What changed in this filing

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Item 1A. Risk Factors

2026-05-08 compared with 2025-11-12 · 489 added, 411 removed, 815 unchanged (52% of the section changed)

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strategy and related exposures.

federal regulations, there is a possibility that ETH may be classified as a “ security.

” Any classification

of ETH as a “ security ” would subject us to additional regulation and could materially impact

the operation of our business.

the SEC nor any other U.S.

federal or state regulator has publicly stated whether they agree that ETH is a “security.” Despite

the Executive Order titled “Strengthening American Leadership in Digital Financial Technology” which includes as an objective,

“protecting and promoting the ability of individual citizens and private sector entities alike to access and … to maintain

self-custody of digital assets,” ETH has not yet been classified with respect to U.S.

federal securities laws.

Therefore, while

(for the reasons discussed below) we believe that ETH is not a “security” within the meaning of the U.S.

federal securities

laws, and registration of the Company under The Investment Company Act of 1940, as amended (the “Investment Company Act”)

is therefore not required under the applicable securities laws, we acknowledge that a regulatory body or federal court may determine

Our belief, even if reasonable under the circumstances, would not preclude legal or regulatory action based on such a finding

that ETH is a “security” which would require us to register as an investment company under the Investment Company Act.

have also adapted our process for analyzing the U.S.

federal securities law status of ETH and other cryptocurrencies over time, as guidance

and case law have evolved.

the SEC and CFTC have issued joint interpretive guidance identifying ETH as a “digital commodity” rather than a “digital

security,” that guidance is non-binding and could be modified or rejected by a court, and any determination that ETH is a “security”

would subject us to additional regulation and could materially impact the operation of our business.

March 17, 2026, the U.S.

Securities and Exchange Commission (“SEC”), joined by the U.S.

Commodity Futures Trading Commission

(“CFTC”), issued a joint interpretation (the “Joint Interpretation”) clarifying the application of the federal

securities laws to crypto assets and establishing a taxonomy of five categories:

“digital commodities,” “digital collectibles,”

“digital tools,” “stablecoins,” and “digital securities.” The Joint Interpretation expressly identifies

ETH as an example of a digital commodity, and the SEC and CFTC have each stated that they will administer their respective statutes consistent

with the Joint Interpretation.

The Joint Interpretation is consistent with our long-held view, described below, that ETH is not a “security”

within the meaning of the U.S.

federal securities laws and that registration of the Company under the Investment Company Act of 1940,

as amended (the “Investment Company Act”), is therefore not required under the applicable securities laws.

Joint Interpretation is interpretive guidance rather than a rulemaking and does not itself have the force of law.

It could be modified,

withdrawn, or superseded by future SEC or CFTC leadership, narrowed or invalidated through judicial challenge, or rendered obsolete by

subsequent legislation or rulemaking.

Federal and state courts are not bound by the Joint Interpretation, and the ultimate legal question

of whether any particular digital asset, or any particular transaction involving a digital asset, is a “security” remains

subject to judicial determination under tests articulated by the U.S.

Supreme Court, including in the Howey and Reves cases.

the Joint Interpretation acknowledges that a crypto asset that is not itself a security may nonetheless become subject to an “investment

contract” depending on the manner in which it is offered or sold, so classification of ETH as a digital commodity does not foreclose

the possibility that particular transactions involving ETH could be characterized as securities transactions.

have adapted, and expect to continue to adapt, our process for analyzing the U.S.

federal securities law status of ETH and other cryptocurrencies

over time, as guidance, interpretive releases, and case law have evolved.

As part of our U.S.

federal securities law analytical process, we take into account a number of factors, including

the various definitions of “security” under U.S.

federal securities laws and federal court decisions interpreting the elements

of these definitions, such as the U.S.

Supreme Court’s decisions in the Howey and Reves cases, as well as court rulings,

reports, orders, press releases, public statements, and speeches by the SEC Commissioners and SEC Staff providing guidance on when a

digital asset or a transaction to which a digital asset may relate may be a security for purposes of U.S.

federal securities law analytical process,

we take into account a number of factors, including the various definitions of “security” under U.S.

federal securities laws

position that ETH is not a “security” is premised, among other reasons, on our conclusion ETH does not meet the elements

of the Howey test.

Among the reasons for our conclusion that ETH is not a security is that holders of ETH do not have a reasonable

expectation of profits from our efforts in respect of their holding of ETH.

Also, ETH ownership does not convey the right to receive

any interest, rewards, or other returns.

acknowledge, however, that the SEC, a federal court or another relevant entity could take a different view.

The regulatory treatment

of ETH is such that it has drawn significant attention from legislative and regulatory bodies.

Application of securities laws to the

specific facts and circumstances of digital assets is complex and subject to change.

Our conclusion, even if reasonable under the circumstances,

would not preclude legal or regulatory action based on a finding that ETH, or any other digital asset we might hold is a “security.”

As such, we are at risk of enforcement proceedings against us, which could result in potential injunctions, cease-and-desist orders,

fines, and penalties if Ether was determined to be a security by a regulatory body or a court.

Such developments could subject us to

fines, penalties, and other damages, and adversely affect our business, results of operations, financial condition and prospects.

and federal court decisions interpreting the elements of these definitions, such as the U.S.

Supreme Court’s decisions in the Howey

and Reves cases, as well as court rulings, reports, orders, press releases, public statements, and speeches by the SEC Commissioners

and SEC Staff — including, most recently, the Joint Interpretation — providing guidance on when a digital asset, or a transaction

to which a digital asset may relate, may be a security for purposes of U.S.

federal securities laws.

Our position that ETH is not a “security”

is premised, among other reasons, on our conclusion that ETH does not meet the elements of the Howey test.

Among the reasons for our

conclusion that ETH is not a security is that holders of ETH do not have a reasonable expectation of profits from our efforts in respect

of their holding of ETH.

Also, ETH ownership does not convey the right to receive any interest, rewards, or other returns.

Notwithstanding

the Joint Interpretation and our own conclusion, we acknowledge that a federal or state court, state securities regulator, future SEC

or CFTC leadership, or private plaintiff could take a different view as to the status of ETH or any particular transaction involving

State “blue sky” regulators are not formally bound by the Joint Interpretation, and private litigants are not bound

by the views of any federal regulator.

Application of securities laws to the specific facts and circumstances of digital assets is complex

and subject to change.

As such, we remain at risk of private litigation, state enforcement proceedings, and — in the event the

Joint Interpretation is modified, withdrawn, or judicially rejected — federal enforcement proceedings, any of which could result

in potential injunctions, cease-and-desist orders, fines, penalties, damages, or a requirement that we register as an investment company

under the Investment Company Act, and any of which could adversely affect our business, results of operations, financial condition and

we were deemed to be an investment company under the Investment Company Act, applicable restrictions likely would make it impractical

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and could have a material adverse effect on our business, results of operations, financial condition, and prospects.

or regulatory change regarding the regulation of “ commodities ” by the Commodities Futures Trading

Commission (“CFTC”) and the potential regulation of digital assets as “ digital commodities ”

could subject us to additional regulatory burdens and oversight by the CFTC and could adversely affect the market price of ETH

and the market price of our listed securities.

developments regarding the classification of digital assets as “commodities” or “digital commodities” by the

Commodities Futures Trading Commission (“CFTC”), including recent joint SEC-CFTC interpretive guidance and pending legislation,

could subject us to additional regulatory burdens and oversight by the CFTC and could adversely affect the market price of ETH and the

market price of our listed securities.

CFTC has stated it believes, and judicial decisions involving CFTC enforcement actions have confirmed, that at least some digital assets

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rules promulgated by the CFTC thereunder (“CFTC Rules”).

While the CFTC has enforcement authority to police against fraud

and manipulation in spot commodity markets (including the spot market for digital assets that are commodities), the CFTC only has regulatory

and supervisory jurisdiction with respect to “commodity interest” transactions, such as futures, options, and swaps on a

commodity (including a digital asset commodity) and certain leveraged, margined, or financed transactions in commodities involving retail

Accordingly, we are not currently regulated or supervised by the CFTC and are not subject to the legal and regulatory obligations

that are applicable to CFTC-registered entities under the CEA and CFTC Rules.

On March 17, 2026, the U.S.

