{"url_path":"/sec/ambr/10-k/2026/item-3","section_key":"item-3","section_title":"Item 3 ****KEY INFORMATION**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-13","source_url":"https://www.sec.gov/Archives/edgar/data/1697818/0001104659-26-060362-index.html","accession_number":"0001104659-26-060362","cik":"0001697818","ticker":"AMBR","issuer_name":"Amber International Holding Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/1697818/0001104659-26-060362-index.html","primary_entity_key":"0001697818","primary_entity_name":"Amber International Holding Ltd"},"word_count":39249,"has_tables":true,"body_markdown":"**ITEM 3.****KEY INFORMATION**\n\n**Disposals and Merger**\n\nOn March 12, 2025, iClick completed its merger with Amber DWM. The Merger is accounted for as a reverse acquisition for accounting purposes. Accordingly, the Merger is treated as the equivalent of Amber DWM issuing shares for the acquisition of iClick, accompanied by a recapitalization, for accounting purposes. The financial results of iClick have been included in our consolidated financial results since March 12, 2025.\n\nIn connection with the Merger, we entered into intercompany services agreements with certain wholly owned subsidiaries of our parent, Amber Group. These agreements would afford us with substantially the same economic benefits as the transactions contemplated under the merger agreement signed in connection with the Merger, pending certain regulatory approvals for DWM Asset Restructuring contemplated under the merger agreement. This includes our entitlement to 100% of the consolidated net income generated from certain contracts associated with WFTL effective from January 1, 2025. Therefore, the net income from WFTL Assigned Contracts was not reflected in our results before 2025. On October 28, 2025, the WFTL Assigned Contracts were assumed by AGTL, which is also a wholly owned subsidiary of Amber Group and an affiliate of the Company. On November 25, 2025, Amber Match Limited, one of our wholly owned subsidiaries, entered into intercompany services agreement with AGTL to replace its previous agreement with WFTL on substantially the same terms.\n\nWe optimize our business to drive returns to the shareholders through proactive monitoring our operations and market trends. As of the end of 2025, certain operations under iClick were classified as held-for-sale, and we completed one of the disposals in October 2025.\n\n**Implications of Being a Foreign Private Issuer**\n\nWe are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers. Moreover, the information we are required to file with or furnish to the Securities and Exchange Commission (the “SEC”) will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. In addition, as a company incorporated in the Cayman Islands, we are permitted to adopt, and have adopted certain home country practices in relation to corporate governance matters that differ significantly from the Nasdaq Global Market (“Nasdaq”) listing standards. See “—Risks Related to Our Business—As a company incorporated in the Cayman Islands, we have adopted certain home country practices in relation to corporate governance matters that differ significantly from the Nasdaq corporate governance requirements; these practices may afford less protection to shareholders than they would enjoy if we complied fully with Nasdaq corporate governance listing standards.; these practices may afford less protection to shareholders than they would enjoy if we complied fully with the Nasdaq corporate governance requirements.” These practices may afford less protection to shareholders than they would enjoy if we complied fully with the Nasdaq listing standards.\n\n​\n\n1\n\n[Table of Contents](#TOC)\n\n**Risks Associated with the Holding Foreign Companies Accountable Act**\n\nPursuant to the Holding Foreign Companies Accountable Act, as amended by the Consolidated Appropriations Act, 2023, or the HFCA Act, If the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the U.S. Public Company Accounting Oversight Board (the “PCAOB”) for two consecutive years because of a position taken by authorities in a foreign jurisdiction, the SEC will prohibit our ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States. On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in Chinese Mainland or Hong Kong, including iClick’s former auditor, PricewaterhouseCoopers, who has audited its financial statements as of and for the years ended December 31, 2022 and 2023. Subsequently, iClick were conclusively identified by the SEC as a “Commission-Identified Issuer” under the HFCA Act on June 1, 2022 in respect of its annual report for the year ended December 31, 2021 filed on May 2, 2022.\n\nOn December 15, 2022, the PCAOB announced its determination that it was able to inspect and investigate audit firms in Chinese Mainland and Hong Kong completely for purposes of the HFCA Act, and the PCAOB vacated its December 16, 2021 determinations. As a result, the SEC will not provisionally or conclusively identify an issuer as a Commission-Identified Issuer if it files an annual report with an audit report issued by a registered public accounting firm headquartered in Chinese Mainland or Hong Kong on or after December 15, 2022, until such time as the PCAOB issues a new determination. In addition, our auditor WWC, P.C., who has audited our consolidated statements of financial position as of December 31, 2025, and the related consolidated statements of profit or loss, comprehensive loss, changes in shareholders’ equity and cash flows for the year ended December 31, 2025, including the related notes contained in this annual report is not on the list published by the PCAOB subject to the determinations as to inability to inspect or investigate completely, as announced by the PCAOB on December 16, 2021, and it is based in the U.S. and is registered with the PCAOB and subject to PCAOB inspection, having its latest inspection completed in December 2025. However, if the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in certain jurisdictions and we use an accounting firm headquartered in one of such jurisdictions to issue an audit report on our financial statements filed with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year.\n\nWhile we currently do not expect the HFCA Act to prevent us from maintaining the trading of our ADSs in the U.S., uncertainties exist with respect to future determinations of the PCAOB in this respect and any further legislative or regulatory actions to be taken by the U.S. or Chinese governments that could affect our listing status in the U.S. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.\n\n**Risks Associated with Our Corporate Structure**\n\nWe are a holding company with no business operations of our own. We conduct all of our operations through our subsidiaries. As a result, our ability to pay dividends depends upon dividends paid by our subsidiaries. If our subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us.\n\n2\n\n[Table of Contents](#TOC)\n\nThe following chart illustrates our organizational structure, including our principal subsidiaries and consolidated affiliated entities as of March 31, 2026:\n\n​\n\n3\n\n[Table of Contents](#TOC)\n\n**A.****[Reserved]**\n\n**B.****Capitalization and Indebtedness**\n\nNot Applicable.\n\n**C.****Reasons for the Offer and Use of Proceeds**\n\nNot Applicable.\n\n**D.****Risk Factors**\n\nOur business, financial condition and results of operations are subject to various changing business, competitive, economic, political and social conditions. In addition to the factors discussed elsewhere in this annual report, the following are some of the important factors that could adversely affect our operating results, financial condition and business prospects, and cause our actual results to differ materially from those projected in any forward-looking statements.\n\n**Summary of Risk Factors**\n\n**Risks Related to Our Business**\n\nRisks and uncertainties relating to our business include, but are not limited to, the following:\n\n●\n\nWe may not obtain the regulatory approval in relation to DWM Asset Restructuring in a timely manner or at all and may need to continue relying on the intercompany services agreements to receive the economic benefits of the intercompany services agreement with AGTL.\n\n●\n\nOur institutional crypto financial services and solutions business is nascent, not fully proven by market and subject to material legal, regulatory, operational, reputational, tax and other risks in the jurisdictions where we operate and are not assured to be profitable.\n\n●\n\nOur revenue is highly dependent on digital asset prices, trading volumes and market liquidity, all of which are subject to extreme volatility.\n\n●\n\nA particular digital asset, product, or service’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty and if we are unable to properly characterize a digital asset or product offering, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, which may adversely affect our business, operating results, and financial condition.\n\n●\n\nIf we fail to develop, maintain and enhance our brand and reputation, our business operating results and financial condition may be adversely affected.\n\n●\n\nWe may not be able to compete effectively, which could materially and adversely affect our business, financial condition, results of operations and prospects, as well as our reputation and brands.\n\n●\n\nWe may be subject to inquiries, investigations, and enforcement actions by regulators and governmental authorities worldwide, including those related to sanctions, export control, and anti-money laundering.\n\n●\n\nFailure by us or our third-party custodians to adequately safeguard clients’ digital assets could result in significant losses and severely damage our business and reputation.\n\n●\n\nIf 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 revenue, could decline, which could adversely impact our business, operating results, and financial condition.\n\n4\n\n[Table of Contents](#TOC)\n\n●\n\nOur business is susceptible to risks associated with international operations, including risks associated with difficulties, delays or failures in obtaining and/or maintaining the regulatory approvals, permissions, authorizations, licenses or consents that may be required to offer certain products or services in one or more international markets.\n\n**Risks Related to Cryptocurrencies and Digital Assets**\n\nRisks and uncertainties relating to cryptocurrencies and digital assets include, but are not limited to, the following:\n\n●\n\nThe continuing development and acceptance of digital assets and distributed ledger technology are subject to a variety of risks.\n\n●\n\nDigital assets represent a new and rapidly evolving industry, and our business operations and financial performance have in the past been, and may in the future be impacted by the acceptance of Bitcoin and other digital assets.\n\n●\n\nThe prices of digital assets are extraordinarily volatile.\n\n●\n\nDue to a lack of familiarity and some negative publicity associated with digital asset-related companies, existing and potential clients, counterparties and regulators may lose confidence in digital asset management companies.\n\n●\n\nMany digital asset transactions are irrevocable and stolen or incorrectly transferred digital assets may be irretrievable. As a result, any incorrectly executed digital asset transactions could adversely affect our business operations and financial performance.\n\n●\n\nPolitical or economic crises may motivate large-scale sales of digital assets, which would result in a reduction in values and materially and adversely affect us.\n\n●\n\nThe value of cryptocurrencies and other digital assets may be subject to momentum pricing risk.\n\n●\n\nBlockchain networks, digital assets and the digital asset trading platforms on which these assets are traded are dependent on internet and other blockchain infrastructure and susceptible to system failures, security risks and rapid technological change.\n\n●\n\nFrom time to time, we may encounter technical issues in connection with the integration of supported digital assets and changes or upgrades to the underlying digital asset networks of supported cryptocurrencies or protocols, and more broadly, such changes or upgrades may be delayed or unsuccessful, any of which could materially and adversely affect our investments and trading strategies, financial condition and results of operations.\n\n●\n\nChanges in the governance of a digital asset network may not receive sufficient support from users and miners, which may negatively affect that digital asset network’s ability to grow and respond to challenges.\n\n**Risks Related to Our American Depositary Shares**\n\nIn addition to the risks described above, we are subject to risks relating to our ADSs, including but are not limited to the following:\n\n●\n\nThe market price for our ADSs may be volatile.\n\n●\n\nOur ADSs may not comply with the minimum listing requirements of the Nasdaq.\n\n●\n\nOur dual-class share structure with different voting rights will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.\n\n●\n\nOur directors, officers and principal shareholders have substantial influence over our company and their interests may not be aligned with the interests of our other shareholders.\n\n5\n\n[Table of Contents](#TOC)\n\n●\n\nWe have granted, and may continue to grant, share incentives, which may result in increased share based compensation expenses.\n\n●\n\nIf securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the market price for our ADSs and trading volume could decline.\n\n●\n\nThe sale or availability for sale of substantial amounts of our ADSs could adversely affect their market price.\n\n●\n\nBecause we do not expect to pay dividends in the foreseeable future, you must rely on price appreciation of our ADSs for return on your investment.\n\n●\n\nOur memorandum and articles of association that contain anti-takeover provisions that could discourage a third party from acquiring us and adversely affect the rights of holders of our Class A ordinary shares and ADSs.\n\n●\n\nAs a company incorporated in the Cayman Islands, we have adopted certain home country practices in relation to corporate governance matters that differ significantly from the Nasdaq corporate governance requirements; these practices may afford less protection to shareholders than they would enjoy if we complied fully with Nasdaq corporate governance listing standards.; these practices may afford less protection to shareholders than they would enjoy if we complied fully with the Nasdaq corporate governance requirements.\n\n**Risks Related to Our Business**\n\nRisks Related to Our Institutional Crypto Financial Services and Solutions Business\n\nWe may not obtain the regulatory approval in relation to DWM Asset Restructuring in a timely manner or at all and may need to continue relying on the intercompany services agreements to receive the economic benefits of the intercompany services agreement with AGTL.\n\nPursuant to the Merger Agreement, certain local regulatory approvals shall have been obtained before the completion of the Merger. These approvals include local regulatory approvals for the DWM Asset Restructuring and for the Company to become a controller in Sparrow Tech Private Limited, an indirect subsidiary of Amber DWM. Specifically, the Company’s acquisition of 100% of the equity interest in WhaleFin Markets Limited from Amber Group is subject to acceptance of the license application with the Securities Futures Commission in Hong Kong; the Company becoming a controller in Sparrow Tech Private Limited is subject to the Monetary Authority of Singapore’s approval regarding the change of controller; and the assignment of the intercompany services agreement with AGTL is subject to Amber Premium FZE obtaining the Virtual Asset Service Provider (the “VASP”) license with the Virtual Assets Regulatory Authority (the “VARA”) in Dubai.\n\nTo expedite the closing of the Merger, the parties have entered into the Framework Agreement to amend and waive certain closing conditions to the Merger, including in relation to the DWM Asset Restructuring and these regulatory approvals, and to provide for alternative arrangements that would afford the Company with substantially the same economic benefits as the transactions contemplated under the Merger Agreement. Specifically, (i) pursuant to the Framework Agreement, the parties have agreed to complete the DWM Asset Restructuring and cause Sparrow Tech Private Limited to become an indirect subsidiary of the Company promptly upon the receipt of the relevant regulatory approvals, and (ii) pursuant to certain intercompany services agreement entered into concurrently with the execution of the Framework Agreement, while the regulatory approvals are pending, the Company will receive 100% of the consolidated basis net income generated by the WFTL Assigned Contracts and 100% consolidated net income of Sparrow Tech Private Limited. On October 28, 2025, the WFTL Assigned Contracts were assumed by AGTL, which is also a wholly owned subsidiary of Amber Group and an affiliate of ours, and Amber Match Limited, one of our wholly owned subsidiaries, entered into intercompany services agreement with AGTL to replace its previous agreement with WFTL on substantially the same terms.\n\n6\n\n[Table of Contents](#TOC)\n\nAs of the date of this annual report, we have obtained certain local regulatory approvals in Singapore and Dubai. For instance, we became a controller in Sparrow Tech Private Limited in April 2025 and Amber Premium FZE received the VASP license from VARA in April 2026. The DWM Asset Restructuring is still ongoing, as certain required local regulatory approvals have not been obtained.**We cannot assure you that we may obtain the regulatory approval in relation to DWM Asset Restructuring in a timely manner or at all. In the absence of such regulatory approvals, we will continue relying on the intercompany services agreement to receive the 100% of the consolidated basis net income generated by the intercompany services agreement with AGTL. The counterparty to Framework Agreement and the intercompany service agreement may not perform their obligations under the contracts and the contractual arrangement does not afford us with control over their business operations, all of which could lead to material adverse effect on the Company’s business and results of operations.\n\nOur institutional crypto financial services and solutions business is nascent, not fully proven by market and subject to material legal, regulatory, operational, reputational, tax and other risks in the jurisdictions where we operate and are not assured to be profitable.\n\nOur institutional crypto financial services and solutions business is nascent, not fully proven by market and subject to material legal, regulatory, operational, reputational, tax and other risks in every jurisdiction and are not assured to be profitable. We may fail to be able to implement investment or trading strategies, develop our business lines or produce a return for our investors. We have chosen to pursue a number of different businesses in this evolving industry and in different jurisdictions. It is possible that some of these businesses or jurisdictions may be difficult to enter and/or it may become evident that a particular business is not a productive use of capital or time. This could lead it to modify our businesses and focus.\n\nFrom time to time, we may also launch new lines of business, offer new products and services within existing lines of business or undertake other strategic projects. There are substantial risks and uncertainties associated with these efforts and we would invest significant capital and resources in such efforts. Also, the volatile nature of the onchain economy makes it difficult to evaluate our current business and future prospects. Regulatory requirements can affect whether initiatives are able to be brought to market in a manner that is timely and attractive to our clients. Initial timetables for the development and introduction of new lines of business, products or services and price and profitability targets may not be met.\n\nOur revenue is highly dependent on digital asset prices, trading volumes and market liquidity, all of which are subject to extreme volatility.\n\nWe generate the substantial majority of our revenue from commissions and execution fees charged on clients’ purchase, sale, and trading of digital assets, which primarily include Bitcoin and Ethereum. These fees are typically either flat or calculated as a percentage of transaction value. A sustained decline in digital asset prices, trading volumes, or overall market liquidity would directly and materially reduce our revenue.\n\nDigital asset prices have exhibited extreme historical volatility. For example, Bitcoin experienced drawdowns exceeding 70% in multiple market cycles such as in 2018 and 2022, and similar sharp corrections occurred in 2025 amid macroeconomic tightening, interest rate changes and sector-specific events. Such volatility can be driven by macroeconomic factors (interest rates, inflation, monetary policy), regulatory announcements, technological developments, market sentiment, large-scale liquidations, or incidents at major platforms. There is no assurance that digital asset prices or institutional trading activity will recover to or maintain prior levels. The price and trading volume of any digital asset is subject to significant uncertainty and volatility, and may significantly decline in the future, without recovery. Such uncertainty and volatility depend on a number of factors, including:\n\n●\n\nmarket conditions of, and overall sentiment towards, digital assets and the onchain economy, including, but not limited to, as a result of actions taken by or developments of other companies in the onchain economy (for example, smart contract hacks or protocol failures encountered by other companies in the onchain economy). See “—Risks Related to Cryptocurrencies and Digital Assets;”\n\n●\n\nchanges in liquidity, volume, and trading activities;\n\n●\n\ntrading activities on digital asset trading platforms worldwide, many of which may be unregulated, and may include manipulative activities;\n\n●\n\ninvestment and trading activities of highly active retail and institutional users, speculators, miners, and investors;\n\n7\n\n[Table of Contents](#TOC)\n\n●\n\nthe speed and rate at which cryptocurrency is able to gain adoption as a medium of exchange, utility, store of value, consumptive asset, security instrument, or other financial assets worldwide, if at all;\n\n●\n\ndecreased user and investor confidence in digital assets and digital asset platforms;\n\n●\n\nnegative publicity and events relating to the onchain economy;\n\n●\n\nunpredictable social media coverage or “trending” of, or other rumors and market speculation regarding, digital assets;\n\n●\n\nthe ability for digital assets to meet user and investor demands;\n\n●\n\nthe functionality and utility of digital assets and their associated ecosystems and networks, including digital assets designed for use in various applications;\n\n●\n\nconsumer preferences and perceived value of digital assets and digital asset markets;\n\n●\n\nincreased competition from other payment services or other digital assets that exhibit better speed, security, scalability, or other characteristics;\n\n●\n\nregulatory or legislative changes and updates affecting the onchain economy;\n\n●\n\nthe characterization of digital assets under the laws of various jurisdictions around the world;\n\n●\n\nthe maintenance, troubleshooting, and development of the blockchain networks underlying digital assets, including by miners, validators, and developers worldwide;\n\n●\n\nthe ability for cryptocurrency networks to attract and retain miners or validators to secure and confirm transactions accurately and efficiently;\n\n●\n\nongoing technological viability and security of digital assets and their associated smart contracts, applications and networks, including vulnerabilities against hacks and scalability;\n\n●\n\nfees and speed associated with processing digital asset transactions, including on the underlying blockchain networks and on digital asset trading platforms;\n\n●\n\nfinancial strength of market participants;\n\n●\n\nthe availability and cost of funding and capital;\n\n●\n\nthe liquidity of digital asset trading platforms;\n\n●\n\ninterruptions or temporary suspensions or other compulsory restrictions in products or services from or failures of major digital asset platforms;\n\n●\n\navailability of an active derivatives market for various digital assets;\n\n●\n\navailability of banking and payment services to support cryptocurrency-related projects;\n\n●\n\nlevel of interest rates and inflation;\n\n●\n\nmonetary policies of governments, trade restrictions, and fiat currency devaluations; and\n\n●\n\nnational and international economic and political conditions.\n\n8\n\n[Table of Contents](#TOC)\n\nThere is no assurance that any digital asset will maintain its value or that there will be meaningful levels of trading activities. In the event that the price of digital assets or the demand for trading digital assets decline, our business, operating results, and financial condition would be adversely affected.\n\nA particular digital asset, product, or service’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty and if we are unable to properly characterize a digital asset or product offering, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, which may adversely affect our business, operating results, and financial condition.\n\nSeveral jurisdictions have taken a broad-based approach to classifying digital assets, products, and services as “securities,” while other jurisdictions, such as Switzerland, Malta, and Singapore, have adopted a narrower approach. As a result, certain digital assets, products, or services may be deemed to be a “security” under the laws of some jurisdictions but not others. Various jurisdictions may, in the future, adopt additional laws, regulations, or directives that affect the characterization of digital assets, products, or services as “securities.” The classification of a digital asset as a security under applicable law has wide-ranging implications for the regulatory obligations that flow from the offer, sale, trading, and clearing of such assets.\n\nWe have procedures to analyze whether each digital asset, products, or services that we seek to support could be deemed to be a “security” under applicable laws. Our procedures do not constitute a legal standard, but rather represent our company-developed metrics, which permit us to make a risk-based assessment regarding the likelihood that a particular digital asset could be deemed a “security” under applicable laws. Regardless of our conclusions, we could be subject to legal or regulatory action in the event a regulatory authority, or a court having final determinative authority on the topic, were to determine that a supported digital asset, product, or service currently offered, sold, or traded on our platform is a “security” under applicable laws. We believe that our process reflects a comprehensive and thoughtful analysis and is reasonably designed to facilitate consistent application of available legal guidance to digital assets to facilitate informed risk-based business judgment. However, we recognize that the application of securities laws to the specific facts and circumstances of digital assets may be complex and subject to change, and that a listing determination does not guarantee any conclusion under the relevant securities laws. We expect our risk assessment policies and procedures to continuously evolve to take into account case law, facts, and developments in technology.\n\nThere can be no assurances that we will properly characterize any given digital asset, product, or service as a security or non-security, or that the regulatory authorities, or a court, if the question was presented to it, would agree with our assessment. If a regulatory authority or a court were to determine that a supported digital asset, product, or service currently offered, sold, or traded on our platform is a security, we would not be able to offer such digital asset as part of our products or services until we are able to do so in a compliant manner. In addition, we could be subject to judicial or administrative sanctions for failing to offer or sell the digital asset in compliance with legal requirements, or for acting as an unregistered broker, dealer, or securities exchange. Such an action could result in injunctions, cease and desist orders, as well as civil monetary penalties, fines, and disgorgement, criminal liability, and reputational harm. Clients that traded such supported digital assets through us and suffered trading losses could also seek to rescind such transaction on the basis that they were conducted in violation of applicable law, which could subject us to significant liability. Furthermore, if we remove any assets from our products or services, our decision may be unpopular with users and may reduce our ability to attract and retain clients.\n\nFurther, if Bitcoin, Ethereum, stablecoins, or any other supported digital asset is deemed to be a security under any jurisdiction, or in a proceeding in a court of law or otherwise, it may have adverse consequences for such supported digital asset. For instance, all transactions in such supported digital asset would have to be registered with the relevant authority, or conducted in accordance with an exemption from registration, which could severely limit its liquidity, usability and transactability. Moreover, the networks on which such supported digital assets are utilized may be required to be regulated as securities intermediaries, and subject to applicable rules, which could effectively render the network impracticable for its existing purposes. Further, it could draw negative publicity and a decline in the general acceptance of the digital asset. Also, it may make it difficult for such supported digital asset to be traded, cleared, and custodied as compared to other digital assets that are not considered to be securities.