31, 2024 and December 31, 2023, respectively . See Notes 5 and 6 to our audited consolidated financial statements for additional disclosures related to impairment of long-lived assets.
See Note 6, Goodwill and Intangible Assets, Net , to our audited consolidated financial statements for additional disclosures related to the impairment of goodwill and other intangible assets.
Customers include customers of our loyalty clients who use our platform to transact in loyalty points, as well as customers of our clients who transact in crypto through, and have accounts on, our platform (except as defined for ASC 606 purposes above). • “Loyalty points” means loyalty and/or reward points that are issued by clients to their customers.
Customers include customers of our clients who transact in digital assets through, and have accounts on, our platform (except as defined for ASC 606 purposes above). -79- Founded in 2018, Bakkt, Inc. (the “Company”) builds digital financial infrastructure designed to support institutional participation in the digital asset economy.
Goodwill and Intangible Assets Impairments ($ in thousands) Year Ended December 31, 2024 Year Ended December 31, 2023 $ Change % Change Goodwill and intangible assets impairments $ — $ 60,499 $ (60,499) n/m We recorded impairments of goodwill and other intangible assets of $60.5 million during the year ended December 31, 2023 .
We recorded no impairment of goodwill and other intangible assets from continuing operations during the years ended December 31, 2025 and December 31, 2024, respectively . We recorded no impairment of goodwill and other intangible assets from discontinued operations during the years ended December 31, 2025 and December 31, 2024, respectively .
Restricted cash is -95- held to satisfy certain minimum capital requirements pursuant to regulatory requirements, or as collateral for insurance contracts and our purchasing card facility. Restricted cash decreased during 2024 primarily due to a lower regulatory capital requirement for Bakkt Trust, partially offset by the pledging of cash collateral for the purchasing card facility.
Cash and cash equivalents consist of cash deposits at banks and money market funds. Restricted cash is held to satisfy collateral requirements for insurance contracts and bank ACH processing. Restricted cash decreased during 2025 primarily due to lower insurance collateral requirements and the sale of Bakkt Trust and our Loyalty Business.
Professional services increased by $6.4 million, or 61.9%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Professional services increased by $8.8 million, or 53.6%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. The increase was primarily due to increases of $6.4 millon in legal fees and $4.5 million in other professional fees. slightly offset by a decrease of $2.1 million in audit and tax fees.
Our operating cash usage in 2024 declined from 2023 levels driven by the combined impact of increased revenue and expense reductions from restructuring actions. In addition, we may in the future enter into arrangements to acquire or invest in complementary businesses, services, technologies or intellectual property rights.
In addition, we may in the future enter into arrangements to acquire or invest in complementary businesses, services, technologies or intellectual property rights. However, except with respect to our proposed acquisition of DTR, we have no agreements or commitments with respect to any such acquisitions or investments at this time.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeConsolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2024 Year Ended December 31, 2023 Year Ended December 31, 2022 Cash flows from operating activities: Net loss $ (103,447) $ (225,812) $ (1,989,934) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization 343 13,932 25,350 Change in fair value of contingent consideration liability — (2,952) — Non-cash lease expense 1,721 3,058 2,679 Share-based compensation expense 15,841 15,452 31,557 Unit-based compensation expense — 1,309 557 Forfeiture and cancellation of common units — (13) (185) Deferred income taxes — — (11,594) Impairment of long-lived assets 889 30,265 11,494 Goodwill and intangible assets impairments — 60,499 1,822,089 Loss on disposal of assets — 75 3,834 Loss (gain) from change in fair value of warrant liability 17,186 1,571 (16,638) Other (52) 19 285 Changes in operating assets and liabilities: Accounts receivable 5,405 (10,036) (7,164) Prepaid insurance 9,077 9,773 9,384 Deposits with clearinghouse — 14,991 1 Accounts payable and accrued liabilities (15,618) (7,985) 744 Due to related party (870) 2,062 551 Deferred revenue (3,252) 396 (2,364) Operating lease liabilities (3,636) (3,029) 4,150 Customer funds payable 55,641 32,334 40 Other assets and liabilities (431) 3,394 (2,433) Net cash used in operating activities (21,203) (60,697) (117,597) Cash flows from investing activities: Capitalized internal-use software development costs and other capital expenditures (3,087) (9,433) (30,543) Purchase of available-for-sale securities (17,966) (61,829) (306,593) Proceeds from the maturity of available-for-sale securities 35,187 185,765 165,175 Acquisition of Bumped Financial, LLC — (631) — Acquisition of Apex Crypto LLC, net of cash acquired — (47,902) — Net cash provided by (used in) investing activities: 14,134 65,970 (171,961) Cash flows from financing activities: Proceeds from Concurrent Offerings, net of issuance costs 46,505 — — Withholding tax payments on net share settlements on equity awards (2,690) (2,634) (2,586) Proceeds from the exercise of warrants 3 — 2 Net cash provided by (used in) financing activities: 43,818 (2,634) (2,584) Effect of exchange rate changes (1,501) 436 (850) Net increase (decrease) in cash, cash equivalents, deposits, restricted cash and customer funds 35,248 3,075 (292,992) Cash, cash equivalents, deposits, restricted cash and customer funds at the beginning of the period 118,498 115,423 408,415 Cash, cash equivalents, deposits, restricted cash and customer funds at the end of the period $ 153,746 $ 118,498 $ 115,423 Supplemental disclosure of cash flow information: Cash paid for income taxes $ — $ 239 $ — Non-cash operating lease right-of-use asset acquired $ — $ 3,788 $ 11,006 Supplemental disclosure of non-cash investing and financing activity: Capitalized internal-use software development costs and other capital expenditures included in accounts payable and accrued liabilities $ — $ 478 $ 3,900 Reconciliation of cash, cash equivalents, deposits, restricted cash and customer funds to consolidated balance sheets: Cash and cash equivalents $ 39,049 $ 52,882 $ 98,332 Restricted cash 24,889 31,838 16,500 Customer funds 88,566 32,925 591 Deposits (See Note 6) 1,242 853 — Total cash, cash equivalents, deposits, restricted cash and customer funds $ 153,746 $ 118,498 $ 115,423 The accompanying notes are an integral part of these consolidated financial statements . -117- Table of Contents Notes to the Consolidated Financial Statements 1.
