Company: CRCL
Filing Date: 2025-08-12
Form Type: S-1
Source: 0001193125-25-178989
Chunk: 177

Company: Circle Internet Group, Inc.
Filing Date: 2025-08-12
Form: S-1
Chunk 177
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 only on the best information available at the time. As additional information becomes available, we reassess the potential liability related to pending claims, litigation, or other violations and may revise our estimates. Due to the inherent uncertainties of the legal and regulatory process in the multiple jurisdictions in which we operate, our judgments may differ materially from the actual outcomes.**

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Convertible debt We have elected the fair value option for our convertible debt. We believe the estimate of fair value of these financial instruments requires significant judgment. We measured the fair value of our convertible debt using the probability weighted “as converted” model, which uses both observable and unobservable inputs and reflects our best estimates of the assumptions a market participant would use to calculate fair value. The significant unobservable inputs used include, but are not limited to:

| • |     | timing and probability of liquidity and other events; |

| • |     | discount rate; and |

| • |     | fair value of the underlying stock. |

Under the fair value election, changes in fair value of convertible debt are reported as Other income (expense), net in the consolidated statements of operations in each reporting period subsequent to the issuance. In the future, depending on the valuation approaches used and the expected timing and weighting of each, the inputs described above, or other inputs, may have a greater or lesser impact on our estimates of fair value. These inputs are based on historical performance of loans facilitated through our platform, as well as the consideration of market participant requirements. See Note 2 and Note 11 to our audited consolidated financial statements and Note 2 and Note 10 to our unaudited condensed consolidated financial statements included elsewhere in this prospectus for further information regarding the fair value measurements of convertible debt. Quantitative and qualitative disclosures about market risk Interest rate risk Our results of operations are exposed to changes in interest rates, among other macroeconomic conditions. Interest rate risk is highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations, and other factors beyond our control. Fluctuations in interest rates impact reserve return rates, such that a decrease in interest rates reduces reserve return rates and an increase in interest rates increases reserve return rates. Reserve return rate is a contributing factor to reserve income which in turn is a contributor to distribution and transaction costs. As such, fluctuations in interest rates may result in changes in reserve income and in turn distribution costs. However, interest rates are only one contributor to reserve income, and the other—USDC in