Added10-Q 2026-08-13 vs 10-K 2026-03-30
The Company’s deposits into the Rysk Institutional Volatility Income Vault and smart contract enabled options activity expose the Company to additional risks and earnings volatility.
HYPDHyperion DeFi
We were organized as a corporation under the laws of the State of Florida on March 12, 2014 under the name “PGP Holdings V, Inc.” 10-K, Item 1
- Headquarters
- Dallas, TX
- CEO
- Hyunsu Jung
- Next results
- around Mar 25, 2027
148 paragraphs in Risk Factors of the 10-K filed Mar 30, 2026 with nothing like them in the 10-K filed Apr 15, 2025. Quoted exactly. Paragraphs that were only edited are under 10-K change.
Compared with the Risk Factors in the latest 10-K of the other 31 Crypto companies: a paragraph with at least half its words the same at another company is called similar, and the companies are listed under it. A paragraph most of them have is marked boilerplate. No line means no other company has one like it. This counts text; it does not say how serious a risk is.
The Hyperliquid platform and technologies and HYPE have a limited operating history.
The Hyperliquid blockchain, exchange and related products launched in early 2023, and the HYPE token launched in November 2024. When we refer to HYPE, we are referring to HYPE tokens and liquid staking tokens derived from HYPE tokens (“LSTs”). We also hold other digital assets. Hyperliquid is an early-stage project with a limited operating history. Developers, validators, traders and market makers may not adopt Hyperliquid’s technology, and we believe that Hyperliquid’s adoption will likely depend on significant platform and product development and differentiation in a highly competitive market. A failure to scale, unexpected technical flaws, privacy issues or the lack of engagement could materially reduce demand for HYPE and adversely affect its value.
Because our treasury strategy is currently primarily focused on holdings of HYPE, our treasury assets are highly dependent upon the value and performance of the Hyperliquid platform and HYPE. If the Hyperliquid platform fails to achieve its objective, or has significant setbacks or delays, the value of HYPE may severely decline, which could materially and adversely impact the value of our treasury assets, liquidity, and financial condition, which could have a substantial impact on the value of our common stock.
HYPE is subject to extreme price volatility, and any sustained decline in the market price of HYPE could lead to substantial losses on our digital asset holdings and could adversely affect the market price of our common stock.
The price of HYPE has exhibited sudden and significant fluctuations due to shifts in market sentiment, speculative trading, macroeconomic trends, technology-related disruptions and regulatory announcements. Because digital asset trading markets are relatively new, largely unregulated and, at times, subject to limited liquidity, HYPE has experienced and may continue to experience larger or more frequent price swings than traditional asset classes. A rapid decrease in the price of HYPE - whether the result of negative perception, a lack of stability on the digital asset trading platforms on which HYPE trades, market manipulation of cryptocurrency trading platforms by customers, a cyber-security incident, regulatory action or other factors-could materially reduce the value of any HYPE we hold, force us to recognize impairment charges, and depress the market price of our securities.
Additionally, large portions of HYPE, potentially 238 million HYPE tokens or more, have been reported to be held by the Hyperliquid core contributors. As a result, trading activity by these parties could have a material impact on the price and trading volume of HYPE. Further, to our knowledge, the core contributors and other large holders of HYPE began to “unlock” their tokens on November 29, 2025, meaning that they became able to sell some of their HYPE starting on such date and at periodic unlock dates over a multi-year period. The large influx of HYPE increases the circulating supply, which can lead to a price drop if demand does not increase proportionally to absorb the new tokens. If all HYPE tokens that were unlocked on that day and are unlocked on subsequent unlock dates are immediately sold, this could have significant impacts on the price of HYPE on or around such unlock dates and depress the price of our common stock.
HYPE is a highly volatile asset, and fluctuations in the price and liquidity of HYPE may influence our financial results and the market price of our listed securities.
Similar paragraph at 13 of 31 other Crypto companies: ABTC, ASST, BKKT, DJT, EXOD, HSDT, HUT, MSTR and 5 moreOur financial results and the market price of our listed securities would be adversely affected, and our business and financial condition would be negatively impacted, if the price of HYPE decreased substantially, including as a result of:
decreased user and investor confidence in HYPE, including due to the various factors described in this filing;
investment and trading activities such as (i) trading activities of highly active retail and institutional users, speculators and investors or (ii) actual or expected significant dispositions of HYPE by large holders, including the expected liquidation of digital assets seized by governments or associated with entities that have filed for bankruptcy protection, or associated with tokens vested by the Hyperliquid core team;
negative publicity, media or social media coverage, or sentiment due to events in or relating to, or perception of, HYPE, Hyperliquid or the broader digital assets industry;
changes in consumer preferences and the perceived value or prospects of HYPE or the utility of Hyperliquid;
competition from other decentralized exchanges or digital assets that exhibit comparable or better speed, security, scalability or energy efficiency, that feature other more favored characteristics, that are backed by governments, including the U.S. government, or reserves of fiat currencies, or that represent ownership or security interests in physical assets;
a decrease in the price of other digital assets, to the extent the decrease in the price of such other digital assets may cause a decrease in the price of HYPE or adversely affect investor confidence in digital assets generally;
developments relating to the Hyperliquid blockchain, including (i) changes to the Hyperliquid blockchain that impact its security, speed, scalability, usability or value, such as changes to the cryptographic security protocol underpinning the Hyperliquid blockchain, changes to the maximum number of HYPE outstanding, changes to the mutability of transactions, changes relating to the size of blockchain blocks, and similar changes; (ii) failures to make upgrades to the Hyperliquid blockchain and the Hyperliquid interface to adapt to security, technological, legal or other challenges; and (iii) changes to the Hyperliquid blockchain that introduce software bugs, security risks or other elements that adversely affect HYPE;
disruptions, failures, unavailability, or interruptions in services of trading venues for HYPE;
the filing for bankruptcy protection by, liquidation of, or market concerns about the financial viability of digital asset custody infrastructure providers, trading venues, lending platforms, investment funds, or other digital asset industry participants;
regulatory, legislative, enforcement and judicial actions that adversely affect access to, functionality of or performance of Hyperliquid and its associated products such as cryptocurrency perpetual futures, the price, ownership, transferability, trading volumes, legality or public perception of, HYPE or other Layer 1 blockchains, or that adversely affect the operations of or otherwise prevent digital asset custodians, trading venues, lending platforms or other digital assets industry participants from accessing the Hyperliquid decentralized exchange and its associated products or operating in a manner that allows them to continue to deliver services to the digital assets industry;
transaction congestion and fees associated with processing transactions on the Hyperliquid network;
Similar paragraph at 10 of 31 other Crypto companies: ABTC, ASST, DJT, EXOD, FIGR, GEMI, HUT, MSTR and 2 moremacroeconomic changes, such as changes in the level of interest rates and inflation, fiscal and monetary policies of governments, trade restrictions and fiat currency devaluations;
developments in mathematics or technology, including in digital computing, algebraic geometry and quantum computing, that could result in the cryptography used by the Hyperliquid blockchain becoming insecure or ineffective; and
Similar paragraph at 11 of 31 other Crypto companies: ABTC, ASST, DJT, EXOD, FIGR, GEMI, HUT, MARA and 3 morechanges in national and international economic and political conditions, including, without limitation, federal government policies, trade tariffs and trade disputes, and the adverse impacts attributable to global conflicts, including those between Russia and Ukraine and in the Middle East.
The price of our listed securities has been and is likely to continue to be volatile, and with the adoption of our cryptocurrency treasury strategy in 2025, we expect to continue to see additional volatility in our stock price. In addition, if investors view the value of our listed securities as dependent upon or linked to the value or change in the value of our HYPE holdings, the price of HYPE may significantly influence the market price of our listed securities. The price of HYPE has historically been, and is likely to continue to be, volatile.
HYPE faces unique technical, governance and concentration risks that could materially affect its long-term viability.
HYPE is a high-throughput Layer 1 blockchain with an architectural feature that differs significantly from other blockchains, such as Ethereum. While these features allow for rapid processing of transactions, they introduce risks that could adversely impact the value of HYPE and the stability of the HYPE network. HYPE has previously experienced a network outage that resulted in slow operations and user inability to close positions. If this kind of network outage were to recur, the confidence of the HYPE development community and its users could be adversely affected, which could cause a decline in the value of HYPE. Structural flaws could emerge that require a fork, which may have an adverse impact on the HYPE network and our holdings.
In addition, the concentration of validators on the Hyperliquid network presents centralization risks that could affect the security and value of our HYPE token holdings. The Hyperliquid blockchain currently operates with a limited number of validators (approximately 24 as of the date of this filing), which creates potential single points of failure. If these validators were to be compromised or act maliciously, it could result in network disruption, loss of funds, or other adverse effects that could materially impact the value of our HYPE token holdings.
HYPE is subject to technological obsolescence, including competition from emerging blockchain and artificial intelligence protocols, which could have a negative impact on the price of HYPE and adversely affect the value of our HYPE holdings.
The digital asset ecosystem is characterized by rapid technological innovation and evolution, short development cycles, and intense competition among Layer 1 blockchains and related infrastructure providers. Numerous alternative cryptocurrencies, blockchains, and DeFi platforms are vying for market share in areas such as perpetual futures trading, staking, and on-chain liquidity provision, which are core to the Hyperliquid ecosystem and its HYPE token. As of February 28, 2026, HYPE was the eleventh largest digital asset by market capitalization (excluding stablecoins), as tracked by CoinMarketCap.com, based on circulating market capitalization. As of February 28, 2026, the top eleven digital assets tracked by CoinMarketCap.com (excluding stablecoins) had a total market capitalization of approximately $1.82 trillion (including the approximately $7.5 billion market cap of HYPE, based on circulating market capitalization), as calculated using market prices and total available supply of each digital asset.
HYPE faces competition from a wide range of digital assets, including Bitcoin and Ether, and from existing protocols, such as Aptos and Sei, as well as new entrants that are currently being developed. Many consortiums and financial institutions are also researching and investing resources into private or permissioned blockchain platforms rather than open platforms like the Hyperliquid network. As 99% of Hyperliquid’s revenues are currently allocated to the Assistance Fund for the repurchase of HYPE tokens, a decline in revenue could have a material impact on the demand for HYPE tokens. In addition, HYPE is supported by fewer trading platforms than more established digital assets, such as Bitcoin and Ether, which could impact its liquidity. Further, the Hyperliquid network is in direct competition with other smart contract platforms, such as the Ethereum, Solana, Avalanche and Cardano networks. Competition from the emergence or growth of alternative digital assets or other smart contract platforms could have a negative impact on the demand for, and price of, HYPE, and thereby adversely affect the value of our HYPE holdings.