Biggest changeConsolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2025 Year Ended December 31, 2024 Year Ended December 31, 2023 Cash flows from operating activities: Net loss $ (132,232) $ (103,447) $ (225,812) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization 607 343 13,932 Change in fair value of contingent consideration liability — — (2,952) Non-cash lease expense 895 1,721 3,058 Share-based compensation expense 71,603 15,841 15,452 Unit-based compensation expense — — 1,309 Forfeiture and cancellation of common units — — (13) Impairment of long-lived assets 961 889 30,265 Loss on sale of businesses 22,663 — — Gain on lease terminations (8,884) — — Goodwill and intangible assets impairments — — 60,499 Loss on disposal of assets — — 75 Loss on extinguishment of convertible debenture 2,617 — — Loss (gain) from change in fair value of warrant liabilities (30,191) 17,186 1,571 Change in fair value of derivative assets (13,973) — — Loss on Equity Method Investee 323 — — TRA Equity Settlement 22,983 — — Other 538 (52) 19 Changes in operating assets and liabilities: Accounts receivable (1,237) 5,405 (10,036) Prepaid insurance 1,223 9,077 9,773 Deposits with clearinghouse (2,500) — 14,991 Accounts payable and accrued liabilities (5,139) (15,618) (7,985) Due to related party (2,358) (870) 2,062 Deferred revenue (152) (3,252) 396 Operating lease liabilities (4,135) (3,636) (3,029) Customer funds payable (73,904) 55,641 32,334 Assets and liabilities of businesses held for sale (3,284) — — Other assets and liabilities 177 (431) 3,394 Net cash used in operating activities (153,399) (21,203) (60,697) Cash flows from investing activities: Capitalized internal-use software development costs and other capital expenditures (1,167) (3,087) (9,433) Purchase of marketable securities (55,235) (17,966) (61,829) Proceeds from the maturity of marketable securities 55,000 35,187 185,765 Proceeds from Sale of Bakkt Trust 4,518 — — Purchase of intangible assets (2,650) — — Purchase of equity method investment (11,472) — — Cash paid for Loyalty divestiture (20,146) — — Cash advance for Loyalty Buyer (17,591) — — Cash proceeds from derivative 10,621 — — -111- Table of Contents Bakkt, Inc.
Basis of Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
Basis for opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
Liquidation In the event of any voluntary or involuntary liquidation, dissolution or winding up of our affairs, the holders of Class A common stock are entitled to share ratably in all assets remaining after payment of our debts and other liabilities, subject to prior distribution rights of preferred stock or any class or series of stock having a preference over the Class A common stock, then outstanding, if any.
Liquidation In the event of any voluntary or involuntary liquidation, dissolution or winding up of our affairs, the holders of Class A common stock are entitled to share ratably in all assets remaining after payment of the Company’s debts and other liabilities, subject to prior distribution rights of preferred stock or any class or series of stock having a preference over the Class A common stock, then outstanding, if any.
Both are reported as part of Compensation and benefits on the consolidated statements of operations. 2 Occupancy includes facility related expenses such as rent and is reported as Selling, general and administrative on the consolidated statements of operations. 3 Marketing and promotions primarily consist of web-based promotional campaigns, promotional activities with clients, conferences and user events, and brand-building activities and are reported as Selling, general and administrative on the consolidated statements of operations. 4 Business insurance primarily consists of business liability insurance premiums and is recorded as Selling, general and administrative on the consolidated statements of operations. 5 Goodwill and intangible asset impairments is presented in combination with Depreciation and amortization to the CODM. 6 Other operating costs consist primarily of Acquisition-related expenses, Related party expenses, and Impairment of long-lived assets as presented on the statements of operations, as well as costs that are reported as Selling, general and administrative, and Compensation and benefits on the consolidated statements of operations. 7 Other expense (income), net consists primarily of Interest income, net, (Loss) gain from change in fair value of warrant liability, and Other expense, net, and Income tax (expense) benefit as presented in the consolidated statements of operations.
Both are reported as part of Compensation and benefits on the consolidated statements of operations. 2 Occupancy includes facility related expenses such as rent and is reported as Selling, general and administrative on the consolidated statements of operations. 3 Marketing and promotions primarily consist of web-based promotional campaigns, promotional activities with clients, conferences and user events, and brand-building activities and are reported as Selling, general and administrative on the consolidated statements of operations. 4 Business insurance primarily consists of business liability insurance premiums and is recorded as Selling, general and administrative on the consolidated statements of operations. 5 Goodwill and intangible asset impairments is presented in combination with Depreciation and amortization to the CODM. 6 Other operating costs consist primarily of TRA Settlements, Acquisition-related expenses, Related party expenses, and Impairment of long-lived assets as presented on the statements of operations, as well as costs that are reported as Selling, general and administrative, and Compensation and benefits on the consolidated statements of operations. 7 Other expense (income), net consists primarily of Interest income, net, (Loss) gain from change in fair value of warrant liability, and Other expense, net, and Income tax (expense) benefit as presented in the consolidated statements of operations.
Change in Accounting Principle As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for obligations to safeguard crypto assets for others as of December 31, 2024 due to the adoption of SEC Staff Accounting Bulletin 122. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management.
Change in Accounting Principle As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for obligations to safeguard crypto assets for others as of December 31, 2024 due to the adoption of SEC Staff Accounting Bulletin 122. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management.
The August and September 2023 expiry months continued to be listed for trading through their regular last trading days, which were August 24 and September 28, 2023 respectively. No material revenues associated with the Triparty Agreement were recognized during the years ended December 31, 2024 and December 31, 2023, respectively.
The August and September 2023 expiry months continued to be listed for trading through their regular last trading days, which were August 24 and September 28, 2023 respectively. No material revenues associated with the Triparty Agreement were recognized during the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively.
We will not issue additional shares of Class V common stock, other than in connection with the valid issuance or transfer of Opco common units in accordance with Opco’s Third Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”).