Securities and Exchange Commission (“SEC”),

joined by the CFTC, issued a joint interpretation (the “Joint Interpretation”) clarifying the application of the federal

securities laws to crypto assets and establishing a token taxonomy distinguishing “digital commodities,” “digital collectibles,”

“digital tools,” “stablecoins,” and “digital securities.” The Joint Interpretation expressly identifies

ETH as an example of a digital commodity, and the CFTC has stated that it will administer the CEA consistent with the Joint Interpretation.

the CFTC has enforcement authority to police against fraud and manipulation in spot commodity markets (including the spot market for

digital assets that are commodities), the CFTC continues to have regulatory and supervisory jurisdiction only with respect to “commodity

interest” transactions, such as futures, options, and swaps on a commodity (including a digital asset commodity) and certain leveraged,

margined, or financed transactions in commodities involving retail customers.

The Joint Interpretation did not expand the CFTC’s

statutory jurisdiction over spot digital asset activities.

Accordingly, we are not currently regulated or supervised by the CFTC and

are not subject to the legal and regulatory obligations that are applicable to CFTC-registered entities under the CEA and CFTC Rules.

Joint Interpretation is interpretive guidance rather than a rulemaking, and it does not itself have the force of law.

It could be modified,

withdrawn, or superseded by future SEC or CFTC leadership, narrowed or invalidated through judicial challenge, or rendered obsolete by

subsequent legislation or rulemaking.

No assurance can be given that ETH will continue to be treated as a digital commodity under this

or any future guidance, or that the current allocation of jurisdiction between the SEC and CFTC with respect to ETH and other digital

assets will remain unchanged.

A change in ETH’s regulatory classification, or in the coordinated posture between the SEC and the

CFTC, could materially increase our compliance burden, restrict our ability to hold or transact in ETH, and adversely affect the market

price of ETH and the market price of our listed securities.

regulation of digital assets in the U.S.

is subject to change because of the enactment and adoption of new laws and regulations.

example, the proposed CLARITY Act recently passed by the U.S.

House of Representatives and other draft digital asset market structure

and regulation bills have proposed granting the CFTC additional regulatory and supervisory powers with respect to spot digital assets

as “digital commodities.” While it is not possible to predict if and in what form such proposals will be adopted, if any,

changes to or expansion of the jurisdiction of the CFTC with respect to activities in spot digital assets could result in the imposition

of additional regulatory obligations and burdens, which could include registration, disclosure, reporting, and business conduct requirements.

For example, it is possible that if the CLARITY Act were to become law as currently proposed, our ETH Treasury Management strategy could

cause us to be deemed a “commodity pool” under the CEA such that our operators and advisors may need to register with the

CFTC as commodity pool operators and comply with other CFTC regulations as well as the rules of the National Futures Association.

additional regulatory burdens and oversight could materially increase the cost of our business, could adversely affect the market price

of ETH, and in turn could adversely affect the market price of our listed securities.

also remains subject to change through the enactment and adoption of new laws and regulations,

and the Joint Interpretation is expressly intended to complement, rather than substitute for, Congressional market structure legislation.

The proposed CLARITY Act passed by the U.S.

House of Representatives, and other draft digital asset market structure and regulation bills,

have proposed granting the CFTC additional regulatory and supervisory powers with respect to spot digital assets as “digital commodities.”

While it is not possible to predict if and in what form such proposals will be adopted, if any, changes to or expansion of the jurisdiction

of the CFTC with respect to activities in spot digital assets could result in the imposition of additional regulatory obligations and

burdens, which could include registration, disclosure, reporting, and business conduct requirements.

For example, it is possible that

if the CLARITY Act were to become law as currently proposed, our ETH Treasury Management strategy could cause us to be deemed a “commodity

pool” under the CEA such that our operators and advisors may need to register with the CFTC as commodity pool operators and comply

with other CFTC regulations as well as the rules of the National Futures Association.

Such additional regulatory burdens and oversight

could materially increase the cost of our business, could adversely affect the market price of ETH, and in turn could adversely affect

the market price of our listed securities.

may be subject to regulatory developments related to digital assets and digital asset markets, which could adversely affect our business,

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digital assets are relatively novel and the application of state and federal securities laws and other laws and regulations to digital

assets are unclear in certain respects, it is possible that regulators in the United States or foreign countries may interpret or apply

existing laws and regulations in a manner that adversely affects the price of digital assets.

federal government, states, regulatory

agencies, and foreign countries may also enact new laws and regulations, or pursue regulatory, legislative, enforcement or judicial actions,

that could materially impact the price of digital assets or the ability of individuals or institutions such as us to own or transfer

digital assets.

assets is still evolving, it is possible that regulators in the United States or foreign countries may interpret or apply existing laws

and regulations in a manner that adversely affects the price of digital assets.

federal government, states, regulatory agencies,

and foreign countries may also enact new laws and regulations, or pursue regulatory, legislative, enforcement or judicial actions, that

could materially impact the price of digital assets or the ability of individuals or institutions such as us to own or transfer digital

January 23, 2025, President Trump issued an executive order titled “Strengthening American Leadership in Digital Financial Technology”

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sector leadership in the responsible development of cross-border payments and financial markets technologies, among others.

with the Executive Order and the July 2025 working group report, on March 17, 2026, the U.S.

Securities and Exchange Commission (“SEC”),

joined by the CFTC, issued a joint interpretation (the “Joint Interpretation”) clarifying the application of the federal

securities laws to crypto assets.

The Joint Interpretation establishes a taxonomy of five categories — “digital commodities,”

“digital collectibles,” “digital tools,” “stablecoins,” and “digital securities” —

and expressly identifies ETH as an example of a digital commodity.

The SEC and CFTC have each stated that they will administer their

respective statutes consistent with the Joint Interpretation.

While we believe the Joint Interpretation provides meaningful additional

clarity regarding the regulatory status of ETH, it is interpretive guidance rather than a rulemaking, does not itself have the force

of law, and is not binding on federal or state courts, state securities regulators, or private litigants.

The Joint Interpretation could

be modified, withdrawn, or superseded by future SEC or CFTC leadership, narrowed or invalidated through judicial challenge, or rendered

obsolete by subsequent legislation or rulemaking, and it also acknowledges that a crypto asset that is not itself a security may nonetheless

become subject to an “investment contract” depending on the manner in which it is offered or sold.

have also been several bills introduced in Congress that propose to establish additional regulation and oversight of the digital asset

For example, the CLARITY Act was passed by the House of Representatives in July 2025, which would, if enacted, regulate digital

asset markets and digital asset trading platforms in the United States.

In addition, also in July 2025, the Guiding and Establishing

National Innovation for U.S.

Stablecoins Act of 2025 (the “GENIUS Act”) became the first federal law specifically regulating

the issuance, custody and other stablecoin-related matters in the United States.

It is difficult to predict whether, or when, the CLARITY

Act or another bill that would regulate digital asset markets and digital asset trading platforms may become law or what any such bill

is difficult to predict whether, or when, as a result of these developments, Congress will grant additional authorities to the SEC or

other regulators, what the nature of such additional authorities might be, how additional legislation and/or regulatory oversight might

impact the ability of digital asset markets to function, the willingness of financial and other institutions to continue to provide services

to the digital assets industry, or how any new regulations or changes to existing regulations might impact the value of digital assets

generally and ETH held by the Company specifically.

The consequences of increased federal regulation of digital assets and digital asset

activities could have a material adverse effect on our business, results of operations, financial condition, and prospects, as well as

the market price of ETH, which in turn could adversely affect the market price of our listed securities.

asset markets and digital asset trading platforms in the United States and provide statutory backing for the allocation of jurisdiction

between the SEC and CFTC reflected in the Joint Interpretation.

In addition, also in July 2025, the Guiding and Establishing National

Innovation for U.S.

Stablecoins Act of 2025 (the “GENIUS Act”) became the first federal law specifically regulating the issuance,

custody and other stablecoin-related matters in the United States.

It is difficult to predict whether, or when, the CLARITY Act or another

bill that would regulate digital asset markets and digital asset trading platforms may become law or what any such bill may entail.

is difficult to predict whether, or when, as a result of these developments, Congress will grant additional authorities to the SEC, the

CFTC, or other regulators, what the nature of such additional authorities might be, how additional legislation and/or regulatory oversight

might impact the ability of digital asset markets to function, the willingness of financial and other institutions to continue to provide

services to the digital assets industry, or how any new regulations, changes to existing regulations, or changes to or withdrawal of

existing interpretive guidance might impact the value of digital assets generally and ETH held by the Company specifically.