Similar paragraph at 1 of 31 other Crypto companies: UPXICompetitors may offer superior scalability, security, interoperability, decentralization, programmability and adoption, and may attract developers away from the HYPE ecosystem. Advancements in AI and blockchain technology are likely to accelerate the development of such protocols, including the development of additional networks that natively integrate AI into consensus mechanisms and other core features. If HYPE is unable to evolve to address such increased competition or if Layer 2 networks believe that HYPE’s core technology stack is outdated or less attractive compared with other Layer 1 networks, HYPE may be considered technologically obsolete by the next generation of protocols. Any decline in the HYPE network would materially impact the market value of HYPE and adversely affect the value of our HYPE treasury holdings and our stock price.
Investors may also invest in HYPE through means other than our securities, including through direct investments in HYPE and other financial vehicles, such as securities backed by or linked to HYPE and digital asset treasury companies similar to us. Market and financial conditions, and other conditions beyond our control, may make it more attractive to gain exposure to HYPE through other vehicles, rather than our securities.
Similar paragraph at 1 of 31 other Crypto companies: CORZProof-of-stake blockchains are a relatively recent innovation, and have not been subject to as widespread use or adoption over as long of a period of time as traditional proof-of-work blockchains.
Certain digital assets, such as Bitcoin, use a “proof-of-work” consensus algorithm. The genesis block on the Bitcoin blockchain was mined in 2009, and Bitcoin’s blockchain has been in operation since then. Many newer blockchains enabling smart contract functionality use a newer consensus algorithm known as “proof-of-stake.” While their proponents believe that they may have certain advantages, the “proof-of-stake” consensus mechanisms and governance systems underlying many newer blockchain protocols, including the Hyperliquid network, and their associated digital assets – including our HYPE holdings – have not been tested at scale over as long of a period of time or subject to as widespread use or adoption as, for example, Bitcoin’s proof-of-work consensus mechanism has. This could lead to these blockchains, and their associated digital assets, having undetected vulnerabilities, structural design flaws, suboptimal incentive structures for network participants (e.g., validators), technical disruptions or a wide variety of other problems, any of which could cause these blockchains not to function as intended, lead to outright failure to function entirely causing a total outage or disruption of network activity, or cause the blockchains to suffer other operational problems or reputational damage, leading to a loss of users or adoption or a loss in value of the associated digital assets, including our HYPE holdings. Over the long term, there can be no assurance that the proof-of-stake blockchain on which our HYPE holdings rely will achieve widespread scale or adoption or perform successfully. Any failure to do so could negatively impact the price of HYPE and the value of our HYPE holdings.
The concentration of our HYPE holdings could enhance the risks inherent in our HYPE treasury strategy.
The concentration of our HYPE holdings limits the risk mitigation that we could achieve if we were to purchase a more diversified portfolio of treasury assets, and the absence of diversification enhances the risks inherent in our HYPE treasury strategy. Any future significant declines in the price of HYPE would have a more pronounced impact on our financial condition than if we used our cash to purchase a more diverse portfolio of assets.
The emergence or growth of other digital assets, including those with significant private or public sector backing, could have a negative impact on the price of HYPE and adversely affect our business.
As a result of our HYPE treasury strategy, our assets are concentrated in our HYPE holdings. Accordingly, the emergence or growth of digital assets other than HYPE may have a material adverse effect on our financial condition. There are numerous alternative digital assets and many entities, including consortiums and financial institutions, that are researching and investing resources into private or permissioned blockchain platforms or digital assets, that do not use proof-of-stake consensus mechanism like the Hyperliquid network, or use different technical innovations that build upon or improve the proof-of-stake consensus mechanism. For example, in late 2022, the Ethereum network transitioned to a “proof-of-stake” mechanism for validating transactions that requires significantly less computing power than proof-of-work mining. The Ethereum network has completed another major upgrade since then and may undertake additional upgrades in the future. If the mechanisms for validating transactions in Ethereum and other alternative digital assets are perceived as superior to proof-of-stake, those digital assets could gain market share relative to HYPE.
We plan to use a portion of our capital raised that is not required to provide working capital for our ongoing operations to invest in HYPE, which may adversely affect our financial results and the market price of our securities.
Similar paragraph at 1 of 31 other Crypto companies: TRONWe plan to use a portion of our capital raised that is not required to provide working capital for our ongoing operations to invest in HYPE. The price of HYPE has been subject to significant price fluctuations and is highly volatile. Moreover, digital assets are relatively novel, and the application of securities laws and other regulations to such assets is unclear in many respects. It is possible that regulators may interpret laws in a manner that adversely affects the liquidity or value of our HYPE holdings.
Any increase or decrease in the fair value of HYPE will require us to recognize unrealized gains or losses, which could be material to our financial results for the applicable reporting period, which may create significant volatility in our reported earnings. Any decrease in reported earnings or increased volatility of such earnings could have a material adverse effect on the market price of our securities. In addition, the application of generally accepted accounting principles in the United States with respect to digital assets remains uncertain in some respects, and any future changes in the manner in which we account for our HYPE holdings could have a material adverse effect on our financial results and the market price of our securities.
In addition, if investors view the value of our securities as dependent upon or linked to the value or change in the value of our HYPE holdings, the price of such digital assets may significantly influence the market price of our securities.
Our digital asset holdings are less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.
Similar paragraph at 13 of 31 other Crypto companies: ASST, DFDV, DJT, FWDI, HSDT, LITS, MSTR, NAKA and 5 moreHistorically, cryptocurrency markets have been characterized by significant volatility in price, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, potential susceptibility to market abuse and manipulation, compliance and internal control failures at exchanges, and various other risks inherent in their entirely electronic, virtual form and decentralized network. During times of market instability, we may not be able to sell our digital asset holdings at favorable prices or at all. Further, we use custody infrastructure providers and transact with trade execution partners. Currently, we do not deposit our digital assets directly with a custodian but instead use a self-custody approach using infrastructure provided by a custodian. These entities do not have the same protections as are available to cash or securities deposited with or transacted by institutions subject to regulation. For example, U.S. banks are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per depositor in the case of the bank’s insolvency. In addition, U.S. broker-dealers are covered by the Securities Investor Protection Corporation (“SIPC”), which ensures recovery of the securities by the depositor. In contrast, cryptocurrency custody infrastructure providers do not offer such protections. If such a provider were to become insolvent, it is possible that, while the assets are not in custody of a third party, we could face delays or difficulties with respect to the management of our digital assets.
Similar paragraph at 11 of 31 other Crypto companies: ASST, BKKT, DFDV, DJT, FWDI, HSDT, LITS, SBET and 3 moreApart from the risk of insolvency of the custody infrastructure provider, there is also a risk of custodians causing operational difficulty, typically in connection with a security incident, regulatory compliance or technical issues, and may be unresponsive to customers attempting to retrieve their funds. In such events, it may be difficult to reach a representative to assist with unfreezing assets and we may not be able to sell or use our digital assets.
Similar paragraph at 1 of 31 other Crypto companies: DFDVAdditionally, the secondary market for borrowing against digital assets is not well developed. We may be unable to enter into term loans or other capital raising transactions collateralized by our unencumbered digital assets or otherwise generate funds using our digital assets, especially during times of market instability or when the price of digital assets has declined significantly. If we are unable to sell our digital assets, enter into additional capital raising transactions using digital assets as collateral or otherwise generate funds using our digital assets, or if we are forced to sell our digital assets at a significant loss in order to meet our working capital requirements, our business and financial condition could be negatively impacted.
Similar paragraph at 9 of 31 other Crypto companies: ASST, DFDV, DJT, FWDI, LITS, MSTR, SBET, SUIG and 1 moreCompetition from central bank digital currencies (“CBDCs”) and emerging payments initiatives involving financial institutions could adversely affect the price of HYPE and other digital assets.
Similar paragraph at 1 of 31 other Crypto companies: UPXICentral banks in various countries have introduced digital forms of legal tender. China’s CBDC project, known as Digital Currency Electronic Payment, has reportedly been tested in a live pilot program conducted in multiple cities in China. Central banks representing at least 130 countries have published retail or wholesale CBDC work ranging from research to pilot projects. Whether or not they incorporate blockchain or similar technology, CBDCs, as legal tender in the issuing jurisdiction, could have an advantage in competing with, or replace, HYPE and other cryptocurrencies as a medium of exchange or store of value. Central banks and other governmental entities have also announced cooperative initiatives and consortia with private sector entities, with the goal of leveraging blockchain and other technology to reduce friction in cross-border and interbank payments and settlement, and commercial banks and other financial institutions have also recently announced a number of initiatives of their own to incorporate new technologies, including blockchain and similar technologies, into their payments and settlement activities, which could compete with, or reduce the demand for, HYPE. As a result of any of the foregoing factors, the price of HYPE could decrease, which could adversely affect the value of our HYPE holdings.
Similar paragraph at 1 of 31 other Crypto companies: UPXIThe Company’s options activity on the price of HYPE exposes the Company to financial, liquidity, and counterparty risk.
The Company operates an options strategy on the price of HYPE to mitigate risk and enhance yield on its digital asset treasury. The Company executes its options strategies through agreements with institutional counterparties. Confirmations of transaction activity are executed among the Company and its counterparties. In 2025, the Company only executed out of the money covered call option agreements, on the price of HYPE sold against and collateralized by HYPE owned by the Company (including liquid staking tokens such as HiHYPE and kHYPE). Executing covered calls limits upside appreciation potential on the Company’s corresponding digital assets. In addition, these covered call agreements are typically collateralized 100% by the Company’s underlying digital assets. This means the Company is restricted from selling, transferring, or otherwise deploying corresponding HYPE tokens while posted as collateral under open positions. In the first quarter of 2026, the Company also sold out of the money puts on the price of HYPE. Selling
puts may obligate the Company to purchase HYPE at a level above the current market price if the options expire in-the-money, which could result in a subsequent unrealized loss on the value of HYPE purchased. In addition, these put agreements are typically 100% collateralized by cash, USDC, or USDH, and the Company is restricted from utilizing that collateral for other purposes. The Company may choose to execute other options strategies in the future, including but not limited to, purchasing puts. There can be no assurance that such options activity will result in net positive economic impacts to the Company. Further, while the Company conducts due diligence on its counterparties, including their safeguarding practices with respect to the Company’s posted collateral, there can be no assurance that the posted collateral will be returned to the Company when the positions are closed. In addition, while counterparty diversification is a factor in the Company’s decision for which counterparties to use, all collateral under the Company’s options strategy may be posted to one counterparty or concentrated in a small number of counterparties, which may create concentrated risk of loss.
The Company’s Temporary Use Agreement with Native Markets, Inc. exposes the Company to financial risk, earnings volatility, liquidity constraints, and risk of loss.