The Company will not issue additional shares of Class V common stock, other than in connection with the valid issuance or transfer of Opco common units in accordance with Opco’s Third Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”).
Our realizability of our deferred tax assets, in each jurisdiction, is dependent upon the generation of future taxable income sufficient to utilize the deferred tax assets on income tax returns, including the reversal of existing temporary differences, historical and projected operating results and tax planning strategies.
The realizability of the deferred tax assets, in each jurisdiction, is dependent upon the generation of future taxable income sufficient to utilize the deferred tax assets on income tax returns, including the reversal of existing temporary differences, historical and projected operating results and tax planning strategies.
Revenue generated by Apex Crypto from the acquisition date through December 31, 2023 was $725.9 million, and is included in the Company's statements of operations. Net loss generated by Apex Crypto from the acquisition date through December 31, 2023 was $39.9 million, and is included in the Company's statements of operations.
Revenue generated by Apex Crypto from the acquisition date through December 31, 2023 was $725.9 million, and is included in the Company's consolidated statements of operations. Net loss generated by Apex Crypto from the acquisition date through December 31, 2023 was $39.9 million, and is included in the Company's consolidated statements of operations.
The Company has no reason to believe it will incur any expense associated with such potential liability because (i) it has no known or historical experience of claims to use as a basis of measurement, (ii) it accounts for and continually verifies the amount of crypto assets within its control, and (iii) it has established security around custodial product private keys to minimize the risk of theft or loss.
The Company has no reason to believe it will incur any expense associated with such potential liability because (i) it has no known or historical experience of claims to use as a basis of measurement, (ii) it accounts for and continually verifies the amount of digital assets within its control, and (iii) it has established security around custodial product private keys to minimize the risk of theft or loss.
The ICE Credit Facility contains customary affirmative and negative covenants, including negative covenants limiting the ability of the Company and its subsidiaries to, among other things, incur debt, grant liens, undergo certain fundamental changes, dispose of assets, make certain restricted payments and prepayments, enter into restrictive agreements, enter into transactions with affiliates, make investments, and amend certain agreements relating to debt, in each case, subject to limitations and exceptions set forth in the ICE Credit Facility.
The ICE Credit Facility contained customary affirmative and negative covenants, including negative covenants limiting the ability of the Company and its subsidiaries to, among other things, incur debt, grant liens, undergo certain fundamental changes, dispose of assets, make certain restricted payments and prepayments, enter into restrictive agreements, enter into transactions with affiliates, make investments, and amend certain agreements relating to debt, in each case, subject to limitations and exceptions set forth in the ICE Credit Facility.
Prior to the second quarter of 2024, our Class 1 Warrants and Class 2 Warrants were valued using the Black-Scholes-Merton model and a Monte Carlo simulation, respectively.
Prior to the second quarter of 2024, the Class 1 Warrants and Class 2 Warrants were valued using the Black-Scholes-Merton model and a Monte Carlo simulation, respectively.
Bakkt Crypto also has money transmitter licenses wherever its business model requires (46 states plus Washington D.C., giving effect to the surrender of duplicative and unneeded licenses following the merger of Bakkt Crypto Solutions and Bakkt Marketplace discussed below) which require it to maintain a minimum tangible net worth.
BFS also has money transmitter licenses wherever its business model requires (46 states plus Washington D.C., giving effect to the surrender of duplicative and unneeded licenses following the merger of Bakkt Crypto Solutions, LLC and Bakkt Marketplace, LLC discussed below) which require it to maintain a minimum tangible net worth.
Cryptocurrency Held on Platform The Company is obligated to securely store crypto assets that it holds for customers, a substantial portion of which are held in cold storage. As such, the Company may be liable to users of its platform for losses arising from the Company’s failure to secure crypto assets from theft or loss.
Cryptocurrency Held on Platform The Company is obligated to securely store digital assets that it holds for customers, a substantial portion of which are held in cold storage. As such, the Company may be liable to users of its platform for losses arising from the Company’s failure to secure digital assets from theft or loss.
The Class 1 Warrants and Class 2 Warrants may each be exercised at any time after the 6 month anniversary of the relevant closing. The Class 2 warrant agreement contains an alternative exercise clause that entitles the holder to exchange two warrants for a share of stock if certain conditions are met.
The Class 1 Warrants and Class 2 Warrants may each be exercised at any time after the six month anniversary of the relevant closing. The Class 2 warrant agreement contains an alternative exercise clause that entitles the holder to exchange two warrants for a share of stock if certain conditions are met.
Dividends Subject to preferences that may be applicable to any outstanding preferred stock, the holders of shares of Class A common stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the Board out of funds legally available therefor. As of December 31, 2024, no dividends have been declared.
Dividends Subject to preferences that may be applicable to any outstanding preferred stock, the holders of shares of Class A common stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the Board out of funds legally available therefor. As of December 31, 2025, no dividends have been declared.
In the qualitative assessment, we may consider factors such as economic conditions, industry and market conditions and developments, overall financial performance and other relevant entity-specific events in determining whether it is more likely than not that the fair value of the reporting unit is less than the carrying amount.
In the qualitative assessment, management may consider factors such as economic conditions, industry and market conditions and developments, overall financial performance and other relevant entity-specific events in determining whether it is more likely than not that the fair value of the reporting unit is less than the carrying amount.
The metrics for PSUs granted during 2024 relate to our performance during fiscal year 2024, as measured against objective performance goals approved by the Board. The actual number of units earned may range from 0% to 150% or 200% of the target number of units depending on the metric and depending upon achievement of the 2024 performance goals.
The metrics for PSUs granted during 2024 relate to the Company’s performance during fiscal year 2024, as measured against objective performance goals approved by the Board. The actual number of units earned may range from 0% to 150% or 200% of the target number of units depending on the metric and depending upon achievement of the 2024 performance goals.
At the Company’s discretion, the Company settled the final tranche of vested participation units in October 2023 by issuing 4,472 shares of Class A common stock in lieu of making cash payments. The units are unvested on the grant date and are subject to the vesting terms in the award agreement.
