Company: FLDDW
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001013762-25-004107
Chunk: 2

Company: Fold Holdings, Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1
Chunk 2
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 chargebacks, returns, refunds, or other circumstances. In addition, rewards are subject
to expiry if users fail to maintain an active account for more than twelve consecutive months.

A user may redeem rewards by making a request
to withdraw them to a personal bitcoin wallet, either to an external bitcoin wallet or to a user’s bitcoin wallet at the qualified
custodians used by Fold. Users can initiate a redemption request at any time, but redemption requests are fulfilled by Fold approximately
once per week as a batch fulfilment. To fulfill rewards withdrawal requests Fold sends bitcoin from our Rewards Treasury to the user’s
bitcoin wallet address, which they provide during their redemption request. In the future, Fold may offer the ability for users to redeem
their rewards for other goods and services but has no immediate plans to do so.

Customer rewards are valued in bitcoin as of the date the rewards are
earned, and therefore we try to match the cost basis of those rewards with the cost basis of our Rewards Treasury. To do so, Fold typically
purchases bitcoin once per day in an amount that approximates the amount of rewards earned by customers on that day. Our goal
is to always maintain an amount of bitcoin in our Rewards Treasury equal to or greater than our customer rewards obligations. We monitor
the balances of our Rewards Treasury and customer rewards obligations on a daily basis to ensure that we have appropriate reserves to
fulfill customer obligations.  In the event that the balance of our Rewards Treasury were to fall below the balance of our corresponding
customer rewards liability, Fold may utilize excess bitcoin reserves from our Investment Treasury to fulfill customer liabilities. Fold
purchases bitcoin for our Investment Treasury on an intermittent basis when we have available discretionary cash balances to do so.

Custody & Trading

Fold partners with Fortress Trust LLC, a Nevada-chartered
trust company (“Fortress”), and BitGo Trust Company, Inc., a South Dakota-chartered trust company (“BitGo”) (collectively,
the “Bitcoin Service Providers”), to offer eligible customers the ability to buy, sell, store, and withdraw Bitcoin through
Fold. These Bitcoin Service Providers are both qualified custodians, meaning they are qualified under applicable state banking, payments
or trust laws to custody digital assets, that offer institutional-grade custody, liquidity, and security solutions for digital assets,
specializing in multi-signature wallets and cold storage services for bitcoin. Additional information with respect to the Bitcoin Service
Providers’ respective qualifications under applicable law can be found online at https://