\n\n9\n\n[Table of Contents](#TOC)\n\nIf we fail to develop, maintain and enhance our brand and reputation, our business operating results and financial condition may be adversely affected.\n\nOur brand and reputation are key assets and a competitive advantage, and maintaining a strong brand and reputation will be an important factor in the success and the development of our business. Protecting and enhancing our brand depends largely on the success of our marketing efforts, our ability to provide consistent, high-quality, and secure products, services, features, and support, and our ability to successfully secure, maintain and defend our rights to use our corporate names, logos, and other trademarks important to our brand. Thus, maintaining, protecting, and enhancing our reputation is also important to our development plans and relationships with our partners and counterparties. Furthermore, we believe that the importance of our brand and reputation may increase as competition in both the traditional financial services industry and the digital asset industry further intensifies. Our brand and reputation could be harmed if we fail to achieve these objectives or if our public image were to be tarnished by negative publicity, unexpected events, or actions by third parties. Unfavorable publicity regarding, for example, the quality of or changes to our products and services, litigation or regulatory activity, privacy practices, data security compromises or breaches, terms of service, employment matters, the use of our products, services, or supported digital assets for illicit or objectionable ends, the actions of our clients, employees, or the actions of other companies that provide similar services to ours, has in the past, and could in the future, adversely affect our reputation and our business. Moreover, to the extent that we acquire a company and maintain that acquired company’s separate brand, we could experience brand dilution or fail to retain positive impressions of our own brand to the extent such impressions are instead attributed to the acquired company’s brand. In addition, actions by, or unfavorable publicity about, our founders, key executives, or prominent employees may directly and adversely impact our corporate brand and reputation.\n\nMore broadly, because the digital asset and blockchain technology sectors are relatively nascent, public opinion is underdeveloped and will continue to evolve over time. Unfavorable media coverage in relation to the digital asset industry may adversely impact our business, our operating results and the value of any investment in it. If we fail to protect our brand image or reputation, we may experience material adverse effects to the size, demographics, engagement, and loyalty of our clients and counterparties, resulting in decreased revenue, which could adversely affect our business, operating results, and financial condition. For further discussion of these risks, please see “—Risks Related to Cryptocurrencies and Digital Assets—Due to a lack of familiarity and some negative publicity associated with digital asset-related companies, existing and potential clients, counterparties and regulators may lose confidence in digital asset management companies.”\n\nWe may not be able to compete effectively, which could materially and adversely affect our business, financial condition, results of operations and prospects, as well as our reputation and brand.\n\nThe onchain economy is highly innovative, rapidly evolving, and characterized by experimentation, changing client needs, frequent introductions of new products and services, and subject to uncertain and evolving industry and regulatory requirements. We expect competition to further intensify in the future as existing players enhance their offerings and new entrants emerge. We face significant competition globally from a variety of market participants. Our main competition falls into the following categories:\n\n●\n\nTraditional financial technology and brokerage firms that have entered the digital asset wealth management market in recent years and offer overlapping features tailored to similar client segments;\n\n●\n\nCompanies focused on the digital asset market, some of whom choose to operate in jurisdictions with less stringent local rules and regulations and are potentially able to more quickly adapt to market trends, support a broader range of digital assets, and develop new digital asset-based products and services due to a different standard of regulatory scrutiny and compliance costs;\n\n●\n\nCrypto-native companies and traditional financial incumbents that offer point or siloed solutions specifically targeted at institutional or niche clients; and\n\n●\n\nDecentralized and non-custodial platforms (DeFi), which facilitate trading and lending without relying on a centralized intermediary.\n\n​\n\n10\n\n[Table of Contents](#TOC)\n\nMany innovative start-up companies and larger incumbents have made, and continue to make, significant investments in research and development, and we expect these companies to continue to develop similar or superior products and technologies that compete with ours. Further, more traditional financial and non-financial services businesses may choose to offer digital asset-based services in the future as the industry gains mainstream adoption. Our current and potential competitors may establish cooperative relationships among themselves or with third parties that may further enhance their resources.\n\nOur existing competitors have, and our potential competitors are expected to have, certain competitive advantages over us, including:\n\n●\n\ngreater name recognition, longer operating histories, larger client bases, and larger market shares;\n\n●\n\noperations in certain jurisdictions with lower compliance costs and greater flexibility to explore new product offerings;\n\n●\n\nsignificantly larger financial, technological, marketing, and other resources, allowing them to devote greater efforts to the development and promotion of their platforms;\n\n●\n\nestablished core business models outside of the digital asset industry, allowing them to operate on lesser margins or at a loss to acquire market share; and\n\n●\n\ngreater resources to make acquisitions or form strategic alliances.\n\nIn response to competition, our competitors may be better at developing new products, responding more quickly to new digital asset developments, and undertaking more extensive marketing campaigns. Consequently, we may have to lower and/or adjust the various fees that we charge to our clients or significantly increase our operating expenses and capital expenditures to attract and retain clients, which could materially and adversely affect our business, profit margins and results of operations. If we are not able to compete effectively, the level of digital asset transaction activities and user engagement on our platform may decrease and our market share may be negatively affected, which could materially and adversely affect our business, financial condition, results of operations and prospects.\n\nWe may be subject to inquiries, investigations, and enforcement actions by regulators and governmental authorities worldwide, including those related to sanctions, export control, and anti-money laundering.\n\nAs we continue to expand our business worldwide, we have 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 digital asset exchanges over time. Moreover, laws regulating financial services, the internet, mobile technologies, digital assets, AI, 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, it is 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 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, as well as with persons, entities, and governments identified on certain prohibited party lists. Nonetheless, there can be no guarantee that our compliance program will prevent transactions with particular persons or addresses or prevent every potential violation of OFAC sanctions. Any present or future government inquiries relating to sanctions could result in negative consequences for us, including costs related to government investigations, financial penalties, and harm to our reputation. The impact on us related to such matters could be substantial. Although we have implemented controls, and are working to implement additional controls and screening tools designed to prevent sanctions violations, there is no guarantee that we will not inadvertently provide access to our products and services to sanctioned parties or jurisdictions in the future.\n\n11\n\n[Table of Contents](#TOC)\n\nRegulators worldwide frequently study each other’s approaches to the regulation of the onchain economy. 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. Conversely, if regulations diverge worldwide, we may face difficulty adjusting our products, services, and other aspects of our business with the same effect. These risks are heightened as we face increased competitive pressure from other similarly situated businesses that engage in regulatory arbitrage to avoid the compliance costs associated with regulatory changes.\n\nThe complexity of international regulatory and enforcement regimes, coupled with the scope of our growing operations in Asia, the Middle East and globally and the evolving global regulatory environment, could result in a single event prompting a large number of overlapping investigations and legal and regulatory proceedings by multiple government authorities in different jurisdictions. Any of the foregoing could, individually or in the aggregate, harm our reputation, damage our brand and business, and adversely affect our operating results and financial condition. Due to the uncertain application of existing laws and regulations, it may be that, despite our regulatory and legal analysis concluding that certain products and services are currently unregulated, such products or services may indeed be subject to financial regulation, licensing, or authorization obligations that we have not obtained or with which we have not complied. As a result, we are at a heightened risk of enforcement action, litigation, regulatory, and legal scrutiny which could lead to sanctions, cease and desist orders, or other penalties and censures which could significantly and adversely affect our continued operations and financial condition.\n\nFailure by us or our third-party custodians to adequately safeguard clients’ digital assets could result in significant losses and severely damage our business and reputation.\n\nWe primarily rely on third-party institutional-grade custodians to safekeep the majority of digital assets held on behalf of our clients. Although we maintain robust internal controls and select custodians with strong security practices, digital asset custody remains subject to risks including cyberattacks, insider theft, operational failures, bankruptcy of the custodian, or loss of private keys. Unlike traditional financial assets, digital assets generally lack comprehensive insurance coverage, and historical incidents (including major exchange and custodian failures) have resulted in permanent asset loss for clients and platforms.\n\nAny such event — whether at our own systems or at a custodian — could lead to client losses, significant compensation claims, regulatory investigations, license suspensions, reputational harm, and loss of institutional client trust, any of which would materially and adversely affect our business, financial condition, and results of operations.\n\nWe may from time to time deposit, transfer and hold in custody with third-party custodians client funds and digital assets. Our policies, procedures, operational controls and controls over financial reporting are designed to protect us from material risks surrounding commingling of assets, conflicts of interest and the safeguarding of digital assets and client funds deposited, transferred or held in custody with third-party custodians across jurisdictions. In addition, our security technology is designed to prevent, detect, and mitigate inappropriate access to our systems, by internal or external threats.\n\nFurthermore, our know-your-customer (“KYC”) and onboarding processes are designed to verify the identity of our clients, manage associated risks and prevent offers and sales of some digital assets and other products and services to certain persons. We believe we have developed and maintained administrative, technical, and physical safeguards designed to comply with applicable legal requirements and industry standards.\n\n12\n\n[Table of Contents](#TOC)\n\nAs our business continues to grow, we must continue to strengthen our associated internal controls and ensure that our third-party custodians and other service providers do the same. Our success and the success of our product offerings require significant confidence in our and our third-party service providers’ ability to properly custody and manage digital asset balances and handle large and growing transaction volumes and amounts of client funds. In addition, we are dependent on our third-party service providers’ operations, liquidity, and financial condition for the proper custody, maintenance, use and safekeeping of these client assets. Any material failure by us or such third-party service providers to maintain the necessary controls, policies, safeguarding procedures, perceived or otherwise, or to manage the digital assets we or they hold for or on behalf of our clients or for our own investment and operating purposes could also adversely impact our business, operating results, and financial condition. Further, any material failure by us or our third-party service providers to maintain the necessary controls or to manage client digital assets and funds appropriately and in compliance with applicable regulatory requirements could result in reputational harm, significant financial losses, lead clients to discontinue or reduce their use of our and our third-party service providers’ products and services, and result in significant penalties and fines and additional restrictions, which could adversely impact our business, operating results, and financial condition.\n\nFurthermore, it is possible that hackers, employees or service providers acting contrary to our or our third-party custodians’ policies, or others could circumvent these safeguards to improperly access our systems or documents, or the systems or documents of our third-party service providers or agents, and improperly access, obtain and misuse client digital assets and funds. The methods used to obtain unauthorized access, disable, or degrade service or sabotage systems are also constantly changing and evolving and may be difficult to anticipate or detect for long periods of time. Our and our third-party custodians’ insurance coverage for such impropriety is limited and may not cover the extent of loss nor the nature of such loss, in which case We may be liable for the full amount of losses suffered, which could be greater than all of our assets. Our and our third-party custodians’ ability to maintain insurance is also subject to the insurance carriers’ ongoing underwriting criteria. Any loss of client funds or digital assets could result in a subsequent lapse in insurance coverage, which could cause a substantial business disruption, adverse reputational impact, inability to compete with our competitors, and regulatory investigations, inquiries, or actions. Additionally, transactions undertaken through electronic channels may create risks of fraud, hacking, unauthorized access or acquisition, and other deceptive practices. Any security incident resulting in a compromise of client assets could result in substantial costs to us and require us to notify impacted clients, and in some cases regulators, of a possible or actual incident, expose us to regulatory enforcement actions, including substantial fines, limit our ability to provide services, subject us to litigation, significant financial losses and adversely impact our brand, reputation, business, results of operations, financial condition and prospects.\n\nIf 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 revenue, could decline, which could adversely impact our business, operating results, and financial condition.\n\nThe institutional crypto financial services and solutions industry, and the onchain economy generally, has been characterized by many rapid, significant, and disruptive products and services in recent years. These include decentralized applications, which allow yield farming, staking, token wrapping, governance tokens, innovative programs to attract clients such as transaction fee mining programs, initiatives to attract traders such as trading competitions, airdrops and giveaways, staking reward programs, and novel cryptocurrency fundraising and distribution schemes. We expect new services and technologies to continue to emerge and evolve, which may be superior to, or render obsolete, the products and services that we currently provide. We cannot predict the effects of new services and technologies on our business. However, our ability to grow our client base and revenue will depend in part on our ability to innovate and create successful new products and services, both independently and in conjunction with third-parties. In particular, developing and incorporating new products and services into our business may require substantial expenditures, take considerable time, and ultimately may not be successful. Any new products or services could fail to attract clients, generate revenue, or perform or integrate well with third-party applications and platforms. In addition, our ability to adapt and compete with new products and services may be inhibited by regulatory requirements and general uncertainty in the law, constraints by our financial institution partners and payment processors, third-party intellectual property rights, or other factors. Moreover, we must continue to enhance our technical infrastructure and other technology offerings to remain competitive and maintain a platform that has the required functionality, performance, capacity, security, and speed to attract and retain clients. As a result, we expect to expend significant costs and expenses to develop and upgrade our technical infrastructure to meet the evolving needs of the industry. Our success will depend on our ability to develop and incorporate new offerings and adapt to technological changes and evolving industry practices. If we are unable to do so in a timely or cost-effective manner, our business and our ability to successfully compete, retain existing clients, and attract new clients may be adversely affected.\n\n13\n\n[Table of Contents](#TOC)\n\nOur business is susceptible to risks associated with international operations, including risks associated with difficulties, delays or failures in obtaining and/or maintaining the regulatory approvals, permissions, authorizations, licenses or consents that may be required to offer certain products or services in one or more international markets.\n\nWe currently have subsidiaries in jurisdictions, such as Singapore, Hong Kong and Dubai. We plan to enter into or increase our presence in additional markets around the world, and any inability or failure to adequately exploit opportunities for international expansion, may harm our business and adversely affect our revenue. Our ability to manage our business and conduct our operations internationally requires considerable management attention and resources and is subject to particular challenges of supporting a rapidly growing business in an environment of diverse cultures, languages, customs, tax laws, legal systems, alternate dispute systems and regulatory systems. As we continue to expand our business and client base internationally, we will be increasingly susceptible to risks associated with international operations. These risks and challenges include:\n\n●\n\ndifficulties, delays or failures in obtaining and/or maintaining the regulatory approvals, permissions, authorizations, licenses or consents that may be required to offer certain products or services in one or more international markets. For example, we may not be able to obtain the final regulatory approvals for our license applications in Hong Kong in a timely manner, or at all. Even if we are able to obtain such licenses, our business, financial condition and results of operations may still be adversely affected by the ongoing compliance requirements associated with such licenses. As of December 31, 2025, we had 5,229 Cumulative KYC’ed Users, with Client Assets on Platform of over US$1.3 billion. In connection with our application for a VASP license in Hong Kong and other regions, we have been aligning our user base with enhanced suitability and compliance standards globally. During the first quarter of 2026, we streamlined a portion of client accounts as part of this process to better align with updated regulatory requirements. While this resulted in a planned reduction in total user count, we believe it strengthens our platform’s long-term operational integrity and positions us to attract higher-quality, institutional-grade participation in a regulated environment;\n\n●\n\ndifficulty establishing and managing international operations and the increased operations, travel, infrastructure and legal and compliance costs associated with locations in different countries or regions;\n\n●\n\nthe need to understand and comply with local laws, regulations and customs in multiple jurisdictions, including laws and regulations governing broker-dealer practices, some of which may be different from, or conflict with, those of other jurisdictions, and which might not permit us to operate our business or collect revenue in the same manner as we do in such other jurisdictions;\n\n●\n\nour interpretations of local laws and regulations, which may be subject to challenge by local regulators;\n\n●\n\ndifficulties in managing multiple regulatory relationships across different jurisdictions on complex legal and regulatory matters;\n\n●\n\nif we were to engage in any merger or acquisition activity internationally, this is complex and would be new for us and subject to additional regulatory scrutiny;\n\n●\n\nthe need to vary products, pricing and margins to effectively compete in international markets;\n\n●\n\nthe need to adapt and localize products for specific countries, including obtaining rights to third-party intellectual property used in each country;\n\n●\n\nincreased competition from local providers of similar products and services;\n\n●\n\nthe challenge of positioning our products and services to meet a demand in the local market (also known as “product-market fit”);\n\n●\n\nthe ability to obtain, maintain, protect, defend and enforce intellectual property rights abroad;\n\n●\n\nthe need to offer client support and other aspects of our offering (including websites, articles, blog posts and client support documentation) in various languages;\n\n14\n\n[Table of Contents](#TOC)\n\n●\n\ncompliance with anti-bribery laws, such as the Foreign Corrupt Practices Act and equivalent anti-bribery and anti-corruption requirements in local markets, by us, our employees and our business partners, and the potential for increased complexity due to the requirements on us as a group to follow multiple rule sets;\n\n●\n\ncomplexity and other risks associated with current and future legal requirements in other countries, including laws, rules, regulations and other legal requirements related to cybersecurity and data privacy frameworks and labor and employment laws;\n\n●\n\nthe need to enter into new business partnerships with third-party service providers in order to provide products and services in the local market, which we may rely upon to be able to provide such products and services or to meet certain regulatory obligations;\n\n●\n\nvarying levels of internet technology adoption and infrastructure, and increased or varying network and hosting service provider costs and differences in technology service delivery in different countries;\n\n●\n\nfluctuations in currency exchange rates and the requirements of currency control regulations, which might restrict or prohibit conversion of other currencies into our reporting currency;\n\n●\n\ntaxation of our international earnings and potentially adverse tax consequences due to requirements of or changes in the income and other tax laws of the jurisdictions in which we operate; and\n\n●\n\npolitical or social unrest or economic instability in a specific country or region in which we operate.\n\nWe may not be able to penetrate or successfully operate in the markets we choose to enter. In addition, we may incur significant expenses as a result of our international expansion, and we may not be successful. We may launch products that lack local product-market fit, face local competition from pre-existing companies offering similar products and/or face limited brand recognition in certain parts of the world, any of which could lead to non-acceptance or delayed acceptance of our products and services by clients in new markets. Product adoption and growth rates may vary significantly across different markets. We are subject to income taxes and other taxes in the jurisdictions where we transact or conduct business, and such laws and tax rates vary by jurisdiction. We are subject to review and audit by local and foreign tax authorities. Such tax authorities may disagree with tax positions we take, and if any such tax authority were to successfully challenge any such position, our financial condition or results of operations could be materially and adversely affected. Our failure to successfully manage these risks, or any failure to quickly exploit any opportunity for international expansion could harm our international operations in the markets we choose to enter and have an adverse effect on our business, financial condition and results of operations.\n\nThe wealth management products that we distribute involve various risks and failure to identify or fully appreciate such risks may negatively affect our reputation, client relationships, results of operations and financial conditions.\n\nWe offer our clients access to a comprehensive suite of institutional crypto financial services and solutions, catering to the different investment targets and risk preferences of our clients. These products often have complex structures and involve various risks, including default risks, interest risks, liquidity risks, market risks, counterparty risks, fraud risks and other risks. Particularly, certain wealth management offerings, such as those involving staking, yield-generating, or similar reward programs, have increasingly been the target of intense regulatory scrutiny. In addition, we are subject to evolving regulations in relation to digital assets and wealth management products distributed in different jurisdictions. Regulators, including the U.S. Securities and Exchange Commission, have asserted that certain crypto lending, staking, or yield products may constitute unregistered offers and sales of securities. There is no assurance that our operations will be deemed as being in full compliance with such regulations at all times, and we could face sudden enforcement actions, injunctions, or requirements to halt specific product offerings.\n\n15\n\n[Table of Contents](#TOC)\n\nOur success in providing institutional crypto financial services and solutions depends, in part, on our ability to successfully identify the risks associated with such products and services, and failure to identify or fully appreciate such risks may negatively affect our reputation, client relationships, results of operations and financial conditions. Although we generally do not guarantee the principal or the return of the wealth management products available through our platform and do not bear any liabilities for any loss to capital invested in the products, we must be cautious of the selection of the financial products we offer and must accurately describe the risks associated with those products for our clients. Although we enforce and implement strict risk management policies and procedures, such risk management policies and procedures may not be fully effective in mitigating the risk exposure for all of our clients in all market environments or covering all types of risks, or shielding us from retroactive regulatory reclassifications of our products. If we fail to identify and fully appreciate the risks associated with the financial products we offer, or if regulatory authorities compel us to suspend or alter our highest-yielding products, or fail to disclose such risks to our clients, or if our clients suffer financial losses or other damages resulting from the financial products we offer, our reputation, client relationships, results of operations and financial conditions will be materially and adversely affected.\n\nWe are not obligated to hedge our exposures, and, if we do, hedging transactions may be ineffective or reduce our overall performance.\n\nWe are not obligated to, and sometimes may not, hedge our exposures. However, from time to time, we may use a variety of financial instruments and derivatives, such as options, swaps, and forward contracts, for risk management purposes, including to: protect against possible changes in the market value of our investment or trading assets resulting from fluctuations in cryptocurrency markets or securities markets and changes in interest rates; protect our unrealized gains in the value of our investments or trading assets; facilitate the sale of any such assets; enhance or preserve returns, spreads or gains on any trade or investment; hedge the interest-rate or currency-exchange risk on any of our liabilities or assets; protect against any increase in the price of any assets that we anticipate purchasing at a later date; or to any other end that we deem appropriate. The success of any hedging activities by us will depend, in part, on our ability to correctly assess the degree of correlation between the performance of the instruments used in the hedging strategy and the performance of the assets being hedged. Since the characteristics of many assets change as markets change or time passes, the success of our hedging strategy will also be subject to our ability to continually recalculate, readjust and execute hedges in an efficient and timely manner. In addition, while we may enter into hedging transactions with the view to reducing risk, in certain circumstances such transactions may actually increase risk or result in a poorer overall performance for us than if we had not engaged in such hedging transactions.