Security & Operations

Custody and Services Providers:

Coinbase Custody Trust Company, LLC

Digital Assets: Bitcoin, Ethereum

Regulatory Overview

Name: Coinbase Custody Trust Company, LLC

Location: 200 Park Avenue South, Suite 1208, New York, NY 10003

General: Coinbase Custody Trust Company is a fiduciary under § 100 of the New York Banking Law and a qualified custodian for purposes of Rule 206(4)-2(d)(6) under the Investment Advisers Act of 1940, as amended, and is licensed to custody Client’s Digital Assets in trust on Client’s behalf. Digital Assets in Client’s Custodial Account are not treated as general assets of Trust Company. Rather, Trust Company serves as a fiduciary and custodian on Client’s behalf, and the Digital Assets in Client’s Custodial Account are considered fiduciary assets that remain Client’s property at all times.

Audit: SOC1 Type II, SOC2 Type II

Regulation: Regulated by the New York Department of Financial Services (NYDFS), and operated as an independently capitalised entity, Coinbase Custody Trust Company, LLC.

Coinbase Custody is a fiduciary under § 100 of the New York Banking Law and is licensed to custody its clients’ digital assets in trust on their behalf. As a New York state-chartered trust held to the same fiduciary standards as national banks, Coinbase Custody is a qualified custodian for purposes of § 206(4)-2(d)(6) of the Advisers Act, commonly called the custody role.

Due Diligence: Coinbase is not a related party of the Cypherpunk Holdings Inc. in any manner other than the custody.

Negative Outlook

There are no known instances of significant negative news with respect to Coinbase Custody, or its parent Coinbase Inc.

Cypherpunk Holdings Inc. is not aware of anything with regards to the custodian’s operations that would adversely affect Cypherpunk Holdings Inc. ability to obtain an unqualified audit opinion on its audited financial statements.

Insurance: Coinbase Custody carries an annually renewed commercial crime policy that carries a $255M USD limit (per-incident and overall), with Coinbase Global as the named insured.

Percentage of Assets: Coinbase Custody is in custody of 100% of Cypherpunk Holdings Bitcoin (BTC)

Balance Custody

Digital Assets: Monero

Regulatory Overview

Name: PARADISO VENTURES INC. O/A Balance

Address: 8 Telegram Mews, Unit 637, M5V 3Z5, Toronto, Ontario, Canada

General: PARADISO VENTURES INC. O/A Balance is a private company incorporated under the Canadian Business Corporations Act with the registered office address at 8 Telegram Mews, Unit 637, M5V 3Z5, Toronto, Ontario, Canada which sells digital goods and services.

Regulation: Paradiso Ventures Inc. O/A Balance is registered with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) as a money service business dealing in virtual currencies with registration number M20210422. It is regulated by FinTRAC in Canada.

Audit: SOC2 Pending

Negative Outlook

There are no known instances of significant negative news with respect to Paradiso Ventures Inc. O/A.

Balance has not yet completed SOC 2 Type II audit for a period covering the fiscal year of the business. Cypherpunk Holdings liquidates its holdings at Balance before its fiscal year end. Given this liquidation, Cypherpunk Holdings Inc. is not aware of anything that would prevent its ability to obtain an unqualified audit opinion on its audited financial statements.

Insurance: Balance maintains liability protection for up to $5,000,000 CAD of assets stored in an Offline Digital Asset Cache.

Due Diligence: Balance is not a related party of the Cypherpunk Holdings Inc. in any manner other than the custody.

Percentage of Assets: Balance is in custody of 100% of Cypherpunk Holdings Monero (XMR).

Current Lending Arrangements:

Cypherpunk Holdings Maintains lending arrangements with two entities. These arrangements allow Cypherpunk Holdings to lend the following entities Bitcoin. In return, a small interest rate is earned, typically paid in Bitcoin.

Lending Entities:

BlockFi Lending LLC – New York

Genesis Global Capital LLC – New York

Current Brokers:

Gemini.com

Cypherpunk Holdings maintains an account with Gemini (N.Y. Trust Company), as its prime brokerage for Bitcoin and Ethereum. Gemini maintains SOC1 TypeII and SOC2 Type II audits, and is insured. Cypherpunk Holdings does not maintain balances at Gemini for extended periods of time, and cryptocurrencies are transferred to custodians after trades are complete.

Kraken.com

Cypherpunk Holdings maintains an account with Kraken.com, as its brokerage for Monero (XMR). Cypherpunk Holdings does not maintain a balance at Kraken for extended periods of time, and cryptocurrencies are transferred to custodians after trades are complete.

Cryptocurrency security

  • Documented threat model, business continuity planning and key recovery procedures
  • Multi-signature cold storage in use when supported, otherwise key-splitting in effect
  • Third parties engaged for additional software support and services

Investment Concentration Restrictions

Investment Concentration Risks

Cypherpunk Holdings considers Bitcoin a treasury reserve asset. As such, there is an acute concentration of the company’s assets in Bitcoin. Cryptocurrencies such at Bitcoin have a limited history, their fair values have historically been volatile and the value of cryptocurrencies held by the Company could decline rapidly. A decline in the market prices of cryptocurrencies could negatively impact the Company’s future operations. Historical performance of cryptocurrencies is not indicative of their future performance.

Investors are advised to review the Financial Risk Factors in the companies financial statements for additional disclosures on these risks.