On November 19, 2025, the Company entered into a Temporary Use Agreement with Native Markets, Inc., for 300,000 HYPE tokens. This is the Company’s only Temporary Use Agreement, as of December 31, 2025. Under this Agreement, the Company’s 300,000 HYPE tokens are staked at a deployer address to meet certain requirements of the Hyperliquid blockchain which unlocks more favorable economics for USDH. In return the Company receives a fee for the use of its tokens by NativeMarkets, Inc., and the Company is entitled to receive all staking rewards on the tokens. The Company’s interest in the tokens is secured by a Security Agreement and UCC Filing. However, there can be no assurance that the Company’s tokens will be returned to the Company at the end of the Temporary Use Agreement. In addition, the Company has limited ability to sell, transfer, or obtain liquidity against its tokens while they are deployed into this strategy. Furthermore, given that this strategy has contractual limitations limiting the Company’s ability to withdraw its tokens without financial consequence, the Company may not be able to immediately deploy these tokens into more compelling economic opportunities without significant delay. The Company may enter into similar Temporary Use Agreements, or other arrangements whereby the Company’s tokens are deployed in bespoke arrangements with uncertain economic, liquidity, and risk outcomes.
The Kinetiq protocol is a liquid staking platform built on the Hyperliquid Layer 1 blockchain. On November 27, 2025, Kinetiq executed a token generation event of its governance token called “KNTQ”. KNTQ gives holders voting rights to influence Kinetiq’s governance decisions, such as protocol upgrades, parameter changes, and reward structures. The maximum total supply of KNTQ is 1 billion, of which 25% was air dropped on November 27, 2025. It is reported that approximately 30% of the KNTQ maximum supply are retained for growth and rewards, 23.5% for contributors, 10% for the Kinetiq Foundation, and the rest for other purposes. The Company received 1,918,478.78 KNTQ in the airdrop on November 27, 2025. KNTQ has limited trading history, with a limited number of trading venues providing liquidity as of December 31, 2025. There can be no assurance that the Company will be able to monetize these tokens for any material economic value.
The Company’s liquid staking activities, including its holdings of HiHYPE, kHYPE, and kmHYPE (each an intangible digital asset), expose the Company to additional risks and earnings volatility.
Hyperion Institutional HYPE (“HiHYPE”), Kinetiq Staked HYPE (“kHYPE”) and Kinetiq Market HYPE (“kmHYPE”) are liquid staking tokens (each, an “LST”) designed by Kinetiq that enable the Company to access HyperEVM DeFi. Each LST evidences ownership of the Company’s deposited HYPE, the underlying digital asset of such LST, and automatically accrues staking rewards denominated in HYPE. Liquid staking allows the Company to earn native staking rewards while maintaining access to liquidity on its digital assets that can be used for additional strategies on- and off-chain.
The risks involved with liquid staking differ from direct staking, including the following:
Liquid staking requires a certain level of technical expertise to manage the staking and un-staking process effectively. There is associated counterparty risk tied to the reliance on using the liquid staking provider’s smart contract platform.
Disputes or compromise among the liquid staking provider’s core team may lead to the value of staking assets diverging from HYPE or failure to exit the liquid staking position.
The price of the staked derivative may decrease from its original price. This may happen because the new token has a lower market price.
If we lose any of our LSTs, we will also lose access to our staked token. This can result from liquidations at lending protocols or other execution partners, the loss of private keys or other forms of access to the addresses that hold our LSTs, and mistaken or stolen asset transfers.
The Hyperliquid network is based, in part, upon the development and deployment of smart contracts, which are self-executing contracts with the terms of the agreement written into software code. Like any software code, smart contracts are exposed to risk that the code contains a bug or other security vulnerability, which can lead to loss of assets that are held on or transacted through the contract. The smart contract is deployed on Hyperliquid and, as such, may contain a bug or other vulnerability that may lead to the loss of, or inability to access, digital assets held in the smart contract. The Company currently relies on Kinetiq for its liquid staking solution. The smart contract code written by Kinetiq was audited by Code4rena, Spearbit, Pashov Audit Group and Zenith. Nevertheless, there is no guaranty against a bug or other vulnerability leading to a loss of digital assets.
In addition, the Company is also exposed to risk of losing HYPE in the pool due to system failure or hacking. As a result, LSTs do not confer an enforceable right to the underlying HYPE tokens, but only a claim. Further, the redemption of LSTs back into the underlying HYPE tokens may be subject to any protocol-defined lockup or unbonding periods.
LSTs are initially recognized at the fair value of the HYPE tokens exchanged and, due to their indefinite useful life, are not amortized but instead are subject to impairment testing. In contrast, HYPE is measured at fair value. The variances in valuation methods between HYPE and LSTs may create material volatility in the financial statements depending on conversion and redemption activity between HYPE and LSTs each period. In addition, any staking rewards earned on LSTs are not recognized until LSTs are redeemed.
HYPE, the Hyperliquid network and other digital assets are novel and are subject to significant legal and regulatory uncertainty.
HYPE and other digital assets are relatively novel, have not been in existence for an extended period of time, and are subject to significant uncertainty, which could adversely impact their price. The application of state and federal securities laws and other laws and regulations to digital assets is unclear in certain respects, and it is possible that regulators in the United States or foreign countries may interpret or apply existing laws and regulations in a manner that adversely affects the price of HYPE or the ability of individuals or institutions such as us to own or transfer HYPE.
Similar paragraph at 12 of 31 other Crypto companies: ASST, DFDV, DJT, FWDI, HSDT, LITS, MSTR, NAKA and 4 moreThe U.S. federal government, states, regulatory agencies, and foreign countries may also enact new laws and regulations, or pursue regulatory, legislative, enforcement or judicial actions, that could materially impact the price of HYPE or the ability of individuals or institutions such as us to own or transfer HYPE. For example, within the past several years:
Similar paragraph at 9 of 31 other Crypto companies: DFDV, DJT, HSDT, MSTR, NAKA, SBET, SUIG, TRON and 1 morein March 2026, the SEC and the Commodity Futures Trading Commission (the “CFTC”) jointly released interpretive guidance regarding the application of federal securities laws to certain crypto assets and transactions (the “SEC Interpretive Release”). Among other things, the interpretive guidance aims to: provide a token taxonomy for digital commodities, digital collectibles, digital tools, stablecoins, and digital securities; address how a non-security crypto asset may become subject to, and how it may cease to be subject to, an investment contract; and clarify the application of federal securities laws to airdrops, protocol mining, protocol staking, and the wrapping of a non-security crypto asset; ,
in January 2025, President Trump signed an Executive Order instructing a working group comprised of representatives from key federal agencies to evaluate measures that can be taken to provide regulatory clarity and certainty built on technology-neutral regulations for individuals and firms involved in digital assets, including through well-defined jurisdictional regulatory boundaries. This area continues to evolve and additional regulations are likely to be issued in the future, the effect of which cannot be predicted at this time;
in January 2025, the SEC announced the formation of a “Crypto Task Force,” which was created to provide clarity on the application of the federal securities laws to the crypto asset market and to recommend policy measures with respect to digital asset security status, registration and listing of digital asset-based investment vehicles, and digital asset custody, lending and staking;
in November 2023, Binance Holdings Ltd. (“Binance”) and its then chief executive officer reached a settlement with the U.S. Department of Justice, the CFTC, the U.S. Department of Treasury’s Office of Foreign Asset Control, and the Financial Crimes Enforcement Network to resolve a multi-year investigation by the agencies and a civil suit brought by
the Commodity Futures Trading Commission, pursuant to which Binance agreed to, among other things, pay $4.3 billion in penalties across the four agencies and to discontinue its operations in the United States;
in November 2023, the SEC filed a complaint against Payward Inc. and Payward Ventures Inc., together known as Kraken, alleging, among other claims, that Kraken’s crypto trading platform was operating as an unregistered securities exchange, broker, dealer and clearing agency;
in June 2023, the SEC filed complaints against Binance and Coinbase, Inc. (“Coinbase”), and their respective affiliated entities, relating to, among other claims, assertions that each party was operating as an unregistered securities exchange, broker, dealer and clearing agency;
in June 2023, the United Kingdom adopted and implemented the Financial Services and Markets Act 2023, which regulates market activities in “cryptoassets”;
in April 2023, the European Union adopted Markets in Crypto Assets Regulation, a comprehensive digital asset regulatory framework for the issuance and use of digital assets, like bitcoin;
in China, the People’s Bank of China and the National Development and Reform Commission have outlawed cryptocurrency mining and declared all cryptocurrency transactions illegal within the country, and
Uncertainty over the passage of legislation in the United States that would help clarify the regulatory landscape, such as the CLARITY Act.
While the complaint against Coinbase was dismissed in February 2025, the complaint against Payward Inc. and Payward Ventures Inc. was dismissed with prejudice in March 2025, and the complaint against Binance was dismissed on May 29, 2025, the SEC or other regulatory agencies may initiate similar actions in the future, which could materially impact the price of HYPE and our ability to own or transfer HYPE.
It is not possible to predict whether or when new laws will be enacted that change the legal framework governing digital assets or provide additional authorities to the SEC or other regulators, or whether or when any other federal, state or foreign legislative bodies will take any similar actions. It is also not possible to predict the nature of any such additional laws or authorities, how additional legislation or regulatory oversight might impact the ability of digital asset markets to function, the willingness of financial and other institutions to continue to provide services to the digital assets industry, or how any new laws or regulations, or changes to existing laws or regulations, might impact the value of digital assets generally and HYPE specifically. The consequences of any new law or regulation relating to digital assets and digital asset activities could adversely affect the market price of HYPE, as well as our ability to hold or transact in HYPE, and in turn adversely affect the market price of our listed securities.
Our HYPE and other digital assets treasury strategy subjects us to enhanced regulatory oversight.
There has been increasing focus on the extent to which digital assets can be used to launder the proceeds of illegal activities, fund criminal or terrorist activities, or circumvent sanctions regimes, including those sanctions imposed in response to the ongoing conflict between Russia and Ukraine. While we have implemented and maintain policies and procedures reasonably designed to promote compliance with applicable anti-money laundering and sanctions laws and regulations and take care to only acquire our HYPE and other digital assets through entities subject to anti-money laundering regulation and related compliance rules in the United States, if we are found to have purchased any of our HYPE or other digital assets from bad actors that have used HYPE or other digital assets to launder money or persons subject to sanctions, we may be subject to regulatory proceedings, and any further transactions or dealings in HYPE or other digital assets by us may be restricted or prohibited.
