FLDDW

Item 1A - Risk Factors”; and • those factors in the other documents filed by Fold from time to time with the U.S.
Securities and Exchange Commission (“SEC”).
The discussion in this Annual Report should be read in conjunction with the financial statements and notes thereto included in Item 8 of this Annual Report.
Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.
We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
This Annual Report and all subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.
We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances after the date of this Annual Report, except as may be required by law.
Summary of Principal Risk Factors Our business is subject to a number of risks and uncertainties.
The following is a summary of the principal risk factors that could materially adversely affect our business, financial condition and results of operations.
A more complete statement of these risks and uncertainties is set forth in “Risk Factors” in Item 1A of Part I of this Annual Report. • Our operating results have and will significantly fluctuate, including due to the highly volatile nature of bitcoin. • Volatility in the price of bitcoin could limit our options in obtaining cash funding on favorable terms. • We may suffer losses due to abrupt and erratic market movements. • Our investments in bitcoin are subject to volatile market prices and risks of loss. • We have a history of negative cash flows. • We may not be able to generate sufficient cash flow to service all of our obligations. • The slowing or stopping of the development or acceptance of bitcoin and bitcoin-based technologies, and blockchain networks more broadly, could have a material adverse effect on the successful development and adoption of our business. • We are subject to an extensive, highly-evolving and uncertain regulatory landscape and any adverse changes to, or our failure to comply with, any laws and regulations could adversely affect our brand, reputation, business, operating results, and financial condition. • Our or our third-party partners’ failure to safeguard and manage our and our customers’ fiat currencies and bitcoin could adversely impact our business, operating results, and financial condition. • Due to unfamiliarity and some negative publicity associated with bitcoin products and services, confidence or interest in our platforms may decline. • Transferring bitcoin on the bitcoin network involves risks, which could result in loss of customer assets or our proprietary assets, customer disputes and other liabilities, which could adversely impact our business. • The regulatory environment in which the consumer finance industry operates could have a material adverse effect on our business and operating results. • If we cannot keep pace with rapid industry changes to provide new and innovative products and services, the use of our products and services, and consequently our net revenue, could decline, which could adversely impact our business, operating results, and financial condition. • The cryptoeconomy is novel.
We may be unable to effectively react to proposed legislation and regulation of crypto assets or crypto asset platforms that are adverse to our business. • We rely on our agreement with BitGo to offer our bitcoin-related services.
If our relationship with BitGo were to end, the ability to continue to offer our bitcoin services would be affected, which could affect our financial and business results. • We rely on our program agreement with Sutton Bank to offer our Fold prepaid card product.
If our relationship with Sutton Bank, or other bank relationships established in the normal course of business, were to end, our ability to continue to offer our card product would be affected, which could affect our financial and business results. • We may in the future enter into partnerships, collaborations, joint ventures, or strategic alliances with third parties.
If we are unsuccessful in establishing or maintaining strategic relationships with these third parties or if these third parties fail to deliver certain operational services, our business, operating results, and financial condition could be adversely affected. • Our ability to offer, service, and grow the Fold Credit Card depends on our ability to retain and obtain key third-party partners, including a lender, which we do not currently have.
Our failure to obtain a lender, or the failure or inability of existing or future partners to perform their obligations for our credit card program (including by reason of insolvency) could disrupt or terminate our ability to offer the credit card. • We currently rely on third-party service providers for certain aspects of our operations, and any interruptions in services provided by these third parties may impair our ability to support our customers. • The Fold Credit Card is a new and complex product, and we may not be able to attract and retain cardholders or operate the program profitably. • The sale of our Common Stock to SZOP may cause dilution to existing stockholders and the subsequent sale of the shares of Common Stock acquired by SZOP, or the perception that such sales may occur, could cause the price of our Common Stock to fall. • We may incorporate artificial intelligence (“AI”) into our internal operations, for example, to enhance employee productivity.
Implementation of artificial intelligence technologies may result in legal and regulatory risks, reputational harm, or other adverse consequences to our business.
Unless the context requires otherwise, references to “Fold,” “we,” “us,” or “our” and the "Company” in this section are to the business and operations of Fold Holdings, Inc. after the closing of the Merger and to the business and operations of Fold, Inc. prior to the closing of the Merger (as such term is defined below).
