Risk Disclosure

Borrowing demand decreases

This is the single most important factor in determining the borrowing interest rates.

Supply of shares increases

If the supply of shares available to borrow grows faster than the demand for shares to be borrowed, interest rates may decrease.

Bid-Ask spreads

When rebalancing collateral from one ETF security to another, unpredictable changes in market liquidity conditions may lead to capital losses.

NAV discount

The market price of an individual Bitcoin ETF may substantially decrease compared to its Net Asset Value (NAV), making it impossible to reclaim the full principle until market conditions change.

Counterparty default

In any securities lending transaction, counterparty default is a risk. Major brokerage firms such as Interactive Brokers, Charles Schwab, E*TRADE, and Ally Bank are our counterparties. If our counterparty were to default on its obligations, we would have the right to withdraw the collateral from the counterparty's custodian bank.

Custodial risk

Bitcoin transactions are irrevocable and stolen or incorrectly transferred bitcoins may be irretrievable. As a result, any incorrectly executed bitcoin transactions could adversely affect the value of your collateral.

Regulatory uncertainty

Regulatory changes or interpretations could obligate Encrypted Energy or its counterparties to register and comply with new regulations, resulting in potentially extraordinary, nonrecurring expenses to Encrypted Energy and its counterparties.

Bitcoin ETF fees

The financial sponsors of the Bitcoin ETF funds, such as BlackRock, Franklin Templeton, Fidelity, Bitwise, and ARK Invest, may increase their fees to prices that exceed the yields generated from lending shares in their funds.

Competitive pressures

New entrants to the market for Floating-Rate Bitcoin Notes may negatively affect the ability of the Encrypted Energy to garner substantial income and achieve commercial success.