N-2 - USD ($) |
Aug. 06, 2025 |
Jun. 30, 2025 |
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| Cover [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Entity Central Index Key | 0002044327 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Amendment Flag | false | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Document Type | 424B1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Entity Registrant Name | C1 Fund Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fee Table [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shareholder Transaction Expenses [Table Text Block] |
(1)
The
sales load set forth in the table is based on the Company issuing an aggregate of 6,000,000 Common Shares as part of the offering. In
such case, Benchmark will deduct from the offering proceeds an aggregate sales load of $4,200,000, which reflects an underwriting commission
equal to seven percent (7.00%) of the gross proceeds from the sale of Common Shares in the offering. A portion of the sales load
is earned by Benchmark as pre-offering fees in the amount of $175,000 for assessing the viability of the public offering and for assisting
with this offering. The remainder of the sales load is earned by Benchmark upon Closing. The aggregate sales load will immediately reduce
the net asset value of each Common Share purchased in this offering. See “Underwriting.”
(2)
The
Company estimates that it will incur organizational costs and offering expenses (other than the sales load) of approximately $1.37 million
or approximately $0.23 per Common Share, in connection with this offering. Pursuant to the Reimbursement Agreement, our Sponsor will pay
approximately $1.37 million of these organizational costs and expenses pre-offering and will be reimbursed from the proceeds of the
offering, payable promptly following the Closing. Our Board, including the independent directors, has unanimously approved the Reimbursement
Agreement. The reimbursement to the Sponsor will be included in the offering expenses. In addition to such expenses, Benchmark will deduct
from the gross offering proceeds (a) a non-accountable expense allowance equal to 0.6% of the gross proceeds received in the offering,
and (b) certain expenses in connection with the offering. See “Underwriting.”
(3)
There
will be no brokerage charges with respect to our Common Shares issued directly by us as a result of distributions payable either in shares
or in cash pursuant to our Distribution Reinvestment Plan. However, each participant will pay a pro rata share, based on the number
of shares purchased, of brokerage trading fees incurred in connection with Open-Market Purchases. The Company expects that the brokerage
trading fees on Open-Market Purchases will be between 1% to 2% of the value of the Open-Market Purchase. The Company will pay the Plan Administrator
an account fee of $1.20 per account. The common shareholders ultimately will bear the cost of this fee. See “Distribution
Reinvestment Plan.” |
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| Sales Load [Percent] | [1] | 7.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Transaction Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Transaction Expenses [Percent] | [2] | 2.28% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annual Expenses [Table Text Block] |
(4)
Under
the Investment Advisory Agreement, we will pay the Adviser a Management Fee, payable quarterly, in an amount equal to an annualized rate
of 2.50% of our average net assets at the end of the two most recently completed calendar quarters. See “Management — Investment
Advisory Agreement.”
The
Management Fee reflected in the table is calculated by determining the ratio of the Management Fee to our net assets attributable to Common
Shares. The estimate of our Management Fee referenced in the table is based on our net assets of $53.8 million.
(5)
Other
Expenses are based on estimated amounts for the current fiscal year and includes accounting, legal and auditing fees of the Company, expenses
related to the Company’s distribution reinvestment plan, as well as fees paid to the Administrator, Plan Administrator, the
transfer agent, the custodian and the independent directors. These expenses will be ultimately borne by the shareholders of the Company’s
common stock. See “Management — Payment of Our Expenses.”
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| Management Fees [Percent] | [3] | 2.50% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Annual Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Annual Expenses [Percent] | [4] | 2.50% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Annual Expenses [Percent] | 5.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Expense Example [Table Text Block] |
Example
The
following example demonstrates the projected dollar amount of total cumulative expenses over various periods with respect to a hypothetical
investment in our Common Shares. In calculating the following expense amounts, we have assumed we would have no leverage and that our
annual operating expenses would remain at the levels set forth in the table above. Transaction expenses are included in the following
example.
The
foregoing table is to assist you in understanding the various costs and expenses that an investor in our Common Shares will ultimately
bear. While the example assumes, as required by the SEC, a 5% annual return, our performance will vary and may result in a return greater
or less than 5%. In addition, while the example assumes reinvestment of all distributions at net asset value, if our Board authorizes
and we declare a cash distribution, participants in our distribution reinvestment plan who have not otherwise elected to receive cash
will receive a number of shares of our Common Shares, determined by dividing the total dollar amount of the distribution payable to a
participant by the market price per share of our Common Shares at the close of trading on the valuation date for the distribution. See
“Distribution Reinvestment Plan”
for additional information regarding our distribution reinvestment plan. The example set forth above reflects the sales load of 7.00%
of the gross proceeds from the sale of Common Shares in the offering.
This
example and the expenses in the table above should not be considered a representation of our future expenses, and actual expenses (including
the cost of debt, if any, and other expenses) may be greater or less than those shown. For a further explanation of the fees and expenses
we pay and that you incur indirectly as shareholders of the Company, please see the discussion under “Management — Investment
Advisory Agreement.” |
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| Expense Example, Year 01 | $ 117 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Expense Example, Years 1 to 3 | 210 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Expense Example, Years 1 to 5 | 303 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Expense Example, Years 1 to 10 | $ 535 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Purpose of Fee Table , Note [Text Block] | The following table is intended to assist you in understanding the costs and expenses that you will ultimately bear directly or indirectly. You should understand that some of the percentages indicated in the tables below are estimates and may vary. The expenses shown in the table and related footnotes are based on estimated amounts for the Company’s first year of operations, except for Other Expenses as noted in footnote 5, and are based on the Company issuing 6,000,000 Common Shares. Accordingly, the Company’s net assets for purposes of the tables and example below include estimated net proceeds from the offering of $55,800,000. The following table should not be considered a representation of our future expenses. Actual expenses may be greater or less than shown. Except where the context suggests otherwise, whenever this prospectus contains a reference to fees or expenses paid by “us” or “the Company” or that “we” will pay fees or expenses, you will ultimately bear these fees or expenses as an investor in the Company. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Transaction Fees, Note [Text Block] | as a percentage of offering price | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Expenses, Note [Text Block] | Other Expenses are based on estimated amounts for the current fiscal year and includes accounting, legal and auditing fees of the Company, expenses related to the Company’s distribution reinvestment plan, as well as fees paid to the Administrator, Plan Administrator, the transfer agent, the custodian and the independent directors. These expenses will be ultimately borne by the shareholders of the Company’s common stock. See “Management — Payment of Our Expenses.” | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment Objectives and Practices [Text Block] |
THE
COMPANY’S INVESTMENTS
Investment
Objective and Investment Strategy
Our
investment objective is to maximize our portfolio’s total return. To achieve our investment objective, we intend to invest in a
portfolio of up to 30 of the C1 Thirty companies. The “C1 Thirty” is the group of 30 companies our Adviser has determined,
based on its application of the economic and financial factors set forth in our investment targeting and screening process, which is described
in the section of this prospectus captioned “The Company’s Investments — Investment
Process,” to be the leading private digital asset services and technology companies globally,
excluding those whose business is principally administered in the People’s Republic of China, including Hong Kong and Macao. The
C1 Thirty may include companies that were private when we made an investment in them but have since conducted an initial public offering.
For this purpose, we consider any companies that develop, sell or provide products and solutions related to the development, issuance,
storage, custody, security, trading, management, compliance, marketing, analysis or processing of crypto assets or the development, management
or servicing of permissioned or permissionless blockchain technology and infrastructure to be within the scope of companies in which we
may invest. These companies may include companies that provide blockchain and digital assets to deliver services and develop new financial
products and services, such as the use of blockchain and digital assets to enable peer-to-peer financial transactions on DeFi platforms
(thereby removing third parties and centralized institutions in these transactions), companies that develop or issue stablecoins as an
option that may be used for everyday transactions and fintech companies that use blockchain and digital assets to develop new financial
services and products. A blockchain is a distributed database or ledger that is shared among the nodes (e.g., modem, cable, cable optics,
wireless) of a computer. Blockchains store information in “blocks” which are linked together via cryptography. The best-known
blockchain is Bitcoin, which is decentralized and permissionless (i.e., it is open to the public and does not require permission for use).
While we intend to invest in many of the C1 Thirty companies, it is possible we will not have opportunities to invest in all 30. We are
not a founder of and, other than the investments that we will make pursuant to our principal investment strategy, do not have a parent-subsidiary
relationship with any of the C1 Thirty companies. We will not hold a controlling interest in any of the C1 Thirty companies.
Under
normal market conditions, we will invest at least 80% of the value of our total assets in equity and equity-linked securities issued by
C1 Thirty companies. We believe that there are attractive opportunities to invest in digital asset services and technology companies that
are late-stage private companies, and therefore in order to maximize stockholder value, we expect a portion of our investments to be in
such late-stage private companies. We believe investments in late-stage private companies present the opportunity to invest in companies
before they conduct an initial public offering, which would provide liquidity for our investments. We may invest in these companies alongside
other third party investors, such as private equity firms, with which neither we nor the Adviser is affiliated. Our investment strategy
and policies do not establish a minimum or maximum amount to be invested in late-stage private companies. We do not have a predetermined percentage
of our investments that will be in late-stage private companies. We believe not having a predetermined percentage allows us to maximize
stockholder value. Our investment in equity will include common shares, preferred shares, and equity-linked securities issued by a C1
Thirty company that provide us with economic exposure to the equity securities of such issuer, including any security convertible (with
or without consideration) into common shares, any warrant or right to subscribe to or purchase common shares or common shares carrying
a warrant or right. Equity-linked securities mean securities the returns on which are linked to the performance of an equity security,
a basket of equity securities or an index of equity securities. Investments in rights, warrants, convertible securities and equity-linked
securities may subject the Company to similar risks as those associated with investments in capital stock as well as additional risks
associated with derivative securities. The trading price of rights, warrants, convertible securities and equity-linked securities may
not equal the underlying value of the equity to which they are linked. We will invest principally in the equity and equity-linked securities
of private digital asset services and technology companies that our Adviser has determined to include in the C1 Thirty.
Separate
from our principal investment strategy of, under normal market conditions, investing at least 80% of our total assets in equity and equity-linked
securities issued by the C1 Thirty companies, we may also, as a non-principal investment strategy, invest the remaining portion (which
is up to 20% in the event we only invest 80% of our total assets in our principal strategy) of the value of our total assets in other
investments.