The consequences

of these potential developments, including any narrowing, modification, or withdrawal of the Joint Interpretation, could have a material

adverse effect on our business, results of operations, financial condition, and prospects, as well as the market price of ETH, which

in turn could adversely affect the market price of our listed securities.

Common Stock may not always trade at a premium to the value of the digital assets we hold, and may trade at a discount thereto.

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ETH staking activities could result in “slashing risks” and loss of staked ETH.

ETH staking exposes us

to slashing risks, defined as a punitive mechanism built into the Ethereum network, designed to penalize validators and their delegators

for misbehavior or failing to follow network rules, which could result in the loss of our staked ETH.

ETH staking exposes us to slashing risks,

defined as a punitive mechanism built into the Ethereum network, designed to penalize validators and their delegators for misbehavior

or failing to follow network rules, which could result in the loss of our staked ETH.

are subject to provider and counterparty risks, including risks relating to our custodians.

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broader digital assets industry is subject to counterparty risks, which could adversely impact the adoption rate, price, and use of ETH.

A series of recent high-profile bankruptcies, closures, liquidations, regulatory enforcement actions and other events relating to

companies operating in the digital asset industry have highlighted the counterparty risks applicable to owning and transacting in digital

Although these bankruptcies, closures, liquidations and other events have not resulted in any loss or misappropriation of our

ETH or LsETH, nor have such events adversely impacted our access to our ETH or LsETH, they have, in the short-term, likely negatively

impacted the adoption rate and use of ETH.

Additional bankruptcies, closures, liquidations, regulatory enforcement actions or other events

involving participants in the digital assets industry in the future may further negatively impact the adoption rate, price, and use of

ETH, limit the availability to us of financing collateralized by ETH, or create or expose additional counterparty risks.

A series of recent high-profile bankruptcies, closures, liquidations, regulatory enforcement actions and other events relating to companies

operating in the digital asset industry have highlighted the counterparty risks applicable to owning and transacting in digital assets.

Although these bankruptcies, closures, liquidations and other events have not resulted in any loss or misappropriation of our ETH or

LsETH, nor have such events adversely impacted our access to our ETH or LsETH, they have, in the short-term, likely negatively impacted

the adoption rate and use of ETH.

Additional bankruptcies, closures, liquidations, regulatory enforcement actions or other events involving

participants in the digital assets industry in the future may further negatively impact the adoption rate, price, and use of ETH, limit

the availability to us of financing collateralized by ETH, or create or expose additional counterparty risks.

in the accounting treatment of our ETH holdings or LsETH holdings could have significant accounting impacts, including increasing the

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ASU 2023-08 could also have adverse tax consequences.

In addition, on September 30, 2025, the Treasury and the IRS issued interim guidance (the “Interim Guidance”)

which, in relevant part, clarifies that a corporation may disregard unrealized gains and losses on its digital asset holdings when computing

AFSI for purposes of determining whether it is subject to the 15% CAMT under the Inflation Reduction Act.

The Treasury and IRS intend

to issue revised proposed regulations similar to this Interim Guidance.

These impacts could in turn have a material

adverse effect on our financial results and the market price of our listed securities.

Additionally, our LsETH holdings as of September 30,

2025 are accounted for at cost-less-impairment.

Significant declines in the price of LsETH may result in material impairment within our

financial results.

In addition, on September 30, 2025, the

Treasury and the IRS issued interim guidance (the “Interim Guidance”) which, in relevant part, clarifies that a corporation

may disregard unrealized gains and losses on its digital asset holdings when computing AFSI for purposes of determining whether it is

subject to the 15% CAMT under the Inflation Reduction Act.

The Treasury and IRS intend to issue revised proposed regulations similar

to this Interim Guidance.

These impacts could in turn have a material adverse effect on our financial results and the market price of

our listed securities.

Additionally, our LsETH holdings as of December 31, 2025 are accounted for at cost-less-impairment.

declines in the price of LsETH may result in material impairment within our financial results.

is a highly volatile asset, and fluctuations in the price of ETH are likely to influence our financial results and the market price of

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user and investor confidence in ETH, including due to the various factors described herein;

and trading activities, such as (i) trading activities of highly active retail and institutional users, speculators, miners and investors;

(ii) actual or expected significant dispositions of ETH by large holders, including the expected liquidation of digital assets associated

with entities that have filed for bankruptcy protection and the transfer and sale of ETH associated with significant hacks, seizures,

or forfeitures;

and (iii) actual or perceived manipulation of the spot or derivative markets for ETH or spot ETH exchange-traded

products (“ETPs”);

publicity, media or social media coverage, or sentiment due to events in or relating to, or perception of, ETH or the broader digital

assets industry, for example, (i) public perception that ETH can be used as a vehicle to circumvent sanctions, including sanctions

imposed on Russia or certain regions related to the ongoing conflict between Russia and Ukraine, or to fund criminal or terrorist

activities, such as the purported use of digital assets by Hamas to fund its terrorist attack against Israel in October 2023;

expected or pending civil, criminal, regulatory enforcement or other high profile actions against major participants in the ETH ecosystem;

(iii) additional filings for bankruptcy protection or bankruptcy proceedings of major digital asset industry participants, such as

the bankruptcy proceeding of FTX Trading and its affiliates;

and trading activities, such as (i) trading activities of highly active retail and institutional

users, speculators, miners and investors;

(ii) actual or expected significant dispositions

of ETH by large holders, including the expected liquidation of digital assets associated

with entities that have filed for bankruptcy protection and the transfer and sale of ETH

associated with significant hacks, seizures, or forfeitures;

and (iii) actual or perceived

manipulation of the spot or derivative markets for ETH or spot ETH exchange-traded products

publicity, media or social media coverage, or sentiment due to events in or relating to,

or perception of, ETH or the broader digital assets industry, for example, (i) public perception

that ETH can be used as a vehicle to circumvent sanctions, including sanctions imposed on

Russia or certain regions related to the ongoing conflict between Russia and Ukraine, or

to fund criminal or terrorist activities, such as the purported use of digital assets by

Hamas to fund its terrorist attack against Israel in October 2023;

(ii) expected or pending

civil, criminal, regulatory enforcement or other high profile actions against major participants

in the ETH ecosystem;

(iii) additional filings for bankruptcy protection or bankruptcy proceedings

of major digital asset industry participants, such as the bankruptcy proceeding of FTX Trading

and its affiliates;

(iv) the actual or perceived environmental impact of ETH and related

activities, including environmental concerns raised by private individuals, governmental and non-governmental organizations, and

other actors related to the energy resources consumed in ETH related processes, and (v) changes in government regulations ;

activities, including environmental concerns raised by private individuals, governmental

and non-governmental organizations, and other actors related to the energy resources consumed

in ETH related processes, and (v) changes in government regulations ;

in consumer preferences and the perceived value or prospects of ETH;

from other digital assets that exhibit better speed, security, scalability, or energy efficiency, that feature other more favored

characteristics, that are backed by governments, including the U.S.

government, or reserves of fiat currencies, or that represent

ownership or security interests in physical assets;

decrease in the price of other digital assets, including stablecoins, or the crash or unavailability of stablecoins that are used

as a medium of exchange for ETH purchase and sale transactions to the extent the decrease in the price of such other digital assets

or the unavailability of such stablecoins may cause a decrease in the price of ETH or adversely affect investor confidence in digital

assets generally;

relating to the ETH protocol that may impact (i) its security, speed, scalability, usability, or value, (b) failures to upgrade the

protocol to adapt to security, technological, legal or other challenges, and (iii) changes to the ETH protocol that introduce software

bugs, security risks or other elements that adversely affect ETH;

● competition

from other digital assets that exhibit better speed, security, scalability, or energy efficiency,

that feature other more favored characteristics, that are backed by governments, including

government, or reserves of fiat currencies, or that represent ownership or security

interests in physical assets;

decrease in the price of other digital assets, including stablecoins, or the crash or unavailability

of stablecoins that are used as a medium of exchange for ETH purchase and sale transactions

to the extent the decrease in the price of such other digital assets or the unavailability

of such stablecoins may cause a decrease in the price of ETH or adversely affect investor

confidence in digital assets generally;

● developments

relating to the ETH protocol that may impact (i) its security, speed, scalability, usability,

or value, (b) failures to upgrade the protocol to adapt to security, technological, legal

or other challenges, and (iii) changes to the ETH protocol that introduce software bugs,

security risks or other elements that adversely affect ETH;