\n\nWe may make, or otherwise be subject to, trade errors**.**\n\nErrors may occur with respect to trades we executed on clients’ behalf. Trade errors can result from a variety of situations, including, for example, an operational breakdown or failure in the processing of a marketing campaign or when the wrong investment is purchased or sold or when the wrong quantity is purchased or sold or when the execution price is wrong. Trade errors frequently result in losses, which could be material. Errors may result in disputes with clients and thus negatively impact our reputation or lead to our financial losses. To the extent that an error is caused by a third party, we may seek to recover any losses associated with the error, although there may be contractual limitations on any third party’s liability with respect to such error.\n\nOur trading orders may not be timely executed.\n\nWe help our clients establish and maintain an overall market position in a combination of financial instruments in the digital asset market. Our trading orders may not be executed in a timely and efficient manner because of various circumstances, including, for example, trading volume surges or systems failures attributable to us or our counterparties, brokers, dealers, agents or other service providers. In such an event, we might only be able to acquire or dispose of some, but not all, of the components of the positions on our clients’ behalf, or if the overall positions were to need adjustments, we might not be able to make such adjustments on our clients’ behalf. As a result, we would not be able to achieve our desired market position, which may result in a loss for our clients. In addition, we can be expected to rely heavily on electronic execution systems (and may rely on new systems and technology in the future), which may be subject to certain systemic limitations or mistakes, causing the interruption of trading orders made by us on our clients’ behalf. Failure to execute orders may lead to disputes and financial losses.\n\n16\n\n[Table of Contents](#TOC)\n\nWe provide collateralized loans to our clients, which exposes us to credit risks and may cause us to incur financial or reputational harm.\n\nWe provide collateralized loans to certain clients secured by their digital asset holdings, which exposes us to the risk of our borrowers’ inability to repay such loans or the depreciation of the value of the collateralized assets. In the future, we may enter into credit arrangements with financial institutions to obtain more capital. Any termination or interruption in the financial institutions’ ability to lend to us could interrupt our ability to provide capital to qualified clients to the extent we rely on such credit lines to continue to offer or to grow such products. Further, our credit approval process, pricing, loss forecasting, and scoring models may contain errors or may not adequately assess creditworthiness of our borrowers, or may be otherwise ineffective, resulting in incorrect approvals or denials of loans. It is also possible that loan applicants could provide false or incorrect information. While we have procedures in place to manage our credit risk, such as conducting due diligence on our clients and running stress test simulations to monitor and manage exposures, including any exposures resulting from loans collateralized with digital assets, we remain subject to risks associated with our borrowers’ creditworthiness, the fluctuation of the collateral value, and our approval process.\n\nBorrower loan loss rates may be significantly affected by economic downturns or general economic conditions beyond our control and beyond the control of individual borrowers. In particular, loss rates on loans may increase due to factors such as prevailing market conditions in the onchain economy, the price of Bitcoin and other digital assets, which have experienced significant fluctuations, the amount of liquidity in the markets, and other factors. Borrowers may seek protection under bankruptcy law or similar laws. If a borrower of a loan files for bankruptcy (or becomes the subject of an involuntary petition), a stay may go into effect that will automatically put any pending collection actions on the loan on hold and prevent further collection action absent bankruptcy court approval. The efficacy of our security interest in client collateral may not be guaranteed under applicable laws and regulations and therefore we may be exposed to loss in the event of a client default, even if we appear to be secured against such default. While we have not incurred any material losses to date, if any of the foregoing events were to occur, our reputation and relationships with borrowers, and our financial results, could be harmed.\n\nOur products and services may be exploited to facilitate illegal activity such as fraud, money laundering, gambling, tax evasion, and scams. If any of our clients use our services to further such illegal activities, our business could be adversely affected.\n\nOur products and services may be exploited to facilitate illegal activity including fraud, money laundering, gambling, tax evasion, and scams. We or our partners may be specifically targeted by individuals seeking to conduct fraudulent transfers, and it may be difficult or impossible for us to detect and avoid such transactions in certain circumstances. The use of our products and services for illegal or improper purposes could subject us to claims, individual and class action lawsuits, and government and regulatory investigations, prosecutions, enforcement actions, inquiries, or requests that could result in liability and reputational harm for us. Moreover, certain activity that may be legal in one jurisdiction may be illegal in another jurisdiction, and certain activities that are at one time legal may in the future be deemed illegal in the same jurisdiction. As a result, there is significant uncertainty and cost associated with detecting and monitoring transactions for compliance with local laws. In the event that a client is found responsible for intentionally or inadvertently violating the laws in any jurisdiction, we may be subject to governmental inquiries, enforcement actions, prosecuted, or otherwise held secondarily liable for aiding or facilitating such activities. Changes in law have also increased the penalties for money transmitters for certain illegal activities, and government authorities may consider increased or additional penalties from time to time. Owners of intellectual property rights or government authorities may seek to bring legal action against money transmitters, including us, for involvement in the sale of infringing or allegedly infringing items. Any threatened or resulting claims could result in reputational harm, and any resulting liabilities, loss of transaction volume, or increased costs could harm our business.\n\nMoreover, while fiat currencies can be used to facilitate illegal activities, digital assets are relatively new and, in many jurisdictions, may be lightly regulated or largely unregulated. Many types of digital assets have characteristics, such as the speed with which digital currency transactions can be conducted, the ability to conduct transactions without the involvement of regulated intermediaries, the ability to engage in transactions across multiple jurisdictions, the irreversible nature of certain digital asset transactions, and encryption technology that anonymizes these transactions, that make digital assets susceptible to use in illegal activity. Regulatory authorities and law enforcement agencies around the world have taken and continue to take legal action against persons and entities alleged to be engaged in fraudulent schemes or other illicit activity involving digital assets.\n\nWhile we believe that our risk management and compliance framework is designed to detect significant illicit activities conducted by our potential or existing clients, it cannot ensure that it will be able to detect all illegal activity on our platform. If any of our clients use our products and services to further such illegal activities, our business could be adversely affected.\n\n17\n\n[Table of Contents](#TOC)\n\nOur compliance and risk management methods might not be effective and may result in outcomes that could adversely affect our reputation, operating results, and financial condition.\n\nOur ability to comply with applicable complex and evolving laws, regulations, and rules is largely dependent on the establishment and maintenance of our compliance, audit, and reporting systems, as well as our ability to attract and retain qualified compliance and other risk management personnel. While we have devoted significant resources to develop policies and procedures to identify, monitor, and manage our risks, and expect to continue to do so in the future, we cannot assure you that our policies and procedures will always be effective. Our risk management policies and procedures rely on a combination of technical and human controls and supervision that are subject to error and failure. Some of our methods for managing risk are discretionary by nature and are based on internally developed controls and observed historical market behavior, and also involve reliance on standard industry practices. These methods may not adequately prevent losses, particularly as they relate to extreme market movements, which may be significantly greater than historical fluctuations in the market. Our risk management policies and procedures also may not adequately prevent losses due to technical errors if our testing and quality control practices are not effective in preventing failures. In addition, we may elect to adjust our risk management policies and procedures to allow for an increase in risk tolerance, which could expose us to the risk of greater losses.\n\nRegulators periodically review our compliance with our own policies and procedures and with a variety of laws and regulations. We have received in the past and may from time to time receive examination reports requiring us to enhance certain practices with respect to our compliance program, including due diligence, training, monitoring, reporting, and recordkeeping. We may from time to time in the future receive additional examination reports citing violations of rules and regulations and inadequacies in existing compliance programs. If we fail to comply with these, or do not adequately remediate certain findings, regulators could take a variety of actions that could impair our ability to conduct our business, including delaying, denying, withdrawing, or conditioning approval of certain products and services. In addition, we face the risk of significant intervention by regulatory authorities, including extensive examination and surveillance activities. In the case of non-compliance or alleged non-compliance, we could be subject to investigations and proceedings that may result in substantial penalties or civil lawsuits, including by clients. Any of these outcomes would adversely affect our reputation and brand and business, operating results, and financial condition. Some of these outcomes could adversely affect our ability to conduct our business.\n\nCyberattacks and security breaches of our system, or those impacting our clients or third parties, could adversely impact our brand and reputation and our business, operating results, and financial condition.\n\nOur business involves the collection, storage, processing, and transmission of confidential information, client, employee, service provider, and other personal data, as well as information required to access client assets. As a result, any actual or perceived security breach of us or our third-party partners may:\n\n●\n\nharm our reputation and brand;\n\n●\n\nresult in our systems or services being unavailable and interrupt our operations;\n\n●\n\nresult in improper disclosure of data and violations of applicable privacy and other laws;\n\n●\n\nresult in significant regulatory scrutiny, investigations, fines, penalties, and other legal, regulatory, and financial exposure;\n\n●\n\ncause us to incur significant remediation costs;\n\n●\n\nlead to theft or irretrievable loss of our or our clients’ fiat currencies or digital assets;\n\n●\n\nreduce client confidence in, or decreased use of, our products and services;\n\n●\n\ndivert the attention of management from the operation of our business;\n\n●\n\nresult in significant compensation or contractual penalties from us to our clients or third parties as a result of losses to them or claims by them; and\n\n18\n\n[Table of Contents](#TOC)\n\n●\n\nadversely affect our business and operating results.\n\nFurther, any actual or perceived breach or cybersecurity attack directed at other financial institutions or digital asset companies, whether or not we are directly impacted, could lead to a general loss of client confidence in the onchain economy or in the use of technology to conduct financial transactions, which could negatively impact us, including the market perception of the effectiveness of our security measures and technology infrastructure.\n\nAn increasing number of organizations, including large merchants, businesses, technology companies, and financial institutions, as well as government institutions, have disclosed breaches of their information security systems, some of which have involved sophisticated and highly targeted attacks, including on their websites, mobile applications, and infrastructure.\n\nAttacks upon systems across a variety of industries, including the digital asset industry, are increasing in their frequency, persistence, magnitude, and sophistication, and, in many cases, are being conducted by sophisticated, well-funded, and organized groups and individuals, including state actors. The techniques used to obtain unauthorized, improper, or illegal access to systems and information (including clients’ personal data and digital assets), disable or degrade services, or sabotage systems are constantly evolving, may be difficult to detect quickly, and often are not recognized or detected until after they have been launched against a target. These attacks may occur on our systems or those of our third-party service providers or partners. Certain types of cyberattacks could harm us even if our systems are left undisturbed. For example, attacks may be designed to deceive employees and service providers into releasing control of our systems to a hacker, while others may aim to introduce computer viruses or malware into our systems with a view to stealing confidential or proprietary data. Additionally, certain threats are designed to remain dormant or undetectable until launched against a target and we may not be able to implement adequate preventative measures.\n\nAlthough we have developed systems and processes designed to protect the data we manage, prevent data loss and other security breaches, effectively respond to known and potential risks, and expect to continue to expend significant resources to bolster these protections, there can be no assurance that these security measures will provide absolute security or prevent breaches or attacks. We have experienced from time to time, and may experience in the future, breaches of our security measures due to human error, malfeasance, insider threats, system errors or vulnerabilities, or other irregularities. Unauthorized parties have attempted, and we expect that they will continue to attempt, to gain access to our systems and facilities, as well as those of our clients, partners, and third-party service providers, through various means, including hacking, social engineering, phishing, and attempting to fraudulently induce individuals (including employees, service providers, and our clients) into disclosing usernames, passwords, payment card information, or other sensitive information, which may in turn be used to access our information technology systems and clients’ digital assets. Threats can come from a variety of sources, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, and insiders. Certain threat actors may be supported by significant financial and technological resources, making them even more sophisticated and difficult to detect. As a result, our costs and the resources we devote to protecting against these advanced threats and their consequences may continue to increase over time.\n\nThe broader adoption, use, and commercialization of AI technology, and the continued rapid pace of developments in the AI field, are inherently uncertain.\n\nWe are actively exploring and developing initiatives related to AI as part of our growth strategy. For instance, MIA, our first in-house developed AI agent, has been deployed externally for content generation, social media consistency, and investor engagement, and internally as a proactive workspace assistant accelerating workflows via a proprietary skill hub and secure internal database. We intend to leverage AI technologies to enhance our investment strategies and risk management processes. AI has been developing at a rapid pace, and continues to evolve and change. If we are unable to keep up with the changing AI landscape or in developing services to meet our customers’ evolving AI needs, or if the AI landscape does not develop to the extent we expect, our business, operating results, financial condition, and future prospects may be adversely impacted. Additionally, we may incur significant costs and experience significant delays in developing new products and services to adapt to the changing AI landscape, and may not achieve a return on investment or capitalize on the opportunities presented by demand for AI solutions. Moreover, while AI adoption is likely to continue and may accelerate, the long-term trajectory of this technological trend is uncertain, and market acceptance, understanding, and valuation of solutions and services that incorporate AI technologies are uncertain.\n\n19\n\n[Table of Contents](#TOC)\n\nFurthermore, the 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 as AI continues to evolve. Regulators and lawmakers around the world have started proposing and adopting, or are currently considering, regulations and guidance specifically on the use of AI. Regulations related to AI Technologies have been introduced in the United States at the federal level and are also enacted and advancing at the state level. Additional regulations may impact our ability to develop, use and commercialize AI, which may affect our business, operating results, financial condition, and future prospects.\n\nOur trading activities may expose us to counterparty credit risks.\n\nCredit risk is the risk that a counterparty will be unable or unwilling to satisfy payment or delivery obligations when due. We are exposed to the risk that third parties, including trading counterparties, clearing agents, trading platforms, decentralized finance protocols, custodians, administrators and other financial intermediaries that may owe us money, securities or other assets will not perform their obligations. Any of these parties might default on their obligations to us because of bankruptcy, lack of liquidity, operational failure or other reasons, in which event we may lose all or substantially all of the value of any such investment or trading transaction. When we trade on digital asset trading platforms that specialize in digital asset futures and derivatives, we are exposed to the credit risk of that digital asset trading platform.\n\nIn derivatives, we may invest in options on digital assets. Purchasing and writing put and call options are highly specialized activities that entail greater-than-ordinary investment risks. An uncovered call writer’s loss is theoretically unlimited. Unlike exchange-traded options, which are standardized with respect to the underlying instrument, expiration date, contract size and strike price, the terms of over-the-counter options (options not traded on exchanges) are generally established through negotiation with the other party to the option contract. While this type of arrangement allows greater flexibility to tailor an option, over-the-counter options generally involve greater credit risk than exchange-traded options, which are guaranteed by the clearing organization of the exchanges where they are traded. While the availability of exchange-traded and over-the-counter options on digital assets has expanded in recent years, the market for such options remains less developed than for more established asset classes, and terms may be less favorable or less liquid in comparison. We also enter into other structured derivative products, including accumulators and decumulators, which may give rise to additional counterparty credit risks depending on the applicable margining and custody arrangements.\n\nWhile we seek to mitigate counterparty credit risk in our structured products and derivatives activities through measures such as full collateralization of customer exposures, margining arrangements with hedging counterparties and controlled custody structures, certain of our hedging arrangements with counterparties are partially collateralized, and accordingly we are exposed to the credit risk of such counterparties. Even where mitigation measures are in place, we remain subject to counterparty credit risk on premium receivables, settlement timing differences, mark-to-market exposures on prepaid margin amounts and operational risks, including execution risk.\n\nThe failure or bankruptcy of any of our centralized clearing agents (or futures commission merchants) could result in a substantial loss of our assets. If a centralized clearing agent is unable to satisfy a substantial deficit in a client account, our other clients may be subject to risk of loss of their funds in the event of that centralized clearing agent’s bankruptcy. In such an event, the centralized clearing agent’s clients, such as us, are entitled to recover, even in respect of property specifically traceable to them, only a proportional share of all property available for distribution to all of that centralized clearing agent’s clients.\n\nOur operations are reliant on technology provided by third parties which are out of our direct control.\n\nCertain aspects of our operations are reliant on technology, including hardware, software and telecommunications systems. Significant parts of the technology used in the management of each client may be provided by third parties and are therefore beyond our direct control. Forecasting, trade execution, data gathering, risk management, portfolio management, information technology infrastructure and support, compliance and accounting systems all are designed to depend upon a high degree of automation and computerization. Although we seek, on an ongoing basis, to ensure adequate backups of software and hardware where possible and will attempt to conduct adequate due diligence and monitoring of providers, if such efforts are unsuccessful or inadequate, software or hardware errors or failures may result in errors, data loss and/or failures in trade execution, risk management, portfolio management, compliance or accounting. Errors or failures may also result in the inaccuracy of data and reporting or the unavailability of data or vulnerability of data to the risk of loss or theft. Errors may occur gradually and once in the code may be very hard to detect and can potentially affect results over a long period of time. If an unforeseeable software or hardware malfunction or problem is caused by a defect, virus or other outside force, a client may be materially adversely affected.\n\n20\n\n[Table of Contents](#TOC)\n\nIn particular, we may rely on cloud (including private and public cloud-based) technology for certain operations, including data storage. Cloud-based technology, like any electronic data storage or processing technology, is not fail-safe. It may be subject to certain defects, failures or interruptions of service beyond our direct control. It is also possible that such technology could be compromised by a third party, including through the use of malicious software or programs, such as viruses, which may expose the Company and a client to theft (of data or other assets) and/or significant business interruption. In addition, a software provider may cease operations or be relatively thinly capitalized and our and a client’s ability to be made whole after any loss may be compromised as a result.\n\nOur business relies on third-party service providers and subjects us to risks that we may not be able to control or remediate.\n\nOur operations could be interrupted if our third-party service providers experience operational or other systems difficulties, terminate their services or fail to comply with regulations. We outsource some of our operational activities and accordingly depend on relationships with many third-party service providers. Specifically, we rely on third parties for certain services, including, but not limited to, legal, accounting, custodying and other financial operations, trade related activity, IT infrastructure and systems, trade reconciliation, and margin and collateral movement. Our business depends on the successful and uninterrupted functioning of our information technology and telecommunications systems and third-party service providers. The failure of these systems, a cybersecurity breach involving any of our third-party service providers or the termination or change in terms of a third-party software license or service agreement on which any of these systems is based could interrupt our operations. Because our information technology and telecommunications systems interface with and depend on third-party systems, we could experience service denials if demand for such services exceeds capacity or such third-party systems fail or experience interruptions. Replacing vendors or addressing other issues with our third-party service providers could entail significant delay, expense and disruption of service. As a result, if these third-party service providers experience difficulties, are subject to cybersecurity breaches, or terminate their services, and we are unable to replace them with other service providers, particularly on a timely basis, our operations could be interrupted. If an interruption were to continue for a significant period, our business, financial condition and results of operations could be adversely affected. Should we be required to replace third-party service providers, it may be at a higher cost to us, which could adversely affect our business, financial condition and results of operations.\n\nAny inability to maintain adequate relationships with third-party banks and trading venues with respect to, and any inability to settle client trades related to, our cryptocurrency offerings, may adversely affect our business, financial condition and results of operations.\n\nThe cryptocurrency market operates 24 hours a day, seven days a week. The cryptocurrency market does not have a centralized clearinghouse, and transactions in cryptocurrencies rely on direct settlements between third parties after trades are executed. Accordingly, we rely on third-party banks to facilitate cash settlements between clients and us and rely on the ability of our trading venues to complete cryptocurrency settlements. In addition, we must maintain cash assets in our bank accounts sufficient to meet the working capital needs of our business, which includes deploying available working capital to facilitate cash settlements between us and our clients and certain trading venues. If third-party banks or trading venues have operational failures and cannot perform and facilitate our routine cash and cryptocurrency settlement transactions, we will be unable to support normal cryptocurrency trading operations and these disruptions could have an adverse impact on our business, financial condition and results of operations. Similarly, if we fail to maintain cash assets in our bank accounts sufficient to meet the working capital needs of our business and necessary to complete routine cash settlements related to our trading activity, such failure could impair our ability to support normal trading operations and these disruptions could have an adverse impact on our business, financial condition and results of operations.\n\nWe may also be harmed by the loss of any of our financial institution partners and trading venues. As a result of the many regulations applicable to cryptocurrencies or the risks of digital assets generally, many financial institutions have decided, and other financials may in the future decide, to not provide bank accounts (or access to bank accounts), payments services or other financial services to companies providing cryptocurrency products, including us. Similarly, a number of such companies have had their existing bank accounts closed by their banks. Banks may refuse to provide bank accounts and other banking services to digital asset-related companies, including us, for a number of reasons, such as perceived compliance risks or costs. Any inability to procure or keep banking services would have a material and adverse effect on us.\n\n21\n\n[Table of Contents](#TOC)\n\nSimilarly, continued general banking difficulties may decrease the utility or value of digital assets or harm public perception of those assets. In addition to banks, other third-party service providers including accountants, lawyers and insurance providers may also decline to provide services to companies engaged in digital asset-related businesses because of the perceived risk profile associated with such businesses or the lack of regulatory certainty. Consequently, if we or our trading venues cannot maintain sufficient relationships with the banks that provide these services, banking regulators restrict or prohibit banking of cryptocurrency businesses, or if these banks impose significant operational restrictions, it may be difficult for us to find alternative business partners, which may result in a disruption of our business and could have an adverse impact on our reputation, financial condition and results of operations.