In any event, investments made pursuant to our non-principal investment strategy will not exceed 20% of the value of our total assets,
and any singular investment type will be less than 10% of the value of our total assets. Under this non-principal investment strategy,
we may invest on an opportunistic basis in equity and equity-linked securities issued by select U.S. publicly traded securities or certain
non-U.S. companies that otherwise meet our investment criteria. Also within this non-principal investment strategy, we may invest in ETFs
that are registered as investment companies with the SEC and whose shares are registered under the Securities Act and listed for trading
on a national securities exchange, as well as ETPs that are not registered as investment companies with the SEC but whose securities are
registered under the Securities Act and listed for trading on a national securities exchange. Any investments we make in ETFs and ETPs
will be subject to the following statutory limits: (i) we will acquire no more than 3% of the outstanding voting securities of any
such ETF or ETP; (ii) our investment in any single ETF or ETP will comprise no more than 5% of the value of our total assets at time
of acquisition; and (iii) our cumulative investments in ETFs and ETPs will be less than 10% of the value of our total assets. Also
within this non-principal investment strategy, we may invest less than 10% of the value of our total assets in BDCs, that meet our investment
criteria and have made an election pursuant to section 54(a) of the Investment Company Act, to be subject to the provisions of sections
55 through 65 of this Act. We are not currently aware of any BDCs that invest in digital asset services and technology companies, but
if we become aware in the future of any such BDCs, we may invest in them. If an opportunity arises to invest in BDCs that invest in digital
asset services and technology companies, such investment would provide us with another means to gain exposure to the economic benefits
of companies that are engaged in the digital asset services and technology industry. Additionally within this non-principal investment
strategy, we may invest less than 10% of the total value of our assets in shares of U.S. registered money market funds that are operated
in compliance with Rule 2a-7 under the Investment Company Act and government securities that are issued or guaranteed as to principal
and interest by the U.S. Government or an instrumentality of the U.S. Government.
There
can be no assurance that we will achieve our investment objectives or that our investment program will succeed.
To
achieve our investment objective, the Adviser will leverage the Investment Committee members’ network of relationships with other
sophisticated institutions to source and evaluate investments using the following investment strategies:
•
Identify
high quality growth companies. Based
on the Investment Committee members’ experience in analyzing technology trends and markets, the Adviser will identify private digital
asset services and technology companies that it believes are capable of producing substantial growth. The Adviser will initially identify
about 300 of these companies, and pare down the listing initially to 100 companies, then 50 companies and eventually to what it considers
to be the C1 Thirty.
•
Acquire
potential investments from a variety of industry sources. The Adviser will
further rely on the Investment Committee members’ collective industry knowledge as well as their understanding of where leading
venture capitalists and other institutional investors are investing. The Adviser will leverage the Investment Committee members’
relationships in the widely disbursed digital asset services and technology industry and will use independent research to identify companies
that the Adviser believes are differentiated and best positioned for sustained growth. The Adviser will continue to expand its sourcing
network in order to evaluate a wide range of investment opportunities in companies that demonstrate strong operating fundamentals.
•
Acquire
positions in targeted investments. We will seek to selectively add to our portfolio
by sourcing investment opportunities at a price which the Adviser considers to be acceptable, in accordance with its Investment Policies
and Procedures, to warrant a bid for the purchase of such securities for the Company. To this end, we will utilize multiple methods to
acquire equity and equity-linked securities in private companies that are not available to most individual investors.
•
Create
access to a varied investment portfolio. We will seek to hold a varied portfolio
of equity investments that comprise the C1 Thirty companies, which the Adviser believes will minimize the impact on our portfolio of a
negative downturn at any one specific company or industry. We believe that our relatively varied portfolio will provide a convenient means
for investors, including unaccredited investors investing in us, to obtain access to an asset class that has generally been limited to
venture capital, private equity and similar large institutional investors. •
Focus
on companies that embrace and comply with applicable laws and regulations regarding digital asset services and technology. We
will seek to invest in companies that proactively comply with applicable laws and regulations regarding digital asset services and technology,
seek to work with regulatory agencies in the U.S. and other jurisdictions to develop and promote policies, products and practices compatible
with existing regulations and anticipate opportunities to develop products and offer services compatible with established regulatory practices.
Investment
Sources and Types
We
will acquire the securities in our investment portfolio for our principal strategy through the means described below. Other than the requirement
that, under normal market conditions, we will invest at least 80% of our total assets in equity and equity-linked securities issued by
the C1 Thirty companies, we have not and we will not have pre-determined limits or requirements as to what percentage of the securities
in our portfolio will be acquired through each of the means described below. We believe that not imposing predetermined limits or requirements
allows us to maximize value.
Purchases
on private secondary marketplaces. We
will invest in the C1 Thirty companies principally by purchasing securities pursuant to purchase agreements in private transactions exempt
from Section 5 of the Securities Act that are identified on private secondary marketplaces registered as broker-dealers under Section 15
of the Securities Exchange Act and operated as ATSs in accordance with the requirements of Regulation ATS under the Securities Exchange
Act. These marketplaces include Forge Securities LLC (which is registered as a broker-dealer and operates as an ATS), NPM Securities,
LLC (a registered broker dealer, ATS, member of FINRA/SIPC and a wholly owned subsidiary of NASDAQ Private Markets, LLC) and Hiive Markets
Limited (which is registered as a broker-dealer and operates as an ATS). We believe that these private secondary marketplaces, which have
become leading facilities for transactions in securities issued by venture-backed global companies, including companies within the digital
asset services and technology industry, should provide us with a steady supply of investments to meet our investment policies. We will
incur transaction fees in connection with purchases identified on an ATS. These fees typically range from 1% to 5% of the transaction
value. We will account for these fees as part of the total cost of the securities being acquired by the Company. If the transaction does
not settle for reasons such as the issuer exercises its ROFR or if the seller breaches its obligation to sell the securities, we will
not incur these fees.
Purchases
in one-off Private Transactions. In addition, we will purchase shares directly
from stockholders, including institutional investors and current or former employees, of privately-held companies that meet our investment
criteria, in private transactions exempt from the Securities Act through the execution of purchase agreements. We believe the Adviser
will be able to find an adequate supply of these one-off private transactions because of the extensive existing relationships the members
of the Investment Committee have built over several years with persons in the venture capital community and digital asset industry.
The Adviser will not make general solicitations for these one-off private transactions, which will rely on an exemption from registration
under the Securities Act. As digital asset services and technology companies grow and experience significant increased value while remaining
private, employees and other stockholders may seek liquidity by selling shares to a third party directly or via a secondary marketplace.
Sales of shares in private companies are typically restricted by contractual transfer restrictions (such as ROFRs), and may be further
restricted by provisions in company charter documents, and company employment and trading policies, which may impose strict limits on
transfer. We expect to be able to obtain approvals for the transfers or waivers of these contractual restrictions for most transactions
because C1 Thirty companies are late-stage companies that are valued in excess of $500 million, and are likely to have established
procedures allowing for their securities to be sold in order to streamline requests from their shareholders and we believe that issuers
will welcome the opportunity to have the Company invest in them because of the Company’s market position and the reputation of the
Investment Committee members within the digital assets industry. In the instances when we are not able to obtain approvals for transfers
or waivers of contractual transfer restrictions and the purchase agreement automatically terminates, we may seek to enter into another
purchase agreement. A description of how we intend to transact these purchases is set forth in the “The
Company’s Investments — Transaction Execution” section of this
prospectus. As disclosed elsewhere in this prospectus, the members of the Investment Committee will leverage their extensive existing
relationships. Some of these relationships are with broker-dealers that, from time to time, may
bring opportunities for the Company to purchase shares directly from eligible shareholders. In these purchases conducted directly with
eligible securityholders, we may be required to pay a commission or similar compensation to a broker-dealer. These fees typically range
from 2% to 5% of the transaction value. We will account for these fees as part of the total cost of the securities being acquired by the
Company. If the transaction does not settle for reasons such as the issuer exercises its ROFR or if the seller breaches its obligation
to sell the securities, we will not incur these fees.
Direct
purchases in Private offerings. We
will also purchase securities in the C1 Thirty companies directly in private offerings conducted in reliance on Section 4(a)(2) of
the Securities Act and/or Rule 506 thereunder. There is a large market among private digital asset services and technology companies
for equity capital investments. Many of these companies lack the necessary cash flows to sustain substantial amounts of debt, and therefore
have viewed equity capital as a more attractive long-term financing tool. We will seek to be a source of such equity capital as a means
of investing in these companies and look for opportunities to invest alongside other unaffiliated venture capital and private equity investors
with whom we have established relationships. We have not entered into any allocation policy with any of these persons to invest in private
companies that meet our investment criteria. Although, we believe that direct private offerings may be a good source to obtain investments
in private digital asset services and technology companies, we believe that substantially most of our purchases of securities would be
made pursuant to purchase agreements with securityholders that we identify through private secondary marketplaces and in purchase agreements
in one-off private transactions with eligible securityholders, and we expect that we would not frequently purchase securities directly
with the issuer.
When
we acquire shares in private companies via private secondary marketplaces one-off private transactions, and direct equity investments,
we may face limitations in the amount and quality of information we can obtain regarding such companies and their securities.
No
Direct Investments in Unregulated Crypto Assets. We will not invest directly
in any crypto assets or other digital assets. We may, however, invest as a non-principal strategy in ETPs that are primarily engaged in
investing, reinvesting or trading in physical spot Bitcoin or Ether, which are crypto assets that are not treated as securities under
federal securities law. We intend to make any such investment in accordance with the following statutory limits: (i) we will acquire
no more than 3% of the outstanding voting securities of any such ETP; (ii) our investment in any one ETP will comprise no more than
5% of the value of our total assets at time of acquisition; and (iii) our investment in such ETPs, together with our investment in
ETFs, will comprise less than 10% of the value of our total assets.
Temporary
Defensive Policy. The Company has adopted a policy that the Adviser may elect
to invest the Company’s funds in cash equivalents, U.S. government securities and other high quality debt investments for temporary
defensive purposes.
Investment
Process
Concentrated
Digital Asset-related Focus
We
believe that the world is in the midst of a revolution driven by blockchain and digital asset technology, which have the potential to
extend into every sector, market, and geography. Thus, the opportunity for digital asset services and technology companies extends across
a broad spectrum. These broad markets have the potential to produce disruptive technologies, reach a large addressable market, and provide
significant commercial opportunities. Thus, the Adviser will actively seek out promising investments across a diverse selection of companies
engaged in a new blockchain and digital asset technology business, such as companies involved in DeFi, stablecoins and other innovations.
Investment
Targeting and Screening
The
Adviser will identify prospective portfolio companies by ranking private digital asset services and technology companies that have a minimum
valuation of $500 million and meet certain general growth and health factors. These factors include: General
growth and health factors
The
Adviser will first evaluate a universe of about 300 private digital asset services and technology companies using the following general
growth and health factors:
•
Whether
the company has been identified as a prospective portfolio company by the Adviser’s network of relationships in this industry and
validated by comparison with the investment decisions of leading venture capitalists and institutional investors;
•
Whether
the company has recently raised capital from what we believe to be reputable U.S. or international institutional or private investors
•
Whether
the company has any outstanding preferred stock liquidation preference that is strong relative to market valuation;
•
Whether
the company’s financial structure is not burdened with debt and other financial constraints (e.g. ratchets with significant penalties,
heavy debt loads) that might suggest the risk of impending financial distress;
•
Whether
the company’s corporate structure and governance are transparent and comparable with standard corporate and governance structures;
•
Whether
the company’s executive team is stable and has had relatively little turnover over the past 12 months;
•
Whether
the company has developed a clear and actionable growth strategy; and
•
Whether
the company has a plan for regulatory compliance.
The
Adviser will identify a select set of companies that it will evaluate in greater depth.
There
is a potential that our $500 million minimum valuation requirement could preclude us from investing in private companies that have
a valuation below such level but nonetheless meet your key health and growth criteria, which could preclude us from capitalizing on attractive
investment opportunities.