● disruptions,

failures, unavailability, or interruptions in service of trading venues for ETH;

filing for bankruptcy protection by, liquidation of, or market concerns about the financial viability of digital asset custodians,

trading venues, lending platforms, investment funds, or other digital asset industry participants;

legislative, enforcement and judicial actions that adversely affect the price, ownership, transferability, trading volumes, legality

or public perception of ETH, or that adversely affect the operations of or otherwise prevent digital asset custodians, trading venues,

lending platforms or other digital assets industry participants from operating in a manner that allows them to continue to deliver

services to the digital assets industry;

in staking rewards of ETH, or increases in the costs associated with ETH staking, including increases in electricity costs and hardware

and software used in staking, or new or enhanced regulation or taxation of ETH staking, which could further increase the costs associated

filing for bankruptcy protection by, liquidation of, or market concerns about the financial

viability of digital asset custodians, trading venues, lending platforms, investment funds,

or other digital asset industry participants;

● regulatory,

legislative, enforcement and judicial actions that adversely affect the price, ownership,

transferability, trading volumes, legality or public perception of ETH, or that adversely

affect the operations of or otherwise prevent digital asset custodians, trading venues, lending

platforms or other digital assets industry participants from operating in a manner that allows

them to continue to deliver services to the digital assets industry;

in staking rewards of ETH, or increases in the costs associated with ETH staking, including

increases in electricity costs and hardware and software used in staking, or new or enhanced

regulation or taxation of ETH staking, which could further increase the costs associated

with ETH staking, any of which may cause a decline in support for the Ethereum protocol;

congestion and fees associated with processing transactions of ETH or lengthened periods to exit ETH staking or other delays to unstaking

or withdrawing ETH from staking protocols;

staking exposes us to slashing risks, defined as a punitive mechanism built into the Ethereum network, designed to penalize validators

and their delegators for misbehavior or failing to follow network rules, which could result in the loss of our staked ETH;

● transaction

congestion and fees associated with processing transactions of ETH or lengthened periods

to exit ETH staking or other delays to unstaking or withdrawing ETH from staking protocols;

staking exposes us to slashing risks, defined as a punitive mechanism built into the Ethereum

network, designed to penalize validators and their delegators for misbehavior or failing

to follow network rules, which could result in the loss of our staked ETH;

● macroeconomic

changes, such as changes in the level of interest rates and inflation, fiscal and monetary policies of governments, trade restrictions,

and fiat currency devaluations;

in national and international economic and political conditions, including, without limitation, federal government policies, trade

tariffs and trade disputes, the adverse impacts attributable to the current conflict between Russia and Ukraine and the economic

sanctions adopted in response to the conflict, and the broadening of the Israel-Hamas conflict to other countries in the Middle East;

in mathematics or technology, including in digital computing, algebraic geometry and quantum computing, that could result in the

cryptography used by the ETH blockchain becoming insecure or ineffective

changes, such as changes in the level of interest rates and inflation, fiscal and monetary

policies of governments, trade restrictions, and fiat currency devaluations;

in national and international economic and political conditions, including, without limitation,

federal government policies, trade tariffs and trade disputes, the adverse impacts attributable

to the current conflict between Russia and Ukraine and the economic sanctions adopted in

response to the conflict, and the broadening of the Israel-Hamas conflict to other countries

in the Middle East;

● developments

in mathematics or technology, including in digital computing, algebraic geometry and quantum

computing, that could result in the cryptography used by the ETH blockchain becoming insecure

or ineffective

Ethereum network operates using open-source protocols, meaning that any user can become a node by downloading the Ethereum Client and

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“fork” in the Ethereum protocol could adversely affect the value of the Company’s shares.

in the Ethereum protocol may lead to disruptions, security risks or declines in ETH value and therefore the value of the Company’s common stock.

A “fork” occurs when a change to the Ethereum network’s source code creates two incompatible versions of the

blockchain, resulting in separate networks.

Forks may be planned (e.g., upgrades to the Ethereum protocol like the Merge or Dencun) or

unplanned (e.g., due to software bugs or validator disagreement).

in the Ethereum protocol may lead to disruptions, security risks or declines in ETH value and therefore the value of the Company’s

common stock.

A “fork” occurs when a change to the Ethereum network’s source code creates two incompatible versions

of the blockchain, resulting in separate networks.

Forks may be planned (e.g., upgrades to the Ethereum protocol like the Merge or Dencun)

or unplanned (e.g., due to software bugs or validator disagreement).

Planned forks are designed to improve performance or introduce new

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Such actions could cause significant variation in our operating results in any quarter.

There are also volatility risks related

to stablecoins, which are designed to have a relatively stable price relative to an underlying physical asset, most commonly a fiat currency,

are also volatility risks related to stablecoins, which are designed to have a relatively stable price relative to an underlying physical

asset, most commonly a fiat currency, such as U.S.

dollars, or an exchange-traded commodity.

The stability of a stablecoin results from the underlying assets backing the stablecoin

that are held by the stablecoin’s issuer in reserve accounts, among other factors such as the ability of a holder to redeem the

stablecoin from its issuer at par.

The issuers of certain stablecoins currently retain broad discretion to determine the composition and

amounts of assets held in the issuers’ accounts backing those stablecoins, and to substitute assets other than the fiat currency

that is initially deposited.

The composition of backing assets varies considerably across popular stablecoins, with some stablecoins backed

entirely by off-chain assets including cash or short-term, highly liquid assets, and others backed by assets significantly less liquid

than cash or cash equivalents.

For example, Circle, which issues USDC, reports that it holds cash and short-term cash equivalents to back

its USDC stablecoins.

The stability of a stablecoin results from

the underlying assets backing the stablecoin that are held by the stablecoin’s issuer in reserve accounts, among other factors

such as the ability of a holder to redeem the stablecoin from its issuer at par.

The issuers of certain stablecoins currently retain

broad discretion to determine the composition and amounts of assets held in the issuers’ accounts backing those stablecoins, and

to substitute assets other than the fiat currency that is initially deposited.

The composition of backing assets varies considerably

across popular stablecoins, with some stablecoins backed entirely by off-chain assets including cash or short-term, highly liquid assets,

and others backed by assets significantly less liquid than cash or cash equivalents.

For example, Circle, which issues USDC, reports

that it holds cash and short-term cash equivalents to back its USDC stablecoins.

We regularly transact in and hold stablecoins;

as of September 30, 2025, USDC is the only stablecoin that we held.

A lack of applicable law and regulation has afforded discretion to certain stablecoin issuers to determine the composition and amounts

of assets backing those stablecoins.

There is a risk that an issuer may be unable to liquidate enough backing assets if it were to face

mass redemptions ofits stablecoin, which could cause the price of the stablecoin to deviate from the price of the underlying fiat currency

or other asset with which the stablecoin is designed to align in price.

In extreme cases, such as a request to immediately redeem all

or substantially all of a particular stablecoin in circulation, even stablecoins backed by reserves comprised primarily of cash and cash

equivalents may be subject to instability or an inability of the stablecoin issuer to meet all redemption requests, as the market for

short-dated U.S.

December 31, 2025, USDC is the only stablecoin that we held.

A lack of applicable law and regulation has afforded discretion to certain

stablecoin issuers to determine the composition and amounts of assets backing those stablecoins.

There is a risk that an issuer may be

unable to liquidate enough backing assets if it were to face mass redemptions of its stablecoin, which could cause the price of the stablecoin

to deviate from the price of the underlying fiat currency or other asset with which the stablecoin is designed to align in price.

extreme cases, such as a request to immediately redeem all or substantially all of a particular stablecoin in circulation, even stablecoins

backed by reserves comprised primarily of cash and cash equivalents may be subject to instability or an inability of the stablecoin issuer

to meet all redemption requests, as the market for short-dated U.S.

government obligations might not be sufficiently price stable.

Market participants have increasingly shown concern about

the actual underlying liquidity and reserves for dollar stablecoins such as USDC.

For example, according to reports, Circle had more than

$3 billion of its USDC reserve funds on deposit at SVB which became temporarily inaccessible when SVB was placed into FDIC receivership

in March 2023.

Although these funds were ultimately made available, concerns related to Circle’s access to these funds caused USDC

to temporarily fall below its$1.00 peg, and the total market capitalization of USDC decreased following this temporary depegging.

stablecoin issuer were to fail to honor its redemption obligations, this could undermine public confidence in stablecoins and in digital

assets more broadly, which could have a widespread impact on the crypto economy, causing the prices of other stablecoins and digital assets

to become more volatile.