\n\nWe obtain and process sensitive client data. Any real or perceived improper use of, disclosure of, or access to such data could harm our reputation, as well as have an adverse effect on our business.\n\nWe obtain and process sensitive data, including personal data related to our clients and their transactions, such as their names, addresses, trading data, tax identification, and bank account information. We face risks, including to our reputation, in the handling and protection of this data, and these risks will increase as our business continues to expand. International laws and regulations governing privacy, data protection, and e-commerce transactions require us to safeguard our clients’, employees’, and service providers’ personal data. In particular, we face a number of challenges relating to data from transactions and other activities during the course of our business operations, including:\n\n●\n\nprotecting the data in and hosted on our system, including against attacks on our system by external parties or misbehavior by our employees;\n\n●\n\naddressing concerns related to privacy, security and other factors; and\n\n●\n\ncomplying with applicable laws, rules and regulations relating to the collection, storage, use, transfer, disclosure and security of personal information, including any requests from regulatory and government authorities relating to such data.\n\nIn particular, if we fail to secure our client’s identity and protect their identity-specific data, such as their addresses and contact information, our clients may be vulnerable to harassments, and their assets may also be put at risk due to data leakages. As a result, we may be held liable for these incidents, and our clients may feel insecure and cease to use our services. In addition, any system or technological failure or compromise of our technology system that results in unauthorized access to or release of any personal data of our clients or proprietary information of our business operations could significantly harm our reputation and/or result in litigation, regulatory investigations and penalties against us.\n\nWhile we have adopted a rigorous and comprehensive policy for the collection, processing, storage and other aspects of data use and privacy and taken necessary measures to comply with all applicable data privacy and protection laws and regulations, we cannot guarantee the effectiveness of these policies and measures undertaken by us, or business partners on our platform. Despite the absence of any material cybersecurity breach and our continuous efforts to comply with our internal policies as well as applicable laws and regulations, any failure or perceived failure to comply with all applicable data privacy and protection laws and regulations, any failure or perceived failure of our business partners to do so, or any failure or perceived failure of our employees to comply with our internal control measures, may result in negative publicity and legal proceedings or regulatory actions against us, and could result in fines, revocation of licenses, suspension of business operations or other penalties or liabilities, which may in turn damage our reputation, discourage current and potential shippers and truckers from using our services, and subject us to fines and damages, which could have a material adverse effect on our business and results of operations.\n\n22\n\n[Table of Contents](#TOC)\n\nWe are subject to governmental regulation and other legal obligations related to data privacy, data protection and information security. If we are unable to comply with these laws and regulations, we may be subject to governmental enforcement actions, litigation, fines and penalties or adverse publicity.\n\nOur collection, use and processing of our clients’ personal data and transaction data are governed by data privacy laws and regulations enacted in Singapore, Hong Kong, Dubai and other jurisdictions such as the U.S. or EU to the extent applicable. These data privacy laws and regulations are complex, continue to evolve, and on occasion may be inconsistent among jurisdictions, leading to uncertainties in interpreting such laws. It is possible that these laws, regulations and requirements may be interpreted and applied in a manner that is inconsistent with our existing information processing practices. In addition, many of these laws are significantly litigated and/or subject to regulatory enforcement. Regulatory bodies may also enact or adopt new laws and regulations concerning data privacy, data retention, data transfer, and data protection. Such laws may continue to restrict or dictate how we collect, maintain, combine and disseminate information and could have a material adverse effect on our business, results of operations, financial condition and prospects.\n\nIn the United States, there are numerous federal and state laws and regulations that could apply to our operations or the operations of our partners, including data breach notification laws, financial information and other data privacy laws, and consumer protection laws and regulations (for example, Section 5 of the Federal Trade Commission Act) that govern the collection, use, disclosure, and protection of personal information. In addition, the General Data Protection Regulation (the “GDPR”), which went into effect in the European Union on May 25, 2018, applies to the collection, use, retention, security, processing, and transfer of personal data of individuals in the European Economic Area (“EEA”) and the United Kingdom, which could further add to our compliance costs and limit how we process information.\n\nAny actual or perceived failure by us or the third parties with whom we work to comply with data privacy laws, regulations, guidelines, rules or industry standards, or any security incident that results in the unauthorized release or transfer of personally identifiable information, may result in governmental enforcement actions and investigations, fines and penalties, litigation and/or adverse publicity, which could harm our reputation and have a material adverse effect on our business, reputation, results of operations, financial condition and prospects.\n\nAny significant disruption in our products and services, in our information technology systems, or in any of the blockchain networks we work with, including events beyond our control, could result in a loss of clients or funds and adversely impact our brand and reputation and our business, operating results, and financial condition.\n\nOur reputation and ability to attract and retain clients and grow our business depends on our ability to operate our service at high levels of reliability, scalability, and performance. Our systems, the systems of our third-party service providers and partners, and certain digital asset and blockchain networks have experienced from time to time, and may experience in the future service interruptions or degradation because of hardware and software defects or malfunctions, distributed denial-of-service and other cyberattacks, insider threats, break-ins, sabotage, human error, vandalism, earthquakes, hurricanes, floods, fires, and other natural disasters, power losses, disruptions in telecommunications services, fraud, military or political conflicts, terrorist attacks, computer viruses or other malware, or other events. If any of our systems, or those of our third-party service providers, are disrupted for any reason, our products and services may fail, resulting in unanticipated disruptions, slower response times and delays in our clients’ transaction execution and processing, failed settlement of transactions, incomplete or inaccurate accounting, recording or processing of transactions, unauthorized trades, loss of client information, increased demand on limited client support resources, client claims, complaints with regulatory organizations, lawsuits, or enforcement actions. A prolonged interruption in the availability or reduction in the availability, speed, or functionality of our products and services could harm our business. Significant or persistent interruptions in our services could cause current or potential clients or partners to believe that our systems are unreliable, leading them to switch to our competitors or to avoid or reduce the use of our products and services, and could permanently harm our reputation and brands. Moreover, to the extent that any system failure or similar event results in damages to our clients or their business partners, these clients or partners could seek significant compensation or contractual penalties from us for their losses, and those claims, even if unsuccessful, would likely be time-consuming and costly for us to address.\n\nBecause we are a regulated financial institution in certain jurisdictions, interruptions have resulted and in the future may result in regulatory scrutiny, and significant or persistent interruptions could lead to significant fines and penalties, and mandatory and costly changes to our business practices, and ultimately could cause us to lose existing licenses or banking relationships that we need to operate or prevent or delay us from obtaining additional licenses that may be required for our business.\n\n23\n\n[Table of Contents](#TOC)\n\nIn addition, we are continually improving and upgrading our information systems and technologies. Implementation of new systems and technologies is complex, expensive, time-consuming, and may not be successful. If we fail to timely and successfully implement new information systems and technologies, or improvements or upgrades to existing information systems and technologies, or if such systems and technologies do not operate as intended, it could have an adverse impact on our business, internal controls (including internal controls over financial reporting), operating results, and financial condition\n\nInformation technology is a critical aspect in the efficient operation of our business, failure to maintain or improve our information technology infrastructure could harm our business and prospects.\n\nThe efficient and reliable operation of our business depends on our information technology systems. We are continuously upgrading our platform to provide increased scale, improved performance, additional capacity and additional built-in functionality, including functionality related to security. Adopting new services and maintaining and upgrading our information technology infrastructure require significant investment of time and resources. Any failure to maintain and improve our information technology infrastructure could result in unanticipated system disruptions, slower response times, impaired clients experience, delays in reporting accurate operating and financial information and failures in risk management. The risks of these events occurring are even higher during certain periods of peak usage and activity when digital assets transactions are higher. In addition, much of the software and interfaces we use are internally developed and proprietary technology. If we experience problems with the functionality and effectiveness of our software, interfaces or platform, such as undetected errors or defects, or are unable to maintain and continuously improve our information technology infrastructure to handle our business needs, our business, financial condition, results of operations and prospects, as well as our reputation and brand, could be materially and adversely affected. In addition, we may face technical issues in connection with the integration of supported digital assets and the underlying digital asset networks of these supported digital assets. For details, please see “—Risks Related to Cryptocurrencies and Digital Assets—From time to time, we may encounter technical issues in connection with the integration of supported digital assets and changes or upgrades to the underlying digital asset networks of supported cryptocurrencies or protocols, and more broadly, such changes or upgrades may be delayed or unsuccessful, any of which could materially and adversely affect our investments and trading strategies, financial condition and results of operations.”\n\nThe nature of our business requires the application of complex financial accounting and tax rules, and there is limited guidance from accounting standard setting bodies and taxing authorities. If financial accounting standards undergo significant changes or taxing authorities announce new tax rules, our operating results could be adversely affected.\n\nThe accounting rules and regulations that we must comply with are complex and subject to interpretation by the International Accounting Standards Board and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported financial results and may even affect the reporting of transactions completed before the announcement or effectiveness of a change. In addition, there has been limited precedent for the financial accounting of digital assets and related valuation and revenue recognition standards. As such, there remains significant uncertainty on how companies should account for digital asset transactions, digital assets and related revenue. Furthermore, there has been limited guidance from taxing authorities on treatment of digital assets and revenue therefrom. Uncertainties in or changes to regulatory or financial accounting standards could result in the need to change our accounting methods and restate our financial statements and impair our ability to provide timely and accurate financial information, which could adversely affect our financial statements, result in a loss of investor confidence, and more generally impact our business, operating results, and financial condition.\n\nRisks Related to Our Legacy Online Marketing and Enterprise Solutions Business\n\nWe continue to be subject to the business risks related to our legacy marketing solutions and enterprise solutions.\n\nWe continue to be subject to the business risks related to our legacy marketing solutions and enterprise solutions business, among others:\n\n●\n\nWe face intense competition for our marketing solutions and enterprise solutions, and if we fail to maintain and enhance our capabilities, our results of operations could be materially and adversely affected.\n\n●\n\nA downturn in global economy could reduce the customers’ demand and their ability to pay for our solutions, which could materially and adversely affect our business and results of operations.\n\n24\n\n[Table of Contents](#TOC)\n\n●\n\nOur sales cycle may become more time-consuming and expensive under enterprise solutions, we may encounter pricing pressure and implementation and configuration challenges, and we may have to delay revenue recognition for some complex transactions, all of which could harm our business and operating results.\n\n●\n\nOur revenues, revenues as a percentage of gross billing, gross profit margin and the comparability of our financial results may be affected by our revenue models.\n\n●\n\nLoss of any marketing agency client may materially and adversely affect our business and results of operations.\n\n●\n\nLoss of any content distribution channel and changes in the contract terms with any content distribution channel may materially and adversely affect our business and results of operations.\n\n●\n\nThe independent online marketing technology market is highly fragmented and intensely competitive. Independent online marketing technology platforms also face competitive pressure from well-established internet companies, marketing agencies and traditional media.\n\n●\n\nIf our algorithms and data engines for assessing and predicting potential audience behaviors are flawed or ineffective, or if our platform fails to otherwise function properly, our reputation and market share would be materially and adversely affected.\n\n●\n\nOur ability to collect and use data from various sources could be restricted.\n\n●\n\nBlocking or deletion of cookies or other modifications to privacy settings on PCs and mobile devices could impair our data collection and effectiveness of our solutions.\n\n●\n\nIf we fail to offer high-quality technical support services under enterprise solutions, our relationships with our clients and our financial results may be adversely affected.\n\n●\n\nIf we fail to innovate, adapt and respond timely and effectively to rapidly changing technologies and new trends, our solutions may become less competitive or obsolete.\n\nWe historically rely on the contractual arrangements that establish the structure for certain of our operations in Chinese Mainland.\n\nWe historically conduct our operations in Chinese Mainland primarily through the VIE entities with which we have maintained contractual arrangements. The VIE entities refer to Beijing OptAim Network Technology Co., Ltd. and its subsidiaries. As part of our corporate restructuring efforts to maximize structural efficiency and reduce reliance on the VIE structure, all VIE subsidiaries other than Beijing OptAim Network Technology Co., Ltd., or the VIE, have been disposed of or otherwise deregistered as of the date of this annual report. As of the date of this annual report, our operations in Chinese Mainland are conducted by our PRC subsidiaries and the VIE is not engaged in any business operations itself. As part of our ongoing efforts to streamline and optimize our corporate structure, we may, from time to time, evaluate potential options with respect to the VIE, including the possible unwinding or termination of the related contractual arrangements in the future, subject to applicable regulatory requirements and other considerations. If the PRC government deems that our contractual arrangements with the VIE do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. Our holding company in the Cayman Islands, the VIE, and investors of our Company face uncertainty about potential future actions by the PRC government that could affect the validity and enforceability of the contractual arrangements with the VIE and, consequently, affect the financial performance of the VIE and our Company as a group.\n\n25\n\n[Table of Contents](#TOC)\n\nForeign ownership in advertising business used to be subject to certain restrictions under the PRC laws and regulations. For example, according to the Administrative Provisions on Foreign-Invested Advertising Enterprises, which were abolished in June 2015, foreign investors were required to meet several conditions in order to invest in PRC advertising business, such as a minimum number of years of advertising-related experience and an approval from the relevant PRC regulatory authority. China Search (Asia) Limited is a company incorporated in Hong Kong and Search Asia Technology (Shenzhen) Co., Ltd., or Search Asia, its PRC subsidiary, is considered a foreign invested enterprise, or FIE. To comply with the then-effective PRC laws and regulations, including the Administrative Provisions on Foreign-Invested Advertising Enterprises, iClick Data Technology (Beijing) Limited, or iClick Beijing, later replaced by Search Asia entered into a set of contractual arrangements with the VIE and its shareholders. As a result of these contractual arrangements, we exert control over the VIE and its subsidiaries, and consolidate their operating results in our financial statements.\n\nUnder the Measures on the Administration of Foreign-related Surveys, or the Foreign-related Surveys Measures, promulgated by the National Bureau of Statistics of China on October 13, 2004, no individual or organization may conduct any foreign-related survey without a license for foreign-related survey granted by the National Bureau of Statistics in China or its local counterparts.\n\nUnder the Catalogue for the Guidance of Foreign Investment Industries, or Foreign Investment Catalog, promulgated by the Ministry of Commerce and National Development and Reform Commission on June 28, 2017, only a domestic enterprise or a sino-foreign enterprise which meets the several requirements stipulated in the Foreign-related Surveys Measures can apply for a license for the foreign-related survey. On September 6, 2024, the Ministry of Commerce (“MOFCOM”) and the National Development and Reform Commission, or the NDRC, jointly promulgated the Special Administrative Measures (Negative List 2024) for Foreign Investment Access, or the Special Administrative Measures, which replaced the negative list attached to the Foreign Investment Catalog in 2021. Industries that are not listed in the Special Administrative Measures are permitted areas for foreign investments, and are generally open to foreign investment unless specifically restricted by other PRC regulations. We do not believe our collection and use of multiple kinds of data from multiple sources in China to improve the cost-effectiveness of marketing campaigns for marketers in and outside China fall within the scope of “foreign-related survey” under the Foreign-related Survey Measures listed under the Special Administrative Measures. However, there are uncertainties under the PRC Laws whether such activities may be deemed as “foreign-related survey,” which would require a foreign-related survey license from the National Bureau of Statistics in China or its local counterparts. If the PRC regulatory authorities disagree with our interpretation of what would constitute foreign-related survey and enforcement practices on foreign-related survey licensing requirement or if we expand our business scope to engage in activities falling within the scope of foreign-related survey, we will need to continue to rely on Search Asia’s contractual arrangements with the VIE and its shareholders to conduct certain of our operations in China, including to transfer such operations to the VIE to the extent they are deemed foreign-related survey.\n\nIn the opinion of our PRC counsel, Jingtian & Gongcheng, the ownership structure of our PRC subsidiaries, the VIE entities, and the contractual arrangements among Search Asia, OptAim Network and the shareholders of OptAim Network are not in violation of existing PRC laws, rules and regulations; and these contractual arrangements are valid, binding and enforceable in accordance with their terms and applicable PRC laws and regulations currently in effect. However, Jingtian & Gongcheng has also advised us that there are substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations and there can be no assurance that the PRC government will ultimately take a view that is consistent with the opinion of our PRC counsel.\n\nIt is uncertain whether any new PRC laws, rules or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide. If the ownership structure, contractual arrangements and business of our company, our PRC subsidiaries or our consolidated variable interest entity are found to be in violation of any existing or future PRC laws or regulations, or we fail to obtain or maintain any of the required permits or approvals, the relevant governmental authorities would have broad discretion in dealing with such violation, including levying fines, confiscating our income or the income of our PRC subsidiaries, consolidated variable interest entity, revoking the business licenses or operating licenses of our PRC subsidiaries, consolidated variable interest entity, shutting down our servers or blocking our online platform, discontinuing or placing restrictions or onerous conditions on our operations, requiring us to undergo a costly and disruptive restructuring, restricting or prohibiting our use of proceeds from our offerings and equity issuances to finance our business and operations in China, and taking other regulatory or enforcement actions that could be harmful to our business. Any of these actions could cause significant disruption to our business operations and severely damage our reputation, which would in turn adversely affect our business and results of operations. If any of these occurrences results in our inability to direct the activities of our consolidated variable interest entity and its subsidiary, and/or our failure to receive economic benefits from our consolidated variable interest entity and its subsidiary, we may not be able to consolidate their results into our consolidated financial statements.\n\n26\n\n[Table of Contents](#TOC)\n\nThe contractual arrangements with our variable interest entity and its shareholder for certain of our business operations in Chinese Mainland may not be as effective as direct ownership in providing operational control.\n\nWe rely on contractual arrangements with the VIE, and its shareholders. These contractual arrangements may not be as effective as direct ownership in providing us with control over the VIE entities.\n\nIf we had direct ownership of OptAim Network and its subsidiaries, we would be able to exercise our rights as a shareholder to effect changes in the board of directors of OptAim Network and its subsidiaries, which in turn could implement changes, subject to any applicable fiduciary obligations, at the management and operational level. However, under the current contractual arrangements, we rely on the performance by OptAim Network and the shareholder of OptAim Network of his obligations under the contracts to exercise control over our consolidated variable interest entity and its subsidiaries. The shareholder of our consolidated variable interest entity may not act in the best interests of our company or may not perform their obligations under these contracts. Such risks exist throughout the period in which we intend to operate our business through the contractual arrangements with OptAim Network and its shareholder. In addition, if any third party claims any interest in such shareholder’s equity interests in OptAim Network, our ability to exercise shareholder’s rights or foreclose the share pledge according to the contractual arrangements may be impaired. Therefore, our contractual arrangements with our consolidated variable interest entity may not be as effective in ensuring our control over the relevant portion of our business operations as direct ownership would be.\n\nWe are subject to risks surrounding the evolving laws and regulations regarding cybersecurity, information security, privacy and data protection and other related laws and requirements in China.\n\nCybersecurity and data privacy and security issues are legislative and regulatory focus in China. On July 30, 2021, the State Council of the PRC promulgated the Regulations on the Protection of the Security of Critical Information Infrastructure, which took effect on September 1, 2021. This regulation requires, among others, certain competent authorities to identify critical information infrastructures. If any critical information infrastructure is identified, the relevant authorities shall promptly notify the relevant operator and the Ministry of Public Security. On September 24, 2024, the State Council published the Network Data Security Management Regulations, which sets forth different scenarios under which data processors would be required to apply for cybersecurity review. In addition, the CAC and a number of other departments under the State Council promulgated the Measures for Cybersecurity Review on December 28, 2021, which became effective on February 15, 2022. According to this regulation, critical information infrastructure operators purchasing network products and services and network platform operators carrying out data processing activities, which affect or may affect national security, are required to conduct cybersecurity review. Our PRC legal counsel, Jingtian & Gongcheng, is of the opinion that as of the date of this annual report, we do not need to apply for cybersecurity reviews in China under its current regulatory regime. This is because (i) as of the date of this annual report, we have not received any notice or determination from competent PRC government authorities identifying us as a critical information infrastructure operator or requiring us to undertake a cybersecurity review by the CAC; (ii) as of the date of this annual report, we have not been notified by any authorities of being classified as a data processor carrying out data processing activities that influence or may influence national security; and (iii) as of the date of this annual report, our legacy marketing solutions business operated by us in Chinese Mainland include promoting content distribution opportunities for the publisher under our sales agency arrangement, providing mobile online advertising services and mobile content distributions to PRC clients, and operating the CMRS team, and data processed in our business is less likely to have a bearing on national security, thus making it unlikely for such data to be classified as core or important data by the authorities. However, we cannot rule out the possibility that the competent PRC government authorities will not initiate cybersecurity reviews on us in the future.\n\n27\n\n[Table of Contents](#TOC)\n\nWe may be subject to PRC laws relating to the collection, use, sharing, retention security, and transfer of confidential and private information, such as personal information and other data. These PRC laws apply not only to third-party transactions, but also to transfers of information between us and our wholly foreign-owned enterprises in China, and other parties with which we have commercial relations. For example, on September 1, 2021, the PRC Data Security Law became effective, which imposes data security and privacy obligations on entities and individuals conducting data-related activities, and introduces a data classification and hierarchical protection system based on the importance of data in economic and social development, as well as the degree of harm it will cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked, or illegally acquired or used. In addition, the Standing Committee of PRC National People’s Congress promulgated the Personal Information Protection Law (the “PIPL”) on August 20, 2021, which took effect on November 1, 2021. The PIPL further emphasizes processors’ obligations and responsibilities for personal information protection and sets out the basic rules for processing personal information and the rules for cross-border transfer of personal information. As of the date hereof, we have not been involved in any investigations on data security or privacy compliance issues in connection with the PRC Data Security Law or the PIPL, and we have not received any inquiry, notice, warning, or sanctions in such respect. In addition, we do not expect to have significant data security or privacy issues given that the nature of our business does not involving collecting and use of vast personal data. However, we cannot guarantee that the regulators will agree with us or will not in the future adopt new regulations that restrict our business operations.