Due
Diligence Process
Once
the Adviser has identified those companies that it believes warrant more in-depth analysis, based on its evaluation of the prospective
companies using the above-listed general growth and health factors, the Adviser will conduct thorough evaluation of potential portfolio
companies using key indicators of each company’s health and growth that collectively comprise the Adviser’s proprietary investment
process. These key indicators include:
•
The
company’s total addressable market;
•
The
market growth rate;
•
The
company’s recent financing rounds;
•
The
company’s growth rate;
•
The
company’s competitive positioning;
•
The
company’s business model;
•
The
Company’s network effects and economies of scale;
•
Any
applicable regulatory and legal concerns; and
•
Any
other indicators that, in the circumstances, might be strongly correlated with higher or lower valuations.
“Total
addressable market,” also referred to as the available market, is the overall revenue opportunity for a product or service if 100%
market share is achieved. “Market growth rate” means the percentage increase or decrease in the total size of a market
over a defined period of time. “Recent financing rounds” means the latest instances in which a company raised capital from
investors. “Company growth rate” means the rate at
which a company’s revenue or market share has increased or decreased over a defined period of time. “Competitive positioning”
means the strategy a company employs to differentiate itself and its products or services from competitors. “Business models”
means the plan, model or framework to generate revenue and make a profit from operations. “Network effects” means the phenomenon
that occurs when an increase in the number of users or participants improve the value of a good or service. “Economies of scale”
means cost advantages a business obtains when the volume of production increases, reducing the per-unit costs.
The
Adviser will give each prospective portfolio company that passes its initial due diligence review a qualitative ranking to allow the Adviser
to evaluate it against others in our pipeline, and the Adviser will review and update these rankings on a regular basis.
The
Adviser’s due diligence process will vary depending on whether we are investing through a private secondary transaction on a marketplace
or by a direct equity investment. The Adviser will access information on our potential investments through a variety of sources, including
information made available on secondary marketplaces, publications by private company research firms, industry publications, commissioned
analysis by third-party research firms, and, to a limited extent, directly from the company or financial sponsor. The Adviser will utilize
a combination of each of these sources to help set a target price and valuation for the companies ultimately selected for investment.
Portfolio
Construction and Sourcing
Upon
completion of the due diligence process, the Adviser will select investments for inclusion in the C1 Thirty based on their value proposition,
total addressable market, fundamentals and valuation. The Adviser will seek to create a relatively varied portfolio that we expect will
include investments in companies representing a broad range of investment themes. The Adviser generally will choose to pursue specific
investments based on the availability of shares and valuation expectations. The Adviser will utilize a combination of secondary marketplaces,
direct purchases from stockholders and direct equity investments in order to make investments in our portfolio companies. Once we have
established an initial position in a portfolio company, the Adviser may choose to increase our stake through subsequent purchases. Maintaining
a balanced portfolio is a key to our success, and as a result the Adviser will constantly evaluate the composition of our investments
and our pipeline to ensure we are exposed to a diverse set of companies within our target segments.
Transaction
Execution
We
will enter into purchase agreements for substantially all of our private company portfolio investments. We will purchase securities directly
from securityholders, including institutional investors and current or former employees, of private companies that meet our investment
criteria, in private transactions exempt from the Securities Act through the execution of purchase agreements. As stated elsewhere in
this prospectus, we believe that substantially most of our purchases of securities would be made pursuant to purchase agreements with
securityholders that we identify through private secondary marketplaces and in purchase agreements in one-off private transactions with
eligible securityholders, and we expect that we would not frequently purchase securities directly with the issuer.
We
will seek to purchase preferred stock, convertible securities or common stock of privately-held companies that meet our investment criteria.
A table discussing the process of our planned purchases of such securities through purchase agreements from securityholders, including
institutional investors and current or former employees, of private companies, is set forth below.
Risk
Management and Monitoring
The
Adviser will monitor the financial trends of each portfolio company to assess our exposure to individual companies as well as to evaluate
overall portfolio quality. The Adviser will establish valuation targets at the portfolio level and for gross and net exposures with respect
to specific companies and industries within our overall portfolio. In cases where we make a direct investment in a portfolio company,
we may also obtain board positions, board observation rights and/or information rights from that portfolio company in connection with
our equity investment.
Portfolio
Contents and Techniques
Our
portfolio will be composed principally of the following investments, each of which present certain unique risks which may impact the value
of our investments and in turn the value of our shares and your investment in us.
Equity
Securities and Equity-linked Securities
We
invest in equity securities, including common stocks, preferred stocks, convertible securities, rights, warrants and depositary receipts
issued by companies that meet our investment criteria, including principally the C1 Thirty companies. Common stock represents an equity
ownership interest in a company. We may hold or have exposure to common stocks issued by private digital asset services and technology
companies of any size, including small and medium capitalization stocks. Because we will ordinarily have exposure to common stocks, historical
trends would indicate that our portfolio and investment returns will be subject at times, and over time, to higher levels of volatility
and market and issuer-specific risk than if it invested exclusively in convertible securities.
Rights,
warrants and convertible securities grant their holders the option to acquire the underlying equity securities, but unlike capital stock,
they do not confer dividend or voting rights with respect to the underlying
equity securities. While the value of rights, warrants and convertible securities is based on the value of the underlying equity securities,
the value of a right, warrant or convertible security may not move in tandem with the underlying equity security and may expire worthless.
We may also invest in equity-linked securities, which are securities the returns on which are linked to the performance of an equity security,
a basket of equity securities or an index of equity securities. Because equity-linked securities are sometimes issued by a third party
other than the issuer of the underlying equity security, the Company is subject to risks if the underlying equity security, reference
rate or index underperforms, or if the issuer defaults on the payments at maturity. Investments in rights, warrants, convertible securities
and equity-linked securities may subject the Company to similar risks as those associated with investments in capital stock as well as
additional risks associated with derivative securities.
Restricted
and Illiquid Investments
We
may invest without limitation in illiquid or less liquid investments or investments in which no secondary market is readily available
or which are otherwise illiquid, including particularly private placement securities. Liquidity of an investment relates to the ability
to dispose easily of the investment and the price to be obtained upon disposition of the investment, which may be less than would be obtained
for a comparable more liquid investment.
Illiquid
investments may trade at a discount from comparable, more liquid investments. Illiquid investments are subject to legal or contractual
restrictions on disposition or lack an established secondary trading market. Investment of our assets in illiquid investments may restrict
our ability to dispose of our investments in a timely fashion and for a fair price as well as our ability to take advantage of market
opportunities.
Preferred
Equity
We
may invest in preferred securities. There are two basic types of preferred securities. The first type, sometimes referred to as traditional
preferred securities, consists of preferred stock issued by an entity taxable as a corporation. The second type, sometimes referred to
as trust preferred securities, are usually issued by a trust or limited partnership and represent preferred interests in deeply subordinated
debt instruments issued by the corporation for whose benefit the trust or partnership was established.
Traditional
Preferred Securities. Traditional preferred securities generally pay fixed
or adjustable rate dividends to investors and generally have a “preference” over common stock in the payment of dividends
and the liquidation of a company’s assets. This means that a company must pay dividends on preferred stock before paying any dividends
on its common stock. In order to be payable, distributions on such preferred securities must be declared by the issuer’s board of
directors. Income payments on typical preferred securities currently outstanding are cumulative, causing dividends and distributions to
accumulate even if not declared by the board of directors or otherwise made payable. In such a case all accumulated dividends must be
paid before any dividend on the common stock can be paid. However, some traditional preferred stocks are non-cumulative, in which case
dividends do not accumulate and need not ever be paid. A portion of the portfolio may include investments in non-cumulative preferred
securities, whereby the issuer does not have an obligation to make up any arrearages to its stockholders. Should an issuer of a non-cumulative
preferred stock held by us determine not to pay dividends on such stock, the amount of dividends we pay may be adversely affected. There
is no assurance that dividends or distributions on the preferred securities in which we invest will be declared or otherwise made payable.
Preferred
stockholders usually have no right to vote for corporate directors or on other matters. Shares of preferred stock have a liquidation value
that generally equals the original purchase price at the date of issuance. The market value of preferred securities may be affected by
favorable and unfavorable changes impacting companies in the utilities and financial services sectors, which are prominent issuers of
preferred securities, and by actual and anticipated changes in tax laws, such as changes in corporate income tax rates or the “Dividends
Received Deduction.” Because the claim on an issuer’s earnings represented by preferred securities may become onerous when
interest rates fall below the rate payable on such securities, the issuer may redeem the securities. Thus, in declining interest rate
environments in particular, our holdings, if any, of higher rate-paying fixed rate preferred securities may be reduced and we may be unable
to acquire securities of comparable credit quality paying comparable rates with the redemption proceeds. Trust
Preferred Securities. Trust preferred securities are typically issued by corporations,
generally in the form of interest-bearing notes with preferred security characteristics, or by an affiliated business trust of a corporation,
generally in the form of beneficial interests in subordinated debentures or similarly structured securities. The trust preferred securities
market consists of both fixed and adjustable coupon rate securities that are either perpetual in nature or have stated maturity dates.
Trust
preferred securities are typically junior and fully subordinated liabilities of an issuer or the beneficiary of a guarantee that is junior
and fully subordinated to the other liabilities of the guarantor. In addition, trust preferred securities typically permit an issuer to
defer the payment of income for 18 months or more without triggering an event of default. Generally, the deferral period is five years
or more. Because of their subordinated position in the capital structure of an issuer, the ability to defer payments for extended periods
of time without default consequences to the issuer, and certain other features (such as restrictions on common dividend payments by the
issuer or ultimate guarantor when full cumulative payments on the trust preferred securities have not been made), these trust preferred
securities are often treated as close substitutes for traditional preferred securities, both by issuers and investors. Trust preferred
securities have many of the key characteristics of equity due to their subordinated position in an issuer’s capital structure and
because their quality and value are heavily dependent on the profitability of the issuer rather than on any legal claims to specific assets
or cash flows.
Warrants
Warrants
are instruments issued by corporations enabling the owners to subscribe to and purchase a specified number of shares of the corporation
at a specified price during a specified period of time. Warrants normally have a short life span to expiration. The purchase of warrants
involves the risk that we could lose the purchase value of a warrant if the right to subscribe for additional shares is not exercised
prior to the warrants’ expiration. Also, the purchase of warrants involves the risk that the effective price paid for the warrant
added to the subscription price of the related security may exceed the subscribed security’s market price such as when there is
no movement in the level of the underlying security.
Exchange-Traded
Funds and Exchange-Traded Products
We
may invest in ETFs and ETPs as part of our non-principal investment strategy. Any ETF in which we invest will be registered as an investment
company under the Investment Company Act, and its shares will be registered under the Securities Act and listed for trading on a national
securities exchange. Additionally, we may invest in ETPs that are primarily engaged in investing, reinvesting or trading in Bitcoin or
Ether, which are crypto assets that are not treated as securities under federal securities laws. Any ETP in which we invest will not be
registered as an investment company under the Investment Company Act, but its shares will be registered under the Securities Act and listed
for trading on a national securities exchange.
Investments
we make in ETFs and ETPs will be in accordance with the following statutory limits: (i) we will acquire no more than 3% of the outstanding
voting securities of any such ETF or ETP; (ii) our investment in any single ETF or ETP will comprise no more than 5% of the value
of our total assets at time of acquisition; and (iii) our cumulative investments in ETFs and ETPs will be less than 10% of the value
of our total assets.