Volatility in stablecoins, operational

issues with stablecoins (for example, technical issues that prevent settlement), concerns about the sufficiency of any reserves that support

stablecoins, or regulatory concerns about stablecoin issuers or intermediaries ,such as crypto asset spot markets, that support stablecoins,

could have a significant impact on the global crypto market and may adversely affect our business.

Because stablecoins purport to be backed

by underlying reserve assets, a fundamental issue in the event of the bankruptcy or insolvency of the issuer of a given stablecoin is

which party possesses beneficial ownership of the underlying reserve assets:

the holder of the stablecoin, or the issuer.

If a particular

stablecoin were structured in a manner that entitles its holder only to a contractual right to payment from the issuer (even if such

payments are to be derived from the underlying assets), then the assets underlying the stablecoins may be considered to be the property

of the issuer’s bankruptcy estate, such that all of the issuer’s creditors would be entitled to their pro rata share of such

assets, with the stablecoin holder being treated as an unsecured creditor of the issuer.

In such an event, if the issuer were to have

insufficient funds or assets to satisfy the claims of its creditors, then the holder of a stablecoin would likely receive only a partial

recovery, and not the full purported value of its stablecoin holdings.

Conversely, if a particular stablecoin were structured in a manner

that entitles its holder to absolute beneficial ownership of the underlying reserve assets, whereby the issuer holds bare legal title

to the underlying assets but has no beneficial interest or property rights in such assets, then the holders would likely have a stronger

claim on the underlying assets in the event of a bankruptcy or insolvency of the issuer.

However, due to the novelty of stablecoins,

courts have not yet considered the treatment of underlying reserve assets in the context of a bankruptcy or insolvency of a stablecoin

issuer, and there can be no certainty as to a court’s determination in such circumstances.

participants have increasingly shown concern about the actual underlying liquidity and reserves for dollar stablecoins such as USDC.

For example, according to reports, Circle had more than $3 billion of its USDC reserve funds on deposit at SVB which became temporarily

inaccessible when SVB was placed into FDIC receivership in March 2023.

Although these funds were ultimately made available, concerns

related to Circle’s access to these funds caused USDC to temporarily fall below its $1.00 peg, and the total market capitalization

of USDC decreased following this temporary depegging.

If a stablecoin issuer were to fail to honor its redemption obligations, this could

undermine public confidence in stablecoins and in digital assets more broadly, which could have a widespread impact on the crypto economy,

causing the prices of other stablecoins and digital assets to become more volatile.

in stablecoins, operational issues with stablecoins (for example, technical issues that prevent settlement), concerns about the sufficiency

of any reserves that support stablecoins, or regulatory concerns about stablecoin issuers or intermediaries , such as crypto asset spot

markets, that support stablecoins, could have a significant impact on the global crypto market and may adversely affect our business.

stablecoins purport to be backed by underlying reserve assets, a fundamental issue in the event of the bankruptcy or insolvency of the

issuer of a given stablecoin is which party possesses beneficial ownership of the underlying reserve assets:

the holder of the stablecoin,

or the issuer.

If a particular stablecoin were structured in a manner that entitles its holder only to a contractual right to payment

from the issuer (even if such payments are to be derived from the underlying assets), then the assets underlying the stablecoins may

be considered to be the property of the issuer’s bankruptcy estate, such that all of the issuer’s creditors would be entitled

to their pro rata share of such assets, with the stablecoin holder being treated as an unsecured creditor of the issuer.

In such an event,

if the issuer were to have insufficient funds or assets to satisfy the claims of its

then the holder of a stablecoin would likely receive only a partial recovery, and not the full purported value of its stablecoin holdings.

Conversely, if a particular stablecoin were structured in a manner that entitles its holder to absolute beneficial ownership of the underlying

reserve assets, whereby the issuer holds bare legal title to the underlying assets but has no beneficial interest or property rights

in such assets, then the holders would likely have a stronger claim on the underlying assets in the event of a bankruptcy or insolvency

of the issuer.

However, due to the novelty of stablecoins, courts have not yet considered the treatment of underlying reserve assets

in the context of a bankruptcy or insolvency of a stablecoin issuer, and there can be no certainty as to a court’s determination

in such circumstances.

technology may expose us to sanctioned or blocked persons or may result in unintentional or inadvertent violations of economic sanctions

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such actions could occur at a time that is unfavorable to investors.

Note – pretty small risk here.

If this is a normal CYA then

fine but if this causes any concern we should discuss.

may engage in decentralized finance transactions and deploy ETH using liquid staking protocols, which present additional risk as opposed

to simply holding our digital assets.

may engage in decentralized finance transactions and deploy ETH using liquid staking and liquid restaking protocols, which present additional

risk as opposed to simply holding our digital assets.

intend to invest and deploy ETH using one or more decentralized finance protocols.

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decentralized finance protocols will be subjected to costly and burdensome compliance regimes or even prohibited outright.

have also deployed ETH using liquid staking protocols.

Liquid staking protocols are even newer than many decentralized finance protocols

and are a novel and evolving technology.

Although the staff of the SEC’s Division of Corporation Finance has provided a statement

that the staff does not generally believe liquid staking services are securities offerings, and that it does not believe receipt tokens

obtained through such liquid staking services are generally securities, there is no guarantee that courts agree.

have also deployed ETH using liquid staking and liquid restaking protocols, including by staking ETH through Liquid Collective in exchange

for LsETH and through ether.fi in exchange for weETH, the wrapped, non-rebasing form of eETH.

Liquid staking protocols are even newer

than many decentralized finance protocols and are a novel and evolving technology, and liquid restaking protocols — which layer

additional restaking and validation arrangements on top of liquid staking and use the underlying ETH (or its receipt tokens) to provide

cryptoeconomic security to other protocols and services — are even more novel and have an even more limited operating history.

Although the staff of the SEC’s Division of Corporation Finance has provided a statement that the staff does not generally believe

liquid staking services are securities offerings, and that it does not believe receipt tokens obtained through such liquid staking services

are generally securities, there is no guarantee that courts agree.

That staff statement is, by its terms, addressed to liquid staking

and does not directly address liquid restaking arrangements or the receipt tokens obtained from liquid restaking protocols, such as weETH;

the regulatory treatment of liquid restaking arrangements under the federal securities laws therefore remains uncertain.

It is also possible

that the liquid staking protocols we use do not fit the specific scope of the staff statement.

If it is determined that the liquid staking

protocols we use, or the receipt tokens we receive, are securities offerings, the providers of liquid staking protocols may be required

to pay fines or be subject to other third-party claims, and the ETH we have deposited with them may be available to their creditors to

fulfill those claims.

See “ Our shift towards an ETH-focused treasury strategy requires substantial changes in our day-to-day

operations and exposes us to significant operational risks ” and “ We face risks relating to the custody of our

digital assets, including the loss or destruction of private keys required to access our digital assets and cyberattacks or other data

loss relating to our digital assets and insolvency of our custodians.

” There is also ongoing uncertainty as to the regulatory

treatment of liquid staking services from other regulators and agencies.

decentralized finance protocols and liquid staking protocols typically rely on the use of smart contracts.

Smart contracts are computer

programs that run on a digital asset network or related protocol that execute automatically when certain conditions are met.

smart contract functions typically cannot be stopped or reversed, vulnerabilities in or unforeseen consequences of their programming

can have damaging effects for the underlying digital asset network or protocol and the value of digital assets that use or interact with

such smart contracts.

For example, in June 2016, a vulnerability in the smart contracts underlying a protocol that was deployed on the

Ethereum network, The DAO, a distributed autonomous organization for venture capital funding, allowed an attack by a hacker to syphon

approximately $60 million worth of ETH from The DAO into a separate account.

In the aftermath of the theft, certain developers of and

core contributors to the Ethereum network pursued a “hard fork” of the Ethereum network in order to erase any record of the

Despite these efforts, the price of ETH dropped approximately 35% in the aftermath of the attack and subsequent hard fork.

addition, in July 2017, a vulnerability in a smart contract for a multi-signature wallet software developed by Parity led to a $30 million

theft of ETH, and in November 2017, a new vulnerability in Parity’s wallet software led to roughly $160 million worth of ETH being

indefinitely frozen in an account.

smart contracts, such as bridges between separate digital asset networks have also been manipulated, exploited or used in ways that were

not intended or envisioned by their creators.