\n\nOn July 7, 2022, the CAC promulgated the Measures on Security Assessment of Outbound Data Transfer, or the Measures on Security Assessment of Outbound Data Transfer, effective September 1, 2022. These measures shall apply to the security assessment of the provision of important data and personal information collected and generated by data processors in the course of their operations within the territory of the PRC by such data processors to overseas recipients, or the outbound data transfer. Where there are other provisions in laws and administrative regulations, such other provisions shall prevail. On March 22, 2024, the CAC issued the Provisions on Facilitating and Regulating Cross-Border Data Flows, or the Cross-Border Data Flows Provisions, which provides the following circumstances under which data processors shall, through the local cyberspace administration at the provincial level, apply to the national cyberspace administration for security assessment of cross-border data transfer: (i) critical information infrastructure operators providing personal information or important data overseas; and (ii) data processors other than critical information infrastructure operators providing important data overseas, or cumulatively providing overseas personal information (excluding sensitive personal information) of more than one million individuals or sensitive personal information of more than 10,000 individuals since January 1 of the current year. “Important data” is defined under Measures on Security Assessment of Outbound Data Transfer as any data, the tampering, damage, leakage, or illegal acquisition or use of which, may endanger national security, the operation of the economy, social stability, public health and security, etc. On September 24, 2024, the State Council published the Network Data Security Management, which became effective on January 1, 2025. The Network Data Security Management provides that data processors conducting the data processing activities that affect or may affect national security shall apply for cybersecurity review in accordance with the relevant laws and regulations. In addition, network data processors should identify and declare “important data” in accordance with the relevant provisions, but they are not required to conduct security assessment for outbound data transfer for data that has not been notified or published as “important data” by relevant departments or regions. These Measures specify that an outbound data transfer by a data processor that falls under any of the following circumstances, the data processor shall apply to the CAC for the security assessment via the local provincial-level cyberspace administration authority: (i) outbound transfer of important data by a data processor; (ii) outbound transfer of personal information by a critical information infrastructure operator or a personal information processor who has processed the personal information of more than 1,000,000 people; (iii) outbound transfer of personal information by a personal information processor who has made outbound transfers of the personal information of 100,000 people cumulatively or the sensitive personal information of 10,000 people cumulatively since January 1 of the previous year; or (iv) other circumstances where an application for the security assessment of an outbound data transfer is required as prescribed by the CAC. The data we process does not involve the above circumstances. However, we cannot guarantee that the regulators will agree with us or will not in the future adopt new regulations that restrict our business operations.\n\nSince these statements and regulatory actions are relatively new, and some regulations are still at the stage of consultation for comments, it is highly uncertain how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, or the potential impact such modified or new laws and regulations will have on our daily business operation, our ability to accept foreign investments and listing on a U.S. or other foreign exchanges. PRC laws and their interpretations and enforcement continue to develop and are subject to change, and the PRC government may adopt other rules and restrictions in the future.\n\n28\n\n[Table of Contents](#TOC)\n\nOther Risks Related to Our Business\n\nIf we fail to retain existing clients or attract new clients, or if our clients decrease their level of engagement with our services and platform, our business, operating results and financial condition may be significantly harmed.\n\nOur success depends on our ability to retain existing clients, attract new clients and increase client engagement with our services, platform and solutions. In order to achieve this, we must continue to offer leading technologies and ensure that our products and services are secure, reliable and engaging. We must also expand our products and services, and offer attractive fees. There is no assurance that we will be able to continue to do so to retain our existing clients, attract new clients or keep our clients engaged. For example, the customers to the intercompany services agreement with AGTL may not be willing to continue to keep their accounts or business with us after the assignment. A number of factors could negatively affect client retention, growth and engagement, including:\n\n●\n\nclients increasingly engage with competing products and services, including products and services that Amber Premium is unable to offer due to regulatory reasons;\n\n●\n\nwe fail to introduce new and improved products and services, or if it introduces new products or services that are not favorably received;\n\n●\n\nwe fail to support new and in-demand digital assets or if it elects to support digital assets with negative reputations;\n\n●\n\nthere are changes in sentiment about the quality or usefulness of our products and services or concerns related to privacy, security, fiat pegging or other factors;\n\n●\n\nthere are adverse changes in our products and services that are mandated by legislation, regulatory authorities, or litigation;\n\n●\n\nclients perceive the investment products on our platform to be poor investment choices, or experience significant losses in investments made on our platform;\n\n●\n\ntechnical or other problems prevent us from delivering our services with the speed, functionality, security, and reliability that our clients expect;\n\n●\n\ncybersecurity incidents, employee or service provider misconduct, or other unforeseen activities cause losses to us or our clients, including losses to assets held by us on behalf of our clients;\n\n●\n\nmodifications to our pricing model or modifications by our competitors to their pricing models;\n\n●\n\nwe fail to provide adequate client service;\n\n●\n\nregulatory and governmental bodies in countries that we targets for expansion express negative views towards institutional crypto financial services and solutions platforms and, more broadly, the onchain economy;\n\n●\n\nwe or other companies or high-profile figures in our industry are the subject of adverse media reports or other negative publicity;\n\n●\n\ncustomer satisfaction with our solutions, including any new marketing solutions that we may develop;\n\n●\n\nthe competitiveness of our pricing and payment terms for our clients, which may, in turn, be constrained by our capital and financial resources;\n\n●\n\ncustomer satisfaction with our solutions, including any new solutions that we may develop;\n\n●\n\nthe competitiveness of our pricing and payment terms for our clients, which may, in turn, be constrained by our capital and financial resources;\n\n29\n\n[Table of Contents](#TOC)\n\n●\n\ncustomer satisfaction with our account managing services;\n\n●\n\nour ability to customize and tailor our solution offerings and delivery and pricing models in accordance with the evolving needs of our clients and end marketers;\n\n●\n\nour ability to expand our data base and solutions to serve clients in a wider range of industries and geographic regions;\n\n●\n\nour ability to integrate with a wider range of new technologies, systems, networks and standards; and\n\n●\n\nglobal economic conditions and spending levels of customers generally.\n\nFrom time to time, certain of these factors have negatively affected client retention, growth, and engagement to varying degrees. If we are unable to maintain or increase our client base and client engagement, or if we are unable to attract sufficient spend on our products and services from new clients, our revenue, business, operating results and financial condition could be adversely affected. If our client growth rate slows or declines, it will become increasingly dependent on our ability to maintain or increase levels of user engagement and monetization in order to drive growth of revenue.\n\nWe have experienced fluctuations in growth in recent periods, and our historical growth may not be indicative of our future growth.\n\nWe have experienced fluctuations in growth in recent periods. We may not be able to sustain our historical growth rates, or at all. You should not consider our historical growth in gross billing and revenue as indicative of our future performance.\n\nAdditionally, our growth relies in part on the future development and growth of the industries where we operate, which is subject to a variety of factors that are difficult to predict and evaluate and which are beyond our control. If the industries not grow as we expect, our business, financial condition, cash flows and results of operations could be materially and adversely affected.\n\nWe may experience declines in the growth rates of our business, or negative growth, as a result of a number of external factors, including slowing demand for our platform, insufficient growth in the number of users that utilize our platform, declines in the level of usage of our platform by existing users, macroeconomic factors, increasing competition, changes in rules and regulations which we are or may become subject to, a decrease in the growth of our overall market or our failure to continue to capitalize on growth opportunities, including as a result of our inability to scale to meet such growth. Any failure to successfully address these risks and challenges as we encounter them will negatively affect our growth and if our growth rate declines, investors’ perception of our business and the trading price of the ADSs could be adversely affected.\n\nThe regulatory environment in Hong Kong and Chinese Mainland is complex and evolving, and changes in the economic, political or social conditions or government policies of Hong Kong or Chinese Mainland could have an adverse effect on our business and operations.\n\nWe are headquartered in Singapore, and primarily have operations in Singapore, Hong Kong and Dubai. To a lesser extent, we operate a part of our legacy marketing solutions business in Chinese Mainland, with a variable interest entity, Beijing OptAim Network Technology Co., Ltd., or the VIE. The regulatory environment in Hong Kong and Chinese Mainland is complex and evolving, and changes in the economic, political or social conditions or government policies of Hong Kong or Chinese Mainland could have an adverse effect on our business and operations.\n\nTo the extent we operate any business in Chinese Mainland, we may be subject to the risks and uncertainties related to doing business in Chinese Mainland. If these risks or uncertainties were to materialize, our business, results of operations, financial condition, and future prospects could be materially and adversely affected. The PRC government exercises significant oversight and discretion over the conduct of business in China. Laws regulations, or policies, or the interpretation and enforcement thereof, can change quickly and without prior notice. Moreover, the PRC government may intervene in or influence business operations in China at any time, including through regulatory actions, investigations, or industry-wide restrictions. Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which may have retroactive effect. As a result, businesses in China may not be aware of their violation of any of these policies and rules until sometime after the violation. Such unpredictability could adversely affect their business and impede our ability to continue our operations.\n\n30\n\n[Table of Contents](#TOC)\n\nTo the extent we operate any business in Hong Kong, we may be subject to the risks and uncertainties related to doing business in Hong Kong, In addition, although Hong Kong operates under a different set of laws from Chinese Mainland under the principle of “one country, two systems”, mainland Chinese laws and regulations that do not currently apply to companies in Hong Kong may become applicable to companies in Hong Kong due to the PRC government’s oversight of that region, as a result of which the legal risks associated with operating in Chinese Mainland may also apply directly to operating in Hong Kong. We cannot assure you that the oversight, discretion, and control of the PRC government will not impact our operations in Chinese Mainland and Hong Kong. These risks, together with uncertainties in the legal system and the interpretation and enforcement of laws, regulations, and policies in China, could hinder our ability to continue to offer the ADSs and cause the value of such ADSs to significantly decline or become worthless, or otherwise result in material adverse change to our business operations in Hong Kong.\n\nThere may be also other regulatory, legal, political, geopolitical and operational risks and uncertainties as a result of operating in Chinese Mainland and Hong Kong, such as those relating to trade tensions between the U.S. and China, U.S. export control regulations and sanctions targeting certain Chinese companies and industries, and concerns from the U.S. government about the national security implications of Chinese companies operating in sensitive industries. If any of the foregoing risks or uncertainties were to materialize, our business, results of operations and financial condition could also be materially and adversely affected. See “─ Our business is vulnerable to local market conditions around the world and geopolitical developments, such as wars, trade wars and legislative change.”\n\nOur business is vulnerable to local market conditions around the world and geopolitical developments, such as wars, trade wars and legislative change.\n\nOur business is subject to risks associated with doing business internationally and may be harmed by global events beyond our control, including international political and economic relations. For instance, the ongoing armed conflicts between Russia and Ukraine in Europe and among Israel, Hamas and other militant groups in the Middle East, have caused and could continue to cause significant market disruptions and volatility within the markets in Russia, Europe, the Middle East and the United States. The hostilities have adversely affected and could continue to adversely affect global financial markets and thus could affect our business. We cannot predict the progress or outcome of the situation in Ukraine, or Israel, as the conflict and governmental reactions are rapidly developing. Prolonged unrest or intensified military activities could have a material adverse effect on the global economy, and such effect could in turn, have a material adverse effect on the operations, results of operations, financial condition, liquidity and business outlook of our business. In addition, countries could enact sanctions, export controls, tariffs, investment controls or other measures. These types of laws and regulations are subject to frequent changes, and their interpretation and enforcement involves substantial uncertainties, which may be heightened by national security concerns, or be driven by political or other factors that are out of our control. These types of restrictions, and similar or more expansive restrictions that may be imposed by the U.S. or other jurisdictions, may be difficult or costly to comply with and may materially and adversely affect our business operations.\n\nDuring 2025, the U.S. government imposed a wide range of tariffs at varying levels, including in particular tariffs on Chinese imports, and many countries, including China, have taken retaliating measures. While certain tariffs have subsequently been suspended following trade talks between the U.S. and Chinese governments, trade negotiations between the United States and China and other countries remain fluid. Rising political tensions between China and the U.S. could reduce trade volumes, cross-border investment, technological exchange, and other economic activities between major economies, and have a material adverse effect on global economic conditions and the stability of global financial and stock markets. Moreover, the heightened geopolitical uncertainty and potential for further escalation may affect the global macroeconomic environment. These types of geopolitical developments could materially and adversely affect our overall financial performance and the market prices of our ADSs.\n\n31\n\n[Table of Contents](#TOC)\n\nIn addition, we may also be subject to review and enforcement under domestic and foreign laws that screen foreign investment and acquisitions. In both the United States and non-U.S. jurisdictions, these regulatory requirements may treat companies differently based on the type of company in question and the location and nature of its operations. As a result of these laws and regulations, investments by particular investors may need to be filed with local regulators, which in turn may impose added costs on our business, impact our operations, and limit our ability to engage in strategic transactions that might otherwise be beneficial to us and our investors. These laws are also frequently changed and updated. For example, in October 2024, the U.S. Department of the Treasury issued a final rule (the “Outbound Investment Rule”), which imposes a new national security regulatory framework to control outbound investment from the United States in certain sensitive industry sectors in China, including Hong Kong and Macau. The Outbound Investment Rule took effect in January 2025, and it restricts U.S. persons’ direct and indirect investment into companies with specified connections to China that engage in specified “covered activities” within three areas of technology: semiconductors and microelectronics, quantum information technologies, and artificial intelligence systems. Subsequent to the effectiveness of the Outbound Investment Rule, on February 20, 2025, President Trump issued the America First Trade Policy Memorandum, which proposes possible expansion of the set of technologies of concern and a review of exceptions to the Rule, possibly including changes to the existing exception for publicly trades securities. These rules, including any changes to them that may be adopted, may limit our ability to engage in certain kinds of business operations; they may also limit our ability to raise capital from U.S. and other sources if we engage in the development of technologies specified in these rules. Continuing changes in both U.S. and non-U.S. jurisdictions to foreign investment laws and rules could adversely affect our strategic initiatives, financial performance, and growth prospects.\n\nIf we are unable to protect our proprietary information or other intellectual property, our business could be adversely affected.\n\nWe rely on a combination of trademark and trade secret laws, and contractual restrictions, including through confidentiality, non-disclosure and assignment of invention assignment agreements with our key employees, consultants and third parties with whom we do business, to establish, maintain and protect our proprietary information and other intellectual property. Policing any misappropriation, unauthorized use or reverse engineering our proprietary information and other intellectual property is difficult and costly and the steps we have taken may be inadequate. For example, contractual restrictions may be breached, and we may not succeed in enforcing our rights or have adequate remedies for any breach of laws or contractual restrictions. In addition, we may not be able to enter into agreements or arrangements with everyone who has access to our proprietary information or contributes to the development of our intellectual property. Moreover, our trade secrets may be disclosed to or otherwise become known or be independently developed by competitors, and in these situations, we may have no or limited rights to stop others’ use of our information.\n\nFurthermore, to the extent that our employees, consultants or other third parties with whom we do business use intellectual property owned by others in their work for us, disputes may arise as to the rights to such intellectual property. If, for any of the above reasons, our intellectual property is disclosed or misappropriated, it would have an adverse effect on our business, financial condition and results of operations.\n\n32\n\n[Table of Contents](#TOC)\n\nPast and future acquisitions, strategic investments, partnership or alliance could be difficult to integrate, divert the attention of key management personnel, disrupt our business, dilute shareholder value and adversely affect our results of operations and financial condition.\n\nWe have expanded our business and offerings through organic growth as well as acquisitions and strategic investments.\n\nPast and future acquisitions, strategic investments, partnerships or alliances, including our Merger, could be difficult to integrate, divert the attention of key management personnel, disrupt our business, dilute shareholder value and adversely affect our business and results of operations. If we identify an appropriate acquisition candidate, we may not be successful in negotiating the terms and/or financing of the acquisition, and our due diligence may fail to identify all of the problems, liabilities or other shortcomings or challenges of an acquired business, product or technology, including issues related to intellectual property, product quality or architecture, regulatory compliance practices, revenue recognition or other accounting practices or employee or client issues. Any acquisition or investment may require us to use significant amounts of cash, issue potentially dilutive equity securities or incur debt. Although potential synergy may be achieved by acquisitions of related technologies and businesses, no assurance can be given as to the Company’s ability to successfully integrate any operations, personnel, services or products that have been acquired or might be acquired in the future. Failure to successfully assimilate acquired technologies or businesses could have a material adverse effect on our business, financial condition and operating results. In addition, acquisitions involve numerous risks, any of which could harm our business, including:\n\n●\n\ndifficulties in integrating the operations, technologies, services and personnel of acquired businesses, especially if those businesses operate outside of our core competency;\n\n●\n\ncultural challenges associated with integrating employees from the acquired company into our organization;\n\n●\n\nreputation and perception risks associated with the acquired product or technology by the general public;\n\n●\n\nineffectiveness or incompatibility of acquired technologies or solutions;\n\n●\n\npotential loss of key employees of acquired businesses;\n\n●\n\ninability to maintain the key business relationships and the reputations of acquired businesses;\n\n●\n\ndiversion of management’s attention from other business concerns;\n\n●\n\nlitigation for activities of the acquired company, including claims from terminated employees, clients, former shareholders or other third parties;\n\n●\n\nfailure to identify all of the problems, liabilities or other shortcomings or challenges of an acquired company, technology, or solution, including issues related to intellectual property, solution quality or architecture, regulatory compliance practices, revenue recognition or other accounting practices or employee or client issues;\n\n●\n\nin the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries;\n\n●\n\ncosts necessary to establish and maintain effective internal controls for acquired businesses;\n\n●\n\nfailure to successfully further develop the acquired technology in order to recoup our investment; and\n\n●\n\nincreased fixed costs.\n\nIf we are unable to successfully fully integrate any future business, product or technology we acquire, our business, financial condition and results of operations may suffer.\n\n33\n\n[Table of Contents](#TOC)\n\nWe may not be able to obtain additional capital when desired, on favorable terms or at all.\n\nIn previous years, we have financed our operations primarily with cash generated from financing activities such as issuance of ordinary shares upon IPO and follow-on securities offerings, issuance of convertible notes, and bank borrowings. We may not be able to obtain additional capital when desired, on favorable terms or at all.\n\nIf we raise additional funds through future issuances of equity or convertible debt securities, existing shareholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our ordinary shares. In addition, the incurrence of indebtedness may also result in increased fixed obligations and could result in operating and financial covenants that might restrict our operations. These restrictions may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.\n\nOur ability to obtain additional financing is subject to a number of uncertainties, including those relating to:\n\n●\n\nour future business development, financial condition and results of operations;\n\n●\n\ngeneral market conditions for financing activities by companies in our industry;\n\n●\n\nmacro-economic and other conditions in the jurisdictions where we operate and the U.S.\n\nSome of the factors of the above uncertainties are beyond our control. If we fail to obtain additional capital when desired or properly manage our working capital as planned, we may not be able to execute our growth strategies including but not limited to broaden our business scope, penetrate new markets, invest on innovation and technology etc., and could materially and adversely affected our business, results of operations, liquidity, financial condition, competitiveness and prospects.\n\nIn addition, some of our credit facilities contain covenants that impose certain minimum financial performance requirements on us. If we breach any of these covenants, our lenders under our credit facilities will be entitled to accelerate our debt obligations. Any default under our credit facilities could require that we repay these debts prior to maturity, which in turn may have a material adverse effect on our cash flow and liquidity. Further, enforcement against us under any guarantee and other similar arrangements we may enter into in the future could materially and adversely affect our cash flow and liquidity.\n\nOur disclosure controls and procedures were not effective. If we remain unable to remediate identified material weaknesses, or if we have additional material weaknesses in the future, or otherwise fail to implement and maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002, we may be unable to accurately report our financial results and the market price of our ADSs may be adversely affected.\n\nAs a public company in the United States, we are subject to Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, which requires that we include a report of management on our internal control over financial reporting in our annual report on Form 20-F beginning with our annual report for the fiscal year ended December 31, 2018.\n\n34\n\n[Table of Contents](#TOC)\n\nOur management has concluded that our internal control over financial reporting was not effective as of December 31, 2025. For a summary of the material weaknesses identified for the fiscal year ended December 31, 2025, see “Item 15.—Controls and Procedures—Management’s Annual Report on Internal Control Over Financial Reporting.” If we are unable to remediate the applicable material weaknesses, or if we identify additional material weaknesses in the future or otherwise fail to develop and maintain an effective system of internal controls, we may not be able to produce timely and accurate consolidated financial statements, which may subject us to adverse regulatory consequences and adversely affect investor confidence in us and, as a result, the price of our securities and our ability to access the capital markets and other forms of financing in the future. In addition, our internal controls over financial reporting will not prevent or detect all errors or fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. As a result, if we fail to maintain effective internal control over financial reporting or should we be unable to prevent or detect material misstatements due to error or fraud on a timely basis, investors could lose confidence in the reliability of our financial statements, which in turn could harm our business, results of operations and negatively impact the market price of the ADSs, and harm our reputation. Furthermore, we have incurred and expected to continue to incur considerable costs and to use significant management time and other resources in an effort to comply with Section 404 and other requirements of the Sarbanes-Oxley Act.