Business
Development Companies
As
part of our non-principal investment strategy, we may invest less than 10% of the value of our total assets in BDCs, that meet our investment
criteria and have made an election, pursuant to section 54(a) of the Investment Company Act, subject to the provisions of sections 55
through 65 of this Act. We are not currently aware of any BDCs that invest in digital asset services and technology companies, but if
we become aware in the future of any such BDCs, we may invest in them. If an opportunity arises to invest in BDCs that invest in digital
asset services and technology companies, such investment would provide us with another means to gain exposure to the economic benefits
of companies that are engaged in the digital asset services and technology industry. Convertible
Securities
We
may invest in convertible securities. These are bonds, debentures, notes, preferred stock or other securities that may be converted into
or exchanged for a prescribed amount of common stock or other equity security of the same or a different issuer within a particular period
of time at a specified price or formula. A convertible security entitles the holder to receive interest paid or accrued on debt or the
dividend paid on preferred stock until the convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible
securities have characteristics similar to nonconvertible income securities in that they ordinarily provide a stable stream of income
with generally higher yields than those of common stocks of the same or similar issuers, but lower yields than comparable nonconvertible
securities. The value of a convertible security is influenced by changes in interest rates, with investment value declining as interest
rates increase and increasing as interest rates decline. The credit standing of the issuer and other factors also may have an effect on
the convertible security’s investment value. Convertible securities rank senior to common stock in a corporation’s capital
structure but are usually subordinated to comparable nonconvertible securities. Convertible securities may be subject to redemption at
the option of the issuer at a price established in the convertible security’s governing instrument. |
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| Risk Factors [Table Text Block] |
RISK
FACTORS
Investing
in our Common Shares involves a number of significant risks. Before you invest in our Common Shares, you should be aware of various risks
associated with the investment, including those described below. You should carefully consider these risk factors, together with all of
the other information included in this prospectus, before you decide whether to make an investment in our Common Shares. The risks set
out below are not the only risks we face. Additional risks and uncertainties not presently known to us or not presently deemed material
by us may also impair our operations and performance. If any of the following events occur, our business, financial condition and results
of operations could be materially and adversely affected. In such case, you may lose all or part of your investment.
General
Risks
No
operating history as a closed-end investment company
We
are a non-diversified, closed-end management investment company with no operating history. As a result, we are subject to all of the business
risks and uncertainties associated with any new business, including the risk that we will not achieve our investment objective and that
the value of your investment could decline substantially or become worthless. Risk
of operating as a non-diversified, management investment company
We
are classified as a non-diversified, management investment company within the meaning of Section 5(b)(2) of the Investment Company
Act. As such, we do not have the benefits the Investment Company Act provides for a management company that is diversified in the manner
provided in Section 5(b)(1) of this Act. Section 5(b)(1) requires at least 75% of the value of total assets of a diversified
company to consist of cash and cash items (including receivables), Government securities, securities of other investment companies, and
other securities. In addition, Section 5(b)(1) provides that in calculating the 75% amount, the management investment company may
not invest more than 5% of the value of its total assets in any one issuer, and may not acquire more than 10% of the outstanding voting
securities of this issuer. As a non-diversified management investment company, therefore, we are exposed to the risks that arise from
investing in issuers beyond the limits set forth in Section 5(b)(1). No
assurance of investment return
The
types of investments that we make involve a high degree of risk. Financial and operating risks confronting our portfolio companies can
be significant. We cannot provide assurance that we will be able to choose, make or realize investments in any particular company or portfolio
of companies. Moreover, while the type of investments that we make offers the possibility of substantial returns, such investments also
involve a high degree of financial risk and can result in substantial or total capital losses.
In
addition, there can be no assurance that we will be able to generate returns for our investors or that the returns will be commensurate
with the risks of investing in the type of companies and transactions described in this prospectus. The performance and appreciation of
the investments that comprise our portfolio will depend on the successful operation of the companies in which we invest, prevailing interest
rates, and other market conditions over which we and the Adviser will have no control. Returns generated from our investments may not
adequately compensate investors for the business and financial risks assumed, and an investor may lose all or a part of its investment
in our shares. Reliance
on the Adviser
The
Adviser is a newly formed entity and has no prior experience managing a registered closed-end investment company. The Adviser provides
us with management and advisory services and makes investment decisions on our behalf. Investors will have no role in making decisions
with respect to the management, disposition or other realization of any investment, or decisions regarding our business and affairs. Consequently,
our success will depend, in large part, upon the skill and expertise of the Adviser and its Investment Committee. Furthermore, the Investment
Committee members will not focus exclusively on our operations and may have responsibility for other managed investment funds.
The
Investment Committee, acting on behalf of the Adviser, will evaluate, negotiate, structure, close and monitor our investments in accordance
with the terms of this prospectus. The Investment Committee is currently composed of Dr. Najamul Hasan Kidwai, Michael (Xu) Zhao,
Michael Lempres, and Elliot Han, who are all accomplished investment professionals. There can be no assurance that these persons will
continue to be associated with the Adviser while the Adviser serves as our investment adviser. Our future success will depend to a significant
extent on the continued service and coordination of these persons while serving as members of the Investment Committee. If Dr. Kidwai
and Messrs. Zhao, Lempres and Han do not maintain their existing relationships with sources of investment opportunities and do not develop
new relationships with other sources of investment opportunities available to us, we may not be able to grow our investment portfolio.
In addition, individuals with whom the members of the Investment Committee have relationships are not obligated to provide us with investment
opportunities. Therefore, the Adviser can offer no assurance that such relationships will generate investment opportunities for us. Furthermore,
the Adviser cannot assure investors that the Adviser will remain our investment adviser or that we will continue to have access to the
members of the Investment Committee or their information and deal flow. Investment
due diligence and investment research may not reveal all relevant facts regarding investment opportunities.
When
conducting due diligence and investment research, the Adviser may be required to evaluate important and complex business, financial, tax,
accounting, and legal metrics. Outside consultants, legal advisors, accountants and investment banks may be involved in the due diligence
and investment research process in varying degrees depending on the type of investment. When conducting due diligence and investment research
and making an assessment regarding an investment, the Adviser may rely on information provided by such persons, or by the management of
the target of the investment or their advisors. The due diligence investigation and investment research that the Adviser carries out with
respect to any investment opportunity may not reveal or highlight all relevant facts that may be necessary or helpful in evaluating such
investment opportunity, may lead to inaccurate or incomplete conclusions, or may be manipulated by fraud. Moreover, such an investigation
will not necessarily result in the investment being successful. Competition
for investment opportunities; difficulty of locating suitable investments and meeting investment objective.
A
large number of entities compete with us to make the types of direct equity investments that we target as part of our business strategy.
We compete for such investments with a large number of private equity and venture capital funds, other equity and non-equity based investment
funds, investment banks and other sources of financing, including traditional financial services companies such as commercial banks and
specialty finance companies. Many of our competitors are substantially larger than we are and have considerably greater financial, technical
and marketing resources than we do. We may be at a competitive disadvantage with our competitors in a particular industry or investment,
as some of them have greater capital, lower targeted returns, a greater willingness to take on risk, more personnel or greater sector
or investment strategy specific expertise. We and the Adviser may be unable to find a sufficient number of attractive opportunities to
meet our investment objective and there is no assurance as to the timing of investments. The Adviser expects us to benefit from its relationships
and experience making investments; however, there can be no assurance that the Adviser will be able to maintain or draw upon such relationships,
which could have an adverse effect on our ability to find suitable investments and otherwise achieve our investment objective. Furthermore,
the Adviser will emphasize or de-emphasize different aspects of its investment strategy from time to time, and refine or add to our investment
strategy, to respond to changes in market conditions, and there can be no assurance that the Adviser will follow the investment strategy
and process described herein for every investment. Non-U.S.
investments risk
Non-U.S.
securities involve certain factors not typically associated with investing in U.S. securities, including risks relating to the following:
(i) currency exchange matters, including fluctuations in the rate of exchange between the U.S. dollar and the various foreign currencies
in which foreign investments are denominated, and costs associated with conversion of investment principal and income from one currency
into another; (ii) inflation matters, including rapid fluctuations in inflation rates; (iii) differences between the
U.S.
and foreign securities markets, including potential price volatility in and relative liquidity of some foreign securities markets, the
absence of uniform accounting, auditing and financial reporting standards, practices and disclosure requirements and the potential of
less government supervision and regulation; (iv) economic, social and political risks, including potential exchange control regulations
and restrictions on foreign investment and repatriation of capital, the risks of political, economic or social instability and the possibility
of expropriation or confiscatory taxation; (v) the possible imposition of foreign taxes on income and gains recognized with respect
to such securities; and (vi) difficulties in enforcing legal judgements in foreign courts. Laws and regulations of foreign countries
may impose restrictions that would not exist in the United States and may require financing and structuring alternatives that differ significantly
from those customarily used in the United States. No assurance can be given that a change in political or economic climate, or particular
legal or regulatory risks, including changes in regulations regarding foreign ownership of assets or repatriation of funds or changes
in taxation might not adversely affect an investment by us. Global
economic conditions, including those from macro-trends and global events, may adversely affect our investments.
Because
we intend to invest in companies located in various nations, our overall performance depends in part on worldwide economic conditions.
Global financial developments, downturns, and global health crises or pandemics may harm us, including due to disruptions or restrictions
on our employees’ ability to work and travel. The economies of the regions in which we intend to invest have been affected from
time to time by falling demand for a variety of goods and services, restricted credit, poor liquidity, reduced corporate profitability,
volatility in credit, equity, and foreign exchange markets, bankruptcies, labor shortages, labor unrest, pandemics, natural disasters,
supply chain disruptions, inflation, and overall uncertainty with respect to the economy, including with respect to tariff and trade issues.
Ongoing
armed conflicts around the world, such as the invasion of Ukraine by Russia and recently, the conflict in and adjacent to Israel, could
create or exacerbate risks facing our business. The Russia-Ukraine conflict specifically results in numerous countries, including the
United States, imposing significant new sanctions and export controls against Russia, Russian banks, and certain Russian individuals.
These armed conflicts have resulted and could continue to result in, disruptions to trade, commerce, pricing stability, and/or supply
chain continuity, and have introduced significant uncertainty into the global markets. If global economic conditions remain uncertain
or deteriorate further, particularly to the extent such conflicts escalate to involve additional countries, we could see potential scenarios
having a material adverse effect on the businesses in which we intend to invest.
We
believe that other potential conflicts could result in similar disruptions in the regions in which we intend to invest. Such potential
conflicts could include a military conflict between mainland China and Taiwan. While we do not intend to invest in China, a conflict between
China and Taiwan, or any other conflict involving China, could adversely affect global economic conditions and the companies in which
we invest. Moreover, a military conflict between China and Taiwan could disrupt the supply of goods and products relied on by companies
in the digital asset services and technology industry, such as advanced semiconductor chips and other products that are sourced from Taiwan.
Such a conflict would also likely limit access to key Chinese ports and exporters due to both military actions and potential international
sanctions, which could adversely affect the global economy, generally, and companies in which we intend to invest, specifically.
Our
investment portfolio will be recorded at fair value as determined in good faith in accordance with procedures established by our Board
and, as a result, there is and will be uncertainty as to the value of our portfolio investments.