Initial problems and continued problems with the development, design and deployment of

smart contracts may have an adverse effect on the value of protocols, including liquid staking and decentralized finance protocols, built

on smart contract platforms or other digital assets that rely on smart contract technology, including any liquid staking tokens such

If any of the smart contracts with which we interact, whether decentralized finance, liquid staking, or otherwise, suffer from

such manipulation or exploit, or otherwise do not function as intended or as we anticipate, our ETH and any LsETH or similar tokens we

hold may be exposed.

in the governance of a digital asset network or protocol may not receive sufficient support from users and validators, which may negatively

affect that digital asset network ’ s or protocol ’ s ability to grow and respond to challenges.

governance of some digital asset networks and protocols, such as the Ethereum Network, is generally by voluntary consensus and open competition.

For such networks and protocols, there may be a lack of consensus or clarity on that network’s or protocol’s governance,

which may stymie such network’s or protocol’s utility, adaptability and ability to grow and face challenges.

The foregoing

notwithstanding, the underlying software for some digital asset networks and protocols, such as the Ethereum Network, is informally or

formally managed or developed by a group of core developers that propose amendments to the relevant network’s or protocol’s

Core developers’ roles may evolve over time, generally based on self-determined participation.

If a significant majority

of users and validators were to adopt amendments to a decentralized network based on the proposals of such core developers, such network

would be subject to new source code that may adversely affect the value of the relevant digital asset.

As a result of the foregoing,

it may be difficult to find solutions or marshal sufficient effort to overcome any future problems, especially long-term problems, on

digital asset networks.

that the liquid staking or liquid restaking protocols we use, or specific features of those protocols, do not fit within the scope of

the staff statement.

If it is determined that the liquid staking or liquid restaking protocols we use, or the receipt tokens we receive

(including LsETH and weETH), are securities offerings, the providers of those protocols may be required to pay fines or be subject to

other third-party claims, and the ETH we have deposited with them may be available to their creditors to fulfill those claims.

shift towards an ETH-focused treasury strategy requires substantial changes in our day-to-day operations and exposes us to significant

operational risks ” and “ We face risks relating to the custody of our digital assets, including the loss or destruction

of private keys required to access our digital assets and cyberattacks or other data loss relating to our digital assets and insolvency

of our custodians.

” There is also ongoing uncertainty as to the regulatory treatment of liquid staking and liquid restaking

services from other regulators and agencies.

restaking activities also involve risks beyond those associated with native staking or liquid staking.

In a liquid restaking arrangement,

the underlying ETH (or its receipt token) is used to provide cryptoeconomic security not only to the Ethereum proof-of-stake protocol

but also to additional services, such as the EigenCloud Autonomous Verifiable Services (“AVSs”) that we secure through ether.fi.

This exposes our underlying ETH to potential slashing, forfeiture or other penalties arising from issues outside of the Ethereum staking

protocol itself, including operational failures, validator or operator misconduct, or technical problems with the AVSs being secured.

The AVSs and other services secured through restaking are themselves new, with limited operating history, and there can be no assurance

that they will function as designed.

We have deployed a portion of our ETH treasury into weETH issued by ether.fi, and any losses sustained

in connection with that deployment — whether from slashing, smart contract exploits, protocol failure or otherwise — could

have a material adverse effect on our financial condition, results of operations and the market price of our Common Stock.

we have bridged weETH from the Ethereum mainnet to Linea, a zkEVM Layer 2 network, using ether.fi’s weETH OFT bridge powered by

LayerZero v2.

Cross-chain bridges have historically been a frequent target of exploits in decentralized finance, and any failure, vulnerability

or exploit affecting the bridge, the messaging layer or the destination network — or any disruption to or change in the Linea sequencer,

prover, governance or future upgrades — could result in delays in accessing, or partial or total loss of, the weETH we have bridged.

decentralized finance protocols and liquid staking and liquid restaking protocols typically rely on the use of smart contracts.

contracts are computer programs that run on a digital asset network or related protocol that execute automatically when certain conditions

Because smart contract functions typically cannot be stopped or reversed, vulnerabilities in or unforeseen consequences of their

programming can have damaging effects for the underlying digital asset network or protocol and the value of digital assets that use or

interact with such smart contracts.

For example, in June 2016, a vulnerability in the smart contracts underlying a protocol that was

deployed on the Ethereum network, The DAO, a distributed autonomous organization for venture capital funding, allowed an attack by a

hacker to syphon approximately $60 million worth of ETH from The DAO into a separate account.

In the aftermath of the theft, certain

developers of and core contributors to the Ethereum network pursued a “hard fork” of the Ethereum network in order to erase

any record of the theft.

Despite these efforts, the price of ETH dropped approximately 35% in the aftermath of the attack and subsequent

In addition, in July 2017, a vulnerability in a smart contract for a multi-signature wallet software developed by Parity led

to a $30 million theft of ETH, and in November 2017, a new vulnerability in Parity’s wallet software led to roughly $160 million

worth of ETH being indefinitely frozen in an account.

smart contracts, such as bridges between separate digital asset networks, have also been manipulated, exploited or used in ways that

were not intended or envisioned by their creators.

Initial and continued problems with the development, design and deployment of smart

contracts may have an adverse effect on the value of protocols, including liquid staking, liquid restaking and decentralized finance

protocols, built on smart contract platforms or other digital assets that rely on smart contract technology, including any liquid staking

or liquid restaking tokens such as LsETH and weETH.

Liquid restaking tokens such as weETH are exposed not only to risks at the liquid

staking protocol layer but also to risks at the additional restaking and AVS layers and, where bridged to other networks, to risks of

the cross-chain bridge and the destination network.

If any of the smart contracts with which we interact — whether decentralized

finance, liquid staking, liquid restaking, cross-chain bridging or otherwise — suffer from such manipulation or exploit, or otherwise

do not function as intended or as we anticipate, our ETH and any LsETH, weETH or similar tokens we hold may be exposed.

the digital asset award or transaction fees for recording transactions on the Ethereum Network are not sufficiently high to incentivize

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of our Common Stock:

the profit margins of digital asset validating operations are not sufficiently high, digital asset validators are more likely to

immediately sell digital assets earned by validating, resulting in an increase in liquid supply of that digital asset, which would

generally tend to reduce that digital asset’s market price.

reduction in digital assets staked by validators on the Ethereum Network could increase the likelihood of a malicious actor or botnet

obtaining control.

See “-If a malicious actor or botnet obtains control of more than 33% of the validating power on the Ethereum

Network, or otherwise obtains control over the Ethereum Network through its influence over core developers or otherwise, such actor

or botnet could manipulate the Ethereum Network to adversely affect the value of our Common Stock.”

have historically accepted relatively low transaction confirmation fees on most digital asset networks.

If validators demand higher

transaction fees for recording transactions on the Ethereum Network or a software upgrade automatically charges fees for all transactions

on the Ethereum Network, the cost of using ETH may increase and the demand for ETH may correspondingly decrease.

Alternatively, validators

could collude in an anti-competitive manner to reject low transaction fees on the Ethereum Network and force users to pay higher

fees, thus reducing the attractiveness of the Ethereum Network.

Higher transaction confirmation fees resulting through collusion

or otherwise may adversely affect the attractiveness of the Ethereum Network, the value of ETH and the value of our Common Stock.

the extent that any validators cease to record transactions that do not include the payment of a transaction fee in validated blocks

or do not record a transaction because the transaction fee is too low, such transactions will not be recorded on the Ethereum blockchain

until a block is validated by a validator who does not require the payment of transaction fees or is willing to accept a lower fee.

Any widespread delays in the recording of transactions could result in a loss of confidence in the Ethereum Network.

the course of ordering transactions and validating blocks, validators may be able to prioritize certain transactions in return for

increased transaction fees, an incentive system known as “Maximal Extractable Value” or MEV.

For example, in blockchain

networks that facilitate DeFi protocols in particular, such as the Ethereum Network, users may attempt to gain an advantage over

other users by increasing offered transaction fees.

Certain software solutions have been developed which facilitate validators in

capturing MEV produced by these increased fees.

The MEV incentive system may lead to an increase in transaction fees on the Ethereum

Network, which may diminish its use.