Company Overview Founded in 2019, Fold is a bitcoin-focused financial services company dedicated to expanding access to bitcoin through a comprehensive suite of consumer financial products.
Fold was formed to build a modern financial services platform that allows consumers to accumulate, save, and use bitcoin in connection with their everyday financial lives and long-term planning.
Fold has built a banking and payments platform that operates across both U.S. dollars ("USD") and bitcoin, and is designed to connect these systems in a seamless manner.
By integrating traditional banking services with bitcoin-based rewards and savings functionality, Fold seeks to help customers compound positive financial outcomes over time while maintaining familiar financial workflows.
Fold’s consumer offerings include an FDIC-insured checking account, a Visa prepaid debit card, bill payment services, a bitcoin rewards credit card, a bitcoin gift card, and an extensive catalog of merchant reward offers.
Fold also partners with BitGo (as defined below), a national trust bank that is subject to supervision, examination and enforcement by the OCC (as defined below), to offer bitcoin exchange and custody services in all 50 states, supported by institutional-grade custody infrastructure.
By integrating bitcoin into traditional financial products and regulated financial rails, Fold aims to serve as a trusted entry point for consumers seeking to incorporate bitcoin into everyday financial activity in a responsible and accessible manner.
Fold believes we are operating amid a long-term generational transition in how households think about savings, security, and wealth preservation.
As wealth transfers from older generations to Millennials and Generation Z, Fold believes that younger households increasingly view bitcoin not as a peripheral or alternative asset, but as a core component of their financial lives.
Fold believes this generational transition has the potential to drive meaningful changes in how families structure wealth, plan for the future, and transfer value across generations.
Fold is building infrastructure and distribution channels to support this transition.
In addition to its direct-to-consumer platform, Fold is expanding the availability of its bitcoin services through partnerships with large online and physical retailers, enabling consumers to engage with bitcoin through familiar commercial environments.
Fold has also made portions of its consumer platform available to employers, allowing companies to offer bitcoin-enabled financial benefits and services to their workforce, extending Fold’s presence beyond the household and into the workplace.
In addition to enabling customers to accumulate bitcoin through rewards and financial activity, Fold also holds bitcoin as part of its corporate treasury.
Fold views this treasury strategy as a reflection of alignment between Fold and its customers, providing exposure to the long-term value of bitcoin while supporting the financial strength and durability of the operating business.
Fold considers its treasury allocation to be part of a disciplined capital strategy designed to support long-term operations and stockholder interests, rather than short-term financial outcomes.
Fold’s products and services are available in the United States through the Fold mobile application (the “Fold App”).
Our Products and Services Fold is a gateway to earning, buying, and living on bitcoin.
We offer our customers a suite of financial service products tailored to meet the needs of our customers seeking to integrate bitcoin into their everyday finances.
Banking and Payments Fold offers a free, FDIC-insured checking account (the “Fold Checking Account”) that supports direct deposits, bill payments, and the ability to receive paychecks up to three days early.
Fold is not a FDIC-insured bank, and the FDIC-insured checking accounts are offered through Sutton Bank.
In 2020, Fold partnered with Visa to launch a bitcoin rewards debit card, the Fold Visa Prepaid Card (the “Fold Debit Card”).
The Fold Debit Card is a prepaid debit card linked directly to a customer’s Fold Checking Account.

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RISK FACTORS You should consider carefully all of the risks described below, which we believe are the principal risks that we face and of which we are currently aware, and all of the other information contained in this Annual Report.
If any of the events or developments described below occur, our business, financial condition or results of operations could be negatively affected.
Risks Related to our Business and Industry Our operating results have and will significantly fluctuate, including due to the highly volatile nature of Bitcoin.