Under
the Investment Company Act, we are required to carry our portfolio investments at market value or, if there is no readily available market
value, at fair value as determined in good faith in accordance with policies and procedures established by our Board pursuant to the requirements
of Rule 2a-5 under the Investment Company Act. There may not be a public or active secondary market for certain of the types of investments
that we hold and intend to make. Our principal investments will not be publicly traded on a securities exchange but, instead, may be quoted
on a private secondary marketplace that is registered as a broker-dealer and operated as an ATS in accordance with the requirements of
Regulation ATS under the Securities Exchange Act or may be offered through electronic (or other) platforms that are registered as
broker-dealers
but not operated as alternative trading systems. As a result, we will value these investments quarterly at fair value as determined in
good faith in accordance with valuation policies and procedures meeting the requirements of Rule 2a-5 under the Investment Company
Act.
Our
valuation policies and procedures, as adopted by the Board, are designed to achieve the following objectives: (1) to periodically
assess any material risks associated with the determination of the fair value of our investments and to manage these risks; (2) to
select and apply a methodology for determining the fair value of our investments and to periodically review the appropriateness and accuracy
of this methodology, as well as to monitor for circumstances that may necessitate the use of fair value; (3) to test the appropriateness
and accuracy of the fair value methodology that has been selected; and (4) to oversee pricing service providers, if used, including
establishing the process for approving, monitoring, and evaluating each pricing service provider. Consistent with applicable requirements,
the Board has designated the Adviser as Valuation Designee (“Valuation Designee”) under our valuation policies and procedures
to perform the fair value determination for all our investments. The Board will retain responsibility to oversee the Adviser in performing
its role as Valuation Designee. The Adviser, however, will be required to submit quarterly and annual reports relating to its function
as Valuation Designee. In addition, it will be required to promptly notify the Board if matters that materially affect the fair value
of the portfolio of investments occur, including a significant deficiency or material weakness in the design or effectiveness of the Adviser’s
fair valuation determination process or material errors in the calculation of net asset value within five days after the Adviser becomes
aware of the matter.
The
determination of fair value, and thus the amount of unrealized appreciation or depreciation we may recognize in any reporting period,
is to a degree subjective, and the Adviser may have a conflict of interest in making fair value determinations. To minimize the possibility
of conflict, however, the Adviser will specify the titles of persons responsible for determining the fair value of particular investments
(including by specifying the particular functions for which they are responsible) and will reasonably segregate fair value determinations
from the portfolio management function by mandating that portfolio managers may not determine, or effectively determine by exerting substantial
influence on, the fair values ascribed to our investments. Any
unrealized losses we experience on our portfolio may be an indication of future realized losses.
As
a registered closed-end management investment company, we are required to carry our investments at market value or, if no market value
is ascertainable, at the fair value as determined in good faith by the Adviser as the valuation designee pursuant to policies and procedures
approved by our board of directors. Decreases in the market values or fair values of our investments are recorded as unrealized depreciation.
Any unrealized losses in our portfolio could be an indication of an issuer’s inability to meet its repayment obligations. This could
result in realized losses in the future. Efforts
to comply with the Sarbanes-Oxley Act will involve significant expenditures, and non-compliance with such regulations may adversely affect
us.
We
are subject to the Sarbanes-Oxley Act and the related rules and regulations promulgated by the SEC. We are required to periodically review
our internal control over financial reporting, and evaluate and disclose changes in our internal control over financial reporting. Developing
and maintaining an effective system of internal controls may require significant expenditures, which may negatively impact our financial
performance. This process will also result in a diversion of management’s time and attention. We cannot be certain as to the timing
of the completion of our evaluation, testing and remediation actions or the impact of the same on our operations and we may not be able
to ensure that the process is effective or that our internal control over financial reporting will be effective in a timely manner. In
the event that we are unable to develop or maintain an effective system of internal controls and maintain or achieve compliance with the
Sarbanes-Oxley Act and related rules, we may be adversely affected. If
we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial
results or prevent fraud. As a result, stockholders could lose confidence in our financial and other public reporting, which would harm
our business.
Effective
internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure
controls and procedures, are designed to prevent fraud. Any failure to
implement required new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting
obligations. Inferior internal controls could also cause investors and lenders to lose confidence in our reported financial information,
which could have a negative effect on our ability to continue the offering. Risks
Associated with Our Investment Strategy
Investment
methodology
We
may employ certain strategies that depend upon the reliability and accuracy of the Adviser’s analytical investment processes. To
the extent such investment processes (or the assumptions underlying them) do not prove to be correct, we may not perform as anticipated,
which could result in substantial losses. Identification
of appropriate investments
Our
success as a whole depends on the identification and availability of suitable investment opportunities and terms. The availability and
terms of investment opportunities will be subject to market conditions, prevailing regulatory conditions in regions where we may invest,
and other factors outside our control. In addition, we may find ourselves in competition with other funds that have entered or may enter
its markets or with private equity funds and financial institutions that may be willing to extend financing on terms that are more favorable
to the portfolio company than the Adviser believes are appropriate in light of the risk of the investment. Therefore, there can be no
assurance that appropriate investments will be available to, or identified or selected by, us. Concentration
of investments
The
Company’s investments will be concentrated in the digital asset services and technology industry. Under the Investment Company Act,
concentration is deemed to occur when 25% or more of the value of a management company’s total assets is invested or proposed to
be invested in a particular industry or group of industries. Under normal market conditions, we will invest at least 80% of the value
of our total assets in equity and equity-linked securities issued by the C1 Thirty companies. We may be further concentrated in the digital
asset services and technology industry because under our non-principal strategy, we may invest in (i) U.S. publicly traded equity
securities or certain non-U.S. companies that otherwise meet our investment criteria, (ii) if and when such BDCs are organized, BDCs
that invest in digital asset services and technology companies, (iii) ETFs that invest in digital asset services and technology companies
and (iv) exchange-traded products (“ETPs”) that invest in physical spot Bitcoin or Ether, which are crypto assets that
are not registered as securities. ETFs in which we may invest are registered as investment companies under the Investment Company Act
and their shares are registered under the Securities Act and listed for trading on a national securities exchange, and ETPs in which we
may invest are not registered as investment companies under the Investment Company Act but their shares are registered under the Securities
Act and listed for trading on a national securities exchange. To the extent we invest in BDCs, ETFs or ETPs, we will factor in the holdings
of such BDCs, ETFs or ETPs when determining the concentration of the Company’s investments. While we believe this investment strategy
could best achieve our investment objective, as we have indicated, we will be particularly exposed to the risks attendant to investments
in companies within this industry. An economic upturn and positive market movement for companies within this industry, could produce outsized
returns for us, as well as other investors in these companies. A significant downturn, however, and adverse market movement could result
in material losses for all such companies and investors in them. In any such case, because of our concentration, the effect on our overall
financial condition could be significant. Our ability to mitigate these risks may be impaired by our policy not to invest derivatives
and other hedging instruments. Election
not to invest in subsequent financing rounds
Following
an initial investment, the issuers that we invest in may give us the opportunity to make additional investments in subsequent financing
rounds.
We
may elect not to invest in subsequent financing rounds. We have the discretion to invest in subsequent financing rounds, subject to the
amount of capital resources available to us relative to the amount of capital desired
by the issuers that we invest in, the prospects of such a subsequent financing round, and the requirements of applicable law. Our decision
to refrain from investing in subsequent financing rounds may, in some circumstances, jeopardize the continued viability of the issuers
that we invest in and our initial investment, or may result in a missed opportunity for us to increase our participation in a successful
operation. Even if our capital resources exceeds the amount of capital desired by the issuers that we invest in, we may elect not to invest
in subsequent financing rounds because we may not want to increase our concentration of risk, we prefer other opportunities, or the investment
may not be consistent with the requirements of applicable law. We do not expect that the Company would be required to invest in a subsequent
financing round with respect to any securities that it holds, and the Company will not enter into any commitment that would obligate it
to invest in a subsequent financing round.
In
addition, we may be unable to invest in subsequent financing rounds in the issuers we invest in that have conducted an IPO as a result
of regulatory or financial restrictions. Litigation
and regulatory investigations
The
Adviser and its affiliates, from time to time, may be named as defendants in civil proceedings. Litigation or threats of litigation consume
time and resources and jeopardize the successful closing of transactions. Moreover, the outcome of such proceedings may materially adversely
affect the value of portfolio positions, may be impossible to predict, and may continue unresolved for long periods of time. The expense
of prosecuting claims, for which there is no guarantee of success, and/or the expense of defending against claims by third parties and
paying any amounts pursuant to settlements or judgments would generally be borne by us and would reduce net assets.
As
an investment adviser, the Adviser expects to have interactions with and inquiries from regulators from time to time, including but not
limited to matters related to us, the Adviser and its affiliates. Risks
Associated with Our Investments
Risks
associated with investments in private companies.
We
will invest principally in private digital asset services and technology companies that have limited resources and operating histories.
Such investments involve a number of significant risks, including the following:
•
these
companies may have limited financial resources and may be unable to meet their obligations under their existing debt, which may lead to
equity financings, possibly at discounted valuations, in which we could be substantially diluted if we do not or cannot participate, bankruptcy
or liquidation and the reduction or loss of our equity investment;
•
they
typically have limited operating histories, narrower, less established product lines and smaller market shares than larger businesses,
which tend to render them more vulnerable to competitors’ actions, market conditions and consumer sentiment in respect of their
products or services, as well as general economic downturns;
•
they
generally have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly changing
businesses with products subject to a substantial risk of obsolescence, and may require substantial additional capital to support their
operations, finance expansion or maintain their competitive position;
•
because
they are privately owned, there is generally little publicly available information about these businesses; therefore, although the Adviser
will perform due diligence investigations on these companies, their operations and their prospects, the Adviser may not learn all of the
material information we need to know regarding these businesses and, in the case of investments we acquire on private secondary transactions,
the Adviser may be unable to obtain financial or other information regarding the companies with respect to which we invest. Furthermore,
there can be no assurance that the information that the Adviser does obtain with respect to any investment is reliable;
•
they
are more likely to depend on the management talents and efforts of a small group of persons; therefore, the death, disability, resignation
or termination of one or more of these persons could have a material adverse impact on the portfolio company and, in turn, on us; and
•
such
private companies frequently have much more complex capital structures than public companies, and may have multiple classes of equity
securities with differing rights, including with respect to voting and distributions. In addition, it is often difficult to obtain financial
and other information with respect to private companies, and even where we are able to obtain such information, there can be no assurance
that it is complete or accurate. In certain cases, such private companies may also have senior or pari passu
preferred stock or senior debt outstanding, which may heighten the risk of investing in the underlying equity of such private companies,
particularly in circumstances when we have limited information with respect to such capital structures. Although we believe that the Investment
Committee members have extensive experience evaluating and investing in private companies with such complex capital structures, there
can be no assurance that the Adviser will be able to adequately evaluate the relative risks and benefits of investing in a particular
class of a portfolio company’s equity securities. Any failure on the Adviser’s part to properly evaluate the relative rights
and value of a class of securities in which we invest could cause us to lose part or all of our investment, which in turn could have a
material and adverse effect on our net asset value and results of operations.
