Company: FLDDW
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001013762-25-004107
Chunk: 242

Company: Fold Holdings, Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1A
Chunk 242
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 or our customers at one of the Bitcoin Service Providers
may be considered to be the property of a bankruptcy estate, in the event of a bankruptcy of one of the Bitcoin Service Providers. In
addition, Bitcoin held on behalf of our customers could also be considered part of our own bankruptcy estate if we were to become insolvent.

Bitcoin held in segregated wallets, such as our proprietary bitcoin
that is held by BitGo, could be viewed as less of a risk in an insolvency proceeding of the relevant Bitcoin Service Provider. This is
because it is possible to clearly identify the assets to which we have title, as opposed to where assets are commingled with those of
other holders. Bitcoin that we hold in self-custody is also stored in a separate m-of-n wallet for which we control the majority of the
private keys. We are able to directly confirm the contents of this self-custody wallet.

However, our Bitcoin Service Providers do not currently
offer segregated wallet services to our customers. This may cause our customers to view our bitcoin-related services as more risky compared
to other types of bitcoin products and services, and may cause our customers to withdraw bitcoin from the wallet services we provide through
the Bitcoin service providers.

If custodially-held bitcoin is determined to be
the property of a Bitcoin Service Provider’s bankruptcy estate, we and our customers could be treated as a general unsecured creditor
of such custodians, inhibiting our and our customers’ ability to exercise ownership rights with respect to such bitcoin and potentially
being required to share the value of our Bitcoin with those of other creditors of the Bitcoin Service Provider. In addition, it is possible
that a bankruptcy court would require all Bitcoin and other digital assets held by a custodian to be converted into cash, which could
result in our incurring significant capital gains tax charges. Even if we are able to prevent our and our customers’ bitcoin from
being considered the property of a Bitcoin Service Provider’s bankruptcy estate as part of an insolvency proceeding, it is possible
that we or our customers would still be delayed or may otherwise experience difficulty in accessing bitcoin held by the affected Bitcoin
Service Provider during the pendency of the insolvency proceedings.

Any such outcome could have a material adverse effect
on our financial condition and the market price of our stock. In addition, even if our Bitcoin Service Providers themselves do not become
insolvent, a series of insolvencies of high-profile custodians such as occurred in 2022 could result