Our operating results will continue to fluctuate significantly as a result of a variety of factors, many of which are unpredictable and in certain instances are outside of our control, including: ● our ability to attract, maintain, and grow our customer base and engage our customers; ● changes in the legislative or regulatory environment or actions by U.S. or foreign governments or regulators, including fines, orders, or consent decrees; ● regulatory changes or scrutiny that impact our ability to offer certain products or services; ● our ability to continue to diversify and grow our subscription and services revenue; ● our mix of revenue between transaction and subscription and services; ● pricing for or temporary suspensions of our products and services; ● investments we make in the development of products and services, international expansion, and sales and marketing; ● our ability to establish and maintain partnerships, collaborations, joint ventures, or strategic alliances with third parties; ● market conditions of, and overall sentiment towards, Bitcoin; ● macroeconomic conditions, including interest rates, inflation and central banking policies; ● adverse legal proceedings or regulatory enforcement actions, judgments, settlements, or other legal proceeding and enforcement-related costs; ● the development and introduction of existing and new products and services by us or our competitors; ● our ability to control costs, including our operating expenses incurred to grow and expand our operations and to remain competitive; ● system failure, outages or interruptions, including with respect to our and our partners’ platforms; ● our lack of control over decentralized or third-party blockchains and networks that may experience downtime, cyber-attacks, critical failures, errors, bugs, corrupted files, data losses, or other similar software failures, outages, breaches and losses; ● breaches of security or privacy; ● inaccessibility of our and our partners’ platforms due to our or third-party actions; ● our ability to attract and retain talent; and ● our ability to compete with our competitors.
As a result of these factors, it is difficult for us to forecast growth trends accurately and our business and future prospects are difficult to evaluate, particularly in the short term.
As a result, the trading price of our common stock may increase or decrease significantly.
Moreover, the complexity and evolving nature of our business and the significant uncertainty surrounding the regulation of the Bitcoin economy, prepaid access, virtual currency business and gift card resale requires us to exercise our judgment as to whether certain laws, rules, and regulations apply to us, and it is possible that governmental bodies and regulators may disagree with our conclusions.
We believe that the products and services offered by us directly, as opposed to those that are offered by our third party service providers, including the Bitcoin Service Providers and Sutton Bank, are not subject to supervisory authority of regulatory authorities, or are only subject to certain regulatory regimes.
To the extent that we or our employees, contractors, or agents are deemed or alleged to have violated or failed to comply with any laws or regulations, including related interpretations, orders, determinations, directives, or guidance, we or they could be subject to a litany of civil, criminal, and administrative fines, penalties, orders and actions, including being required to suspend or terminate the offering of certain products and services.
Moreover, new laws, regulations, or interpretations may result in additional litigation, regulatory investigations, and enforcement or other actions, including preventing or delaying us from offering certain products or services offered by our competitors or could impact how we offer such products and services.
We may be subject to additional regulatory scrutiny due to the recent bankruptcy case of Synapse Financial Technologies, Inc.
In certain circumstances, Sutton Bank (and/or any other partner banks) may rely on our records for identifying customers and reconciling certain transactions made to or from deposit accounts, including any comingled funds within the omnibus account.
Any failure by us to maintain complete and accurate records could create uncertainty as to fund attribution and cause delays or outages for customers seeking to withdraw funds from or through our platform.
On September 17, 2024, the FDIC, citing certain alleged recordkeeping issues attendant to Synapse’s comingling of customer funds in custodial accounts, published a notice of proposed rulemaking which would require certain heightened standards for reconciliation and recordkeeping associated with certain custodial accounts containing comingled customer funds.
We are registered as a service provider with Visa network.
As such, we are subject to card network rules that could subject us to a variety of fines or penalties that may be assessed on us.
The termination of our membership or any changes in card network rules or standards, including interpretation and implementation of existing rules or standards, could increase the cost of operating our business or limit our ability to provide our services to our customers, and could have a material adverse effect on our business, financial condition and results of operations.
We operate in a highly competitive industry and we compete against companies with greater financial and other resources, and our business, operating results, and financial condition may be adversely affected if we are unable to respond to our competitors effectively.
The digital assets industry is highly innovative, rapidly evolving, and characterized by healthy competition, experimentation, changing customer needs, frequent introductions of new products and services, and subject to uncertain and evolving industry and regulatory requirements.
Our main competition falls into the following categories: ● traditional financial firms that have entered the Bitcoin market in recent years and offer overlapping features targeted at our customers; ● financial technology providers that do not focus on Bitcoin and may attempt to position themselves as a safer alternative to our products and services; ● mobile payment companies; and ● companies focused on the Bitcoin market, some of whom choose to operate outside of local rules and regulations or in jurisdictions with less stringent local rules and regulations and are potentially able to more quickly adapt to trends and to develop new Bitcoin-based products and services due to a different standard of regulatory scrutiny.