A portion of our HYPE or other digital assets may serve as collateral securing our outstanding indebtedness, and we may incur additional indebtedness or enter into other financial instruments in the future that may be collateralized by our HYPE or other digital assets. We may also consider pursuing strategies to create income streams or otherwise generate funds using our HYPE or other digital assets. These types of digital assets-related transactions are the subject of enhanced regulatory oversight. These and any other digital assets-related transactions we may enter into, beyond simply acquiring and holding digital assets, may subject us to additional regulatory compliance requirements and scrutiny, including under federal and state money services regulations, money transmitter licensing requirements and various commodity and securities laws and regulations.
Additional laws, guidance and policies may be issued by domestic and foreign regulators following the filing for Chapter 11 bankruptcy protection by FTX, one of the world’s largest cryptocurrency exchanges, in November 2022. The FTX collapse may have increased regulatory focus on the digital assets industry. Increased enforcement activity and changes in the regulatory environment, including changing interpretations and the implementation of new or varying regulatory requirements by the government or any new legislation affecting HYPE, as well as enforcement actions involving or impacting our trading venues, counterparties and custody infrastructure providers, may impose significant costs or significantly limit our ability to hold and transact in HYPE. However, it is important to note that Hyperliquid—the exchange to which HYPE is native—is intended to be more decentralized than FTX, such that a single entity is unlikely to exert complete control over the entire system. For example, unlike FTX when it filed for bankruptcy protection, Hyperliquid’s assets are custodied on-chain (not centrally by a single entity), order matching on Hyperliquid occurs transparently via on-chain mechanisms (not fully off-chain), Hyperliquid is governed by a set of approximately 24 validators (not a single individual), and Hyperliquid’s on-chain states (e.g., positions, collateral, and funding rates) are publicly available such that users can audit the system.
In addition, private actors that are wary of HYPE or the regulatory concerns associated with HYPE have in the past taken and may in the future take actions that may have an adverse effect on our business or the market price of our listed securities. For example, it is possible that a financial institution could restrict customers from buying our securities if it were to determine that the value of our securities is closely tied to the performance of HYPE, signaling a reluctance to facilitate exposure to virtual currencies.
Absent federal regulations, there is a possibility that HYPE may be classified as a “security.” Any classification of HYPE as a “security” would subject us to additional regulation and could materially and adversely impact the operation of our business.
If HYPE were classified as a “security” for purposes of the U.S. federal securities laws, our business would become subject to additional regulation, including a requirement to register as an investment company under the Investment Company Act of 1940 (the “Investment Company Act”). To date, neither the SEC nor any other U.S. federal or state regulator has publicly stated whether they believe that HYPE should be classified as a “security.” There can be no certainty that the March 2026 SEC Interpretive Release, including in combination with other rulemakings or executive orders, will become recognized as authoritative framework for determining with certainty whether HYPE is or is not a “security” for purposes of the U.S. federal securities laws. For the reasons discussed below, we believe that HYPE should not be classified as a “security,” and, as a result, we do not believe the Company is required to register as an investment company under the Investment Company Act. However, because of the lack of any current authoritative framework for analyzing the issue, it is possible that the SEC or another regulatory body or federal court could determine that HYPE is a security. Our belief, even if reasonable under the circumstances, would not preclude legal or regulatory action based on such a finding that HYPE is a “security,” including a requirement to register as an investment company under the Investment Company Act. If we were required to register as an investment company, we expect we would need to make fundamental changes to our business model, strategy, operations and assets.
We have implemented a process for analyzing the U.S. federal securities law status of HYPE and other cryptocurrencies as guidance and case law continue to evolve. As part of this process, we take into account a number of factors, including the various definitions of what constitutes a “security” under U.S. federal securities laws and federal court decisions interpreting the elements of these definitions, such as the U.S. Supreme Court’s decisions in the Howey and Reves cases, as well as court rulings, regulatory reports, orders, press releases, public statements, and speeches by the SEC Commissioners and SEC Staff providing guidance on when a digital asset or a transaction to which a digital asset may relate may be a security for purposes of U.S. federal securities laws. In July 2025, the SEC announced “Project Crypto” which is expected to result in rulemakings and/or other authoritative guidance on how to determine whether digital assets are or are not “securities” for purposes of U.S. federal securities laws and in March 2026, the SEC issued the SEC Interpretive Release. Public statements by Chairman Atkins suggest that the SEC is considering further regulatory safe harbors. Further, it appears that the current United States Congress is inclined toward increased flexibility regarding the regulatory treatment of digital assets. We expect this area of regulation will develop rapidly during this Administration, and we plan to continually monitor developments in this area as they evolve.
Our position that HYPE is not a “security” is premised, in part, on our conclusion that HYPE does not meet the elements of the Howey test. Among the reasons for our conclusion that HYPE is not a security is that holders of HYPE do not have a reasonable expectation of profits from the efforts of Hyperliquid, the Hyperliquid Foundation or any other person, entity or group of persons in respect of their holding of HYPE. HYPE’s value does not primarily derive from the efforts of a centralized “manager” because Hyperliquid is structured around validator governance rather than a single operating entity. Relatedly, token holders are not passive investors; rather, they have the ability to directly influence governance decisions, staking incentives, and validator participation. Consistent with this analysis, we note that Hyperliquid’s founding team has stated a clear goal of “full decentralization” in both validator
distribution and protocol governance, signaling an intent to eliminate all vestiges of centralized managerial reliance. Also, HYPE ownership does not guarantee the right to receive any interest, rewards or other returns.
While we recognize that any new regulatory framework for digital assets promulgated by the SEC, such as the SEC Interpretive Release, may not be based on all of the elements of the Howey test, we believe more generally that HYPE does not otherwise have the characteristics of a “security” for purposes of the U.S. federal securities laws. The views of the SEC and other regulators, and Congress, regarding the proper classification of HYPE and other digital assets may evolve over time, based in part on assessments of a multitude of factors over which we have no control. Application of securities laws to the specific facts and circumstances of digital assets is complex and subject to change. Our conclusion that HYPE should not be classified as a security, even if reasonable under the circumstances, would not preclude legal or regulatory action based on a finding that HYPE or any other digital asset we might hold is a “security.” If HYPE is alleged or ultimately determined to be a security, the viability of Hyperliquid, HYPE and our own business model would be materially and adversely affected. In such event, we would likely be required to register as an investment company under the Investment Company Act, and would also be at risk of enforcement proceedings and lawsuits against us, which could result in potential injunctions, cease-and-desist orders, fines and penalties. Such developments would adversely affect our business, results of operations, financial condition and prospects.
If we were deemed to be an investment company under the Investment Company Act, applicable restrictions likely would make it impractical for us to continue segments of our business as currently contemplated.
Under Sections 3(a)(1)(A) and (C) of the Investment Company Act, a company generally will be deemed to be an “investment company” if (i) it is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (ii) it engages or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities, and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Rule 3a-1 under the Investment Company Act generally provides that notwithstanding the test described in clause (ii) in the previous sentence, an entity will not be deemed to be an “investment company” for purposes of the Investment Company Act if no more than 45% of the value of its assets (exclusive of U.S. government securities and cash items) consists of, and no more than 45% of its net income after taxes (for the last four fiscal quarters combined) is derived from, securities other than U.S. government securities, securities issued by employees’ securities companies, securities issued by qualifying majority owned subsidiaries of such entity, and securities issued by qualifying companies that are controlled primarily by such entity.
Similar paragraph at 11 of 31 other Crypto companies: BTBT, CRCL, DFDV, DJT, GEMI, HSDT, LITS, SBET and 3 moreWe do not believe that we are an “investment company” as such term is defined in either Section 3(a)(1)(A) or Section 3(a)(1)(C) of the Investment Company Act since we believe HYPE is not an investment security. With respect to Section 3(a)(1)(A), we do not hold ourselves out as being engaged primarily or propose to engage primarily in the business of investing, reinvesting or trading in securities within the meaning of such section. With respect to Section 3(a)(1)(C), we believe we satisfy the elements of Rule 3a-1 and therefore are deemed not to be an investment company under, and we intend to conduct our operations such that we will not be deemed an investment company under, Section 3(a)(1)(C).
HYPE and other digital assets, as well as new business models and transactions enabled by blockchain technologies, present novel interpretive questions under the Investment Company Act. There is a risk that assets or arrangements that we have concluded are not securities could be deemed to be securities by the SEC or another authority for purposes of the Investment Company Act, which would increase the percentage of securities held by us for Investment Company Act purposes. The SEC has requested information from a number of participants in the digital assets’ ecosystem regarding the potential application of the Investment Company Act to their businesses. For example, in an action unrelated to the Company, in February 2022, the SEC issued a cease-and-desist order under the Investment Company Act to BlockFi Lending LLC (“BlockFi”), in which the SEC alleged that BlockFi was operating as an unregistered investment company because it issued securities and also held more than 40% of its total assets, excluding cash, in investment securities, including the loans of digital assets made by BlockFi to institutional borrowers.
If we were deemed to be an investment company, Rule 3a-2 under the Investment Company Act is a safe harbor that provides a one-year grace period for transient investment companies that have a bona fide intent to be engaged primarily, as soon as is reasonably possible (in any event by the termination of such one-year period), in a business other than that of investing, reinvesting, owning, holding or trading in securities, with such intent evidenced by the company’s business activities and an appropriate resolution of its board of directors. The grace period is available not more than once every three years and runs from the earlier of (i) the date on which the issuer owns securities and/or cash having a value exceeding 50% of the issuer’s total assets on either a consolidated or unconsolidated basis or (ii) the date on which the issuer owns or proposes to acquire investment securities having a value exceeding 40% of the value of such issuer’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Accordingly, the grace period
Similar paragraph at 11 of 31 other Crypto companies: CRCL, DFDV, DJT, GEMI, HSDT, LITS, SBET, SUIG and 3 moremay not be available at the time that we seek to rely on Rule 3a-2; however, Rule 3a-2 is a safe harbor and we may rely on any exemption or exclusion from investment company status available to us under the Investment Company Act at any given time. Furthermore, reliance on Rule 3a-2, Section 3(a)(1)(C) or Rule 3a-1 could require us to take actions to dispose of securities, limit our ability to make certain investments or enter into joint ventures, or otherwise limit or change our service offerings and operations. If we were to be deemed an investment company in the future, restrictions imposed by the Investment Company Act—including limitations on our ability to issue different classes of stock and equity compensation to directors, officers, and employees and restrictions on management, operations, and transactions with affiliated persons—likely would make it impractical for us to continue our business as contemplated, and could have a material adverse effect on our business, results of operations, financial condition and prospects. Investment companies in the United States that are not registered under Section 8 of the Investment Company Act (as we are not), and which are not exempt from such registration, are generally prohibited from engaging in interstate commerce, and the contracts entered into by such companies are generally unenforceable.
We are not subject to the legal and regulatory obligations that apply to investment companies such as mutual funds and funds, or to obligations applicable to investment advisers.