\n\nMisconduct and failure to function by our employees could harm our business and reputation.\n\nWe are exposed to many types of operational risks, including the risk of misconduct by our employees. For instance, we could be materially adversely affected if audience data and marketers’ business information was disclosed to unintended recipients. We could also be materially adversely affected if our employees absconded with our proprietary data or used our know-how to compete with us. Although employees have left our company in the past and may have violated the non-compete and non-solicitation clauses in their employment agreements with little impact on our business, future violations of these clauses could have a material adverse effect on our business. Any of these occurrences could result in our diminished ability to operate our business, potential liability to our clients, inability to attract future clients, reputational damage, regulatory intervention and financial harm, which could negatively impact our business and results of operations.\n\nIf we do not retain our senior management team and key employees, or attract additional technology and sales talents, we may not be able to sustain our growth or achieve our business objectives.\n\nOur future success is substantially dependent on the continued service of our senior management team and key employees. Our future success also depends on our ability to continue to attract, retain and motivate highly skilled employees, particularly employees with technical skills that enable us to deliver effective marketing solutions, and sales and marketing, and publisher development and support personnel with experience in online marketing. Competition for these employees in our industry is intense. As a result, we may be unable to attract or retain these management and other key employees who are critical to our success, resulting in harm to our key business relationships, loss of key information, expertise or proprietary knowledge and unanticipated recruitment and training costs. The loss of the services of our senior management or other key employees could make it more difficult to successfully operate our business and pursue our business goals.\n\nIncreases in labor costs in Hong Kong, Singapore and Dubai may adversely affect our business and results of operations. In addition, we pay various statutory employee benefits, including pension, housing fund, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance to designated government agencies for the benefit of our employees. This risk may be exacerbated by the uncertainties associated with the implementation of cost-saving initiatives. Unless we are able to control our labor costs or pass on these increased labor costs to our users by increasing the fees of our products and services, our financial condition and results of operations may be adversely affected.\n\nWe do not have any business insurance coverage.\n\nCurrently, we have limited insurance coverage for our business operations. Any uninsured business disruptions may result in our incurring substantial costs and the diversion of resources, which could have an adverse effect on our business and results of operations. In addition, we are growing rapidly and our insurance coverage may not be sufficient to protect us from any loss now or in the future and we may not be able to successfully claim our losses under our current insurance policies on a timely basis, or at all.\n\n35\n\n[Table of Contents](#TOC)\n\n**Risks Related to Cryptocurrencies and Digital Assets**\n\nThe continuing development and acceptance of digital assets and distributed ledger technology are subject to a variety of risks.\n\nCryptocurrencies, such as Bitcoin, and the other types of digital assets in which we invest and trade involve a new and rapidly evolving industry of which blockchain technology is a prominent, but not unique, part. The growth of the digital asset industry in general, and distributed ledger technology that supports digital assets, is subject to a high degree of uncertainty. The factors affecting the further development of the digital asset industry, as well as distributed ledger technology, include:\n\n●\n\ncontinued worldwide growth in the adoption and use of digital assets;\n\n●\n\nthe limited operating histories of many cryptocurrency networks, which have not been validated in production and are still in the process of developing and making significant decisions that will affect the design, supply, issuance, functionality, and governance of their respective digital assets and underlying blockchain networks;\n\n●\n\ngovernment and quasi-government regulation of digital assets and their use, or restrictions on or regulation of access to and operation of applicable distributed ledger technology or systems that facilitate their issuance and secondary trading;\n\n●\n\nthe taxation, and tax-related reporting, of transactions involving digital assets by the United States and other jurisdictions;\n\n●\n\nthe maintenance and development of the open-source software protocols of certain blockchain networks used to support digital assets;\n\n●\n\nadvancements in technology, including computing power, that may adversely affect the respective cryptocurrency networks, render existing distributed ledger technology obsolete, inefficient, or fail to remediate or introduce new bugs and security risks;\n\n●\n\nthe use of the networks supporting digital assets for developing smart contracts and distributed applications;\n\n●\n\ndevelopment of new technologies for mining and staking and the rewards and transaction fees for miners or validators on digital asset networks;\n\n●\n\nchanges in consumer demographics and public tastes and preferences;\n\n●\n\nthe availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies; and\n\n●\n\ngeneral economic conditions and the regulatory environment relating to digital assets.\n\nMany digital asset networks, including Bitcoin and Ethereum, operate on open-source protocols maintained by groups of core developers. The open-source structure of these network protocols means that certain core developers and other contributors may not be compensated, either directly or indirectly, for their contributions in maintaining and developing the network protocol. A failure to properly monitor and upgrade network protocol could damage digital asset networks. As these network protocols are not sold and their use does not generate revenue for development teams, core developers may not be directly compensated for maintaining and updating the network protocols. Consequently, developers may lack a financial incentive to maintain or develop the network, and the core developers may lack the resources to adequately address emerging issues with the networks. There can be no guarantee that developer support will continue or be sufficient in the future. To the extent that material issues arise with certain digital asset network protocols and the core developers and open-source contributors are unable or unwilling to address the issues adequately or in a timely manner, such digital asset networks, and any corresponding digital assets held may be adversely affected.\n\n36\n\n[Table of Contents](#TOC)\n\nDigital assets represent a new and rapidly evolving industry, and our business operations and financial performance have in the past been, and may in the future be impacted by the acceptance of Bitcoin and other digital assets.\n\nDigital assets built on blockchain technology were only introduced in 2008 and remain in the early stages of development. The Bitcoin network was first launched in 2009 and Bitcoins were the first cryptographic digital assets created to gain global adoption and critical mass. Cryptographic and algorithmic protocols governing the issuance of digital assets represent a new and rapidly evolving industry that is subject to a variety of factors that are difficult to evaluate. Because our results of operations may be closely correlated with the acceptance and perception of Bitcoin and/or other digital assets, the realization of one or more of the following risks could materially adversely affect our business operations and financial performance:\n\n●\n\nBitcoins have only recently become selectively accepted as a means of payment by some retail and commercial outlets, and use of Bitcoins by consumers to pay such retail and commercial outlets remains limited. Banks and other established financial institutions may refuse to process funds for Bitcoin transactions; process wire transfers to or from digital asset trading platforms, Bitcoin-related companies or service providers; or maintain accounts for persons or entities transacting in Bitcoin. As a result, the prices of Bitcoins are to some extent still significantly impacted by speculators and miners, thus contributing to price volatility that makes retailers less likely to accept them as a form of payment in the future.\n\n●\n\nBanks may not provide banking services, or may cut off banking services, to businesses that provide digital asset-related services or that accept digital assets as payment, which could dampen liquidity in the market and damage the public perception of digital assets generally or any one digital asset in particular, such as Bitcoin, and their or its utility as a payment system, which could decrease the price of digital assets generally or individually.\n\n●\n\nCertain privacy-preserving features have been or are expected to be introduced to some digital asset networks and digital asset trading platforms or businesses that facilitate transactions in digital assets, including Bitcoin may be at an increased risk of having banking services cut off if there is a concern that these features interfere with the performance of anti-money laundering duties and economic sanctions checks.\n\n●\n\nUsers, developers and miners may otherwise switch to or adopt certain digital assets at the expense of their engagement with other digital asset networks, which may negatively impact those networks, including the Bitcoin network.\n\n●\n\nIn August 2017, the Bitcoin network underwent a hard fork that resulted in the creation of a new digital asset network called Bitcoin Cash. This hard fork was contentious, and as a result some users of the Bitcoin Cash network may harbor ill will toward the Bitcoin network. Any future hard fork could be similarly contentious and some users may attempt to negatively impact the use or adoption of the Bitcoin network or other digital asset networks, as may those involved in contentious hard forks of other digital assets.\n\nDigital assets are a new asset class and represent a technological innovation and they are subject to a high degree of uncertainty. The adoption of digital assets will require growth in usage and in the blockchain technology generally for various applications. Adoption of digital assets will also require greater regulatory clarity. A lack of expansion in use of digital assets and blockchain technologies would adversely affect our financial performance. In addition, there is no assurance that digital assets generally will maintain their value over the long term. The value of digital assets is subject to risks related to our use. If growth in the use of digital assets generally occurs in the near or medium term, there is no assurance that such use will continue to grow over the long term. A contraction in use of digital assets may result in increased volatility or a reduction in digital asset prices, which would materially and adversely affect our business, operating results, and financial condition.\n\nThe prices of digital assets are extraordinarily volatile.\n\nValues of digital assets have historically been highly volatile. The value of cryptocurrencies is based in part on market adoption and future expectations, which may or may not be realized. Fluctuations in the price of various cryptocurrencies may cause uncertainty in the market and could negatively impact trading volumes of cryptocurrencies, which would adversely affect the success of our business, financial condition and results of operations. A significant portion of demand for digital assets is generated by speculators and investors seeking to profit from the short- or long-term holding of these assets. Speculation regarding future appreciation in the value of a digital asset may inflate and make more volatile the price of that digital asset.\n\n37\n\n[Table of Contents](#TOC)\n\nSeveral factors may affect the price of digital assets, particularly cryptocurrencies, including, but not limited to:\n\n●\n\nGlobal cryptocurrency supply and demand, which can be influenced by the growth or decline of retail merchants’ and commercial businesses’ acceptance of cryptocurrencies as payment for goods and services, the security of online digital asset trading platforms and digital wallets that hold cryptocurrencies, the perception that the use and holding of digital currencies is safe and secure and regulatory restrictions on their use.\n\n●\n\nThe development and launch timeline of new digital asset networks, and forthcoming upgrades like proto-danksharding designed to improve network scalability.\n\n●\n\nChanges in the software, software requirements or hardware requirements underlying a blockchain network, such as a fork. Forks in the future are likely to occur and there is no assurance that such a fork would not result in a sustained decline in the market price of cryptocurrencies.\n\n●\n\nChanges in the rights, obligations, incentives or rewards for the various participants in a blockchain network. For digital assets that rely on miners or validators, sophisticated miner groups may become unduly influential over time if system or bandwidth requirements become too high. Where a single personality or entity exerts an outsize influence, an adverse event impacting that individual or entity, such as an insolvency proceeding, could result in a reduction in the price of a digital asset.\n\n●\n\nConcentration of ownership in certain digital assets by an individual or small group of holders or those within one or a small number of jurisdictions. Large sales or distributions by such holders could have an adverse effect on the market price of such digital assets.\n\n●\n\nThe maintenance and development of the software protocol of cryptocurrencies.\n\n●\n\nDigital asset trading platforms’ deposit and withdrawal policies and practices, liquidity on such trading platforms and interruptions in service from or failures of such trading platforms.\n\n●\n\nRegulatory measures, if any, that affect the use and value of digital assets.\n\n●\n\nThe taxation, and tax-related reporting, of transactions involving digital assets by the United States and other jurisdictions.\n\n●\n\nCompetition for and among various cryptocurrencies that exist and market preferences and expectations with respect to adoption of individual currencies.\n\n●\n\nActual or perceived manipulation of the markets for cryptocurrencies.\n\n●\n\nActual or perceived threats that cryptocurrencies and related activities such as mining have adverse effects on the environment or are tied to illegal activities, or on the other hand, the correlation of the price of certain digital assets to the price of Bitcoin in particular.\n\n●\n\nSocial media posts and other public communications by high-profile individuals relating to specific cryptocurrencies, or listing or other business decisions by cryptocurrency companies relating to specific cryptocurrencies.\n\n●\n\nInvestors’ expectations with respect to the rate of inflation, in the economy, monetary policies of governments, trade restrictions and currency devaluations and revaluations.\n\n●\n\nInvestors’ overall confidence in the onchain ecosystem and the safety and reliability of digital asset trading platforms.\n\n●\n\nActivities of stablecoin issuers, the ability of stablecoin issuers to substitute underlying assets to back the stablecoins or the decline in value of those underlying assets and future actions relating to the regulatory or accounting treatment of stablecoins.\n\n38\n\n[Table of Contents](#TOC)\n\nAdditionally, some purportedly decentralized digital assets may be more centralized than widely believed, or may become more centralized over time, increasing the risk that an adverse event impacting an individual personality or entity could result in a reduction in the price of digital assets. While digital assets networks are typically decentralized and do not need to rely on any single government or institution to create, transmit and determine value, in reality a single personality or entity may have the ability to exert centralized authority over a network.\n\nThere are also volatility risks related to stablecoins, which are designed to have a relatively stable price that aligns with the price of 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 segregated or omnibus accounts, among other factors such as the ability of a holder to redeem the stablecoin from its issuer for the underlying asset. 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. Meanwhile, Tether, which issues USDT, publishes a report on a quarterly basis which includes a breakdown of the consolidated total assets comprising its reserves backing USDT as of a given reporting date, and according to such reports, its reserves have included commercial paper and certificates of deposit, cash and bank deposits, reverse repo notes, money market funds, treasury bills, secured loans, corporate bonds, funds and precious metals, and other investments (including digital tokens), and Tether reserves the right to redeem USDT by making in-kind redemptions of any assets held in its reserves. As a result of the discretion afforded to certain stablecoin issuers to determine the composition and amounts of assets held in the issuers’ accounts 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. 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. 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 USDT and USDC. For example, according to reports, Circle had more than US$3 billion of its USDC reserve funds temporarily locked in Silicon Valley Bank when such bank 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 US$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 onchain economy, causing the prices of other stablecoins and digital assets to become more volatile.\n\nBecause 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.\n\n39\n\n[Table of Contents](#TOC)\n\nSome digital assets may be more difficult to value than other investments because such assets may not have a liquid or transparent trading market. For example, some digital asset trading platforms have created their own digital assets and used them in opaque and potentially fraudulent manners to facilitate transactions and trading relationships. In certain circumstances, such digital assets are thinly traded, making it difficult to ascertain the true value of such assets. We may not be able to sell a digital asset promptly or at a reasonable time or price. Although there may be an institutional market for certain digital assets, it is not possible to predict exactly how the market for such assets will develop or whether they will continue to exist. A digital asset that was liquid at the time of purchase may subsequently become illiquid, and its value may decline as a result. In addition, transaction costs are generally higher for digital assets.\n\nThere is no assurance that cryptocurrencies will maintain their long-term value in terms of purchasing power in the future, or that acceptance of cryptocurrency payments by mainstream retail merchants and commercial businesses will continue to grow. Only a limited number of cryptocurrencies, including Bitcoin, have become sometimes accepted as a means of payment for some goods and services, and use of cryptocurrencies by consumers to pay at retail and commercial outlets remains very limited. In part, this is because cryptocurrencies face significant scaling obstacles that can lead to high fees or slow transaction settlement times and attempts to increase the volume of transactions may not be effective. A lack of expansion by cryptocurrencies into retail and commercial markets, or a contraction of such limited use as has developed to date, may result in increased volatility or a reduction in the value of that cryptocurrency or cryptocurrencies generally, which has in the past, and could materially and adversely affect our business, operating results, and financial condition.\n\nDue to a lack of familiarity and some negative publicity associated with digital asset-related companies, existing and potential clients, counterparties and regulators may lose confidence in digital asset management companies.\n\nSince the inception of the onchain economy, numerous digital asset-related companies have been sued, investigated, or shut down due to fraud, manipulative practices, business failure, and security breaches. In many of these instances, clients of these companies were not compensated or made whole for their losses. Larger platforms are more appealing targets for hackers and malware and may also be more likely to be targets of regulatory enforcement actions. For example, in February 2021, Bitfinex settled a long-running legal dispute with the State of New York related to Bitfinex’s alleged misuse of over US$800 million of client assets and, in October 2023, hackers were reported to have stolen US$570 million from the BNB Smart Chain, a blockchain linked with Holdings Ltd. (“Binance”), which operates one of the world’s largest digital asset trading platforms. In February 2025, the digital asset trading platform Bybit reportedly lost approximately $1.5 billion in Ether through a hacker-induced transfer from its cold wallet to a wallet address said to be associated with the Lazarus Group (a hacker group believed to be run by the government of North Korea). Further, in 2022 and 2023, each of Celsius Networks, Voyager Digital, Three Arrows Capital, FTX and Genesis declared bankruptcy. In particular, in November 2022, FTX—which was at the time one of the world’s largest and most popular digital asset trading platforms—became insolvent, and it was revealed that the platform had been misusing client assets, resulting in a loss of confidence in participants of the onchain economy and negative publicity surrounding digital assets more broadly. The U.S. Department of Justice subsequently brought criminal charges, including charges of fraud, violations of federal securities laws, money laundering and campaign finance offenses, against FTX’s former CEO and others. In November 2023, FTX’s former CEO was convicted of fraud and money laundering.\n\nThe SEC also brought charges against Genesis Capital and Gemini Trust Company, LLC (“Gemini”) in January 2023 for their alleged unregistered offer and sale of securities to retail investors. In March 2024, Genesis Capital settled the charges, agreeing to a final judgment ordering it to pay a $21 million civil penalty.\n\n40\n\n[Table of Contents](#TOC)\n\nFurther, in June 2023, the SEC initiated lawsuits against Coinbase, Inc. (“Coinbase”) and Binance alleging, among other things, that such firms were operating as unregistered securities exchanges in the United States, and identifying a number of digital assets that the SEC alleges to be unregistered securities. In addition, in November 2023, the SEC filed a complaint against Payward, Inc. and Payward Ventures, Inc. (together known as “Kraken”) and brought similar charges, including an allegation that Kraken operated as an unregistered securities exchange, brokerage and clearing agency. In November 2023, Binance pleaded guilty to the U.S. Justice Department’s investigations into violations relating to the Bank Secrecy Act of 1970, as amended (“BSA”), and failure to register as a money transmitting business and the International Emergency Economic Powers Act, and the founder of Binance pleaded guilty to failing to maintain an effective AML program in violation of the BSA. As part of the settlement, Binance separately reached resolutions with the CFTC, FinCEN and OFAC. In February 2025, Coinbase and the SEC entered into a court-approved joint stipulation to dismiss the SEC’s lawsuit with prejudice. In March 2025, Kraken and the SEC jointly dismissed the SEC’s lawsuit with prejudice. In May 2025, Binance and the SEC jointly dismissed the SEC’s lawsuit with prejudice. Several other digital assets market participants have also announced that the SEC informed them that the SEC was terminating its investigation or enforcement action into their firm. Further, the Justice Department in April 2025 issued a memorandum indicating that it will prioritize cases related to digital assets’ use in crimes of fraud, terrorism, drugs and human trafficking, organized crime, hacking and gang financing, and that other sorts of cases related to digital assets will be deprioritized. The final outcome of these and other lawsuits (to the extent not yet dismissed), their effect on the broader digital asset investment ecosystem and the reputation impact on industry participants, remain uncertain. Such litigation has led, and this or other litigation in the future may lead, to further volatility in digital asset prices.\n\nIn addition, there have been reports that a significant amount of trading volume on digital asset trading platforms is fabricated and false in nature, with a specific focus on unregulated platforms located outside the United States. Such reports may indicate that the market for digital asset trading platform activities is significantly smaller than otherwise understood.\n\nNegative perception, a lack of stability and standardized regulation in the onchain economy, and the closure or temporary shutdown of digital asset trading platforms due to fraud, business failure, hackers or malware, or government mandated regulation, and associated losses suffered by clients may reduce confidence in the onchain economy and result in greater volatility of the prices of assets, including significant depreciation in value. Any of these events could have an adverse impact on our reputation, business, operating results, and financial condition.\n\nMany digital asset transactions are irrevocable and stolen or incorrectly transferred digital assets may be irretrievable. As a result, any incorrectly executed digital asset transactions could adversely affect our business operations and financial performance.\n\nDigital asset transactions are typically not reversible without the consent and active participation of the recipient of the transaction. Once a transaction has been verified and recorded in a block that is added to the blockchain, an incorrect transfer or theft of a digital asset generally will not be reversible and we may not be capable of seeking compensation for any such transfer or theft. Although transfers of digital assets that we hold and/or that are custodied on behalf of our clients will regularly be made to or from our custody accounts, it is possible that, through computer or human error, or through theft or criminal action, such digital assets could be transferred from our custody accounts in incorrect amounts or to unauthorized third parties, or to uncontrolled accounts.\n\nSuch events have occurred in connection with digital assets in the past. To the extent that we are unable to seek a corrective transaction with such a third party or are incapable of identifying the third party which has received such digital assets through error or theft, we will be unable to revert or otherwise recover incorrectly transferred digital assets. We will also be unable to convert or recover the digital assets transferred to uncontrolled accounts. To the extent that we are unable to seek redress for such error or theft, such loss could have a material adverse effect on our reputation, business, operating results, and financial condition.\n\nPolitical or economic crises may motivate large-scale sales of digital assets, which would result in a reduction in values and materially and adversely affect us.\n\nCertain digital assets, as alternatives to fiat currencies that are backed by central governments, are subject to supply and demand forces based upon the desirability of an alternative, decentralized means of buying and selling goods and services, and it is unclear how such supply and demand will be impacted by geopolitical events. For example, political or economic crises could motivate large-scale acquisitions or sales of digital assets either globally, regionally or locally. Large-scale sales of certain digital assets would result in a reduction in their value and could materially and adversely affect our business, operating results, and financial condition.\n\n41\n\n[Table of Contents](#TOC)\n\nThe value of cryptocurrencies and other digital assets may be subject to momentum pricing risk.\n\nMomentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing public, accounts for anticipated future appreciation in value. Cryptocurrency and other digital asset market prices are determined primarily using data from various digital asset trading platforms, over-the-counter markets, and derivative platforms. Momentum pricing may have resulted, and may continue to result, in speculation regarding future appreciation in the value of cryptocurrencies and other digital assets, inflating and making their market prices more volatile, and such effects may be material and adverse. As a result, cryptocurrencies and other digital assets may be more likely to fluctuate in value due to changing investor confidence in future appreciation (or depreciation) in their market prices, which could adversely and materially affect our results of operations.\n\nBlockchain networks, digital assets and the digital asset trading platforms on which these assets are traded are dependent on internet and other blockchain infrastructure and susceptible to system failures, security risks and rapid technological change.