Company: HODL
Filing Date: 2025-11-13
Form Type: 10-Q
Source: 0000930413-25-003438
Chunk: 125

Company: VanEck Bitcoin ETF
Filing Date: 2025-11-13
Form: 10-Q
Item: Part I, Item 3
Chunk 125
---
 artificial rather than genuine demand for bitcoin, thereby
artificially inflating the price of bitcoin. On February 17, 2021, the New York Attorney General entered

22

into an agreement with Tether’s operators, requiring them to cease
any further trading activity with New York persons and pay $18.5 million in penalties for false and misleading statements made
regarding the assets backing Tether. On October 15, 2021, the CFTC announced a settlement with Tether’s operators in which
they agreed to pay $42.5 million in fines to settle charges that, among others, Tether’s claims that it maintained sufficient
U.S. dollar reserves to back every Tether stablecoin in circulation with the “equivalent amount of corresponding fiat currency”
held by Tether were untrue.

USDC is a reserve-backed stablecoin issued by Circle Internet Financial
that is commonly used as a method of payment in digital asset markets, including the bitcoin market. While USDC is designed to
maintain a stable value at one U.S. dollar at all times, on March 10, 2023, the value of USDC fell below $1.00 for multiple days
after Circle Internet Financial disclosed that $3.3 billion of the USDC reserves were held at Silicon Valley Bank, which had entered
FDIC receivership earlier that day. Stablecoins are reliant on the U.S. banking system and U.S. treasuries, and the failure of
either to function normally could impede the function of stablecoins, and therefore could adversely affect the value of the Shares.

Given the foundational role that stablecoins play in global digital
asset markets, their liquidity can have a dramatic impact on the broader digital asset market, including the market for bitcoin.
A significant portion of the digital asset market continues to depend on stablecoins such as Tether and USDC. As such, any disruption
in the operation or perceived stability of these stablecoins such as a disorderly de-pegging event or a loss of market confidence
resulting in a run on reserves could lead to substantial market volatility across digital assets more broadly.

Additional risks such as operational failures (e.g., technical issues
that prevent settlement), concerns regarding the adequacy or transparency of reserve assets backing stablecoins, the use of unbacked
or undercollateralized stablecoins in potentially manipulative trading practices and regulatory scrutiny of stablecoin issuers
or intermediaries, including exchanges that facilitate stablecoin transactions, may