Similar paragraph at 12 of 31 other Crypto companies: ASST, DFDV, DJT, FWDI, HSDT, LITS, MSTR, NAKA and 4 moreMutual funds, exchange-traded funds and their directors and management are subject to extensive regulation as investment companies and investment advisers under U.S. federal and state law; this regulation is intended for the benefit and protection of investors. We are not subject to, and do not otherwise voluntarily comply with, these laws and regulations. This means, among other things, that the execution of or changes to our treasury reserve policy or our HYPE strategy, our use of leverage, the manner in which our HYPE is custodied, our ability to engage in transactions with affiliated parties and our operating and investment activities generally are not subject to the extensive legal and regulatory requirements and prohibitions that apply to investment companies and investment advisers. For example, although a significant change to our treasury reserve policy would require the approval of our board of directors, no stockholder or regulatory approval would be necessary. Consequently, our board of directors has broad discretion over the investment, leverage and cash management policies it authorizes, whether in respect of our HYPE or other activities we may pursue, and has the power to change our current policies, including our strategy of acquiring and holding HYPE. As a result, investors in our company may be exposed to greater volatility, concentration risk and governance discretion than they would be if we were subject to the protections afforded to regulated investment vehicles.
Similar paragraph at 13 of 31 other Crypto companies: ASST, BKKT, DFDV, DJT, FWDI, HSDT, LITS, MSTR and 5 moreHYPE is created and transmitted through the operations of the peer-to-peer Hyperliquid network, a decentralized network of computers running software following the HYPE protocol. If the Hyperliquid network is disrupted or encounters any unanticipated difficulties, the value of HYPE could be negatively impacted.
If the Hyperliquid network is disrupted or encounters any unanticipated difficulties, the processing of transactions on the Hyperliquid network may be disrupted, which in turn may prevent us from depositing or withdrawing HYPE from our wallet addresses or otherwise effecting HYPE transactions. Such disruptions could include, for example: the price volatility of HYPE; the insolvency, business failure, interruption, default, failure to perform, security breach, or other problems of participants, custodians or others; the closing of HYPE trading platforms due to fraud, failures, security breaches or otherwise; or network outages or congestion, power outages, or other problems or disruptions affecting the Hyperliquid network. For example, in June 2025, after a trader allegedly manipulated the price of JELLY in a Hyperliquid vault market, Hyperliquid forcibly closed the market at a very low price to minimize losses. Hyperliquid’s intervention raised questions as to whether the platform is truly decentralized.
In addition, digital asset validating operations can consume significant amounts of electricity, which may have a negative environmental impact and give rise to public opinion against allowing, or government regulations restricting, the use of electricity for validating operations. Additionally, validators may be forced to cease operations during an electricity shortage or power outage.
Similar paragraph at 1 of 31 other Crypto companies: SBETWe face risks relating to the custody of our HYPE and other digital assets, such as the loss or destruction of private keys required to access our HYPE and cyberattacks or other data loss relating to our HYPE, including smart contract-related losses and vulnerabilities.
We hold our HYPE and other digital assets in self-custodied wallet addresses using infrastructure provided by Anchorage Digital Bank (a regulated custodian), as well as hardware wallet providers. Our wallet infrastructure does not restrict our ability to reallocate our HYPE and other digital assets among our wallet addresses, and our HYPE and other digital assets may be concentrated with a single custodian or custodial infrastructure provider from time to time. In light of the significant amount of HYPE that we hold, we expect to continually seek to engage additional custody infrastructure providers to achieve a greater degree of diversification in the custody of our HYPE as the extent of potential risk of loss is dependent, in part, on the degree of diversification. However, multiple custody infrastructure providers may utilize similar wallet infrastructure, cloud service providers or software systems, which could
increase systemic technology risk. While we will conduct due diligence on our custody infrastructure providers and any smart contract platforms we may use, there can be no assurance that such diligence will uncover all risks, including operational deficiencies, hidden vulnerabilities or legal noncompliance.
Similar paragraph at 1 of 31 other Crypto companies: HSDTHYPE is controllable only by the possessor of both the unique public key and private key(s) relating to the local or online digital wallet in which the HYPE is held. While the Layer 1 blockchain ledger requires a public key relating to a digital wallet 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 HYPE held in such wallet. To the extent the private key(s) for a digital wallet are lost, destroyed, or otherwise compromised and no backup of the private key(s) is accessible, neither we nor our custody infrastructure providers will be able to access the HYPE held in the related digital wallet. Furthermore, we cannot provide assurance that our digital wallets, nor the digital wallets of our custody infrastructure providers, will not be compromised as a result of a cyberattack. The HYPE and blockchain ledger, as well as other digital assets and blockchain technologies, have been, and may in the future be, subject to security breaches, cyberattacks or other malicious activities.
Similar paragraph at 15 of 31 other Crypto companies: ABTC, ASST, BKKT, BMNR, BTBT, CRCL, DJT, GEMI and 7 moreThe digital assets held by us are not insured. The market for such insurance is in the early stages. Further, banking institutions will not accept our digital assets and they are therefore not insured by the Federal Deposit Insurance Corporation (“FDIC”) or the Securities Investor Protection Corporation (“SIPC”). Therefore, a loss may be suffered with respect to our digital assets that is not covered by insurance and we may not be able to recover any of our carried value in these digital assets if they are lost or stolen or suffer significant and sustained reduction in conversion spot price. If we are not otherwise able to recover damages from a malicious actor in connection with these losses, our business and results of operations may suffer, which may have a material negative impact on the price of our securities. The limited rights of legal recourse available to us and our lack of insurance protection for risk of loss of our digital assets exposes us and our shareholders to the risk of loss of our digital assets for which no person may ultimately be held liable and we may not be able to recover our losses. Any uninsured losses may have an adverse effect on our results of operations, financial condition and prospects.
Similar paragraph at 1 of 31 other Crypto companies: CLSKTo the extent that we obtain insurance to cover losses of our HYPE holdings in the future, such insurance may cover none or only a small fraction of the value of the entirety of our HYPE holdings. Any loss associated with any insolvency proceedings is unlikely to be covered by any insurance coverage we may obtain in the future related to our HYPE. The legal framework governing digital asset ownership and rights in custodial or insolvency contexts remains uncertain and continues to evolve, which could result in unexpected losses, protracted recovery processes or adverse treatment in insolvency proceedings.
We use smart contracts that are subject to coding errors and other potential flaws.
As part of our treasury management strategy, we may engage in staking, restaking, or other permitted activities that involve the use of “smart contracts” or decentralized applications. The use of smart contracts or decentralized applications entails certain risks including risks stemming from the existence of an “admin key” or coding flaws that could be exploited, potentially allowing a bad actor to issue or otherwise compromise the smart contract or decentralized application, which could lead to a loss of our HYPE. Like all software code, smart contracts are exposed to risk that the code contains a bug or other security vulnerability, which can lead to loss of assets that are held on or transacted through the contract or decentralized application. Smart contracts and decentralized applications may contain bugs, security vulnerabilities or poorly designed permission structures that could result in the irreversible loss of HYPE or other digital assets. Exploits, including those stemming from admin key misuse, admin key compromise or protocol flaws, have occurred in the past and may occur in the future.
Similar paragraph at 1 of 31 other Crypto companies: HSDTOur participation in on-chain activities related to validating and DeFi partnerships, such as our HYPE Asset Use Service agreements, exposes the company to slashing risk, which may result in partial loss of staked digital assets. Slashing is an enforcement mechanism that financially penalizes blockchain network validators for behavior that endangers network security or reliability. Slashing may occur due to validator misbehavior, software flaws, operational mistakes or changes to network governance, with tokens permanently forfeited and not recoverable. Such losses could have a material adverse effect on our financial condition and reputation. While we seek to mitigate these risks through legal contracts, internal controls and counterparty diligence, residual risk remains due to factors beyond our control.
We face other risks related to our digital asset treasury reserve business model.
Similar paragraph at 1 of 31 other Crypto companies: DFDVOur digital asset treasury reserve business model exposes us to various risks, including the following:
Similar paragraph at 9 of 31 other Crypto companies: DFDV, DJT, HSDT, MSTR, NAKA, SBET, SUIG, UPXI and 1 moreHYPE and other digital assets are subject to significant legal, commercial, regulatory and technical uncertainty, and our HYPE strategy subjects us to enhanced regulatory oversight;
Similar paragraph at 9 of 31 other Crypto companies: DFDV, DJT, FWDI, HSDT, MSTR, NAKA, SUIG, TRON and 1 moreregulatory changes could impact our ability to operate validators or receive rewards;
regulatory scrutiny of the Company’s activities may increase, potentially limiting our operations;
potential litigation risks exist related to smart contract vulnerabilities, validator operations, or our business activities;
uncertainty around the regulatory status of digital assets, including HYPE, may impact our ability to list on certain exchanges;
changes in political administration may not guarantee a favorable regulatory environment for digital assets;
future SEC actions or court decisions could retroactively classify digital assets as a security, potentially leading to penalties or forced unwinding of transactions; and
increased regulatory focus on Layer 1 blockchains beyond Bitcoin and Ethereum could result in new compliance requirements.
We may engage in distinct digital asset financing strategies in which we will leverage our digital asset holdings to acquire additional amounts of the same leveraged digital assets, and may do so on a compounded basis, which will increase our exposure to smart-contract, operational and counterparty risks.
Similar paragraph at 1 of 31 other Crypto companies: DFDVWe may engage in digital asset leverage strategies to acquire additional amounts of HYPE. As part of this strategy, we may borrow digital assets by pledging our own HYPE holdings as collateral, deploy these borrowed assets to acquire additional amounts of HYPE, and subsequently re-pledge the newly acquired HYPE to further engage in these leveraged transactions. As each of these transactions will be effectuated on chain, the strategy may expose us to significant smart-contract vulnerabilities and operational risks. The smart contracts that are used for purposes of these transactions may contain undiscovered bugs, logical errors or economic vulnerabilities that could be exploited by malicious actors or that could cause the contracts to perform in unintended ways, resulting in partial or total loss of our collateral and borrowed assets. In addition, the strategy may subject us to counterparty risk through the platforms we utilize to facilitate leveraging strategies including, among others, insolvency of the platform, coding errors and cyberattacks. Finally, lenders customarily require that collateral ratios be maintained within narrowly defined thresholds and may exercise broad contractual discretion to impose additional margin requirements or to liquidate collateral without notice when those thresholds are breached. We may also incur losses if the interest that accrues on our borrowings significantly exceeds the revenue generated by the borrowed HYPE.
Similar paragraph at 1 of 31 other Crypto companies: DFDVFINANCIAL REPORTING, TAX, ACCOUNTING AND TRADING RISKS ASSOCIATED WITH OUR STRATEGY
We may be subject to additional tax liability if regulation or policy changes adversely affect the tax treatment of rewards from staking HYPE.