\n\nThe success of cryptocurrency-based blockchain and other digital asset platforms will depend on the continued development of a stable public infrastructure, with the necessary speed, data capacity and security, and the timely development of complementary products such as high-speed modems for providing reliable internet access and services. Digital assets have experienced, and are expected to continue to experience, significant growth in the number of users and amount of content. Blockchains will continue to be increasingly interconnected with other blockchains and real-world applications. As services and applications continue to be built on top of blockchains, they will place increased reliance on third-party infrastructure providers, including in connection with cross-chain bridges and messaging, liquidity providers, wallets, data feeds and oracles. Reliance on any of these third-parties introduces additional risks and points of failure. There is no assurance that the relevant digital asset infrastructure will continue to be able to support the demands placed on it by this continued growth or that the performance or reliability of the technology will not be adversely affected by this continued growth. There is also no assurance that the infrastructure or complementary products or services necessary to make digital assets a viable product for their intended use will be developed in a timely manner, or that such development will not result in the requirement of incurring substantial costs to adapt to changing technologies. The failure of these technologies or platforms or their development could materially and adversely affect our investment and trading strategies, the value of our assets and the value of any investment in us. Any number of technical changes, software upgrades, soft or hard forks, cybersecurity incidents or other changes to the underlying blockchain network may occur from time to time, causing incompatibility, technical issues, disruptions or security weaknesses to our systems. If we are unable to identify, troubleshoot and resolve any such issues successfully, we may no longer be able to support such cryptocurrency, our clients’ assets may be frozen or lost, the security of our hot or cold wallets may be compromised and our systems and technical infrastructure may be affected, all of which could adversely impact the success of our business, financial condition and results of operations. Cryptocurrencies are created, issued, transmitted, and stored according to protocols run by computers in the cryptocurrency network. It is possible these protocols have undiscovered flaws or could be subject to network scale attacks which could result in losses to us. Advancements in quantum computing could break the cryptographic rules of protocols which support certain of our assets.\n\nFrom time to time, we may encounter technical issues in connection with the integration of supported digital assets and changes or upgrades to the underlying digital asset networks of supported cryptocurrencies or protocols, and more broadly, such changes or upgrades may be delayed or unsuccessful, any of which could materially and adversely affect our investments and trading strategies, financial condition and results of operations.\n\nIn order to support any digital asset, a variety of front and back-end technical and development work is required to be implemented in our wallet, custody, trading, and other solutions for our clients, and to integrate such supported digital asset with our existing technical infrastructure. For certain digital assets, a significant amount of development work is required and there is no guarantee that we will be able to support successfully any existing or future digital asset. In addition, such integration may introduce software errors or weaknesses into our products and existing infrastructure. Even if such integration is initially successful, any number of technical changes, software upgrades, soft or hard forks, cybersecurity incidents, or other changes to the underlying blockchain network may occur from time to time, causing incompatibility, technical issues, disruptions, or security weaknesses to our products and existing infrastructure. If we are unable to identify, troubleshoot and resolve any such issues successfully, we may no longer be able to support such digital asset, our clients’ assets may be frozen or lost, the security of our hot, warm, or cold wallets may be compromised, and our technical infrastructure may be affected, all of which could adversely impact our business.\n\n42\n\n[Table of Contents](#TOC)\n\nRising adoption of blockchain networks leads to network congestion, as space on decentralized ledgers is inherently scarce. From a design standpoint, striking a balance between security, decentralization, and scalability (or transactional throughput) is subject of great debate among innovators and has led to the creation of a variety of networks that make different trade-offs to achieve different outcomes. If network congestion rises to the point where transaction fees make it prohibitively expensive for average users to operate on the network, those users may stop using the network, and application developers may seek to build on other networks where users can afford to transact.\n\nAny number of anticipated or unforeseen technical changes or software upgrades, soft or hard forks, cybersecurity incidents or other changes to the underlying blockchain network may cause incompatibility, technical issues, disruptions or security weaknesses to our systems. If we or our third-party providers are unable to identify, troubleshoot and resolve any such issues successfully, we may no longer be able to support such cryptocurrency, our clients’ assets may be frozen or lost, and our technical infrastructure may be affected, all of which could adversely impact the success of our business, financial condition and results of operations.\n\nChanges in the governance of a digital asset network may not receive sufficient support from users and miners, which may negatively affect that digital asset network’s ability to grow and respond to challenges.\n\nThe governance of decentralized networks, such as the Bitcoin and Ethereum networks, is by voluntary consensus and open competition. As a result, there may be a lack of consensus or clarity on the governance of any particular decentralized digital asset network, which may stymie such network’s utility and ability to grow and face challenges. The foregoing notwithstanding, the protocols for some decentralized networks, such as the Bitcoin network, are informally managed by a group of core developers that propose amendments to the relevant network’s source code. Core developers’ roles evolve over time, largely based on self-determined participation. If a significant majority of users and miners adopt amendments to a decentralized network based on the proposals of such core developers, such network will be subject to new protocols 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.\n\nA temporary or permanent “fork” could adversely affect our business operations and financial conditions.\n\nMany public blockchain networks, including the Bitcoin network, operate using open-source protocols, meaning that any user can download the software, modify it and then propose that the users and miners of Bitcoin, for example, adopt the modification. The development team for a network might propose and implement amendments to a network’s source code through software upgrades altering the original protocol, including fundamental ideas such as the irreversibility of transactions and limitations on the validation of blockchain software distributed ledgers. Such changes to original protocols and software could materially and adversely affect our business, operating results, and financial condition.\n\nWhen a modification is introduced and a substantial majority of users and miners consent to the modification, the change is implemented and the network remains uninterrupted. However, if less than a substantial majority of users and miners consent to the proposed modification, and the modification is not compatible with the software prior to its modification, the consequence would be what is known as a “hard fork” of the Bitcoin network, with one group running the pre-modified software and the other running the modified software. The effect of such a fork would be the existence of two versions of Bitcoin running in parallel, yet lacking interchangeability. Both Bitcoin and Ethereum networks have experienced “forks” in recent years. A fork can lead to a disruption of networks and its information technology systems, which can further lead to temporary or even permanent loss of client assets. For example, in August 2017, Bitcoin “forked” into Bitcoin and a new digital asset, Bitcoin Cash, as a result of a several-year dispute over how to increase the rate of transactions that the Bitcoin network can process.\n\nForks may also occur as a network community’s response to a significant security breach. For example, in June 2016, an anonymous hacker exploited a smart contract running on the Ethereum network to syphon approximately US$60 million of ETH held by the DAO, a distributed autonomous organization, into a segregated account. In response to the hack, most participants in the Ethereum community elected to adopt a “fork” that effectively reversed the hack. However, a minority of users continued to develop the original blockchain, now referred to as “Ethereum Classic” with the digital asset on that blockchain now referred to as Ether Classic, or ETC. ETC now trades on several digital asset trading platforms.\n\n43\n\n[Table of Contents](#TOC)\n\nA fork may also occur as a result of an unintentional or unanticipated software flaw in the various versions of otherwise compatible software that users run. Such a fork could lead to users and miners abandoning the digital asset with the flawed software. It is possible, however, that a substantial number of users and miners could adopt an incompatible version of the digital asset while resisting community-led efforts to merge the two chains. This could result in a permanent fork, as in the case of Ether and Ether Classic.\n\nIn addition, many developers have previously initiated hard forks in the Bitcoin blockchain to launch new digital assets, such as Bitcoin Cash, Bitcoin Gold, Bitcoin Silver and Bitcoin Diamond. Later, the Bitcoin Cash blockchain was again forked to launch a new digital asset, Bitcoin Satoshi’s Vision. To the extent such digital assets compete with a digital asset held by us or our clients, such competition could impact demand for such digital asset and could adversely impact our business operations and financial condition. Furthermore, a hard fork can lead to new security concerns. For example, when the Ethereum and Ethereum Classic networks split in July 2016, replay attacks, in which transactions from one network were rebroadcast to nefarious effect on the other network, plagued Ethereum trading platforms through at least October 2016. An Ethereum trading platform announced in July 2016 that it had lost 40,000 Ether Classic, worth about US$100,000 at that time, as a result of replay attacks. Another possible result of a hard fork is an inherent decrease in the level of security due to significant amounts of mining power remaining on one network or migrating instead to the new forked network. After a hard fork, it may become easier for an individual miner or mining pool’s hashing power to exceed 50% of the processing power of the digital asset network that retained or attracted less mining power, thereby making digital assets that rely on proof-of-work more susceptible to attack.\n\nA hard fork may adversely affect the price of the digital asset at the time of announcement or adoption. For example, the announcement of a hard fork could lead to increased demand for the pre-fork digital asset, in anticipation that ownership of the pre-fork digital asset would entitle holders to a new digital asset following the fork. The increased demand for the pre-fork digital asset may cause the price of the digital asset to rise. After the hard fork, it is possible the aggregate price of the two versions of the digital asset running in parallel would be less than the price of the digital asset immediately prior to the fork.\n\nThe Ethereum network is in the process of implementing software upgrades and other changes to its protocol. For example, in September 2022, the Ethereum network activated the long-awaited “Merge” upgrade. The Merge effectively swapped Ethereum’s consensus mechanism away from proof-of-work to proof-of-stake. A digital asset network’s consensus mechanism is a material aspect of its source code, and any failure to properly implement such a change could have a material adverse effect on the value of digital assets that rely on the Ethereum network, including some of which we or our clients hold. Although the Merge appears to be successful thus far, it is possible that the Merge introduced a currently undiscovered error or vulnerability. It is expected that further developments and forks for the Ethereum network are forthcoming.\n\nAny future forks could adversely affect our business operations and financial conditions.\n\nIf a malicious actor or botnet obtains control of more than 50% of the processing power on a digital asset network, or otherwise obtains control over a digital asset network through its influence over core developers or otherwise, such actor or botnet could manipulate the blockchain of such digital asset to adversely affect its ability to operate.\n\nIf a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains a majority of hash rate on a proof-of-work system, or otherwise controls a sizeable portion of supply in a proof-of-stake system, it can maliciously disrupt the blockchain, either by halting functionality, censoring transactions, or even double-spending coins. If such an actor or botnet obtains a majority of the processing power dedicated to mining on a particular digital asset network, it may be able to alter the relevant blockchain on which transactions in that digital asset rely by constructing fraudulent blocks or preventing certain transactions from completing in a timely manner, or at all. The malicious actor or botnet could also control, exclude or modify the ordering of transactions. Although the malicious actor or botnet would 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. To the extent that such malicious actor or botnet did not yield its control of the processing power on the relevant digital asset network or the digital asset community did not reject the fraudulent blocks as malicious, reversing any changes made to the relevant blockchain may not be possible. Further, a malicious actor or botnet could create a flood of transactions in order to slow down the relevant digital asset network.\n\n44\n\n[Table of Contents](#TOC)\n\nFor example, in August 2020, the Ethereum Classic Network was the target of two double-spend attacks by an unknown actor or actors that gained more than 50% of the processing power of the Ethereum Classic Network. The attack resulted in reorganizations of the Ethereum Classic Blockchain that allowed the attacker or attackers to reverse previously recorded transactions in excess of over US$5.0 million and US$1.0 million.\n\nFurther, a malicious actor or botnet could create a flood of transactions in order to slow down the relevant digital asset network. For example, on June 2, 2018, the Horizen network was the target of a double-spend attack by an unknown actor that gained more than 50% of the processing power of the Horizen network. The attack was the result of delayed submission of blocks to the Horizen network. The core developers of Zen have since begun to implement mitigation procedures to significantly increase the difficulty of attacks of this nature by introducing a penalty for delayed block submissions.\n\nThe crossing of the 50% threshold indicates a greater risk that a single mining pool or small group of mining pools could exert authority over the validation of digital asset transactions, and this risk is heightened if over 50% of the processing power on the network falls within the jurisdiction of a single governmental authority. To the extent that such events occur on the network of a digital asset that we or our clients hold, if the network participants, including any core developers and administrators of mining pools, do not ensure greater decentralization of mining processing power of such network, the feasibility of a malicious actor obtaining control of the processing power on such network will increase, which may adversely affect our business.\n\nA malicious actor may also obtain control over the Bitcoin network through its influence over core developers by gaining direct control over a core developer or an otherwise influential programmer. To the extent that the Bitcoin ecosystem does not grow, the possibility that a malicious actor may be able to obtain control of the processing power on the Bitcoin network in this manner will remain heightened.\n\nAny of the above events could materially and adversely affect our business, operating results, and financial condition.\n\nThe theft, loss, hacking, or destruction of private keys required to access any digital assets held in custody for our own account or for our clients may be irreversible. If we are unable to access our private keys or if we experience a hack or other data loss relating to our ability to access any digital assets, it could cause regulatory scrutiny, reputational harm, and other losses.\n\nDigital assets are generally controllable only by the possessor of the unique private key relating to the digital wallet in which the digital assets are held. While blockchain protocols typically require public addresses to be published when used in a transaction, private keys must be safeguarded and kept private in order to prevent a third party from accessing the digital assets held in such a wallet. To the extent that any of the private keys relating to our wallets containing digital assets held for our own account or for our clients is lost, destroyed, or otherwise compromised or unavailable, and no backup of the private key is accessible, we will be unable to access the digital assets held in the related wallet. Further, we cannot provide assurance that our wallets will not be hacked or compromised. Digital assets and blockchain technologies have been, and may in the future be, subject to security breaches, hacking, or other malicious activities. For example, in February 2025, cryptocurrency exchange Bybit suffered the largest crypto heist in history, losing $1.5 billion in Ethereum (ETH) from a cold wallet. Any loss of private keys relating to, or hack or other compromise of, digital wallets used to store our clients’ digital assets could adversely affect our clients’ ability to access or sell their digital assets, require us to reimburse our clients for their losses, and subject us to significant financial losses in addition to losing clients’ trust in us and our products. As such, any loss of private keys due to a hack, a misconduct or error of employee or third-party service provider, or other compromise by third parties could hurt our brand and reputation, result in significant losses, and adversely impact our business. The total value of digital assets in our possession and control is significantly greater than the total value of insurance coverage that would compensate us in the event of theft or other loss of funds, which could cause our business, operating results, and financial condition to be adversely impacted in the event of such uninsured loss.\n\n45\n\n[Table of Contents](#TOC)\n\nAdverse developments affecting financial institutions could adversely affect our industry and business.\n\nAdverse developments that affect financial institutions, such as events involving liquidity that are rumored or actual, have in the past and may in the future lead to bank failures and market-wide liquidity problems. For example, on March 10, 2023, Silicon Valley Bank was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver. Similarly, on March 12, 2023, the New York Department of Financial Services took possession of Signature Bank and appointed the FDIC as receiver of the bank. The U.S. Department of the Treasury, the Federal Reserve and the FDIC released a statement that indicated the FDIC would complete its resolution of Silicon Valley Bank and Signature in a manner that fully protects all depositors. The U.S. Department of Treasury, FDIC and Federal Reserve Board also announced a program to provide up to US$25 billion of loans to financial institutions secured by certain of such government securities held by financial institutions to mitigate the risk of potential losses on the sale of such instruments, widespread demands for client withdrawals or other liquidity needs of financial institutions. We have diverse banking relationships with most of our deposits at large, systemically important financial institutions. To the extent that we have deposited funds with banking institutions that fail and are not otherwise protected, we would lose the amount of our deposits over the then current FDIC insurance limit. The loss of our deposits could reduce the amount of cash we have available to operate our business and have an adverse impact on our business, financial condition and results of operations.\n\nWe offer DeFi products to our clients and our clients may suffer losses if the DeFi protocols, or our activities thereon, do not function as expected.\n\nWe offer DeFi products to our clients. DeFi protocols achieve their purposes through self-executing smart contracts. Some of these DeFi protocols allow users to, for example, transfer digital assets to a pool from which other users can borrow without requiring an intermediate party to facilitate these transactions. Digital assets transferred to a pool generally earn interest to the lender, based on the rates at which borrowers repay the loan, and can generally be withdrawn with no restrictions. However, these DeFi protocols pose heightened regulatory concerns and are subject to various risks, including the risk that the underlying smart contract is insecure, the risk that borrowers may default and the lender will not be able to recover its digital assets, the risk that any underlying collateral may experience significant volatility, and the risk that certain core developers with protocol administration rights can make unauthorized or harmful changes to the underlying smart contract. If any of these risks materialize, our clients’ digital assets in these DeFi protocols may be adversely impacted, and our reputation, business operations and financial condition may be adversely affected.\n\nWe currently offer products involving, and expect to continue to support, certain smart contract-based digital assets. If the underlying smart contracts for these digital assets do not operate as expected, they could lose value and our businesses could be adversely affected.\n\nWe currently offer products involving, and expect to continue to support, various digital assets that represent units of value on smart contracts deployed on a third party blockchain. Smart contracts are programs that store and transfer value and execute automatically when certain conditions are met. Since smart contracts typically cannot be stopped or reversed, vulnerabilities in their programming and design can have damaging, and even permanent, ramifications. For instance, in April 2018, a batch overflow bug was found in many Ethereum-based ERC20-compatible smart contract tokens that allowed hackers to create a large number of smart contract tokens, causing multiple digital asset platforms worldwide to shut down ERC20-compatible token trading. Similarly, in March 2020, a design flaw in the MakerDAO smart contract caused forced liquidations of digital assets at significantly discounted prices, resulting in millions of dollars of losses to users who had deposited digital assets into the smart contract. If any such vulnerabilities or flaws come to fruition, smart contract-based digital assets may suffer negative publicity, be exposed to security vulnerabilities, decline significantly in value, and lose liquidity over a short period of time. As smart contract-based digital assets continue to develop and evolve, we may be subject to unintended or unforeseen regulatory risks and regulatory actions, which may be inconsistently applied across jurisdictions.\n\n46\n\n[Table of Contents](#TOC)\n\nIn some cases, smart contracts can be controlled by one or more “admin keys” or users with special privileges, or “super users.” These users have the ability to unilaterally make changes to the smart contract, enable or disable features on the smart contract, change how the smart contract receives external inputs and data, and make other changes to the smart contract. For smart contracts that hold a pool of assets, these users may also be able to extract funds from the pool, liquidate assets held in the pool, or take other actions that decrease the value of the assets held by the smart contract in reserves. Even for digital assets that have adopted a decentralized governance mechanism, such as smart contracts that are governed by the holders of a governance token, such governance tokens can be concentrated in the hands of a small group of core community members, who would be able to make similar changes unilaterally to the smart contract. If any such super user or group of core members unilaterally makes adverse changes to a smart contract, the design, functionality, features and value of the smart contract, its related digital assets may be harmed. In addition, assets held by the smart contract in reserves may be stolen, misused, burnt, locked up or otherwise become unusable and irrecoverable. These super users can also become targets of hackers and malicious attackers. If an attacker is able to access or obtain the super user privileges of a smart contract, or if a smart contract’s super-users or core community members take actions that adversely affects the smart contract, our clients who hold and transact in the affected digital assets may experience decreased functionality and value of the applicable digital assets, up to and including a total loss of the value of such digital assets. Although we do not control these smart contracts, any such events could cause clients to seek damages against us for their losses, result in reputational damage to us, or in other ways adversely impact our business.\n\n**Risks Related to Our American Depositary Shares**\n\nThe market price for our ADSs may be volatile.\n\nSince our ADSs became listed on Nasdaq Global Market on December 21, 2017, the trading price of our ADSs has ranged from US$0.21 to US$19.10 per ADS (trading price presented here reflected actual trading price, without retrospectively applied ratio change). The trading prices of our ADSs are volatile and could fluctuate widely due to factors beyond our control. Furthermore, as a result of the narrow band of our ADSs publicly available for trading, small trades can cause significant percentage changes in valuation in a short time period. Such volatility may affect the attitude of investors towards our securities, which consequently may impact the trading performance of our ADSs, regardless of our actual operating performance. In addition, securities markets may from time to time experience significant price and volume fluctuations that are not related to our operating performance, which may have a material adverse effect on the market price of our ADSs.\n\nIn addition to the above factors, the price and trading volume of our ADSs may be highly volatile due to multiple other factors, including the following:\n\n●\n\nregulatory developments affecting us, our clients and end marketers, or our industry;\n\n●\n\nconditions in the crypto industry;\n\n●\n\nfluctuation of our results of operations from quarter to quarter due to seasonality in crypto business, which may be affected by the online spending cycles of consumers and marketers’ practices in marketing budget allocation;\n\n●\n\nannouncements of studies and reports relating to the quality of our solutions and service offerings or those of our competitors;\n\n●\n\nchanges in the economic performance or market valuations of our competitors;\n\n●\n\nactual or anticipated fluctuations in our quarterly results of operations and changes in or revisions to our expected results;\n\n●\n\nchanges in financial estimates by securities research analysts;\n\n●\n\nannouncements by us or our competitors of new product and service offerings, acquisitions, strategic relationships, joint ventures or capital commitments;\n\n●\n\nadditions to or departures of our senior management;\n\n47\n\n[Table of Contents](#TOC)\n\n●\n\ndetrimental negative publicity about us, our management or our industry;\n\n●\n\nfluctuations of the price of various cryptocurrencies;\n\n●\n\nfluctuations of currency exchange rates;\n\n●\n\nrelease or expiry of lock-up or other transfer restrictions on our outstanding ordinary shares or ADSs;\n\n●\n\nsales or perceived potential sales of additional ordinary shares or ADSs;\n\n●\n\nany share repurchase program; and\n\n●\n\npotential litigation or regulatory investing actions.\n\nAny of these factors may result in large and sudden changes in the volume and price at which our ADSs will trade.\n\nIn the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.\n\nIn addition, the global financial crisis, the trade wars, the Russia-Ukraine conflict, the Hamas-Israel conflict, the economic recessions and deterioration in the credit market in many countries have contributed and may continue to contribute to extreme volatility in the global stock markets. These broad market and industry fluctuations may adversely affect the market price of our ADSs. Volatility or a lack of positive performance in our ADS price may also adversely affect our ability to retain key employees, most of whom have been granted options or other equity incentives.\n\nOur ADSs may not comply with the minimum listing requirements of the Nasdaq.