A
portfolio company’s failure to satisfy financial or operating covenants imposed by its lenders could lead to defaults and, potentially,
termination of its loans and foreclosure on its assets, which could trigger cross-defaults under other agreements and jeopardize our equity
investment in such portfolio company. We may incur expenses to the extent necessary to seek recovery of our equity investment or to negotiate
new terms with a financially distressed portfolio company. To the extent we incur such expenses, the common shareholders ultimately will
bear the cost of those expenses. Investments
in private companies involve different and additional risks than the risks associated with investments in public companies.
Investments
in private companies involve a high degree of risk, which can result in substantial losses. There is generally no publicly available information
about the operating results and financial condition of private companies, and the Company relies significantly on the diligence of its
service providers and agents to obtain information in connection with investment decisions in private companies. If the Company is unable
to identify all material information about these private companies, the Company may fail to receive the expected return on investment,
or lose some or all of the money invested in private companies. In addition, the private companies that the Company will invest in will
usually have shorter operating histories and less experienced management than publicly traded competitors, which may adversely affect
the return on, or the recovery of, investments in such businesses.
Additionally,
private companies are more likely to depend on the management talents and efforts of a small group of persons; therefore, the death, disability,
resignation or termination of one or more of these persons could have a material adverse impact on our investment. Private companies also
generally have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly changing
businesses with products subject to a substantial risk of obsolescence and may require substantial additional capital to support their
operations, finance expansion or maintain their competitive position. The
securities of our portfolio companies are generally illiquid.
The
securities of our portfolio companies are generally illiquid, and the inability of these portfolio companies to complete an IPO or consummate
another liquidity event within our targeted time frame for that investment will extend the holding period of our investments, may adversely
affect the value of these investments, and will delay the distribution of gains, if any. The IPO market is, by its very nature, unpredictable.
A lack of IPO opportunities for privately held emerging companies could lead to companies staying longer in our portfolio as private entities
still requiring funding. This situation may adversely affect the amount of available venture capital funding to companies that cannot
complete an IPO. Such stagnation could dampen returns or could lead to unrealized depreciation and realized losses as some companies run
short of cash and have to accept lower valuations in private fundings or are not able to access additional capital at all. A lack of IPO
opportunities for privately held emerging companies may also cause some venture capital firms to change their strategies, leading some
of them to reduce funding of their portfolio companies and making it more difficult for such companies to access capital. This might result
in unrealized depreciation and realized losses in such companies by other investment funds, like us, who are co-investors in such companies.
There
can be no assurance that we will be able to achieve our targeted return on our portfolio company investments if, as and when they go public.
The
equity securities we acquire in a portfolio company are generally subject to contractual transfer limitations imposed on the portfolio
company’s stockholders as well as other contractual obligations, such as rights of first refusal and co-sale rights. These obligations
generally expire only upon an IPO by the portfolio company or the occurrence of another liquidity/exit event. As a result, prior to an
IPO or other liquidity/exit event, our ability to liquidate our private portfolio company
positions may be constrained. Transfer restrictions could limit our ability to liquidate our positions in these securities if we are unable
to find buyers acceptable to our portfolio companies, or where applicable, their stockholders. Such buyers may not be willing to purchase
our investments at adequate prices or in volumes sufficient to liquidate our position, and even where they are willing, other stockholders
could exercise their co-sale rights to participate in the sale, thereby reducing the number of shares available to sell by us. Furthermore,
prospective buyers may be deterred from entering into purchase transactions with us due to the delay and uncertainty that these transfer
and other limitations create.
If
the portfolio companies in which we invest do not perform as planned, they may be unable to successfully complete an IPO or consummate
another liquidity event within our targeted time frame, or they may decide to abandon their plans for an IPO. In such cases, we will likely
exceed our targeted holding period and the value of these investments may decline substantially if an IPO or other exit is no longer viable.
We may also be forced to take other steps to exit these investments.
The
illiquidity of our portfolio company investments, including those that are quoted on the trading platforms of private secondary marketplaces,
may make it difficult for us to sell such investments should the need arise. Also, if we were required to liquidate all or a portion of
our portfolio quickly, we may realize significantly less than the value at which we have previously recorded our investments. We will
have no limitation on the portion of our portfolio that may be invested in illiquid securities, and a substantial portion of our portfolio
may be invested in such illiquid securities at all times.
In
addition, even if a portfolio company completes an IPO, we will typically not be able to sell our position until any applicable post-IPO
lockup restriction expires. As a result of lockup restrictions, the market price of securities that we hold may decline substantially
before we are able to sell them following an IPO. There is also no assurance that a meaningful trading market will develop for our publicly
traded portfolio companies following an IPO to allow us to liquidate our position when we desire. We
will face risks associated with acquiring securities of C1 Thirty companies through (i) purchases on private secondary marketplaces,
(ii) purchases in one-off private transactions, and (iii) direct purchases in private offerings.
We
will acquire securities of C1 Thirty companies through three principal channels: (i) purchases on private secondary marketplaces,
(ii) purchases in one-off private transactions, and (iii) direct purchases in private offerings. Acquiring securities through
these channels subjects us to risks. For example, our ability to find desired investments and to achieve liquidity depends principally
on how active private secondary markets are and whether we could obtain reasonable prices for our investments, as further described in
the risk factor entitled “Risks related to investing
in securities quoted on private secondary marketplaces” below. In addition, with respect
to purchases of securities pursuant to purchase agreements that we will enter into for transactions identified through ATSs or one-off
private transactions with eligible securityholders, we may be subject to the risk that we may not timely obtain required approvals or
waivers of contractual transfer restrictions following the execution of a purchase agreement. Typically, the transfer restriction that
we will require a waiver of after the signing of a purchase agreement is the issuer’s right of first refusal (“ROFR”)
for the issuer to purchase the securities that we seek to acquire pursuant to the purchase agreement. While we expect that we will be
able to obtain required approvals or waivers of contractual transfer restrictions generally within two weeks of executing a purchase agreement,
there may be cases in which it may take us longer than two weeks to obtain the requested approval or waiver. We will structure our purchase
agreements for the acquisition of securities issued by C1 Thirty companies to provide that approval of the transfer of securities or waiver
of the transfer restrictions must be obtained within 30 days from the date of the execution. The purchase agreements will provide
that in any such case, the agreement will terminate automatically if (i) approval of the transfer of securities or waiver of the
transfer restrictions is not obtained within 30 days from
the signing of the purchase agreement, or (ii) the closing of the purchase agreement, which is completed upon the wiring and receipt
of the funds and the Company receiving written notice of the recording of the transfer of the securities on the books and records of the
issuer of the subject securities, does not occur within 35 days from the signing of the purchase agreement.
With
respect to purchase agreements that are subject to transfer restrictions (such as a ROFR) at the time of signing, we conclude that it
would be appropriate to record the purchase at the time when any and all transfer restrictions have been satisfied. Investors of our Common
Shares should understand that our conclusion is subject to different interpretations by regulatory agencies, courts and other bodies having
oversight authority. If one or more of these authorities reach a different conclusion as it pertains to recognition of purchase agreements,
it could result in us misstating the value of our assets.
In
addition, for purchases that we identify through ATSs and for some purchases conducted directly with eligible securityholders, we may
be required to pay an additional fee. For transactions identified through an ATS, the fee typically ranges from 1% to 5% of the transaction
value. For transactions conducted directly with eligible securityholders where a broker-dealer matches us with the eligible securityholder,
the fee to the broker-dealer typically ranges from 2% to 5%. We will account for these fees as a part of the total cost being paid by
the Company to acquire the particular securities. If the value of the acquired securities does not exceed our total acquisition cost of
the acquired securities, we will realize a loss on this investment when the securities are eventually sold. If the transaction does not
settle for reasons such as the issuer exercises its ROFR or if the seller breaches its obligation to sell the securities, we will not
incur these fees. Risks
related to investing in securities quoted on private secondary marketplaces.
To
acquire investments for our portfolio and to obtain liquidity for these investments, we will utilize private secondary marketplaces that
are registered as broker-dealers under Section 15 of the Securities Exchange Act and operated as ATSs in accordance with the requirements
of Regulation ATS under the Securities Exchange Act.
Our
ability to find desired investments and to achieve liquidity depends principally on how active these markets are and whether we could
obtain reasonable prices for our investments. There can be no assurance that the portfolio companies with respect to which we invest through
private secondary marketplaces will have or maintain active trading markets, and the prices of those securities may be subject to irregular
trading activity, wide bid/ask spreads and extended trade settlement periods, which may result in an inability for us to realize full
value on our investment. In addition, wide swings in market prices, which are typical of irregularly traded securities, could cause significant
and unexpected declines in the value of our portfolio investments. Further, prices in private secondary marketplaces, where limited information
is available, may not accurately reflect the true value of a portfolio company, and may overstate a portfolio company’s actual value,
which may cause us to realize future capital losses on our investment in that portfolio company.
Investments
in private companies, including through private secondary marketplaces, also entail additional legal and regulatory risks, which expose
participants to the risk of liability due to the imbalance of information among participants and participant qualification and other transactional
requirements applicable to private securities transactions, the non-compliance with which could result in rescission rights and monetary
and other sanctions. The application of these laws within the context of private secondary marketplaces and related market practices are
still evolving, and, despite our efforts to comply with applicable laws, we could be exposed to liability. The regulation of private secondary
marketplaces is also evolving. Additional state or federal regulation of these markets could result in limits on the operation of or activity
on those markets. Conversely, deregulation of these markets could make it easier for investors to invest directly in private companies
and affect the attractiveness of the Company as an access vehicle for investment in private shares. Private companies may also seek to
limit secondary trading in their stock, such as through contractual transfer restrictions (such as ROFRs), and provisions in company charter
documents, investor rights of first refusal and co-sale and/or employment and trading policies further restricting trading. To the extent
that these or other developments result in reduced trading activity and/or availability of private company shares, our ability to find
investment opportunities and to liquidate our investments could be adversely affected. Purchasing
securities that are quoted on private secondary marketplaces also subjects us to the risk that we may not timely obtain required approvals
or waivers of contractual transfer restrictions following the execution of a purchase agreement. In addition, for completed transactions
involving private secondary marketplaces, we will incur private secondary marketplace fees that we will account for as a part of the total
cost being paid by us to acquire the particular securities. These risks are described in the risk factor immediately prior to this risk
factor, on page 23. The
Company is subject to counterparty risk in connection with one-off private transactions with eligible securityholders.
When
acquiring shares in private transactions with eligible securityholders of the C1 Thirty companies, the Company will be subject to counterparty
risk. Because transactions with such securityholders are not cleared through a central counterparty, the Company is subject to the risk
that a securityholder is unable or unwilling to perform required contractual obligations. Private companies may seek to limit private
transfers of their securities, such as through contractual transfer restrictions (such as ROFRs). If the securities purchased by the Company
are subject to such restrictions, or if a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial
difficulties, the Company may not to be able to secure the securities that the Company sought to acquire, or the Company may face significant
delays in obtaining such securities. There can be no assurance that a counterparty will not default. We
may not realize gains from our equity investments.
We
invest principally in the equity and equity-linked securities issued by up to 30 companies that our Adviser believes are among the 30
leading private digital asset services and technology companies. However, the equity interests we acquire may not appreciate in value
and, in fact, may decline in value.