The U.S. federal income tax treatment of rewards from staking digital assets such as HYPE remains uncertain and is currently under the subject of debate and regulatory attention. Under current guidance by the Internal Revenue Service (“IRS”), staking rewards are generally treated as ordinary income upon receipt. If regulation or policy changes, or the interpretation or enforcement thereof, results in adverse tax treatment of rewards from staking HYPE, we could be subject to increased audits by the IRS and additional tax liabilities.
Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to our HYPE holdings.
Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future from holding or selling significant amounts of HYPE. The prices of digital assets have historically been subject to significant price fluctuations and are highly volatile. In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”), which we have adopted.
ASU 2023-08 requires us to measure our HYPE holdings at fair value in our statement of financial position, and to recognize gains and losses from changes in the fair value of our HYPE in net income each reporting period. ASU 2023-08 also requires us to provide certain interim and annual disclosures with respect to our HYPE holdings. As a result, volatility in our earnings may be significantly more than what we experienced in prior periods.
Unrealized fair value gains on our HYPE holdings could cause us to become subject to the corporate alternative minimum tax under the Inflation Reduction Act.
The United States enacted the Inflation Reduction Act of 2022 (“IRA”) in August 2022. Unless an exemption applies, the IRA imposes a 15% corporate alternative minimum tax (“CAMT”) on a corporation with respect to an initial tax year and subsequent tax years, if the average annual adjusted financial statement income for any consecutive three-tax-year period preceding the initial tax year exceeds $1 billion. On September 12, 2024, the Department of Treasury and the IRS issued proposed regulations with respect to the application of the CAMT.
In connection with the implementation of our HYPE treasury strategy, we have adopted ASU 2023-08. ASU 2023-08 requires us to measure our HYPE holdings at fair value in our statement of financial position, with gains and losses from changes in the fair value of our HYPE recognized in net income each reporting period. When determining whether we are subject to CAMT and when calculating any related tax liability for an applicable tax year, the proposed regulations provide that, among other adjustments, our adjusted financial statement income must include this ratable amount in addition to any unrealized gains or losses reported in the applicable tax year.
Accordingly, as a result of the enactment of the IRA and our adoption of ASU 2023-08, we could become subject to the CAMT in future tax years, unless the IRA is amended or the proposed regulations with respect to CAMT, when finalized, are revised to provide relief (or other interim relief is granted). If we become subject to the CAMT, it could result in a material tax obligation that we would need to satisfy in cash, which could materially affect our financial results, including our earnings and cash flow, and our financial condition.
Due to the unregulated nature and lack of transparency surrounding the operations of many HYPE trading venues, these trading venues may experience greater fraud, security failures or regulatory or operational problems than trading venues for more established asset classes, which may result in a loss of confidence in HYPE trading venues and adversely affect the value of our HYPE.
Similar paragraph at 10 of 31 other Crypto companies: BKKT, DJT, FWDI, GLXY, HSDT, MARA, MSTR, SBET and 2 moreHYPE trading venues are relatively new and, in many cases, unregulated. Furthermore, there are many HYPE trading venues that do not provide the public with significant information regarding their ownership structure, management teams, corporate practices and regulatory compliance. As a result, the marketplace may lose confidence in HYPE trading venues, including prominent exchanges that handle a significant volume of HYPE trading and/or are subject to regulatory oversight, in the event one or more HYPE trading venues cease or pause for a prolonged period the trading of HYPE or other digital assets, or experience fraud, significant volumes of withdrawal, security failures or operational problems.
Similar paragraph at 13 of 31 other Crypto companies: ABTC, BKKT, CLSK, DJT, FWDI, GLXY, HSDT, HUT and 5 moreThe SEC alleged as part of its June 5, 2023, complaint against Binance that Binance committed strategic and targeted “wash trading” through its affiliates to artificially inflate the volume of certain digital assets traded on its exchange. The SEC has also brought actions against individuals and digital asset market participants alleging that such persons artificially increased trading volumes in certain digital assets through wash trades, or repeated buying and selling of the same assets in fictitious transactions to manipulate their underlying trading price. Such reports and allegations may indicate that the HYPE market is significantly smaller than expected and that the United States makes up a significantly larger percentage of the HYPE market than is commonly understood. Any actual or perceived wash trading in the HYPE market, and any other fraudulent or manipulative acts and practices, could adversely affect the value of our HYPE.
Negative perception, a lack of stability in the broader digital currency markets and the closure, temporary shutdown or operational disruption of HYPE trading venues, lending institutions, institutional investors, institutional miners, custodians, or other major participants in the HYPE ecosystem, due to fraud, business failure, cybersecurity events, government-mandated regulation, bankruptcy or any other reason, may result in a decline in confidence in HYPE and the broader digital currency ecosystem and greater volatility in the price of HYPE. For example, in 2022, each of Celsius Network, Voyager Digital, Three Arrows Capital, FTX and BlockFi filed for bankruptcy, following which digital assets significantly declined. In addition, in June 2023, the SEC announced enforcement actions against Coinbase and Binance, two providers of large trading venues for digital assets, which similarly was followed by a decrease in the market price of digital assets. These were followed in November 2023 by an SEC enforcement action against Payward Inc. and Payward Ventures Inc., together known as Kraken, another large trading venue for digital assets. While the complaint against Coinbase was dismissed in February 2025, the complaint against Payward Inc. and Payward Ventures Inc. was dismissed with prejudice in March 2025, and the complaint against Binance was dismissed in May 2025, the SEC or other regulatory agencies may initiate similar actions in the future. As the price of our listed securities may be affected by the value of our HYPE holdings, the failure of a major participant in the digital currency ecosystem could have a material adverse effect on the market price of our listed securities.
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If we are unable to raise sufficient additional capital on acceptable terms, we may be unable to expand or maintain our HYPE reserve, which could adversely affect our liquidity, financial condition and growth prospects.
We completed a private placement of our securities on June 20, 2025, the net proceeds of which have been used for our HYPE treasury strategy. To the extent holders exercise the warrants we have issued for cash, we may acquire additional HYPE at market prices, which could magnify our exposure to HYPE price volatility. If we are unable to raise sufficient additional capital through warrant exercises, our at-the-market offering facility or other equity financings on acceptable terms, we may be unable to expand or maintain our HYPE reserve, which could adversely affect our liquidity, financial condition and growth prospects.
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We may not be able to obtain financing on favorable terms, if at all. If we raise additional funds by issuing equity securities, the percentage ownership of our then current stockholders will be reduced, and the holders of the new equity securities may have rights superior to those of our then existing securityholders, which could adversely affect the market price of our common stock and the voting power of shares of our common stock. If we raise additional funds by issuing debt securities or preferred stock, the holders of such securities may have rights that are senior to those of our then existing securityholders, and the terms of those securities could impose restrictions on operations and create a significant interest expense for us, which could have a materially adverse effect on our business.
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As previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, we identified a material weakness in our internal control over financial reporting because the controls associated with evaluating our right-of-use (ROU) assets for potential impairment were not adequately designed or operating effectively. This deficiency resulted from a lack of sufficient precision in our control activities to properly account for the impairment of ROU assets and to appropriately measure the impairment loss.
To remediate this material weakness, management redesigned the control requiring that ROU assets be evaluated for impairment upon the occurrence of triggering events. The control now includes the identification of appropriate asset groups, a structured assessment of triggering events, the application of the required order of impairment testing, including performance of the undiscounted cash flow recoverability test with measurement of the impairment utilizing the fair value of the asset group as required, with contemporaneous written documentation subject to review by the Chief Financial Officer.
As previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, we identified a material weakness in our internal control over financial reporting because the controls over the accounting for certain significant and complex, non-routine transactions and events were not adequately designed or operating effectively. Specifically, we failed to properly account for the fair value of common equity shares issued in relation to the consideration for licensing agreements and debt modification.
To remediate this material weakness, management redesigned the control associated with contractual equity issuances. The control now requires that all such obligations to issue equity are subject to a mandatory accounting assessment, followed by a review by a professional with the requisite technical competence.
Management has evaluated the design, implementation and operating effectiveness of these enhanced controls and has concluded that the two material weaknesses described above have been remediated and are operating effectively as of December 31, 2025. This remediation represents a material change to our internal control over financial reporting during the quarter ended December 31, 2025.
Similar paragraph at 1 of 31 other Crypto companies: FIGRIn addition, during the process of preparing the financial statements as of, and for the year ended, December 31, 2025, we determined that we had a new material weakness. We failed to properly design and implement controls over digital asset pricing, specifically relating to validation of digital asset pricing and principal market determination provided by third party service providers.
Due to the existence of this material weakness, our management has concluded that, as of December 31, 2025, our internal control over financial reporting was not effective.
We have since taken steps to redesign the internal controls over digital asset pricing and principal market determination, including implementation of an internal process to test, and independently verify, the digital asset pricing data received from the third party source. Our management is committed to taking further action and implementing necessary enhancements or improvements, including those necessary to address the material weakness cited above. However, the material weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
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The secure processing, storage, maintenance and transmission of this critical information is vital to our operations and business strategy, and we devote significant resources to protecting such information. Although we take measures to protect sensitive information from unauthorized access or disclosure, our information technology and infrastructure may be vulnerable to attacks by hackers or viruses, breaches, interruptions due to employee error, malfeasance, faulty password management, lapses in compliance with privacy and
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New in the latest 10-Q
34 paragraphs in the 10-Q filed Aug 13, 2026 with nothing like them in the 10-Q filed May 15, 2026 (at least half the words must differ; new numbers alone do not count). Quoted exactly, grouped by the item heading above them. This is text that changed, not a judgement of how serious it is.
Financial statements and notes
Digital Assets Receivable, Digital Intangible Assets Receivable, and Credit Loss Allowance
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Level 3 - Inputs that are unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.
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The Company’s digital assets, digital assets receivable and digital intangible assets receivable are subject to fair value measurements on a recurring basis.
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HYPE digital assets are measured at fair value on a recurring basis using quoted prices in its principal market (Level 1 inputs). The Company routinely evaluates which market qualifies as its principal market by considering factors such as accessibility, trading volume, and transaction activity. Ultimately, the principal market is determined as the one accessible to the Company with the highest volume and orderly transactions for HYPE. As of December 31, 2025, the Company had KNTQ digital assets which are measured at fair value on a recurring basis using market-corroborated inputs (Level 2 inputs) including the observed transactions on decentralized exchanges within the Hyperliquid and HyperEVM ecosystems.