\n\nOur ADSs are currently listed on the Nasdaq Global Market. In order to maintain listing on the Nasdaq, we must satisfy minimum financial and other continued listing requirements and standards. If we were not able to maintain compliance with this requirement or any other applicable listing standard of the Nasdaq, our ADSs would be subject to delisting. In the event that our ADSs are delisted from the Nasdaq and are not eligible for quotation or listing on another market or exchange, trading of our ADSs could be conducted only in the over-the-counter market established for unlisted securities such as OTC markets. In such event, it could become more difficult to dispose of, or obtain accurate price quotations for our ADSs, which could cause the price of our ADSs to decline further. As a result, our ability to obtain adequate financing for the continuation of our operations would be substantially impaired, which could have a material adverse effect on our financial condition and results of operations.\n\nOur dual-class share structure with different voting rights will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.\n\nWe have a dual-class share structure such that our ordinary shares consist of Class A ordinary shares and Class B ordinary shares. In respect of matters requiring the votes of shareholders, holders of Class A ordinary shares are entitled to one vote per share, while holders of Class B ordinary shares are entitled to 30 votes per share based on our dual-class share structure. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof, while Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Upon any transfer of Class B ordinary shares by a holder thereof to any person or entity which is not an affiliate of such holder, such Class B ordinary shares shall be automatically and immediately converted into the equal number of Class A ordinary shares.\n\n48\n\n[Table of Contents](#TOC)\n\nAs of March 31, 2026, Mr. Michael Wu, our chairman of the board and Chief Executive Officer, beneficially owned an aggregate of 36,233,237 Class B ordinary shares. Due to the disparate voting powers associated with our dual-class share structure, Mr. Wu beneficially owned approximately 91.9% of the aggregate voting power of the Company as of March 31, 2026. See “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” As a result of the dual-class share structure and the concentration of ownership, Mr. Wu will have considerable influence over matters such as decisions regarding change of directors, mergers, change of control transactions and other significant corporate actions. He may take actions that are not in the best interest of us or our other shareholders. This concentration of ownership may discourage, delay or prevent a change in control of our company, which could have the effect of depriving our other shareholders of the opportunity to receive a premium for their shares as part of a sale of our company and may reduce the price of our ADSs. This concentrated control will limit your ability to influence corporate matters and could discourage others from pursuing any potential merger, takeover or other change of control transactions that holders of Class A ordinary shares and ADSs may view as beneficial.\n\nOur directors, officers and principal shareholders have substantial influence over our company and their interests may not be aligned with the interests of our other shareholders.\n\nOur directors and officers collectively beneficially owned an aggregate of 92.5% of the total voting power of our outstanding ordinary shares as of March 31, 2026. See “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” As a result, they have substantial influence over our business, including significant corporate actions such as change of directors, mergers, change of control transactions and other significant corporate actions. They may take actions that are not in the best interest of us or our other shareholders. This concentration of ownership may discourage, delay or prevent a change in control of our company, which could deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of our company and may reduce the price of the ADSs. These actions may be taken even if they are opposed by our other shareholders, including ADS holders. In addition, the significant concentration of share ownership may adversely affect the trading price of the ADSs due to investors’ perception that conflicts of interest may exist or arise.\n\nWe have granted, and may continue to grant, share incentives, which may result in increased share based compensation expenses.\n\nWe have granted, and may continue to grant, share incentives to employees, directors and advisors to incentivize their performance and align their interests with ours. As of March 31, 2026, 332,375 Class A ordinary shares were outstanding under our Post-IPO Share Incentive Plan, representing the shares underlying the unvested 15,500 restricted Class A ordinary shares units, vested and unexercised options to purchase 95,060 Class A ordinary shares, and unvested options to purchase 221,815 Class A ordinary shares units.\n\nWe account for share-based compensation for these share incentive awards using a fair value based method and recognize expenses in our consolidated statements of comprehensive loss in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board. We will incur additional share based compensation expenses in the future as we continue to grant share incentives using the ordinary shares reserved for this platform. We believe the granting of share-based compensation is of significant importance to our ability to attract and retain key personnel and employees, and we will continue to grant share-based compensation to them in the future. As a result, our expenses associated with share-based compensation may increase, which may have an adverse effect on our results of operations.\n\nIf securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the market price for our ADSs and trading volume could decline.\n\nThe trading market for our ADSs will depend in part on the research and reports that securities or industry analysts publish about us or our business. If research analysts do not establish and maintain adequate research coverage or if one or more of the analysts who cover us downgrade our ADSs or publish inaccurate or unfavorable research about our business, the market price for our ADSs would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for our ADSs to decline.\n\n49\n\n[Table of Contents](#TOC)\n\nThe sale or availability for sale of substantial amounts of our ADSs could adversely affect their market price.\n\nSales of substantial amounts of our ADSs in the public market, or the perception that these sales could occur, could adversely affect the market price of our ADSs and could materially impair our ability to raise capital through equity offerings in the future. Certain holders of our ordinary shares have rights, subject to certain conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other shareholders. We have also registered all ordinary shares that we may issue under our equity compensation plans. These shares can be freely sold in the public market subject to volume limitations applicable to affiliates. If any of these additional shares are sold, or if it is perceived that they will be sold, in the public market, the market price of our ADSs could decline.\n\nWe cannot predict what effect, if any, market sales of securities held by our significant shareholders, including potential sales of our securities upon the conversion of our convertible notes, or any other shareholder or the availability of these securities for future sale will have on the market price of our ADSs.\n\nBecause we do not expect to pay dividends in the foreseeable future, you must rely on price appreciation of our ADSs for return on your investment.\n\nWe currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in our ADSs as a source for any future dividend income.\n\nOur board of directors has discretion as to whether to distribute dividends, subject to certain restrictions under Cayman Islands law, namely that our company may only pay dividends out of profits or share premium, and provided always that in no circumstances may a dividend be paid if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our ADSs will likely depend entirely upon any future price appreciation of our ADSs. There is no guarantee that our ADSs will appreciate in value or even maintain the price at which you purchased the ADSs. You may not realize a return on your investment in our ADSs and you may even lose your entire investment in our ADSs.\n\nOur memorandum and articles of association that contain anti-takeover provisions that could discourage a third party from acquiring us and adversely affect the rights of holders of our Class A ordinary shares and ADSs.\n\nOur memorandum and articles of association contain certain provisions that could limit the ability of others to acquire control of our company, including a dual-class share structure that gives greater voting power to the Class B ordinary shares beneficially owned by Mr. Michael Wu, and a provision that grants authority to our board of directors to establish and issue from time to time one or more series of preferred shares without action by our shareholders and to determine, with respect to any series of preferred shares, the terms and rights of that series. These provisions could have the effect of depriving our shareholders and ADSs holders of the opportunity to sell their shares or ADSs at a premium over the prevailing market price by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transactions.\n\n50\n\n[Table of Contents](#TOC)\n\nAs a company incorporated in the Cayman Islands, we have adopted certain home country practices in relation to corporate governance matters that differ significantly from the Nasdaq corporate governance requirements; these practices may afford less protection to shareholders than they would enjoy if we complied fully with Nasdaq corporate governance listing standards.; these practices may afford less protection to shareholders than they would enjoy if we complied fully with the Nasdaq corporate governance requirements.\n\nAs a Cayman Islands company listed on the Nasdaq Global Market, we are subject to the Nasdaq corporate governance requirements. However, Nasdaq Global Market rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the Nasdaq corporate governance requirements. We follow our home country practices and have relied on and intend to continue to rely on some of the exemptions provided by the Nasdaq Stock Market Rules to a foreign private issuer, including exemptions from the requirements to have:\n\n●\n\nshareholder approval for certain events, including the establishment or amendment of certain equity based compensation plans and arrangements and certain transactions involving issuances of 20% or more interest in our company;\n\n●\n\nmajority of independent directors on our board of directors;\n\n●\n\nan annual general meeting of shareholders;\n\n●\n\nonly independent directors being involved in the selection of director nominees and determination of executive officer compensation; and\n\n●\n\nregularly scheduled executive sessions of independent directors.\n\nAs a result of our reliance on the corporate governance exemptions available to foreign private issuers, you will not have the same protection afforded to shareholders of companies that are subject to all of Nasdaq’s corporate governance requirements.\n\nWe are a “controlled company” as defined under the Nasdaq rules, and as a result, will qualify for exemptions from certain corporate governance requirements. Although we do not intend to rely on these exemptions at this time, we may do so in the future and you may not have the same protections afforded to shareholders of companies that are subject to such requirements.\n\nWe are a “controlled company” as defined under the Nasdaq rules because Mr. Wu beneficially owned approximately 91.9% of the aggregate voting power of the Company as of March 31, 2026. For so long as we remain a controlled company under that definition, we are permitted to elect to rely, and may rely, on certain exemptions from Nasdaq corporate governance rules. As a foreign private issuer and a “controlled company”, we are permitted to elect to rely, and may rely, on certain exemptions from corporate governance rules, including:\n\n●\n\nthe requirement that a majority of our Board consist of independent directors;\n\n●\n\nthe requirement that our compensation, nominating and corporate governance committee be composed entirely of independent directors; and\n\n●\n\nthe requirement for an annual performance evaluation of our compensation, nominating and corporate governance committee.\n\nWe intend to rely on these exemptions as may be changed from time to time and, accordingly, you may not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq.\n\n51\n\n[Table of Contents](#TOC)\n\nYou may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.\n\nWe are an exempted limited liability company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles of association, the Companies Act (Revised) of the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary duties of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.\n\nThe Cayman Islands courts are also unlikely:\n\n●\n\nto recognize or enforce against us judgments of courts of the United States based on certain civil liability provisions of U.S. securities laws; and\n\n●\n\nto impose liabilities against us, in original actions brought in the Cayman Islands, based on certain civil liability provisions of U.S. securities laws that are penal in nature.\n\nThere is no statutory recognition in the Cayman Islands of judgments obtained in the United States, although the courts of the Cayman Islands will in certain circumstances recognize and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits.\n\nAs a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States.\n\nShareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of lists of shareholders of these companies. Our directors will have discretion under our current memorandum and articles of association, to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder resolution or to solicit proxies from other shareholders in connection with a proxy contest.\n\nAs a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States.\n\n52\n\n[Table of Contents](#TOC)\n\nYou may experience difficulties in effecting service of legal process and enforcing judgments obtained against us, our directors or our officers, and the ability of U.S. authorities to bring actions against us, our directors or our officers in China may also be limited.\n\nWe are an exempted limited liability company incorporated under the laws of the Cayman Islands. We conduct all of our current operations outside the United States, and all of our assets are located outside the United States. Many of our directors and executive officers are nationals or residents of jurisdictions other than the United States and most of their assets are located outside of the United States. As a result, it may be difficult or impossible for you to effect service of process within the United States upon these individuals, or to bring an action against us or against these individuals in the United States in the event that you believe your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands, of Singapore, of Hong Kong and of Dubai may render you unable to enforce a judgment against our assets or the assets of our directors and officers. In addition, due to jurisdictional limitations, matters of comity and various other factors, the SEC, Department of Justice (“DOJ”) and other U.S. authorities may be limited in their ability to take enforcement actions, including in instances of fraud, against us or our directors and officers who are reside out of the U.S. See “—Enforceability Of Civil Liabilities.”\n\nThe voting rights of holders of ADSs are limited by the terms of the deposit agreement, and you may not be able to exercise your right to vote your Class A ordinary shares.\n\nAs a holder of our ADSs, you will only be able to exercise the voting rights with respect to the underlying Class A ordinary shares in accordance with the provisions of the deposit agreement. Under the deposit agreement, you must vote by giving voting instructions to the depositary. If we ask for your instructions, then upon receipt of your voting instructions, the depositary will try to vote the underlying Class A ordinary shares in accordance with these instructions. If we do not instruct the depositary to ask for your instructions, the depositary may still vote in accordance with instructions you give, but it is not required to do so. You will not be able to directly exercise your right to vote with respect to the underlying shares unless you withdraw the shares. When a general meeting is convened, you may not receive sufficient advance notice to withdraw the shares underlying your ADSs to allow you to vote with respect to any specific matter. If we ask for your instructions, the depositary will notify you of the upcoming vote and will arrange to deliver our voting materials to you. We have agreed to give the depositary at least 30 days’ prior notice of shareholder meetings.\n\nNevertheless, we cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote your shares. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for their manner of carrying out your voting instructions. This means that you may not be able to exercise your right to vote and you may have no legal remedy if the shares underlying your ADSs are not voted as you requested.\n\nExcept in limited circumstances, the depositary for our ADSs will give us a discretionary proxy to vote the Class A ordinary shares underlying your ADSs if you do not vote at shareholders’ meetings, which could adversely affect your interests.\n\nUnder the deposit agreement for our ADSs, to the extent we have provided the depositary with at least 40 days’ notice of a proposed meeting, if voting instructions are not timely received by the depositary from you, you shall be deemed to have instructed the depositary to give a discretionary proxy to a person designated by us to vote the shares represented by you ADSs as desired.\n\nHowever, no such instruction shall be deemed given and no discretionary proxy shall be given (a) if we inform the depositary in writing that (i) we do not wish such proxy to be given, (ii) substantial opposition exists with respect to any agenda item for which the proxy would be given or (iii) the agenda item in question, if approved, would materially or adversely affect the rights of holders of shares and (b) unless we have provided the depositary with an opinion of our counsel to the effect that (i) the granting of such discretionary proxy does not subject the depositary to any reporting obligations in the Cayman Islands, (ii) the granting of such proxy will not result in a violation of any applicable law, public rule or regulation in force in the Cayman Islands and (iii) the courts of the Cayman Islands will give effect to the voting arrangement and deemed instruction as contemplated in the proxy under Cayman Islands law.\n\nThe effect of this discretionary proxy is that, if you fail to give voting instructions to the depositary as to how to vote the Class A ordinary shares underlying your ADSs at any particular shareholders’ meeting, you cannot prevent our Class A ordinary shares underlying your ADSs from being voted at that meeting, absent the situations described above, and it may make it more difficult for shareholders to influence our management. Holders of our Class A ordinary shares are not subject to this discretionary proxy.\n\n53\n\n[Table of Contents](#TOC)\n\nYour rights to pursue claims against the depositary as a holder of ADSs are limited by the terms of the deposit agreement and the deposit agreement may be amended or terminated without your consent.\n\nUnder the deposit agreement, any action or proceeding against or involving the depositary, arising out of or based upon the deposit agreement or the transactions contemplated thereby or by virtue of owning the ADSs may only be instituted in a state or federal court in New York, New York, and you, as a holder of our ADSs, will have irrevocably waived any objection which you may have to the laying of venue of any such proceeding, and irrevocably submitted to the exclusive jurisdiction of such courts in any such action or proceeding. However, the depositary may, in its sole discretion, require that any dispute or difference arising from the relationship created by the deposit agreement be referred to and finally settled by an arbitration conducted under the terms described in the deposit agreement. Also, we may amend or terminate the deposit agreement without your consent. If you continue to hold your ADSs after an amendment to the deposit agreement, you agree to be bound by the deposit agreement as amended.\n\nYour right to participate in any future rights offerings may be limited, which may cause dilution to your holdings.\n\nWe may from time to time distribute rights to our shareholders, including rights to acquire our securities. However, we cannot make such rights available to you in the United States unless we register both the rights and the securities to which the rights relate under the Securities Act or an exemption from the registration requirements is available. Under the deposit agreement, the depositary will not make rights available to you unless both the rights and the underlying securities to be distributed to ADS holders are either registered under the Securities Act or exempt from registration under the Securities Act. We are under no obligation to file a registration statement with respect to any such rights or securities or to endeavor to cause such a registration statement to be declared effective and we may not be able to establish a necessary exemption from registration under the Securities Act. Accordingly, you may be unable to participate in our rights offerings in the future and may experience dilution in your holdings.\n\nYou may not receive dividends or other distributions on our Class A ordinary shares and you may not receive any value for them, if it is illegal or impractical to make them available to you.\n\nThe depositary of our ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian receives on Class A ordinary shares or other deposited securities underlying our ADSs, after deducting its fees and expenses. You will receive these distributions in proportion to the number of Class A ordinary shares your ADSs represent. However, the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration under the Securities Act but that are not properly registered or distributed under an applicable exemption from registration. The depositary may also determine that it is not feasible to distribute certain property through the mail. Additionally, the value of certain distributions may be less than the cost of mailing them. In these cases, the depositary may determine not to distribute such property. We have no obligation to register under U.S. securities laws any ADSs, Class A ordinary shares, rights or other securities received through such distributions. We also have no obligation to take any other action to permit the distribution of ADSs, Class A ordinary shares, rights or anything else to holders of ADSs. This means that you may not receive distributions we make on our Class A ordinary shares or any value for them if it is illegal or impractical for us to make them available to you. These restrictions may cause a material decline in the value of our ADSs.\n\nYou may be subject to limitations on transfer of your ADSs.\n\nYour ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when it deems expedient in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary deems it advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.\n\n54\n\n[Table of Contents](#TOC)\n\nWe are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies.\n\nBecause we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:\n\n●\n\nthe rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K;\n\n●\n\nthe sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act;\n\n●\n\nthe sections of the Exchange Act requiring principal shareholders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and\n\n●\n\nthe selective disclosure rules by issuers of material nonpublic information under Regulation FD.\n\nWe are required to file an annual report on Form 20-F within four months of the end of each fiscal year and reports on Form 6-K relating to certain material events promptly after we publicly announce these events. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.\n\nWe may lose our foreign private issuer status in the future, which could result in significant additional cost and expense.\n\nThe determination of our status as a foreign private issuer is made annually on the last business day of our most recently completed second fiscal quarter. If we were to lose our foreign private issuer status, the regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly higher. We may also be required to modify certain of our policies to comply with corporate governance practices associated with U.S. domestic issuers, which would involve additional costs.\n\nWe have incurred increased costs as a result of being a public company, and our compliance costs may continue to increase in the future.\n\nWe have incurred additional legal, accounting and other expenses as a public reporting company. For example, we are required to comply with additional requirements of the rules and regulations of the SEC and requirements of the Nasdaq Global Market, including applicable corporate governance practices. We expect that compliance with these requirements will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. We also expect that our management and other personnel will need to divert attention from operational and other business matters to devote substantial time to these public company requirements. We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a public company or the timing of such costs.\n\nIn addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time-consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may also initiate legal proceedings against us and our business may be adversely affected.\n\n55\n\n[Table of Contents](#TOC)\n\nWe believe we were a passive foreign investment company, or PFIC, for United States federal income tax purposes for our prior taxable year and there is significant risk that we will be a PFIC for our current taxable year and in future taxable years, which could subject United States investors in our ADSs or ordinary shares to significant adverse U.S. federal income tax consequences.\n\nA non-U.S. corporation will be a “passive foreign investment company,” or “PFIC,” if, in any particular taxable year, either (a) 75% or more of its gross income for such year consists of certain types of “passive” income or (b) 50% or more of the average quarterly value of its assets (as determined on the basis of fair market value) during such year produce or are held for the production of passive income (the “asset test”). For this purpose, cash generally is treated as a passive asset. Goodwill is treated as an active asset under the PFIC rules to the extent attributable to activities that produce active income for these purposes. We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, 25% or more (by value) of the stock. Although the law in this regard is not entirely clear, we treat our consolidated variable interest entity as being owned by us for U.S. federal income tax purposes because we control its management decisions and are entitled to substantially all of the economic benefits associated with the entity.\n\nBased on our financial statements, the manner in which we conduct our business, the trading price of our ADSs, the value and nature of our assets and the sources and nature of our income, we believe we were a PFIC for our prior taxable year. Additionally, there is a significant risk that we will be a PFIC for our current taxable year and in future taxable years. The determination of whether we are a PFIC is made annually after the close of each taxable year. This determination is based on the facts and circumstances at that time, some of which may be beyond our control, such as the amount and composition of our income and the valuation and composition of our assets, including goodwill and other intangible assets, as implied by the market price of our ADSs and ordinary shares. In particular, because the value of our assets for purposes of the asset test may be determined by reference to the market price of our ADSs, fluctuations in market price of our ADSs and/or ordinary shares may cause us to be a PFIC in the current or subsequent taxable years. In addition, the composition of our income and assets will also be affected by how, and how quickly, we use our liquid assets. As the PFIC tests must be applied at the end of each year, and the composition of our income and assets and the value of its assets may change over time, there can be no assurance that we will not be a PFIC for any year in which a U.S. Holder holds its stock.\n\nIf we are a PFIC in any taxable year, U.S. Holders (as defined in “Item 10. Additional Information—E. Taxation—United States Federal Income Tax Considerations”) may incur significantly increased U.S. income tax on gain recognized on the sale or other disposition of the ADSs or ordinary shares and on the receipt of distributions on the ADSs or ordinary shares to the extent such gain or distribution is treated as an “excess distribution” under the U.S. federal income tax rules, and may be subject to burdensome reporting requirements. Further, if we are a PFIC for any year during which a U.S. Holder holds our ADSs or ordinary shares, the U.S. Holder generally will be required to continue to treat us as a PFIC for all succeeding years during which the U.S. Holder holds our ADSs or ordinary shares, even if we no longer satisfy the tests described above, unless the U.S. Holder makes a special “purging” election on U.S. Internal Revenue Service (“IRS”) Form 8621. For more information, see “Item 10. Additional Information—E. Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Rules.” U.S. Holders are urged to consult their own tax advisors regarding the U.S. federal income tax consequences of holding ordinary shares or ADSs in a PFIC."}