Company: FLDDW
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001013762-25-004107
Chunk: 40

Company: Fold Holdings, Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1
Chunk 40
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 this
sub-custodial arrangement, Fortress sends Fold customer funds to an omnibus BitGo cold storage wallet that is dedicated to Fold customer
assets. Those funds are not commingled with Fold’s proprietary Bitcoin, BitGo’s other customers, or BitGo itself. BitGo controls
the keys to this wallet. 100% of this Bitcoin is held in cold storage.

As of December 31, 2024, 1% of Fold customer Bitcoin was held directly
at Fortress, 22% was held directly at BitGo, and 77% was held at BitGo in a sub-custodial capacity for Fortress.

We hold cash at Sutton Bank in accounts designated
as for the benefit of our customers. We have also entered into partnerships with third parties where our partners receive and hold customer
funds. Our customers open accounts directly with Fortress and/or BitGo to custody their Bitcoin and receive other Bitcoin-related services,
and directly with Sutton Bank to hold cash and receive other fiat-related services. Our and our financial partners’ abilities to
accurately hold customer cash and Bitcoin, as well as cash and Bitcoin we hold for our own investment and operating purposes, requires
a high level of internal controls. We are limited in our ability to influence or manage the controls and processes of third party partners
or vendors and may be dependent on our partners’ and vendors’ operations, liquidity and financial condition to manage these
risks. As we maintain, grow and expand our product and services offerings we also must scale and strengthen our internal controls and
processes, and monitor our third party partners’ and vendors’ ability to similarly scale and strengthen. Failure to do so
could adversely impact our business, operating results, and financial condition. This is important both to the actual controls and processes
and the public perception of the same.

26

Any material failure by us or our partners to maintain
the necessary controls, policies, procedures or to manage the Bitcoin or cash we hold for our own investment and operating purposes could
also adversely impact our business, operating results, and financial condition. Further, any material failure by us or our partners to
maintain the necessary controls or to manage customer Bitcoin and funds appropriately and in compliance with applicable regulatory requirements
could result in reputational harm, litigation, regulatory enforcement actions, significant financial losses, lead customers to discontinue
or reduce their use of our and our partners’ products, and result in significant penalties and fines and additional restrictions,
which could adversely impact our business, operating results,