Users or other stakeholders on the Ethereum Network could also view the existence of MEV as

unfair manipulation of decentralized digital asset networks, and refrain from using DeFi protocols or the Ethereum Network generally.

In addition, it’s possible regulators or legislators could enact rules which restrict the use of MEV, which could diminish

the popularity of the Ethereum Network among users and validators.

Any of these or other outcomes related to MEV may adversely affect

the value of Ether and the value of our Common Stock.

the profit margins of digital asset validating operations are not sufficiently high, digital

asset validators are more likely to immediately sell digital assets earned by validating,

resulting in an increase in liquid supply of that digital asset, which would generally tend

to reduce that digital asset’s market price.

reduction in digital assets staked by validators on the Ethereum Network could increase the

likelihood of a malicious actor or botnet obtaining control.

See “ -If a malicious

actor or botnet obtains control of more than 33% of the validating power on the Ethereum

Network, or otherwise obtains control over the Ethereum Network through its influence over

core developers or otherwise, such actor or botnet could manipulate the Ethereum Network

to adversely affect the value of our Common Stock .”

have historically accepted relatively low transaction confirmation fees on most digital asset

If validators demand higher transaction fees for recording transactions on the

Ethereum Network or a software upgrade automatically charges fees for all transactions on

the Ethereum Network, the cost of using ETH may increase and the demand for ETH may correspondingly

Alternatively, validators could collude in an anti-competitive manner to reject

low transaction fees on the Ethereum Network and force users to pay higher fees, thus reducing

the attractiveness of the Ethereum Network.

Higher transaction confirmation fees resulting

through collusion or otherwise may adversely affect the attractiveness of the Ethereum Network,

the value of ETH and the value of our Common Stock.

the extent that any validators cease to record transactions that do not include the payment

of a transaction fee in validated blocks or do not record a transaction because the transaction

fee is too low, such transactions will not be recorded on the Ethereum blockchain until a

block is validated by a validator who does not require the payment of transaction fees or

is willing to accept a lower fee.

Any widespread delays in the recording of transactions

could result in a loss of confidence in the Ethereum Network.

the course of ordering transactions and validating blocks, validators may be able to prioritize

certain transactions in return for increased transaction fees, an incentive system known

as “Maximal Extractable Value” or MEV.

For example, in blockchain networks that

facilitate DeFi protocols in particular, such as the Ethereum Network, users may attempt

to gain an advantage over other users by increasing offered transaction fees.

Certain software

solutions have been developed which facilitate validators in capturing MEV produced by these

increased fees.

The MEV incentive system may lead to an increase in transaction fees on the

Ethereum Network, which may diminish its use.

Users or other stakeholders on the Ethereum

Network could also view the existence of MEV as unfair manipulation of decentralized digital

asset networks, and refrain from using DeFi protocols or the Ethereum Network generally.

In addition, it’s possible regulators or legislators could enact rules which restrict

the use of MEV, which could diminish the popularity of the Ethereum Network among users and

Any of these or other outcomes related to MEV may adversely affect the value

of Ether and the value of our Common Stock.

Custodians’ digital asset insurance may not be sufficient to make us whole in the event of any loss of ETH.

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capabilities of each single fully participating node.

As of August 31, 2025, the Ethereum Network handled approximately 18 transactions

As of March 31, 2025, the Ethereum Network handled approximately 18 transactions

In an effort to increase the volume of transactions that can be processed on a given digital asset network, many digital

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Transaction fees in 2024 have ranged from a high of $12.11 on January 19 to below

$1.00 throughout much of September 2025.

Increased transaction fees and decreased settlement speeds could preclude certain uses for Ether

(e.g., micropayments), and could reduce demand for, and the price of, ETH, which could adversely impact the value of our Common Stock.

However, reduced gas fees could signal lower demand for ETH.

$1.00 throughout much of the year.

Increased transaction fees and decreased settlement speeds could preclude certain uses for Ether (e.g.,

micropayments), and could reduce demand for, and the price of, ETH, which could adversely impact the value of our Common Stock.

reduced gas fees could signal lower demand for ETH.

is no guarantee that any of the mechanisms in place or being explored for increasing the scale of settlement or throughput of Ethereum

1 unchanged sentence

value of our Common Stock.

AI industry is subject to developing and evolving regulatory frameworks globally, which are expected to become increasingly complex as

AI continues to evolve, and our efforts to, or our failure or inability to comply with, these regulations or regulatory action against

us could adversely affect our results of operations, financial condition or business.

rapid pace of innovation in the field of AI has led to developing and evolving regulatory frameworks globally, which are expected to

become increasingly complex.

and regulators and lawmakers have started proposing and adopting, or are currently considering, regulations

and guidance specifically on the use of AI.

In the U.S., there is ongoing tension between the states and the federal government over

how best to regulate the use of AI.

Colorado passed a Consumer Protections for Artificial Intelligence bill introducing state-level oversight

of “high-risk” AI systems.

It is possible that new laws and regulations will be adopted in the U.S.

and in non-U.S.

jurisdictions,

or that existing laws and regulations may be interpreted, in ways that would affect our operations.

We may be unable to anticipate or

respond to these changes, and may need to expend additional resources to adjust our offerings where legal frameworks diverge.

the cost to comply with such laws or regulations could be significant and would increase our operating expenses, which could adversely

affect our business, financial condition and results of operations.

Cybersecurity

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Cybersecurity

incidents and cyberattacks have been occurring globally at a more frequent and severe level and will likely continue to increase in

frequency in the future.

The digital asset industry are a particular target for cybersecurity incidents, which may occur through

intentional or unintentional acts by individuals or groups having authorized or unauthorized access to our systems or our

clients’ or counterparties’ information, which may include confidential information.

These individuals or groups include

employees, vendors and customers, as well as hackers.

The information and technology systems used by us and our service providers,

and other third parties, are vulnerable to damage or interruption from, among other things:

hacking, ransomware, malware and other

computer viruses;

incidents and cyberattacks have been occurring globally at a more frequent and severe level and will likely continue to increase in frequency

in the future.

The digital asset industry are a particular target for cybersecurity incidents, which may occur through intentional or

unintentional acts by individuals or groups having authorized or unauthorized access to our systems or our clients’ or counterparties’

information, which may include confidential information.

These individuals or groups include employees, vendors and customers, as well

The information and technology systems used by us and our service providers, and other third parties, are vulnerable to damage

or interruption from, among other things:

hacking, ransomware, malware and other computer viruses;

denial of service attacks;

network failures;

computer and telecommunication failures;

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security breaches;

usage errors by their respective professionals;

by their respective professionals;

power outages;

and catastrophic events such as fires, tornadoes, floods, hurricanes and earthquakes.

It is difficult or impossible to defend

against every risk being posed by changing technologies, as well as criminals’ intent to commit cybercrime, and these efforts

may not be successful in anticipating, preventing, detecting or stopping attacks, or reacting in a timely manner.

The increasing

sophistication and resources of cybercriminals and other non-state threat actors and increased actions by nation-state actors make

it difficult to keep up with new threats and could result in a breach of security.

Such threats may see their frequency increased,

and effectiveness enhanced, by the use of artificial intelligence.

Further, cybersecurity risks may be heightened as a result of

ongoing global conflicts such as the Russia-Ukraine conflict or the ongoing Israel-Hamas conflict.

Additionally, we cannot guarantee

that our insurance coverage would be sufficient to cover any such losses.

and catastrophic events such as fires, tornadoes, floods, hurricanes and

It is difficult or impossible to defend against every risk being posed by changing technologies, as well as criminals’

intent to commit cybercrime, and these efforts may not be successful in anticipating, preventing, detecting or stopping attacks, or reacting

in a timely manner.

The increasing sophistication and resources of cybercriminals and other non-state threat actors and increased actions

by nation-state actors make it difficult to keep up with new threats and could result in a breach of security.

Such threats may see their

frequency increased, and effectiveness enhanced, by the use of artificial intelligence.

Further, cybersecurity risks may be heightened

as a result of ongoing global conflicts such as the Russia-Ukraine conflict or the ongoing Israel-Hamas conflict.

Additionally, we cannot

guarantee that our insurance coverage would be sufficient to cover any such losses.

the extent the operation of our systems relies on our third-party service providers, through either a connection to, or an integration

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consensus mechanism and the switch to proof-of-stake validation, the Ethereum Network is currently vulnerable to several types of attacks,

attack ” where, if a malicious actor, validator, botnet (a volunteer or hacked collection of computers controlled by networked

software coordinating the actions of the computers) or group of validators acting in concert were to gain control of more than 33%

of the total staked Ether on the Ethereum Network, a malicious actor could temporarily impede or delay block confirmation or even

cause a temporary fork in the blockchain.

