Crypto platform investors sue SPAC execs over accounting

A street indicator for Wall Street is seen in the money district in New York, U.S., November 8, 2021. REUTERS/Brendan McDermid

(Reuters) – Shareholders in cryptocurrency system Bakkt Holdings Inc sued the financial commitment administrators who took the corporation public by means of a blank check corporation, alleging they misled buyers by improperly classifying shares.

An investor submitted the lawsuit in Brooklyn on Thursday against Bakkt and 5 individuals connected with Chicago-based Victory Park Funds Advisors. The Chicago-based expense supervisor sponsored the unique intent acquisition company (SPAC) that took the enterprise community very last calendar year in a offer that valued Bakkt at $2.1 billion.

A Bakkt spokesperson mentioned the corporation intends to vigorously protect alone. A spokesperson for Victory Park Funds declined to remark.

SPACs are shell companies that raise money by means of a community featuring and request to merge with a private target within just two many years. Shareholders have the option to funds out before the merger which will take the firm general public.

The lawsuit alleges administrators and officers at the SPAC, VPC Influence Acquisition Holdings, concealed faulty economic controls that caused shares to be misclassified and resulted in Bakkt restating its financials in November.

The restatements came immediately after Reuters claimed the U.S. Securities and Trade Commission experienced tightened SPAC accounting benchmarks, directing auditors to rely redeemable shares as short term, relatively than long term, equity.

Bakkt claimed in general public filings previous year that its restatement arrived right after its auditor talked with the SEC about the regulator’s “evolving positions” on SPAC accounting.

The SPAC current market attained a high watermark very last yr, when 613 listings elevated a complete of $145 billion, according to Nasdaq. The frenzy led to a boom in lawsuits by SPAC buyers.

Victory Park Capital has sponsored 3 fintech-targeted SPACs. One particular blended with Dave Inc, a banking app backed by billionaire Mark Cuban, previous 12 months. An additional scrapped its proposed merger with acquire now, pay out later system Kredivo previous thirty day period, citing unfavorable sector problems.

The case is Poirier v. Bakkt Holdings Inc, No. 1:22-cv-02283, U.S. District Courtroom, Japanese District of New York.

For investors: Jeremy Lieberman of Pomerantz

Read extra:

Crypto exchange Bakkt to go public via $2.1-bln deal with blank-verify firm

Unique U.S. SEC cracks down a next time on SPAC fairness accounting treatment method – sources

SPACs under the microscope as lawsuits mount

Mark Cuban-backed banking application Dave to go public in $4 bln SPAC merger

Lending system Kredivo scraps $2.5 billion SPAC offer

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