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As of June 30, 2026, a regulated exchange market is utilized as the principal market for HYPE. The level of inputs used for the fair value measurement of HYPE digital assets as of June 30, 2026 and December 31, 2025, were as follows: June 30, 2026 December 31, 2025 ────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────── Fair Value Fair Value Fair Value Level 1 Level 2 Level 3 Fair Value Level 1 Level 2 Level 3 HYPE digital assets $ 74,119,231 $ 74,119,231 $ $ $ 16,233,941 $ 16,233,941 $ - $ KNTQ digital assets - - 111,406 - 111,406 Total $ 74,119,231 $ 74,119,231 $ $ $ 16,345,347 $ 16,233,941 $ 111,406 $ The carrying amounts of the Company’s financial instruments, such as cash and cash equivalents and accounts payable approximate fair values due to the short-term nature or effective interest rates of these instruments. The fair value of the Company’s digital intangible assets is estimated based on the original digital asset token deposited minus transaction costs. Impairment losses for the Company’s digital intangible assets are recognized when fair value falls below carrying value. Assets Held For Sale In connection with the wind-down of its Ophthalmic Technology segment (the “Biotech Operations”), including the Optejet User Filled Device platform, the Company committed to a plan to sell the related assets (the “Biotech Assets”). Management substantially completed the wind-down of Biotech Operations as of May 31, 2026. Management has concluded that the Biotech Assets meet the criteria in ASC 360-10-45-9 to be classified as held for sale as of June 30, 2026, as (i) management committed to a plan to sell the Biotech Assets, (ii) the Biotech Assets were available for immediate sale in their present condition, (iii) an active program to locate a buyer had been initiated, (iv) the sale was probable and expected to be completed within one year, (v) the Biotech Assets were being actively marketed at a reasonable price, and (vi) it is unlikely that significant changes to the plan would be made. Assets classified as held for sale are measured at the lower of their carrying amount or fair value less costs to sell and are no longer depreciated or amortized once so classified. The Company wrote off $57,773 related to its right-of-use asset associated with the Biotech Operations lease during the three months ended June 30, 2026 as a result of the wind-down. No other Biotech Assets were written down during the six months ended June 30, 2026. Accordingly, the carrying value of the Biotech Assets was zero as of June 30, 2026. On July 30, 2026, the Company completed the sale of substantially all intellectual property associated with its legacy ophthalmic drug delivery (Optejet) program to Arctic Vision (Hong Kong) Limited pursuant to an Intellectual Property Purchase, Sale and Assignment Agreement. The assigned assets consisted of the Company’s Optejet-related patents and patent applications, trademarks, and associated know-how, technical, clinical and regulatory documentation. Consideration consisted of a release of a $100,000 liability owed by the Company to Arctic Vision. The intellectual property was transferred on an “as is” basis, and Arctic Vision assumed all patent and trademark maintenance obligations accruing on or after the closing date. In connection with the transaction, the Company and Arctic Vision terminated their license agreement dated August 10, 2020, as amended, and the Company entered into a mutual termination, release and settlement agreement with Senju Pharmaceutical Co., Ltd. terminating the exclusive license agreement dated March 18, 2015, as amended, under which the Company paid Senju $15,000 and the parties exchanged mutual releases. In connection with the transaction, Arctic Vision paid the Company $15,000. The Company determined that the wind-down of the Biotech Operations does not represent a strategic shift that has a major effect on the Company’s operations and financial results, and accordingly does not qualify for discontinued operations presentation under ASC 205-20. Income Taxes The Company is subject to Federal, New York State and City, and State of California income taxes and files tax returns in those jurisdictions.
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(1) Excludes shares issuable upon conversion of the Series A Convertible Preferred Stock, whose effect is reflected in diluted earnings per share under the two-class method. See above.
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USD Coin (“USDC”) is a U.S. dollar - denominated payment stablecoin issued by Circle Internet Group, Inc., which the Company uses to settle certain digital asset transactions, including purchases of HYPE, contracts under its OTC options strategy, and fees received under its temporary HAUS agreements. USDC is accounted for as a financial instrument that can be redeemed one USDC for one U.S. dollar on demand from the issuer and is not within the scope of ASC 350-60.
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Digital Assets Receivable, Digital Intangible Assets Receivable, and Credit Loss Allowance
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In the three months ended March 31, 2026, the Company deposited $1,765,075 USDH in exchange for 1,765,075 notional Hyperion Rysk Vault Shares, presented within digital intangible assets on the condensed balance sheets, initially valued at the Company’s basis of $1,765,075 (in USDH) with no realized gains or losses. During the three months ended June 30, 2026, all of the Company’s Hyperion Rysk Vault Shares with a USDH liquidity pool (such shares bearing the technical name “WHYPE-USDH-USDH-P-H-HL”) were redeemed for USDH and subsequently converted to USDC. In addition, all of the Company’s Hyperion Rysk Vault Shares with a USDC liquidity pool were redeemed for USDC in the three months ended June 30, 2026. There were no outstanding options transactions within the IVIV as of June 30, 2026.
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As of June 30, 2026, total principal under the Avenue Loan consists of original loan principal of $8,158,195, plus $350,294 of paid-in-kind interest.
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The Avenue Loan matures as follows and includes $809,341 of paid-in-kind interest accrued through maturity.
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Warrants During the six months ended June 30, 2026, there were no new issuances, exercises or expirations of warrants. The following table presents information related to warrants as of June 30, 2026: Warrants Outstanding Warrants Exercisable Weighted Outstanding Average Exercisable Exercise Number of Remaining Life Number of Price Warrants In Years Warrants $3.2500 32,615,381 4.0 32,615,381 $4.0000 350,000 4.0 350,000 $5.2720 394,234 4.1 394,234 $8.6080 302,045 3.6 302,045 $197.5680 108,696 3.6 108,696 $217.9200 49,280 3.5 49,280 $380.8000 1,149 4.9 1,149 33,820,785 4.0 33,820,785 Restricted Stock Units A summary of the restricted stock units activity during the six months ended June 30, 2026 is presented below: Weighted Average Number of Grant Date RSUs Price RSUs non-vested January 1, 2026 1,545,000 $ 6.63 Granted 355,077 3.26 Vested (252,684) 5.33 RSUs non-vested June 30, 2026 1,647,393 $ 6.18 Vested RSUs undelivered January 1, 2026 284,551 $ 5.49 Vested during the period 252,684 5.33 Delivered- net of shares withheld for taxes (259,029) 5.46 Shares withheld to satisfy employee tax obligations (104,655) 5.01 Vested RSUs undelivered June 30, 2026 173,551 $ 4.83 RSUs have been granted to directors, employees and contractors in accordance with the Company’s Amended and Restated 2018 Omnibus Stock Incentive Plan (the “2018 Omnibus Plan”). Some RSUs are subject to delayed delivery of the shares underlying the vested RSUs until the termination of grantee service. As of June 30, 2026, there was $6.4 million of unrecognized stock-based compensation expense related to RSUs which will be recognized over a weighted average period of 1.8 years.
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On December 29, 2025, 82,324 shares were withheld from a delivery of RSUs to the Company’s Chief Executive Officer to cover the Company’s tax obligations, reflected as treasury stock as of December 31, 2025. The Company records repurchases of its own common stock at cost. Repurchased common stock is presented as a reduction of equity in the condensed balance sheets. Gains resulting from differences between the cost of treasury stock and the re-issuance proceeds would be credited to additional paid-in capital. Losses resulting from differences between the cost of treasury stock and the re-issuance proceeds would be debited to additional paid-in capital.
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On March 20, 2026, the Company’s Board of Directors, pursuant to Section 243 of the Delaware General Corporation Law, approved a resolution whereby shares of the Company’s common stock that are withheld in the future upon vesting of the RSUs or exercise of options to satisfy tax withholding obligations or the exercise price of options, as the case may be, will automatically be retired and such shares will (1) resume the status of authorized but unissued shares of common stock and (2) again become available for issuance pursuant to inducement grants or the 2018 Omnibus Plan, as the case may be. As a result of the retirement, the Company derecognized the treasury shares to additional paid in capital during the six months ended June 30, 2026.
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The prior Ophthalmic Technology reportable segment no longer meets the quantitative criteria to be presented as a reportable segment under ASC 280-10, and accordingly, its operating results through the period of its wind-down (completed by May 31, 2026) have been included in the Corporate/Other column for the 2026 periods. The 2025 periods were not required to be recast, and were therefore not recast, since the wind-down of the Ophthalmic Technology segment did not meet the criteria to be presented as a discontinued operation.
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Subsequent to June 30, 2026, the Company entered into additional OTC HYPE options agreements with 250,000 kHYPE being held by institutional derivative counterparties as collateral.
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Subsequent to June 30, 2026, the Company redeemed approximately 55,434 kHYPE for approximately 56,682 HYPE.
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The fair value price of HYPE has declined from approximately $65.00 as of June 30, 2026 to $55.40 as of August 10, 2026, which corresponds to a fair value decline on our approximately 1.1 million tokens of HYPE digital assets held as of June 30, 2026 of approximately $10.9 million.
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Subsequent to June 30, 2026, the Company delivered approximately $1.1 million USDC to the Hyperion Rysk Vault.
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On July 17, 2026, the Company entered into a lending arrangement pursuant to a Facility Schedule dated July 16, 2026 (“Facility”) to the Master Facility Agreement between HyperLend and the Company, dated June 6, 2026, whereby HyperLend facilitates loans through its platform, the Company acts as lender and a privately-held fund (the “Borrower”) is the borrower. The Facility provides for a principal amount of up to $1.0 million, denominated in USDC. The Facility has a term of one month and bears a fixed interest rate of 8.0% per annum payable to the Company. Accrued interest and principal is due at maturity, subject to earlier repayment provisions. The Borrower’s obligations are collateralized by digital assets consisting of natively staked HYPE tokens, which are subject to a security interest and related control rights in favor of HyperLend, acting for itself and for the benefit of the Company. The collateral arrangements are governed by the Facility and an Account Control Agreement among Anchorage Digital Bank N.A. (as the custodian), the Borrower (as pledgor) and HyperLend (as secured party for itself and for the benefit of the Company). The terms of the loan arrangement include customary margin maintenance, liquidation, and collateral monitoring provisions, including specified loan-to-value thresholds and liquidation triggers.
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In October 2025, the Hyperliquid network implemented the Hyperliquid Improvement Proposal 3 (“HIP-3”) upgrade, which enables any user with 500,000 HYPE staked at a deployer address to launch a custom on-chain perpetual futures market for non-crypto assets such as equities, commodities and indices. In July 2026, Hyperliquid Labs announced the Hyperliquid Improvement Proposal 4 (“HIP-4”) upgrade, which is expected to enable any user with 500,000 HYPE staked at a deployer address to launch custom on-chain outcome markets such as prediction markets, options, and other binary-resolution financial instruments. As of August 10, 2026, HIP-4 remains in a testing phase and is not yet launched to end-users. These network upgrades expand both Hyperliquid’s product suite and its potential user base, further establishing it as a premier on-chain destination for financial activity.
