Company: FLDDW
Filing Date: 2025-01-14
Form Type: S-4/A
Source: 0001213900-25-003167
Chunk: 368

Company: Fold Holdings, Inc.
Filing Date: 2025-01-14
Form: S-4/A
Chunk 368
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 partnering with regulated qualified custodians who use secure cold storage to store materially all of the bitcoin held for other parties. Assets held at BitGo are also covered as part of a $250.0 million digital asset insurance policy provided via a third -party, although BitGo is not required to reimburse us or our customers for losses under this policy. Staff Accounting Bulletin No. 121 (“SAB 121”) asks us to consider the legal ownership of the bitcoin held for other parties, including whether the bitcoin held for other parties would be available to satisfy general creditor claims in the event of Fold’s bankruptcy. The legal rights of people with respect to digital assets held on their behalf by a custodian, such as those we partner with, upon the custodian’s bankruptcy have not yet been settled by courts and are highly fact dependent. Our contractual arrangements with our Bitcoin Service Providers state that our customers and trading partners retain legal ownership of the bitcoin custodied by our partners on their behalf; that they have the 228 right to sell, pledge, or transfer the bitcoin; and that they also benefit from the rewards and bear the risks associated with the ownership, including as a result of any bitcoin price fluctuations. We do not use any of the bitcoin held for other parties as collateral for loans or any other financing arrangements, nor do we lend or pledge bitcoin held for others to any third parties. We have been monitoring and will continue to actively monitor legal and regulatory developments and may consider further steps, as appropriate, to support this contractual position so that in the event of Fold’s bankruptcy or the bankruptcy of one of our Bitcoin Service Providers, the bitcoin custodied by our partners should not be deemed to be part of Fold’s bankruptcy estate. We do not expect potential future cash flows associated with the bitcoin safeguarding obligation liability. Critical accounting estimates Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with GAAP. GAAP requires us to make certain estimates and judgments that affect the amounts reported in our financial statements. We base our estimates on historical experience, anticipated future trends, and other assumptions we believe to be reasonable under the circumstances. Because these accounting estimates require significant judgment, our actual results may differ materially from our estimates. According to the U.S. Securities and Exchange Commission (SEC), a “critical accounting estimate” is defined as an estimate that meets two criteria: 1.Material impact:The accounting estimate must involve a significant degree of estimation uncertainty and have a material impact on the financial condition or operating