At the Company’s discretion, the Company settled the final tranche of vested participation units in October 2023 by issuing 4,472 shares of Class A common stock in lieu of making cash payments. The units were unvested on the grant date and were subject to the vesting terms in the award agreement.
Beginning on the 4th anniversary of the date that an incentive unit vests and assuming that Opco had not consummated an IPO or Liquidity Event, the Management Vehicle had the right, but not the obligation, to require Opco to purchase all of the incentive units then held by the Management Vehicle, for a period of four years.
Beginning on the 4th anniversary of the date that an incentive unit vested and assuming that Opco had not consummated an IPO or Liquidity Event, the Management Vehicle had the right, but not the obligation, to require Opco to purchase all of the incentive units then held by the Management Vehicle, for a period of four years.
The warrants issued on April 25, 2024 were valued at $2.6 million using the Black-Scholes-Merton model for Class 1 Warrants and a binomial lattice model for the Class 2 Warrants. Prior to the second quarter of 2024, we used a Monte Carlo simulation to measure the fair value of the Class 2 Warrants.
The warrants issued on April 25, 2024 were valued at $2.6 million using the Black-Scholes-Merton model for Class 1 Warrants and a binomial lattice model for the Class 2 Warrants. Prior to the second quarter of 2024, Bakkt used a Monte Carlo simulation to measure the fair value of the Class 2 Warrants.
During the year ended December 31, 2024, Class 1 and Class 2 warrants exercisable for 288,950 shares of Class A Common Stock were exercised, with substantially all under an alternate cashless exercise, resulting in us issuing 144,675 shares of Class A Common Stock.
During the year ended December 31, 2024, Class 1 and Class 2 warrants exercisable for 288,950 shares of Class A Common Stock were exercised, with substantially all under an alternate cashless exercise, resulting in Bakkt issuing 144,675 shares of Class A Common Stock.
In connection with the VIH Business Combination, the Opco equity holders converted 16,000,000 Opco Class A voting units, 7,698,138 Opco Class B voting units, and 10,810,810 Opco Class C voting units to 7,597,331 shares of Class V common stock on a pro rata basis.
In connection with the referenced business combination, the Opco equity holders converted 16,000,000 Opco Class A voting units, 7,698,138 Opco Class B voting units, and 10,810,810 Opco Class C voting units to 7,597,331 shares of Class V common stock on a pro rata basis.
Our Class A Common Stock began trading on a reverse-split adjusted basis on the New York Stock Exchange (the “NYSE”) as of the open of trading on April 29, 2024. All outstanding warrants and share-based awards were also adjusted on a 1-for-25 basis.
Bakkt’s Class A Common Stock began trading on a reverse-split adjusted basis on the New York Stock Exchange (the “NYSE”) as of the open of trading on April 29, 2024. All outstanding warrants and share-based awards were also adjusted on a 1-for-25 basis.
Restrictions In the event that any outstanding share of Class V common stock ceases to be held directly or indirectly by a holder of Opco common units, such share will automatically be transferred to us and cancelled for no consideration.
Restrictions In the event that any outstanding share of Class V common stock ceases to be held directly or indirectly by a holder of Opco common units, such share will automatically be transferred to Bakkt and cancelled for no consideration.
Approximately $2.4 million of proceeds from the ICE Offering were received concurrently with the closing of the Third-Party Offering, with the remaining $7.4 million received in a subsequent closing of the ICE Offering on April 25, 2024 after we obtained stockholder approval for such issuance.
Approximately $2.4 million of proceeds from the ICE Offering were received concurrently with the closing of the Third-Party Offering, with the remaining $7.4 million received in a subsequent closing of the ICE Offering on April 25, 2024 after Bakkt obtained stockholder approval for such issuance.
The Lease Assignment was contingent upon the landlord’s consent. In January 2025, the Company signed an Assignment and Assumption of Lease with Landlord’s Consent for the New York office lease, which provided the landlord’s consent to the Lease Assignment. The Company is joint and severally liable with the third-party assignee for the obligations under the New York office lease.
The Lease Assignment was contingent upon the landlord’s consent. In January 2025, the Company signed an Assignment and Assumption of Lease with Landlord’s Consent for the New York office lease, which provided the landlord’s consent to the Lease Assignment. The Company is jointly and severally liable with the third-party assignee for the obligations under the New York office lease.
For those uncertain tax positions that are recognized in the consolidated financial statements, liabilities are established to reflect the portion of those positions where the Company cannot conclude “more-likely-than-not” to be realized upon ultimate settlement. The Company had no unrecognized tax benefits or related interest and penalties accrued as of both December 31, 2024 and December 31, 2023. 16.
For those uncertain tax positions that are recognized in the consolidated financial statements, liabilities are established to reflect the portion of those positions where the Company cannot conclude “more-likely-than-not” to be realized upon ultimate settlement. The Company had no unrecognized tax benefits or related interest and penalties accrued as of both December 31, 2025 and December 31, 2024.
Borrowings under the ICE Credit Facility accrue interest at a rate equal to, at Opco’s election, either the secured overnight financing rate (“SOFR”) for a term of one, three or six months plus 12%, or the prime rate plus 11%.
Borrowings under the ICE Credit Facility accrued interest at a rate equal to, at Opco’s election, either the secured overnight financing rate (“SOFR”) for a term of one, three or six months plus 12%, or the prime rate plus 11%.
The acquired developed technology was valued using a relief from royalty method. Acquired crypto safeguarding asset and obligation were valued based on the midpoint of a bid-ask spread as of the acquisition date (level 2 inputs). Other assets and liabilities were carried over at their acquired costs which was not materially different than their fair values.
The acquired developed -130- Table of Contents technology was valued using a relief from royalty method. Acquired crypto safeguarding asset and obligation were valued based on the midpoint of a bid-ask spread as of the acquisition date (level 2 inputs). Other assets and liabilities were carried over at their acquired costs which was not materially different than their fair values.
The DCF model reflected the Company’s assumptions regarding revenue growth rates, forecast earnings before interest, taxes, depreciation, and amortization (“EBITDA”) margins (and thus operating expenses), capital expenditures, discount rates (including the company-specific risk premium assumption), terminal period growth rates, economic and market trends, and other expectations about the anticipated operating results of its reporting unit.
The DCF model reflected the -132- Table of Contents Company’s assumptions regarding revenue growth rates, forecast earnings before interest, taxes, depreciation, and amortization (“EBITDA”) margins (and thus operating expenses), capital expenditures, discount rates (including the company-specific risk premium assumption), terminal period growth rates, economic and market trends, and other expectations about the anticipated operating results of its reporting unit.
For states that have not adopted the MMTMA, Bakkt Crypto is required to maintain tangible net worth of a minimum amount, plus the amount of customer funds held in transit. In March 2024, we received approval from NYDFS to merge, and have since merged, Bakkt Crypto Solutions and Bakkt Marketplace into one legal entity, now referred to as Bakkt Crypto.
For states that have not adopted the MMTMA, BFS is required to maintain tangible net worth of a minimum amount, plus the amount of customer funds held in transit. In March 2024, Bakkt received approval from NYDFS to merge, and have since merged, Bakkt Crypto Solutions, LLC and Bakkt Marketplace, LLC into one legal entity, now referred to as BFS.
PSUs granted in 2024 vest in two equal annual installments from 2025 to 2026. The metrics for PSUs granted during 2023 relate to our performance during fiscal year 2023, as measured against objective performance goals approved by the Board.
PSUs granted in 2024 vest in two equal annual installments from 2025 to 2026. The metrics for PSUs granted during 2023 relate to Bakkt’s performance during fiscal year 2023, as measured against objective performance goals approved by the Board.
For the period beginning March 31 through June 29, 2025, Opco can borrow up to an aggregate principal amount (excluding any capitalized interest) of $20.0 million. From the period beginning June 30 through September 29, 2025, Opco can borrow up to an aggregate principal amount (excluding any capitalized interest) of $30.0 million.
For the period beginning March 31 through June 29, 2025, Opco could borrow up to an aggregate principal amount (excluding any capitalized interest) of $20.0 million. From the period beginning June 30 through September 29, 2025, Opco could borrow up to an aggregate principal amount (excluding any capitalized interest) of $30.0 million.
Under certain circumstances, a default interest rate will apply on all obligations during the existence of an event of default under the ICE Credit Facility at a per annum rate equal to 2% above the otherwise applicable interest rate.
Under certain circumstances, a default interest rate would apply on all obligations during the existence of an event of default under the ICE Credit Facility at a per annum rate equal to 2% above the otherwise applicable interest rate.
Trading: Bakkt Crypto offers customers the ability to purchase or sell certain crypto on its platform. Bakkt Crypto partners with a number of liquidity providers to provide customers with immediate liquidity and access to crypto. Bakkt Crypto settles with the liquidity partners on a daily basis.
Trading: BFS offers customers the ability to purchase or sell certain crypto on its platform. BFS partners with a number of liquidity providers to provide customers with immediate liquidity and access to crypto. BFS settles with the liquidity partners on a daily basis.
During the year ended December 31, 2024, we issued 301 shares of Class A common stock in exchange for the exercise of Public Warrants and received an immaterial amount in proceeds from the exercise of the Public Warrants.
During the year ended December 31, 2024, Bakkt issued 301 shares of Class A common stock in exchange for the exercise of Public Warrants and received an immaterial amount in proceeds from the exercise of the Public Warrants.
Holders of Paired Interests became eligible on April 16, 2022 under the Exchange Agreement to exchange their Paired Interests for Class A common stock, or, at our election, cash in lieu thereof.
Holders of Paired Interests became eligible on April 16, 2022 under the Exchange Agreement to exchange their Paired Interests for Class A common stock, or, at Bakkt’s election, cash in lieu thereof.
A significant input to the Monte Carlo simulation included the volatility of movement in the price of the stock underlying the warrants, which was estimated using the historical volatility of our Class A Common Stock over the contractual period of the warrant.
A significant input to the Monte Carlo simulation included the volatility of movement in the price of the stock underlying the warrants, which was estimated using the historical volatility of the Company’s Class A Common Stock over the contractual period of the warrant.
In addition, we may pay up to $100.0 million of our Class A common stock as additional consideration depending on Apex Crypto’s achievement of certain financial targets through 2025 (the “contingent consideration”). As part of the purchase price allocation the value of the contingent consideration was estimated to be $2.9 million.
In addition, the Company may pay up to $100.0 million of Class A common stock as additional consideration depending on Apex Crypto’s achievement of certain financial targets through 2025 (the “contingent consideration”). As part of the purchase price allocation the value of the contingent consideration was estimated to be $2.9 million.
Leases with an initial term of 12 months or less are not recorded on the balance sheet and the lease expense for these leases is recognized on a straight-line basis over the lease term. -123- Table of Contents The lease liability for each lease is recognized as the present value of the lease payments not yet paid at the commencement date.
Leases with an initial term of 12 months or less are not recorded on the balance sheet and the lease expense for these leases is recognized on a straight-line basis over the lease term. The lease liability for each lease is recognized as the present value of the lease payments not yet paid at the commencement date.
Warrants As of December 31, 2024 and December 31, 2023, there were 7,140,483 and 7,140,808 warrants to purchase Class A Common Stock (“Public Warrants”) outstanding, respectively. The Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of a Public Warrant.
Warrants As of December 31, 2025 and December 31, 2024, there were 7,140,483 and 7,140,483 warrants, respectively to purchase Class A Common Stock (“Public Warrants”) outstanding, respectively. The Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of a Public Warrant.
Because participation units have historically been settled in cash at the Company’s discretion, the Company classified participation units as liability awards on its consolidated balance sheets as of December 31, 2023.
Because participation units had historically been settled in cash at the Company’s discretion, the Company classified participation units as liability awards on its consolidated balance sheets as of December 31, 2023.
If the initial accounting for the business combination has not been completed by the end of the reporting period in which the business combination occurs, provisional amounts are reported to present information about facts and -124- Table of Contents circumstances that existed as of the acquisition date.
If the initial accounting for the business combination has not been completed by the end of the reporting period in which the business combination occurs, provisional amounts are reported to present information about facts and circumstances that existed as of the acquisition date.
ASC 820 establishes a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable and proscribes the following fair value hierarchy in determining fair values: Level 1 — Quoted prices for identical assets or liabilities in active markets.
GAAP establishes a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable and proscribes the following fair value hierarchy in determining fair values: Level 1 — Quoted prices for identical assets or liabilities in active markets.
For any interest period for which Opco has elected to pay interest in kind, the applicable margin on the outstanding loans will increase by 1% per annum.
For any interest period for which Opco has elected to pay interest in kind, the applicable margin on the outstanding loans would increase by 1% per annum.
The Company has not incurred any losses related to such an obligation and therefore has not accrued a liability for losses as of December 31, 2024 and 2023.
The Company has not incurred any losses related to such an obligation and therefore has not accrued a liability for losses as of December 31, 2025 and 2024.
Interest is payable quarterly in arrears with respect to borrowings bearing interest at the prime rate or on the last day of an interest period, but at least every three months, with respect to borrowings bearing interest at the term SOFR rate; provided, that Opco can elect to pay interest in kind by adding such interest amount to the principal amount of the outstanding borrowings under the ICE Credit Facility.
Interest was payable quarterly in arrears with respect to borrowings bearing interest at the prime rate or on the last day of an interest period, but at least every three months, with respect to borrowings bearing interest at the term SOFR rate; provided, that Opco could elect to pay interest in kind by adding such interest amount to the principal amount of the outstanding borrowings under the ICE Credit Facility.
Additionally, we issued 698,934 shares of Class V common stock related to the outstanding Opco incentive units. In connection with the VIH Business Combination, Class C warrants of Opco (“Class C Warrants”) automatically converted into the right to purchase 31,734 Paired Interests in Opco at an exercise price of $126.00 per Paired Interest.
Additionally, Bakkt issued 698,934 shares of Class V common stock related to the outstanding Opco incentive units. In connection with the referenced business combination, Class C warrants of Opco (“Class C Warrants”) automatically converted into the right to purchase 31,734 Paired Interests in Opco at an exercise price of $126.00 per Paired Interest.
Participation units, issued directly by Opco to Opco Plan participants, do not represent an ownership interest in Opco but rather provide Opco Plan participants the contractual right to participate in the value of Opco, if any, through either a cash payment or issuance of Class A common stock upon the occurrence of certain events following vesting of the participation units.
Participation units, issued directly by Opco to Opco Plan participants, did not represent an ownership interest in Opco but rather provided Opco Plan participants the contractual right to participate in the value of Opco, if any, through either a cash payment or issuance of Class A common stock upon the occurrence of certain events following vesting of the participation units.
Any borrowings under the facility made prior to December 31, 2024 require the consent of the Lender in its sole discretion. For the period beginning December 31, 2024 through March 30, 2025, Opco can borrow up to an aggregate principal amount (excluding any capitalized interest) of $10.0 million.
Any borrowings under the facility made prior to December 31, 2024 required the consent of the Lender in its sole discretion. For the period beginning December 31, 2024 through March 30, 2025, Opco could borrow up to an aggregate principal amount (excluding any capitalized interest) of $10.0 million.
Significant judgments in this analysis include the division of long-lived assets into asset groups and cashflow assumptions that are consistent with the inputs used in the income approach for the goodwill impairment analysis.
Significant judgments in these analyses include the division of long-lived assets into asset groups and cashflow assumptions that are consistent with the inputs used in the income approach for the goodwill impairment analysis.
We recognize the lease at its commencement date on the balance sheet as a liability for our obligation related to the lease and a corresponding asset representing our right to use the underlying asset over the period of use.
Bakkt recognize the lease at its commencement date on the balance sheet as a liability for its obligation related to the lease and a corresponding asset representing its right-of-use use of the underlying asset over the period of use.
As of December 31, 2023, we determined the value of the contingent consideration was zero, based on our forward-looking projections and minimum profit requirements associated with the earn-out and reversed the accrual through acquisition expenses. As of December 31, 2024, the value of the contingent consideration continues to be estimated at zero.
As of December 31, 2023 and 2024, management determined the value of the contingent consideration was zero, based on forward-looking projections and minimum profit requirements associated with the earn-out and reversed the accrual through acquisition expenses. As of December 31, 2025, the value of the contingent consideration continues to be estimated at zero.
During the year ended December 31, 2023, we did not issue any shares of Class A common stock in exchange for the exercise of Public Warrants, nor did we receive any proceeds from the exercise of the Public Warrants.
During the year ended December 31, 2023, the Company did not issue any shares of Class A common stock in exchange for the exercise of Public Warrants, nor did it receive any proceeds from the exercise of Public Warrants.
Atlanta, GA March 25, 2024, except for the effects of Staff Accounting Bulletin 122 Accounting for Obligations to Safeguard Crypto-Assets an Entity Holds for its Platform Users, Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, and the Reverse Stock Split completed by the Company on April 29, 2024, all as disclosed in Note 2 as to which the date is March 19, 2025. -112- Table of Contents Bakkt Holdings, Inc.
Atlanta, GA March 25, 2024, except for the effects of Staff Accounting Bulletin 122 Accounting for Obligations to Safeguard Crypto-Assets an Entity Holds for its Platform Users, Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, and the Reverse Stock Split completed by the Company on April 29, 2024, all as disclosed in Note 2 as to which the date is March 19, 2025, and except for the effects of Discontinued Operations, as disclosed in Note 2 as to which the date is December 10, 2025. -106- Table of Contents Bakkt, Inc.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 19, 2025 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 19, 2026 expressed an unqualified opinion.
We intend to use the net proceeds from the Concurrent Offerings for working capital and other general corporate purposes. Preferred Stock We are authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share.
Bakkt intend to use the net proceeds from the Concurrent Offerings for working capital and other general corporate purposes. Preferred Stock Bakkt is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share.
On April 29, 2024, following approval by our stockholders and Board of Directors (the “Board”), we effected a reverse stock split (the “Reverse Stock Split”) of our Class A Common Stock, par value $0.0001 per share (“Class A Common Stock”), and Class V Common Stock, par value $0.0001 per share (“Class V Common Stock” and collectively with the Class A Common Stock, the “Common Stock”), at a ratio of 1-for-25 (the “Reverse Stock Split Ratio”).
On April 29, 2024, following approval by the Company’s stockholders and Board of Directors (the “Board”), Bakkt management effected a reverse stock split (the “Reverse Stock Split”) of the Company’s Class A Common Stock, par value $0.0001 per share (“Class A Common Stock”), and Class V Common Stock, par value $0.0001 per share (“Class V Common Stock” and collectively with the Class A Common Stock, the “Common Stock”), at a ratio of 1-for-25 (the “Reverse Stock Split Ratio”).
Tax Receivable Agreement On October 15, 2021, we entered into a Tax Receivable Agreement (“TRA”) with certain Opco equity holders.
Tax Receivable Agreement On October 15, 2021, Bakkt entered into a Tax Receivable Agreement (“TRA”) with certain Opco equity holders.
In connection with the Concurrent Offerings (Note 10), we issued and sold to the Third-Party Purchasers (as defined below) an aggregate of 1,396,701 shares of the Company’s Class A Common Stock, including 196,701 shares of Class A Common Stock issued upon exercise of certain of the Pre-Funded Warrants (as defined below) prior to the Third-Party Closing, Class 1 Warrants (“Class 1 Warrants”) to purchase an aggregate of 922,722 shares of Class A Common Stock, Class 2 Warrants (“Class 2 Warrants”) to purchase an aggregate of 922,722 shares of Class A Common Stock and Pre-Funded Warrants (“Pre-Funded Warrants”) to purchase an aggregate of 448,742 shares of Class A Common Stock.
In connection with the Concurrent Offerings (Note 12, Stockholders’ Equity ), Bakkt issued and sold to the Third-Party Purchasers (as defined below) an aggregate of 1,396,701 shares of the Company’s Class A Common Stock, including 196,701 shares of Class A Common Stock issued upon exercise of certain of the Pre-Funded Warrants (as defined below) prior to the Third-Party Closing, Class 1 Warrants (“Class 1 Warrants”) to purchase an aggregate of 922,722 shares of Class A Common Stock, Class 2 Warrants (“Class 2 Warrants”) to purchase an aggregate of 922,722 shares of Class A Common Stock and Pre-Funded Warrants (“Pre-Funded Warrants”) to purchase an aggregate of 448,742 shares of Class A Common Stock.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2018.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Ernst & Young LLP We served as the Company’s auditor from 2018 to 2024.
Should we conclude that it is more likely than not that the recorded goodwill and intangible assets amounts have been impaired, we would perform the impairment test.
Should management conclude that it is more likely than not that the recorded goodwill and intangible assets amounts have been impaired, management would perform the quantitative impairment test.
Treasury yield curve in effect on the grant date for securities with similar expected terms to the term of Opco’s incentive units. • Expected dividends – Expected dividends is assumed to be zero as Opco has not paid and does not expect to pay cash dividends or non-liquidating distributions. -151- Table of Contents • Discount for lack of marketability – an estimated two year time to exit certain awards and the six month lock-up restriction on certain awards is reflected as a discount for lack of marketability estimated using the Finnerty model.
Treasury yield curve in effect on the grant date for securities with similar expected terms to the term of Opco’s incentive units. -152- Table of Contents • Expected dividends – Expected dividends was assumed to be zero as Opco had not paid and dids not expect to pay cash dividends or non-liquidating distributions. • Discount for lack of marketability – an estimated two year time to exit certain awards and the six month lock-up restriction on certain awards was reflected as a discount for lack of marketability estimated using the Finnerty model.
Non-forfeited units vest upon the -149- Table of Contents occurrence of a vesting event, as defined in the Opco Plan, subject to time restrictions. The modification to the Opco Plan did not result in additional compensation expense being recognized because the fair value of the units immediately before and after the modification was the same.
Non-forfeited units vested upon the occurrence of a vesting event, as defined in the Opco Plan, subject to time restrictions. The modification to the Opco Plan did not result in additional compensation expense being recognized because the fair value of the units immediately before and after the modification was the same.
Bakkt Crypto holds a New York State virtual currency license (commonly referred to as a "BitLicense"), and money transmitter licenses from all states throughout the U.S. where such licenses are required for the operation of its business and is registered as a money services business with the Financial Crimes Enforcement Network of the United States Department of the Treasury.
BFS holds a New York State virtual currency license (commonly referred to as a "BitLicense"), and money transmitter licenses from all states throughout the United States (“U.S.”) where such licenses are required for the operation of its business and is registered as a money services business with the Financial Crimes Enforcement Network of the United States Department of the Treasury.
Subsequent Events We have evaluated subsequent events and transactions and determined that no events or transactions met the definition of a subsequent event for purpose of recognition or disclosure in these financial statements, other than as described below.
Subsequent Events The Company has evaluated subsequent events and transactions and determined that no events or transactions met the definition of a subsequent event for purpose of recognition or disclosure in these financial statements, other than as described below.
In a concurrent registered direct offering (the “ICE Offering” and, together with the Third-Party Offering, the “Concurrent Offerings”) on February 29, 2024, we entered into a securities purchase agreement with ICE (a related party), pursuant to -144- Table of Contents which we agreed to sell and issue a combination of Class A Common Stock, Class 1 Warrants and Class 2 Warrants.
In a concurrent registered direct offering (the “ICE Offering” and, together with the Third-Party Offering, the “Concurrent Offerings”) on February 29, 2024, Bakkt entered into a securities purchase agreement with ICE (a related party), pursuant to which the Company agreed to sell and issue a combination of Class A Common Stock, Class 1 Warrants and Class 2 Warrants.
The allowance is based upon historical loss patterns, the number of days that billings are past due and, an evaluation of the potential risk of loss associated with delinquent accounts and incorporates the use of forward-looking information over the contractual term of our accounts receivable.
The allowance is based upon historical loss patterns, the number of days that billings are past due and, an evaluation of the potential risk of loss associated with delinquent accounts and incorporates the use of forward-looking information over the -117- Table of Contents contractual term of the Company’s accounts receivable.
We may redeem the outstanding warrants when various conditions are met, such as specific stock prices, as detailed in the specific warrant agreements. The warrants are recorded as a liability and reflected as “Warrant liability” in the consolidated balance sheets.
Bakkt may redeem the outstanding warrants when various conditions are met, such as specific stock prices, as detailed in the specific warrant agreements. The warrants are recorded as a liability and reflected as Warrant liability in the consolidated balance sheets.
Class V Common Stock We are authorized to issue 10,000,000 shares with par value $0.0001 per share. These shares have no economic value but entitle the holder to one vote per share.
Class V Common Stock Bakkt is authorized to issue 10,000,000 shares with par value $0.0001 per share. These shares have no economic value but entitle the holder to one vote per share.
A portion of the units may be subject to vesting upon a liquidity event, initial public offering, or partial exit event, or to the extent any incentive units and participation units remain outstanding and unvested on the date that is the eight-year anniversary of the launch of one of Opco’s services in a production environment, which occurred on September 23, 2019, these remaining units will vest based on the calculated fair market value of Opco as of such date.
A portion of the units could be subject to vesting upon a liquidity event, initial public offering, or partial exit event, or to the extent any incentive units and participation units remained outstanding and unvested on the date that was the eight-year anniversary of the launch of one of Opco’s services in a production environment, which occurred on September 23, 2019, these remaining units would vest based on the calculated fair market value of Opco as of such date.
The DCF model reflected the Company’s assumptions regarding revenue growth rates, forecast earnings before interest, taxes, depreciation, and amortization ("EBITDA"), margins (and thus operating expenses), capital expenditures, discount rates (including the company-specific risk premium assumption), terminal period growth rates, economic and market trends, and other expectations about the anticipated operating results of its reporting unit.
The DCF model reflected the Company’s assumptions regarding revenue growth rates, forecast EBITDA margins (and thus operating expenses), capital expenditures, discount rates (including the company-specific risk premium assumption), terminal period growth rates, economic and market trends, and other expectations about the anticipated operating results of its reporting unit.
For purposes of the TRA, the cash tax savings in income tax will be computed by comparing our actual income tax liability (calculated with certain assumptions) to the amount of such taxes that we would have been required to pay had there been no increase to the tax basis of the assets of Opco as a result of Opco having an election in effect under Section 754 of the Code for each taxable year in which an exchange of Opco common units for Class A common stock occurs and had we not entered into the TRA.
For purposes of the TRA, the cash tax savings in income tax is computed by comparing the Company’s actual income tax liability (calculated with certain assumptions) to the amount of such taxes that Bakkt would have been required to pay had there been no increase to the tax basis of the assets of Opco as a result of Opco having an election in effect under Section 754 of the Code for each taxable year in which an exchange of Opco common units for Class A common stock occurred and had Bakkt not entered into the TRA.
Concurrently, under the terms of the ICE Offering we entered into a securities purchase agreement (the “ICE Purchase Agreement” and, together with the Third-Party Purchase Agreement, the “Purchase Agreements”) with ICE, pursuant to which we issued and sold to ICE an aggregate of 461,361 shares of Class A Common Stock, Class 1 Warrants to purchase an aggregate of 230,680 shares of Class A Common Stock, and Class 2 Warrants to purchase an aggregate of 230,680 shares of Class A Common Stock.
Concurrently, under the terms of the ICE Offering (as defined below) the Company entered into a securities purchase agreement (the “ICE Purchase Agreement” and, together with the Third-Party Purchase Agreement, the “Purchase Agreements”) with ICE, pursuant to which Bakkt issued and sold to ICE an aggregate of 461,361 shares of Class A Common Stock, Class 1 Warrants to purchase an aggregate of 230,680 shares of Class A Common Stock, and Class 2 Warrants to purchase an aggregate of 230,680 shares of Class A Common Stock.
The Triparty Agreement also required Bakkt Trust to make, and, subject to certain limits, to replenish as needed a contribution to ICUS, to be used by ICUS in accordance with the ICUS rules. On September 29, 2023, ICUS returned the Company's $15.2 million contribution, and effective October 2, 2023, the parties terminated the Triparty Agreement. 9.
The Triparty Agreement also required Bakkt Trust to make, and, subject to certain limits, to replenish as needed a contribution to ICUS, to be used by ICUS in accordance with the -141- Table of Contents ICUS rules. On September 29, 2023, ICUS returned the Company's $15.2 million contribution, and effective October 2, 2023, the parties terminated the Triparty Agreement. 11.
Loans under the ICE Credit Facility can be prepaid without penalty, subject to customary breakage costs for loans bearing interest at the term SOFR rate. Amounts repaid under the ICE Credit Facility can be reborrowed prior to the maturity date, subject to certain customary conditions set forth in the ICE Credit Facility.
Loans under the ICE Credit Facility could be prepaid without penalty, subject to customary breakage costs for loans bearing interest at the term SOFR rate. Amounts repaid under the ICE Credit Facility could be re-borrowed prior to the maturity date, subject to certain customary conditions set forth in the ICE Credit Facility.
We also recorded reversal of share-based compensation expense of $1.1 million, $2.0 million, and $1.9 million during the years ended December 31, 2024, December 31, 2023, and December 31, 2022, respectively, for forfeitures, primarily related to executive resignations and the Company's restructuring efforts.
Bakkt also recorded reversal of share-based compensation expense of $—, $1.1 million, and $2.0 million during the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively, for forfeitures, primarily related to executive resignations and the Company's restructuring efforts.
Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
Basis for opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.
We classify as assets or liabilities any equity-linked contracts that (1) require net-cash settlement (including a requirement to net-cash settle the contract if an event occurs and if that event is outside our control) or (2) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement).
Bakkt classifies as assets or liabilities any equity-linked contracts that (1) require net-cash settlement (including a requirement to net-cash settle the contract if an event occurs and if that event is outside its control) or (2) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement).

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