Further, more traditional financial and non-financial services businesses may choose to offer Bitcoin-based services in the future as the industry gains adoption.
Our existing competitors have, and our potential competitors are expected to have, various competitive advantages over us, such as: ● the ability to offer products and services that we do not support or offer on our platform (due to constraints from regulatory authorities, our banking partners, and other factors) such as digital assets that constitute securities or derivative instruments under U.S. or foreign laws; ● greater name recognition, longer operating histories, larger customer bases, and larger market shares; ● larger sales and marketing budgets and organizations; ● more established marketing, banking, and compliance relationships; ● greater customer support resources; ● greater resources to make acquisitions; ● lower labor, compliance, risk mitigation, and research and development costs; ● larger and more mature intellectual property portfolios; ● greater number of applicable licenses or similar authorizations; ● operations in certain jurisdictions with lower compliance costs and greater flexibility to explore new product offerings; and ● substantially greater financial, technical, and other resources.
Rapid and significant technological changes continue to confront the industries in which we operate, including developments in digital banking, mobile financial apps, and point-of-service solutions, as well as developments in Bitcoin and in tokenization, which replaces sensitive data ( e.g. , payment card information) with symbols (tokens) to keep the data safe in the event that sensitive data is stolen or viewed by unauthorized third parties.
Our ability to develop new and innovative products and services may be inhibited by industry-wide standards, payment networks, existing and future laws and regulations, resistance to change from our users or third parties’ intellectual property rights.
We often rely, not only on our own initiatives and innovations, but also on third parties, including some of our competitors, for the development of and access to new technologies and development of a robust market for these new products and technologies.
As we expand and localize our international activities, our obligations to comply with the laws, rules, regulations, and policies of a variety of jurisdictions will increase and we may be subject to inquiries, investigations, and enforcement actions by U.S. and non-U.S. regulators and governmental authorities, including those related to sanctions, export control, and anti-money laundering.
As we expand and localize our international activities, we will become increasingly obligated to comply with the laws, rules, regulations, policies, and legal interpretations of both the jurisdictions in which we operate and those into which we offer services on a cross-border basis.
For instance, financial regulators outside the United States have increased their scrutiny of crypto asset service providers over time, such as by requiring crypto asset custodians and other service providers operating in their local jurisdictions to be regulated and licensed under local laws.
Moreover, laws regulating financial services, the internet, mobile technologies, crypto, and related technologies outside of the United States are highly evolving, extensive and often impose different, more specific, or even conflicting obligations on us, as well as broader liability.
In addition, we are required to comply with laws and regulations related to economic sanctions and export controls enforced by the U.S.
Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), the U.S.
Department of Commerce’s Bureau of Industry and Security, and U.S. anti-money laundering and counter-terrorist financing laws and regulations, enforced by the Financial Crimes Enforcement Network (“FinCEN”) and certain state financial services regulators.
U.S. sanctions and export control laws and regulations generally restrict dealings by persons subject to U.S. jurisdiction with certain jurisdictions that are the target of comprehensive embargoes, currently the Crimea Region, the so-called Donetsk People’s Republic, and the so-called Luhansk People’s Republic of Ukraine, Cuba, Iran, North Korea, and Syria, as well as with persons, entities, and governments identified on certain prohibited party lists.
We have an OFAC compliance program in place that includes monitoring of IP addresses to identify prohibited jurisdictions and of blockchain addresses that have either been identified by OFAC as prohibited or that otherwise are believed by us to be associated with prohibited persons or jurisdictions.
From time to time, we have submitted voluntary disclosures to OFAC or responded to administrative subpoenas from OFAC.
Certain of these voluntary self-disclosures are currently under review by OFAC.
To date, none of those proceedings has resulted in a monetary penalty or finding of violation.
Consequently, developments in any jurisdiction may influence other jurisdictions.
New developments in one jurisdiction may be extended to additional services and other jurisdictions.
As a result, the risks created by any new law or regulation in one jurisdiction are magnified by the potential that they may be replicated, affecting our business in another place or involving another service.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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