Company: FLDDW
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001013762-25-004107
Chunk: 43

Company: Fold Holdings, Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1
Chunk 43
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 Bitcoin. In addition, if any of our customers’ Bitcoin
is lost, we may choose, or in some cases we may be required to, reimburse our customers for their losses, which could subject us to significant
financial losses in addition to losing customer trust in us and our products. As such, any loss of private keys due to a hack, employee
or service provider misconduct or error, or other compromise by third parties could hurt our brand and reputation, result in significant
losses, and adversely impact our business.

We believe this risk is remote because the majority
of the Bitcoin held on behalf of our customers is retained in multi-signature “cold storage” wallets, which means that the
related private keys are not held on a computer system that is connected to the internet. Multi-signature cold storage wallets are intended
to keep the Bitcoin as secure as possible by requiring multiple keys to authorize a transaction while also providing redundancy in the
event that one of the private keys is lost. In the event that a private key is lost, the remaining keys in the multi-signature wallet
can be used to regenerate a new key.

With regards to Bitcoin held on behalf of our customers, approximately
95% is retained in multi-signature cold storage wallets at any given time, while the remaining assets are held in hot wallets used to
facilitate customer withdrawals and other real-time operational needs.

Our digital asset custody partners’ security
technology is designed to prevent, detect, and mitigate inappropriate access to their systems, by internal or external threats. We believe
our digital asset custody partners have developed and maintained administrative, technical, and physical safeguards designed to comply
with applicable legal requirements and industry standards. However, it is nevertheless possible that hackers, employees or service providers
acting contrary to those policies, or others could circumvent these safeguards to improperly access the systems or documents of our business
partners, agents, or service providers, and improperly access, obtain, or misuse customer crypto assets and funds. The methods used to
obtain unauthorized access, disable, or degrade service or sabotage systems are also constantly changing and evolving and may be difficult
to anticipate or detect for long periods of time. Additionally, transactions undertaken through our websites or other electronic channels
may create risks of fraud, hacking, unauthorized access or acquisition, and other deceptive practices. Any security incident resulting
in a compromise of customer assets could result in substantial costs to us and require us to notify impacted individuals, and in some
cases regulators, of a possible or actual incident