This is designed to be a temporary risk, as the Ethereum Network’s inactivity leak

would be expected to eventually penalize the attacker enough for the chain to finalize again (i.e., the honest majority would be

expected to reclaim 2/3rd stake as the attacker’s stake is penalized).

Moreover, it is not believed that a 33% attack would

allow a malicious actor to engage in double-spending or fraudulent block propagation.

attack” where, if a malicious actor, validator, botnet (a volunteer or hacked collection

of computers controlled by networked software coordinating the actions of the computers)

or group of validators acting in concert were to gain control of more than 33% of the total

staked Ether on the Ethereum Network, a malicious actor could temporarily impede or delay

block confirmation or even cause a temporary fork in the blockchain.

This is designed to

be a temporary risk, as the Ethereum Network’s inactivity leak would be expected to

eventually penalize the attacker enough for the chain to finalize again (i.e., the honest

majority would be expected to reclaim 2/3rd stake as the attacker’s stake is penalized).

Moreover, it is not believed that a 33% attack would allow a malicious actor to engage in

double-spending or fraudulent block propagation.

Even without 33% control, a malicious actor

or botnet could create a flood of transactions in order to slow down the Ethereum Network.

attack ” where, if a malicious actor, validator, botnet (a volunteer or hacked collection of computers controlled by networked

software coordinating the actions of the computers) or group of validators acting in concert were to gain control of more than 50%

of the total staked Ether on the Ethereum Network, a malicious actor would be able to manipulate transactions on the blockchain,

including censoring transactions, double-spending and fraudulent block propagation, potentially for an extended period or even permanently.

In theory, the minority non-attackers might reach social consensus to reject blocks proposed by the malicious majority attacker,

reducing the attacker’s ability to engage in malicious activity, but there can be no assurance this would happen or that non-attackers

would be able to coordinate effectively.

attack” where, if a malicious actor, validator, botnet (a volunteer or hacked collection

of computers controlled by networked software coordinating the actions of the computers)

or group of validators acting in concert were to gain control of more than 50% of the total

staked Ether on the Ethereum Network, a malicious actor would be able to manipulate transactions

on the blockchain, including censoring transactions, double-spending and fraudulent block

propagation, potentially for an extended period or even permanently.

In theory, the minority

non-attackers might reach social consensus to reject blocks proposed by the malicious majority

attacker, reducing the attacker’s ability to engage in malicious activity, but there

can be no assurance this would happen or that non-attackers would be able to coordinate effectively.

To the extent that such malicious actor or botnet did not yield its control of the validating

power on the Ethereum Network or the Ethereum community did not reject the fraudulent blocks as malicious, reversing any changes

made to the blockchain may not be possible.

attack ” where, if a malicious actor, validator, botnet (a volunteer or hacked collection of computers controlled by networked

software coordinating the actions of the computers) or group of validators acting in concert were to gain control of more than 66%

of the total staked Ether on the Ethereum Network, a malicious actor could permanently and irreversibly manipulate the blockchain,

including censorship, double-spending and fraudulent block propagation.

Although the malicious actor or botnet may not be able to

generate new tokens or transactions using such control, it could “double-spend” its own tokens (i.e., spend the same

tokens in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintained

control (over 50%).

The attacker could finalize their preferred chain without any consideration for the votes of other stakers and

could also revert finalized blocks.

power on the Ethereum Network or the Ethereum community did not reject the fraudulent blocks

as malicious, reversing any changes made to the blockchain may not be possible.

attack” where, if a malicious actor, validator, botnet (a volunteer or hacked collection

of computers controlled by networked software coordinating the actions of the computers)

or group of validators acting in concert were to gain control of more than 66% of the total

staked Ether on the Ethereum Network, a malicious actor could permanently and irreversibly

manipulate the blockchain, including censorship, double-spending and fraudulent block propagation.

Although the malicious actor or botnet may not be able to generate new tokens or transactions

using such control, it could “double-spend” its own tokens (i.e., spend the same

tokens in more than one transaction) and prevent the confirmation of other users’ transactions

for so long as it maintained control (over 50%).

The attacker could finalize their preferred

chain without any consideration for the votes of other stakers and could also revert finalized

an example from another network, in August 2020, the Ethereum Classic Network, a proof-of-work network, was the target of two double-spend

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transactions in excess of over $5.0 million and $1.0 million.

addition, in May 2019, the Bitcoin Cash network, a proof-of-work network, experienced a >50% attack when two large mining pools reversed

a series of transactions in order to stop an unknown miner from taking advantage of a flaw in a recent Bitcoin Cash protocol upgrade.

Although this particular attack was arguably benevolent, the fact that such coordinated activity was able to occur may negatively impact

perceptions of the Bitcoin Cash network.

Although the two attacks described above took place on proof-of-work-based networks, it is possible

that a similar attack may occur on the Ethereum Network, which could negatively impact the value of Ether and the value of our Common

addition, in May 2019, the Bitcoin Cash network, a proof-of-work network, experienced a >50% attack when two large mining pools

reversed a series of transactions in order to stop an unknown miner from taking advantage of a flaw in a recent Bitcoin Cash protocol

Although this particular attack was arguably benevolent, the fact that such coordinated activity was able to occur may negatively

impact perceptions of the Bitcoin Cash network.

Although the two attacks described above took place on proof-of-work-based networks,

it is possible that a similar attack may occur on the Ethereum Network, which could negatively impact the value of Ether and the value

of our Common Stock.

there are no known reports of malicious control of the Ethereum Network, if groups of coordinating or connected Ether holders that together

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A successful security breach or cyberattack could result in:

partial or total loss of our ETH in a manner that may not be covered by insurance or the liability provisions of the custody agreements

with the custodians who hold our ETH;

partial or total loss of our ETH in a manner that may not be covered by insurance or the

liability provisions of the custody agreements with the custodians who hold our ETH;

to our reputation and brand;

disclosure of data and violations of applicable data privacy and other laws;

regulatory scrutiny, investigations, fines, penalties, and other legal, regulatory, contractual and financial exposure.

● significant

regulatory scrutiny, investigations, fines, penalties, and other legal, regulatory, contractual

and financial exposure.

any actual or perceived data security breach or cybersecurity attack directed at other companies with digital assets or companies that

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we custody substantially all of our ETH, could have a material adverse effect on our business, prospects, financial condition and operating

we are unable to recruit or retain skilled personnel, or if we lose the services of our Chairman of the Board of Directors and Co-Chief

Executive Officers, our business, operating results, and financial condition could be materially adversely affected.

future success depends on our continuing ability to attract and retain highly skilled personnel.

Competition for employees is intense.

We may not be able to retain our current key employees or attract, train, and retain other highly skilled personnel in the future.

for qualified employees in the technology industry has historically been high.

Our future success also depends in large part on the continued

service of Joseph Lubin, our Chairman of the Board of Directors, Rob Phythian and Joseph Chalom as Co-Chief Executive Officers of the

Company, and Robert DeLucia, Chief Financial Officer of the Company.

If we lose the services of Messrs.

Lubin, Phythian, Chalom or DeLucia,

or if we are unable to attract, train and retain the highly skilled personnel we need, our business, operating results and financial

condition could be materially adversely affected.

SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

August 21, 2025, the Board authorized a share repurchase program under which the Company may repurchase up to $1.5 billion of its

outstanding Common Stock.

As of September 30, 2025, the Company has repurchased 1,938,540 of its outstanding Common Stock for

following table sets forth repurchases of our Common Stock during the three months ended September 30, 2025:

of shares purchased (1)

Average price paid per share

of shares purchased as part of the publicly announced program

Approximate dollar value of shares that may yet to be purchased under program

September 1, 2025 – September 30, 2025

1,468,307,512

$ 1,468,307,512

August 21, 2025, the Board authorized a share repurchase program under which the Company may purchase up to $1.5 billion of its outstanding

Common Stock.

The share repurchase program does not have an expiration date and may be adjusted or terminated by the Company at any

There were 1,938,450 shares of Common Stock repurchased as part of the publicly announced share repurchase program during the

three months ended September 30, 2025.

UPON SENIOR SECURITIES

SAFETY DISCLOSURES

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors