Pomerantz Appointed Co-Lead Counsel in Bakkt Holdings Securities Litigation

On August 3, 2022, U.S. Magistrate Judge Peggy Kuo of the Eastern District of New York appointed Pomerantz LLP as Co-Lead Counsel on behalf of Tse Winston Wing Kuen and James Liner – the Co-Lead Plaintiffs – with others, and the class, in Poirier v. Bakkt Holdings, Inc., 22-cv-2283 (E.D.N.Y.). This securities action alleges that Bakkt Holdings, Inc. ("Bakkt" or the "Company") f/k/a VPC Impact Acquisition Holdings (“VIH”) misled the market through faulty financial controls and reporting.

Bakkt is a digital asset platform that enables business and retail customers to manage payments and buy, sell, spend and redeem digital financial assets, including cryptocurrencies and loyalty rewards. The Company was formed as the result of a merger (the “Business Combination”) between VIH – a special purpose acquisition company (SPAC) – and Bakkt Holdings, LLC (“Legacy Bakkt”), first announced in January 2021 and eventually completed in October 2021.

Specifically, the complaint alleges that Bakkt made materially false and misleading statements or failed to disclose that: (i) the Company had defective financial controls; (ii) as a result, there were errors in Bakkt’s financial statements related to the misclassification of certain shares issued prior to the Business Combination; (iii) accordingly, the Company would need to restate certain of its financial statements; (iv) Bakkt downplayed the true scope and severity of these issues; and (v) the Company overstated its remediation of its defective financial controls.

On May 17, 2021, Bakkt notified the Securities and Exchange Commission (the “SEC”) of its inability to timely file its quarterly report for the quarter ended March 31, 2021. Specifically, the Company advised that, as a result of a statement issued by the SEC, “the Company reevaluated the accounting treatment of its public warrants and private placement warrants” and “is currently determining the extent of the SEC Statement’s impact on its financial statements[.]”

On this news, Bakkt’s share price fell 1.2%.

Then, on October 13, 2021, Bakkt disclosed in an SEC filing that it had failed to properly account for the classification of its Class A ordinary shares and “adjust[ed] . . . the initial carrying value of the Class A ordinary shares subject to possible redemption with the offset recorded to additional paid-in capital (to the extent available), accumulated deficit and Class A ordinary shares.” Notably, the Company revised its balance sheet as of December 31, 2020, including, among other changes, additional paid-in capital that was reduced from approximately $9.8 million to nil, an accumulated deficit that ballooned from $4.8 million to $29.2 million and total shareholders’ equity of $5 million that swung to a total shareholders’ deficit of $29.2 million.

On this news, Bakkt’s share price fell a further 4.7%.

Finally, on November 22, 2021, Bakkt disclosed that it had the Company’s management re-evaluated the accounting classification of its Class A ordinary shares of VIH and identified errors in the historical financial statements related to this misclassification prior to the Business Combination. Specifically, the Company found that, as a result of errors in its condensed consolidated financial statements for the year ended December 31, 2020, and the quarterly periods ended March 31, 2021, June 30, 2021, and September 30, 2021, Bakkt would need to “restate certain of VIH’s condensed consolidated financial statements from” those periods.

On this news, Bakkt’s share price fell approximately 13.7%.