Company: ORBS
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001493152-25-023549
Chunk: 229

Company: Eightco Holdings Inc.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part II, Item 1A
Chunk 229
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 threats.

From
time to time, we may generate income through the use of digital assets including WLD or stablecoins in decentralized protocols including
decentralized finance (“DeFi”) applications. DeFi applications include over-collateralized borrow-lend vaults, token-exchange
pools, and other financial or commercial arrangements. Although these protocols are largely designed to limit counterparty risk in transactions,
they introduce novel risks relating to software code bugs, liquidation risks, and governance risks that are designed to operate in decentralized
environments but can be subject to failures or exploits. In addition: (a) network congestion or downtime can increase the likelihood
of asset loss or liquidation; (b) the volatility of digital assets deployed into DeFi applications may increase the likelihood of liquidation
due to market downturns, liquidity crises, governance attacks or other exploits, leading to substantial financial losses; (c) the uncertainty
in the accounting treatment of certain DeFi applications; (d) DeFi applications generally operate on a user-to-protocol basis where a
user of a DeFi application does not know the identity of other parties utilizing the DeFi application; and (e) the use of monitoring
and forensics software to mitigate risks of engaging in DeFi application may not prevent engaging in DeFi pools that are also used by
bad actors.

42

The
Company will face risks relating to the custody of its digital assets. If we or our third-party service providers experience a security
breach or cyberattack and unauthorized parties obtain access to our private keys, or if our private keys are lost or destroyed, or other
similar circumstances or events occur, we may lose some or all of our digital assets and our financial condition and results of operations
could be materially adversely affected.

We
expect our primary counterparty risk with respect to our WLD will be custodian performance obligations under the custody arrangements
we have entered into. A series of recent high-profile bankruptcies, closures, liquidations, regulatory enforcement actions and other
events relating to companies operating in the digital asset industry, the closure or liquidation of certain financial institutions that
provided lending and other services to the digital assets industry, SEC enforcement actions against other providers, or placement into
receivership or civil fraud lawsuit against digital asset industry participants have highlighted the perceived and actual counterparty
risk applicable to digital asset ownership and trading. Legal precedent created in these bankruptcy and other proceedings may increase
the risk of future rulings adverse to our interests in the event one