In
addition, the private company securities we acquire may be subject to drag-along rights, which could permit other stockholders, under
certain circumstances, to force us to liquidate our position in a subject company at a specified price, which could be, in our opinion,
inadequate or undesirable or even below our cost basis. In this event, we could realize a loss or fail to realize gain in an amount that
we deem appropriate on our investment. Further, capital market volatility and the overall market environment may preclude our portfolio
companies from realizing liquidity events and impede our exit from these investments. Accordingly, we may not be able to realize gains
from our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset
any other losses we experience. We will generally have little, if any, control over the timing of any gains we may realize from our equity
investments unless and until the portfolio companies in which we invest become publicly traded. In addition, the portfolio companies in
which we invest may have substantial debt loads. In such cases, we would typically be last in line behind any creditors in a bankruptcy
or liquidation and would likely experience a complete loss on our investment. The
lack of liquidity in, and potentially extended holding period of many of our investments may adversely affect our business and will delay
any distributions of gains, if any.
Our
investments will generally not be in publicly traded securities. Although we expect that some of our equity investments will trade on
private secondary marketplaces, certain of the securities we hold will be subject to legal and other restrictions on resale or will otherwise
be less liquid than publicly traded securities. In addition, while some portfolio companies may trade on private secondary marketplaces,
we can provide no assurance that such a trading market will continue or remain active, or that we will be able to sell our position in
any portfolio company at the time we desire to do so and at the price we anticipate. The illiquidity of our investments, including those
that are quoted on private secondary marketplaces, will make it difficult for us to sell such investments if the need arises. Also, if
we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at which we have
previously recorded our investments. We have no limitation on the portion of our portfolio that may be invested in illiquid securities,
and a substantial portion or all of our portfolio may be invested in such illiquid securities from time to time.
In
addition, because we generally invest in equity and equity-linked securities, with respect to the majority of our portfolio companies,
we do not expect regular realization events, if any, to occur in the near term.
We expect that our holdings of equity securities may require several years to appreciate in value, and we can offer no assurance
that such appreciation will occur. We
will not hold controlling equity interests in our portfolio companies.
We
will not take controlling equity positions in our portfolio companies. As a result, we will be subject to the risk that a portfolio company
may make business decisions with which we disagree, and the stockholders and management of a portfolio company may take risks or otherwise
act in ways that are adverse to our interests. In addition, other stockholders, such as venture capital and private equity sponsors, that
have substantial investments in our portfolio companies may have interests that differ from that of the portfolio company or its minority
stockholders, which may lead them to take actions that could materially and adversely affect the value of our investment in the portfolio
company. Due to the lack of liquidity for the equity and equity-linked investments that we will typically hold in our portfolio companies,
we may not be able to dispose of our investments in the event we disagree with the actions of a portfolio company or its substantial stockholders,
and may therefore suffer a decrease in the value of our investments. Investments
in rights, warrants, convertible securities and equity-linked securities subject the Company to additional risks.
Investments
in rights, warrants, convertible securities and equity-linked securities may subject the Company to similar risks as those associated
with investments in capital stock as well as additional risks associated with investments in derivative securities. The trading price
of rights, warrants, convertible securities and equity-linked securities may not equal the underlying value of the equity to which they
are linked. Rights, warrants and convertible securities grant their holders the option to acquire the underlying equity securities. Unlike
capital stock, they do not confer dividend or voting rights with respect to the underlying equity securities. While the value of rights,
warrants and convertible securities is based on the value of the underlying equity securities, the value of a right, warrant or convertible
security may not move in tandem with the underlying equity security and may expire worthless. Because equity-linked securities are sometimes
issued by a third party other than the issuer of the underlying equity security, the Company is subject to risks if the underlying equity
security, reference rate or index underperforms, or if the issuer defaults on the payments at maturity. In addition, the trading market
for particular equity-linked securities may be less liquid, making it difficult for the Company to dispose of a particular security when
necessary and reduced liquidity in the secondary market for any such securities may make it more difficult to obtain market quotations
for valuing the Company’s portfolio. Reliance
on portfolio company management
The
day-to-day operations of the portfolio companies in which we will invest will be the responsibility of such portfolio company’s
management team. We do not intend to seek representation on the board of directors of portfolio companies or otherwise provide management
or strategic planning assistance, and will not have an active role in the day-to-day management of the companies in which we invest. Although
the Adviser will be responsible for monitoring the performance of each investment, there can be no assurance that the existing management
team, or any successor, will be able to operate the company successfully, or in a way that is consistent with our investment objective.
To the extent that the senior management of a portfolio company performs poorly, or if a key manager of a portfolio company terminates
employment, our investment in such company could be adversely affected. There are many challenges faced by leaders of emerging private
companies, including resignations or dismissals of senior executive officers and other top managers, disputes among investors and board
members, regulatory hurdles, bad press, allegedly unethical or illegal business practices, competition from larger companies with better
resources and experience, and management complicity in discrimination and hostile workplace environments on account of race or gender.
Our returns will depend in large part on the performance of these unrelated individuals and could be substantially adversely affected
by the unfavorable performance of a small number of such individuals.
In
addition, we will generally participate in the capital structure of the portfolio companies on the basis of financial projections for
such portfolio companies. Projected operating results will normally be based in part on the judgment of the management of the portfolio
company. In all cases, projections are only estimates of future results that are based upon assumptions made at the time that the projections
are developed.
There can be no assurance that the projected results will be obtained, and actual results may vary significantly from the projections.
In circumstances in which the Adviser relies on information from corporate management, the Company may be subject to the risk of dysfunctional
or fraudulent management and/or accounting irregularities. Limited
information
Only
limited information may be made available to us regarding our investments in potential portfolio companies. There generally will be little
or no publicly available information regarding the status and prospects of the portfolio company. Investment decisions may depend on the
Adviser’s ability to obtain relevant information from non-public sources, and the Adviser may be required to make decisions without
complete information or in reliance upon information provided by third parties that is impossible or impracticable to verify. There is
a risk that: (i) there are facts or circumstances pertaining to a portfolio company that the public (including us and the Adviser)
are not aware of; and (ii) publicly available information concerning the a portfolio company upon which the Adviser relies may prove
to be inaccurate, and, as a result of (i) or (ii), the investor may suffer a partial or complete loss on its investment.
No
guarantee of future access to information
Each
portfolio company is under no obligation to furnish, or may generally resist providing, information to us with respect to any securities
of the portfolio company, and we may waive or have contractual limitations with respect to such securities. Exercise and use of any information
rights with respect to the portfolio company shall be at our sole discretion. Contingent
liabilities
We
will invest a substantial portion of our assets in private securities. In connection with the disposition of an investment in private
securities, we may be required to make representations about the business and financial affairs of the portfolio company typical of those
made in connection with the sale of a business. We may also be required to indemnify the purchasers of such investment to the extent that
any such representations turn out to be inaccurate or with respect to potential liabilities. These arrangements may result in contingent
liabilities that ultimately result in funding obligations that we must satisfy through our return of distributions previously made to
us. Difficulty
of asset valuations or appraisals
We
hold investments that are not listed on any stock exchange and/or which may be illiquid without a readily independent market valuation.
We are required to fair value such investments and expect to conduct our own fair valuations consistent with valuation policies and procedures
adopted by the Board. The Adviser also utilizes alternative valuation methods, such as engaging third-party valuation providers or pricing
services, as it determines is necessary in order to fair value such investments. All valuation methods necessarily involve a level of
subjectivity for which objective support is unavailable. If a third party is used to assist with asset valuations, we will ultimately
be responsible for the valuation of such assets notwithstanding the assistance from an independent third party provider.
Risks
Associated with Investments in BDCs, ETFs and ETPs
The
Company may invest, as a non-principal investment strategy, in BDCs, ETFs and ETPs. An investment in a BDC, ETF or ETP generally presents
the same principal risks as an investment in a mutual fund that has the same investment objectives, strategies, and policies. The price
of a BDC, ETF or ETP can fluctuate up or down, and the Company could lose money investing in a BDC, ETF or ETP if the prices of the securities
owned by them decrease. In addition, BDCs, ETFs and ETPs may be subject to the following risks that do not apply to conventional mutual
funds: (i) the market price of a BDC’s, ETF’s or ETP’s shares may trade above or below their NAV; (ii) an
active trading market for a BDC’s, ETF’s or ETP’s shares may not develop or be maintained; or (iii) if a BDC’s,
ETF’s or ETP’s shares are listed on an exchange, trading of such shares may be halted if the listing exchange’s officials
deem such action appropriate, the shares are delisted from the exchange, or by the activation of market-wide “circuit breakers”
(which are tied to large decreases in stock prices) that halt stock trading generally. Further, the BDCs, ETFs and ETPs in which
we
may invest are not subject to the Company’s investment policies and restrictions. The Company will generally receive information
regarding the portfolio holdings of BDCs, ETFs and ETPs only when that information is made available to the public. The Company cannot
dictate how the BDCs, ETFs and ETPs invest their assets. The BDCs, ETFs and ETPs may invest their assets in securities and other instruments
and may use investment techniques and strategies that are not described in this prospectus. Notably, unlike the Company, ETPs may invest
directly in physical spot digital assets or crypto assets and therefore they are directly subject to the risks associated with investments
digital assets or crypto assets. Common stockholders will bear two layers of fees and expenses with respect to the Company’s investments
in BDCs, ETFs and ETPs because each of the Company and the BDCs, ETFs and ETPs will charge fees and incur separate expenses.
Risks
Associated with the Digital Asset Industry
Because
we intend to invest in digital asset services and technology companies, we expect the operations of such companies to be subject to risks
associated with investments in this industry.
We
intend to invest in digital asset services and technology companies.
Investments in these businesses involve special risks, including the following risks, among others, any of which could be detrimental
to the value of businesses in which we invest and consequently the value of our shares.
•
Digital
assets have been, and may be, used by bad actors to execute black market transactions, commit fraud, launder funds, evade taxes or economic
sanctions, finance terrorism and other illegal activities, which could negatively impact the reputation and business of the companies
in which we invest.
•
Digital
asset markets, trading platforms and related services are experiencing rapid technological developments and growth. However, they may
decline in popularity, or even face obsolescence, due to slowing usage or acceptance of digital assets and unexpected technical or business
incompatibilities between currencies and related trading services.
•
The
digital asset trading industry is rapidly evolving and has experienced significant uncertainty and volatility due to numerous factors
(including the risks set forth in this risk factor). We expect our portfolio companies will face significant competition, uncertainty
and volatility as digital asset trading businesses continue to evolve, which could have a material adverse effect on our business. For
example, a security breach or another incident that affects a particular digital asset such as Bitcoin or Ether may affect the digital
asset industry as a whole, thereby impacting our business. As a result, future negative developments may reduce the value of the private
digital asset services and technology companies in which we intend to invest and as a result our investments in such companies may be
over-valued.
•
Due
to unfamiliarity and negative publicity surrounding the digital asset industry and digital asset trading platforms (including the quality,
security and reliability of technologies employed by these platforms), existing and potential customers may lose confidence in the businesses
in which we invest.
•
Digital
asset trading platforms may be subject to disputes and claims from customers who incur losses related to the use of such platforms, which
could adversely affect the value of our investments in such platforms.
