Company: DDC
Filing Date: 2025-08-05
Form Type: F-3/A
Source: 0001213900-25-072059
Chunk: 21

Company: DDC Enterprise Ltd
Filing Date: 2025-08-05
Form: F-3/A
Chunk 21
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 bitcoin or other digital assets as treasury reserve assets, private
funds that invest in bitcoin and other digital assets, and similar vehicles. An increase in the competition for sources of capital could
adversely affect the availability and cost of financing for our bitcoin purchases, and thereby could adversely affect the market price
of our listed securities.

We hold substantially all of our bitcoin in custody
accounts at U.S.-based, institutional-grade custodians that have demonstrated records of regulatory compliance and information security.
As a result, the primary counterparty risk we are exposed to with respect to our bitcoin is performance obligations under the various
custody arrangements into which we have entered. We custody our bitcoin across multiple custodians to diversify our potential risk exposure
to any one custodian. Our custodial services contracts do not restrict our ability to reallocate our bitcoin among our custodians, and
our bitcoin holdings may be concentrated with a single custodian from time to time. In light of the significant amount of bitcoin we hold,
we continually seek to engage additional digital asset custodians to further diversify the custody of our bitcoin.

We carefully select the custodians that custody
our bitcoin after undertaking a due diligence process. As part of our custodian selection process, we evaluate and select custodians that
can demonstrate that they operate with strict security protocols, including multifactor authentication procedures designed to safekeep
our bitcoin. In addition, our custodial services agreements generally specify that the private keys that control our bitcoin will be held
in offline or “cold” storage, which is designed to mitigate risks that a system may be susceptible to when connected to the
internet, including the risks associated with unauthorized network access and cyberattacks. We also negotiate liability provisions in
our custodial contracts, pursuant to which our custodians are held liable for their failure to safekeep our bitcoin. In addition to our
custodial arrangements, we also utilize affiliates of our bitcoin custodians to execute bitcoin acquisition and disposition transactions
on our behalf. We leverage the due diligence we conduct in connection with our custodial arrangements when conducting due diligence of
these trade execution service providers.

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We also conduct due diligence reviews during the
custodial relationship to monitor the safekeeping of our bitcoin. As part of our process, we obtain and review our custodians’ Services
Organization Controls reports. We are also contractually entitled to review our custodians’ relevant internal controls through a
variety of methods