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To support HIP - 3, the Company provided Felix Foundation (“Felix”) with the HYPE required to launch a perpetual futures market and received a share of the fees earned from trading activity through its HAUS agreement; in June 2026, the HAUS agreement was terminated and this perpetuals exchange was wound down. This perpetual futures market was operated and maintained by Felix outside the United States, and was not made available or marketed to U.S. persons.
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The Company has received and may continue to receive additional digital assets from issuers and participants active in the Hyperliquid ecosystem.
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In the three months ended June 30, 2026, the Company recognized a $57,773 impairment to its right of use assets in connection with its office located in Laguna Hills, California. The location was the primary nexus of operations related to the Optejet, and the impairment was in connection with the wind down of all Optejet-related activity in the three months ended June 30, 2026. The Company’s lease of the Laguna Hills, California office space is through July, 2027.
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In the six months ended June 30, 2026, the Company recognized a $57,773 impairment to its right of use assets in connection with its office located in Laguna Hills, California. The location was the primary nexus of operations related to the Optejet, and the impairment was in connection with the wind down of all Optejet-related activity in the six months ended June 30, 2026. The Company’s lease of the Laguna Hills, California office space is through July, 2027.
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cash secured put agreements on the price of HYPE sold and secured by the Company’s cash, USDC, and, through May 2026, USDH. In the six months ended June 30, 2026, the Company’s net gains on derivative instruments totaled approximately $0.2 million.
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offering (net of $0.3 million issuance costs) and $3.0 million of net proceeds from the exercise of stock warrants partially offset by $1.5 million from the repayment of notes payable.
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USD Coin (“USDC”) is a U.S. dollar - denominated payment stablecoin issued by Circle Internet Group, Inc., which the Company uses to settle certain digital asset transactions, including purchases of HYPE, contracts under its OTC options strategy, and fees received under its temporary HAUS agreements. USDC is accounted for as a financial instrument that can be redeemed one USDC for one U.S. dollar on demand from the issuer and is not within the scope of ASC 350-60. The Company presents USDC within “Prepaid expenses and other current assets”. The Company held USDC of $2,121,483 as of June 30, 2026 and $132,589 as of December 31, 2025, none of which was pledged, locked or deployed.
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Controls and procedures
detected on a timely basis. We have identified material weaknesses in the past and have taken steps to remediate those material weaknesses, including the following steps taken during the six months ended June 30, 2026:
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Management has evaluated the design, implementation and operating effectiveness of these enhanced controls and has concluded that the material weakness described above has been remediated and the associated controls are operating effectively as of June 30, 2026. This remediation represents a material change to our internal control over financial reporting during the quarter ended June 30, 2026.
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Risk Factors
We may engage in distinct digital asset financing strategies in which we will leverage our digital asset holdings to acquire additional amounts of the same leveraged digital assets, and may do so on a compounded basis, which will increase our exposure to smart-contract, operational and counterparty risks. We may also lend amounts of digital assets (including stablecoins) to third parties through the use of third party on-chain lending platforms.
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We may engage in digital asset leverage strategies to acquire additional amounts of HYPE or lend a portion of digital assets (including stablecoins). As part of this strategy, we may borrow digital assets by pledging our own HYPE holdings as collateral (including on a compounded basis), deploy these borrowed assets to acquire additional amounts of HYPE, and subsequently re-pledge the newly acquired HYPE to further engage in these leveraged transactions. We may also lend digital assets through a third-party loan facilitator, to a borrower under loan, security and third-party custodian agreements on-chain and off-chain. Since some of these transactions will be effectuated on-chain, the strategy may expose us to significant smart-contract vulnerabilities and operational risks. The smart contracts that are used for purposes of these transactions may contain undiscovered bugs, logical errors or economic vulnerabilities that could be exploited by malicious actors or that could cause the contracts to perform in unintended ways, resulting in partial or total loss of our collateral and borrowed assets. In addition, the strategy may subject us to counterparty risk through the platforms we utilize to facilitate leveraging strategies including, among others, insolvency of the platform, coding errors and cyberattacks. We may also be subject to the insolvency of the borrower and the value of the collateral they pledge may not be sufficient to wholly satisfy the outstanding debt obligations of the borrower. Finally, where we are a borrower (and conversely where we act as a lender), lenders customarily require that collateral ratios be maintained within narrowly defined thresholds and may exercise broad contractual discretion to impose additional margin requirements or to liquidate collateral without notice when those thresholds are breached. We may also incur losses if the interest that accrues on our borrowings significantly exceeds the revenue generated by the borrowed HYPE.
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Share sales and buybacks
The Subscription Agreement was terminated on June 8, 2026, and the Company does not anticipate any additional compensation to be paid to Merenti.
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Item 6
101. LAB Inline XBRL Taxonomy Extension Label Linkbase Document Filed herewith 101. PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document Filed herewith 104 Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document contained in Exhibit 101 Filed herewith ───────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────
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The 10-Q's risk factors against the 10-K
Item 1A of the 10-Q filed Aug 13, 2026 against Item 1A of the 10-K filed Mar 30, 2026.
A 10-Q repeats only the risks that changed, so a 10-K paragraph that is missing from it is not counted as removed.
Added is a paragraph with nothing like it in the 10-K, Reworded a sentence that is in both with several words changed,
Quiet changes a sentence in both where one to four words changed and one is a hedge or a modal
(cut words struck through, new words highlighted and underlined).
Text on the page, not a score; each links to the filing at sec.gov.
What the 10-Q itself says about its risk factors:
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Except as set forth below, there have been no material changes to the risk factors set forth in Part I, Item 1A of the 2025 Form 10-K.
Added10-Q 2026-08-13 vs 10-K 2026-03-30
On March 3, 2026, the Company launched in partnership with the Rysk protocol an IVIV, to execute HYPE options (puts and calls) via smart-contracts on-chain. The Company began executing on-chain put sales on the price of HYPE in the three months ended March 31, 2026, pursuant to which the Company executed on-chain options in the price of HYPE during the six months ended June 30, 2026. In order to collateralize these HYPE options, the Company first creates a standalone collateralization liquidity pool of the Company’s assets. Until May 2026, the Company’s liquidity pool was denominated in USDH; following Native Markets’ announcement on May 14, 2026 that it would cease supporting the USDH stablecoin, beginning in June 2026, the Company’s liquidity pool is denominated in USDC. When the Company’s USDC is deposited into the IVIV, it receives in exchange Hyperion Rysk Vault Shares, which evidence ownership of the Company’s deposited USDC plus any income from the IVIV on-chain HYPE options execution in a matter akin to liquid staking tokens. The Company relinquishes control over its underlying USDC when deposited into its liquidity pool. Any increase in the amount of underlying USDC within the IVIV is not recognized as income until the Hyperion Rysk Vault Shares are redeemed for USDC.
Added10-Q 2026-08-13 vs 10-K 2026-03-30
Rysk designed the Hyperion Rysk Vault Shares and manages the underlying smart contracts. Rysk has commissioned Dedaub for multiple comprehensive smart contract security audits covering different protocol versions and components over multiple years; in addition, Rysk uses Opyn Gamma - derived smart contracts, which themselves are widely audited. Nevertheless, there is no guaranty against a bug or other vulnerability leading to a loss of the Company’s Hyperion Rysk Vault Shares or USDC. In addition, the Company is also exposed to risk of losing USDC through system failure or hacking. As a result, the Hyperion Rysk Vault Shares do not confer an enforceable right to the underlying deposited USDC and IVIV assets, but only a claim. Further, the Hyperion Rysk Vault Shares are periodically locked into smart contracts to collateralize on-chain HYPE options activity. Therefore, the Company’s ability to redeem Hyperion Rysk Vault Shares back to underlying USDC is subject to smart contract risk and resolution of HYPE options activity on-chain.
Reworded10-Q 2026-08-13 vs 10-K 2026-03-30
The variances in valuation methods between the Hyperion Rysk Vault Shares and the underlying pool of USDC, including the delay of recognizing income from executed HYPE and LSTs options strategies, may create material volatility in the financial statements depending on conversion and redemption activity between HYPE the Hyperion Rysk Vault Shares and LSTs USDC each period.
Reworded10-Q 2026-08-13 vs 10-K 2026-03-30
Each LST of the Company’s LSTs evidences ownership of the Company’s deposited HYPE, the KNTQ, or HPL (the underlying digital asset of such LST, LST), and automatically accrues may accrue staking rewards denominated in HYPE. the underlying digital asset.
Reworded10-Q 2026-08-13 vs 10-K 2026-03-30
The smart contract code written by Kinetiq was audited by Code4rena, Spearbit, Pashov Audit Group and Zenith. Zenith, and HyperLend’s smart contracts have undergone third-party security reviews by Nethermind Security and Pashov Audit Group.
Reworded10-Q 2026-08-13 vs 10-K 2026-03-30
Finally, where we are a borrower (and conversely where we act as a lender), lenders customarily require that collateral ratios be maintained within narrowly defined thresholds and may exercise broad contractual discretion to impose additional margin requirements or to liquidate collateral without notice when those thresholds are breached.
Reworded10-Q 2026-08-13 vs 10-K 2026-03-30
The Kinetiq HyperLend protocol is a liquid staking liquidity, borrowing, and lending platform built on the Hyperliquid Layer 1 L1 blockchain.
Reworded10-Q 2026-08-13 vs 10-K 2026-03-30
We may engage in digital asset leverage strategies to acquire additional amounts of HYPE. HYPE or lend a portion of digital assets (including stablecoins).
Reworded10-Q 2026-08-13 vs 10-K 2026-03-30
The variances in valuation methods between HYPE HYPE, KNTQ, or HPL and LSTs may create material volatility in the financial statements depending on conversion and redemption activity between HYPE HYPE, KNTQ, or HPL and LSTs each period.
Reworded10-Q 2026-08-13 vs 10-K 2026-03-30
In addition, the Company is also exposed to risk of losing HYPE in the pool due HYPE, KNTQ, or HPL to system failure or hacking.
Reworded10-Q 2026-08-13 vs 10-K 2026-03-30
Reworded10-Q 2026-08-13 vs 10-K 2026-03-30
Reworded10-Q 2026-08-13 vs 10-K 2026-03-30
The Company’s liquid staking activities, including its holdings of HiHYPE, kHYPE, kmHYPE, sKNTQ, and kmHYPE sHPL (each an a digital intangible digital asset), expose the Company to additional risks and earnings volatility.
Reworded10-Q 2026-08-13 vs 10-K 2026-03-30
In contrast, HYPE is HYPE, KNTQ and HPL are measured at fair value.
The first 15 of 18 are shown (at most 12 of each type).
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