•
We
may invest in companies that rely on the functionality of certain “smart contract-based” digital assets. If the underlying
smart contracts for digital assets do not operate as expected, they could lose value and our investments could be adversely affected.
•
The
companies in which we invest may be required to make significant capital and other investments in their businesses and may not be able
to do so based on their operations and financial condition or at a level to remain competitive with competitors that have greater financial
resources.
•
The
companies in which we invest may be subject to stringent security requirements that impose substantial costs and could be the target of
attacks or security breaches, which could have a material adverse effect on their businesses and the value of our investments.
•
U.S.
and foreign governments and/or agencies may introduce increasingly complex and stringent laws, regulations and policies, which could have
a material adverse effect on the companies in which we invest.
•
The
uncertainty surrounding the adoption and implementation of new rules and regulations in the U.S. and foreign countries may lead to increased
market volatility, including significant declines in asset value of any given digital asset and the digital asset industry as a whole.
•
Several
governments and agencies, including the U.S. Federal Reserve Bank (the “Federal Reserve”), are evaluating, have announced
or are preliminarily implementing central bank digital “fiat” currencies which may be fully technically compatible. Thus,
central bank digital “fiat” currencies may adversely affect our investments by reducing the market viability of the services
provided by the companies in which we invest.
•
Increased
environmental concerns about specific digital asset mining technologies and related political actions impacting mining capabilities taken
by the U.S. or foreign governments may have a material adverse effect on the business of companies in which we invest.
•
Future
developments regarding the treatment of digital assets for U.S. federal income and/or foreign tax purposes could adversely impact the
business of companies in which we invest.
•
The
companies in which we invest may be subject to complex financial accounting rules, and there is limited guidance from accounting standard
setting bodies. If financial accounting standards undergo significant changes, the operating results of companies in which we invest could
be adversely affected.
Any
of the foregoing factors could have an adverse impact on the operations, and the value of the shares, of our portfolio companies which
in turn could have a corresponding adverse effect on the value of our shares and could cause you to lose all or substantially all of the
value of your investment in us. Recent
developments in the digital asset economy have led to extreme volatility and disruption in digital asset markets, a loss of confidence
in participants of the digital asset ecosystem, significant negative publicity surrounding digital assets broadly and market-wide declines
in liquidity.
Digital
asset prices fluctuate widely. This has led to volatility and disruption in the digital asset services and technology industry and financial
difficulties for several prominent industry participants, including digital asset trading platforms, hedge funds and lending platforms.
For example, in 2022, digital asset lenders Celsius Network LLC and Voyager Digital Ltd. and digital asset hedge fund Three Arrows Capital
each declared bankruptcy. Developments like these have resulted in a loss of confidence in participants in the digital asset services
and technology industry, negative publicity surrounding digital assets more broadly and market-wide declines in digital asset trading
prices and liquidity.
Also
in 2022, FTX, one of the largest digital asset trading platforms by volume at the time, halted customer withdrawals amid rumors of the
company’s liquidity issues and likely insolvency. Shortly thereafter, FTX’s CEO resigned and FTX and several affiliates of
FTX filed for bankruptcy. The U.S. Department of Justice (“DOJ”) subsequently brought criminal charges, including charges
of fraud, violations of federal securities laws, money laundering, and campaign finance offenses, against FTX’s former CEO and others.
In November 2023, FTX’s former CEO was convicted of fraud and money laundering. Similar charges related to violations of anti-money
laundering laws were brought in November 2023 against Binance and its former CEO. FTX is also under investigation by the SEC, the
DOJ and the Commodity Futures Trading Commission (“CFTC”), as well as by various regulatory authorities in the Bahamas, Europe
and other jurisdictions. In response to these events, the digital asset markets have experienced extreme price volatility and declines
in liquidity. In addition, several other entities in the digital asset industry have filed for bankruptcy since FTX’s bankruptcy
filing, such as BlockFi Inc., Terraform Labs Pte. Ltd. and Genesis Global Capital, LLC, a subsidiary of Genesis Global Holdco, LLC.
These
events have led to a substantial increase in regulatory and enforcement scrutiny of the industry as a whole and of digital asset trading
platforms in particular, including from the DOJ, the SEC, the CFTC, the White House and Congress. For example, in June 2023, the
SEC brought charges against Binance and Coinbase,
two of the largest digital asset trading platforms, alleging that Binance and Coinbase offered and sold certain crypto assets as the subject
of investment contracts. Binance subsequently announced that it would be suspending United States dollar (“USD”) deposits
and withdrawals on Binance and that it planned to delist its USD trading pairs. In addition, in November 2023, the SEC brought similar
charges against Kraken alleging that it offered and sold certain crypto assets as the subject of investment contracts. The actions against
prominent figures in the digital asset services and technology industry, such as those against Binance, Coinbase and Kraken, have led,
and may in the future lead, to further volatility in digital asset prices and in the industry more broadly.
These
events are continuing to develop at a rapid pace and it is not possible to predict at this time all of the risks that they may pose to
us or the digital asset industry as a whole. These events also have also led to significant negative publicity around digital asset market
participants. Continued disruption and instability in the digital asset markets as these events develop could have a material adverse
effect on the operations, and the value of the shares, of our portfolio companies which in turn could have a corresponding adverse effect
on the value of our shares and could cause you to lose all or substantially all of the value of your investment in us.
To
the extent that we invest in ETPs that hold Bitcoin or Ether, the financial return on these products will relate directly to the value
of their digital assets, and the value of such digital assets may be highly volatile and subject to fluctuations due to a number of factors.
Therefore, valuation of the ETPs in which the Company invests in will be materially adversely affected by the manifestation of these risks
all of the risks described below.
While
we will not invest directly in any digital assets, we may from time to time, as a non-principal investment strategy, invest in ETPs that
invest in physical spot Bitcoin or Ether. The value of these ETPs relates directly to the value of the digital assets they hold, and fluctuations
in the price of such digital assets could adversely affect the value of our investments and overall value of our investment portfolio.
The market price of Bitcoin and Ether may be highly volatile, and subject to a number of factors, including:
•
an
increase in the global supply of Bitcoin and/or other digital assets;
•
manipulative
trading activity on digital asset trading platforms, which platforms, in many cases, may be operating out of compliance with regulation;
•
the
adoption of digital assets as a medium of exchange, store-of-value or other consumptive asset and the maintenance and development of open-source
software protocols on which digital assets rely;
•
forks
in the blockchains used by digital assets;
•
investors’
expectations with respect to interest rates, the rates of inflation of fiat currencies or digital assets, and digital asset trading platform
rates;
•
consumer
preferences and perceptions of Bitcoin specifically and digital assets generally;
•
fiat
currency withdrawal and deposit policies on digital asset trading platforms;
•
the
liquidity of digital asset markets and any increase or decrease in trading volume on digital asset markets;
•
investment
and trading activities of large investors that invest directly or indirectly in Bitcoin, Ether or other digital assets;
•
a
“short squeeze” resulting from speculation on the price of Bitcoin, Ether or other digital assets, if aggregate short exposure
exceeds the number of shares of the digital asset fund available for purchase;
•
an
active derivatives market for Bitcoin or Ether specifically or for digital assets generally;
•
a
determination that Bitcoin, Ether or other digital assets are, in fact, securities or changes in their status under the federal securities
laws, or that such digital assets could be offered and sold as the subject of investment contracts, and thus be subject to regulation
under applicable federal securities laws;
•
monetary
policies of governments, trade restrictions, currency devaluations and revaluations and regulatory measures or enforcement actions, if
any, that restrict the use of digital assets as a form of payment or the purchase of digital assets on the digital asset markets;
•
global
or regional political, economic or financial conditions, events and situations, such as the novel coronavirus outbreak;
•
fees
associated with processing digital asset transactions and the speed at which digital asset transactions are settled;
•
interruptions
in service from or closures or failures of major digital asset trading platforms;
•
decreased
confidence in digital asset trading platforms due to the platform operating out of compliance with regulation;
•
increased
competition from other forms of digital assets or payment services; and
•
the
value of digital assets has been, and may continue to be, substantially dependent on speculation, such that trading and investing in digital
assets generally may not be based on fundamental analysis.
In
addition, there is no assurance that Bitcoin or Ether will maintain their value in the long or intermediate term. In the event that the
price of Bitcoin or Ether decline, the value of ETPs in which we may invest will likely decline. Although
digital assets, such as Bitcoin and Ether, are often referred to as “cryptocurrencies,” they are not widely accepted as a
means of payment. The offer and sale of such digital assets, and/or the digital assets themselves, may be required to be registered under
the federal securities laws. The value of Bitcoin, Ether and other digital assets may also be
subject to momentum pricing due to speculation regarding future appreciation in value, leading to greater volatility that could adversely
affect the value of our shares. Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined
by the investing public, accounts for future appreciation in value, if any. We believe that momentum pricing of digital assets has increased
the volatility of the price of digital assets. As a result, digital asset may be more likely to fluctuate in value due to changing investor
confidence, which could impact future appreciation or depreciation of the digital asset service and technology companies in which we may
invest and consequently the value of our shares and your investment in us.
Because
digital asset trading platforms may be operating out of compliance with regulation, our portfolio companies may experience fraud, market
manipulation, business failures, security failures or operational problems, which may adversely affect the value of our investments in
them.
We
may invest in companies that provide services to, or rely on, or integrate with electronic marketplaces where trading platform participants
may trade, buy and sell digital assets. The largest digital asset trading platforms are online and typically trade on a 24-hour basis,
publishing transaction price and volume data. Digital asset trading platforms are relatively new and may be operating out of compliance
with regulation. While many prominent digital asset trading platforms provide the public with significant information regarding their
ownership structure, management teams, corporate practices and regulatory compliance, many other digital asset trading platforms do not
provide this information. Furthermore, while digital asset trading platforms are and may continue to be subject to federal and state licensing
requirements in the United States, digital asset trading platforms do not currently appear to be subject to regulation in a similar manner
as other regulated trading platforms, such as national securities exchanges or designated contract markets. As a result, the marketplace
may lose confidence in digital asset trading platforms.
Many
digital asset trading platforms may be operating out of compliance with regulation, and do not provide the public with significant information
regarding their ownership structure, management team, corporate practices, cybersecurity, and regulatory compliance. In particular, those
located outside the United States may be subject to significantly less stringent regulatory and compliance requirements in their local
jurisdictions and may take the position that they are not subject to laws and regulations that would apply to a national securities exchange
or designated contract market in the United States, or may, as a practical matter, be beyond the ambit of U.S. regulators. As a result,
trading activity on or reported by these digital asset trading platforms is generally significantly less regulated than trading activity
on or reported by regulated U.S. securities and commodities markets, and may reflect behavior that would be prohibited in regulated U.S.
trading venues. Any actual or perceived false trading in the market, and any other fraudulent or manipulative acts and practices, could
adversely affect the market perception and value of digital assets, which could in turn adversely impact the value of our shares.
The
SEC has also identified possible sources of fraud and manipulation in the digital asset markets generally, including, among others (1) “wash-trading”;
(2) persons with a dominant position in Bitcoin manipulating Bitcoin pricing; (3) hacking of the Bitcoin network and trading
platforms; (4) malicious control of the Bitcoin network; (5) trading based on material, non-public information (for example,
plans of market participants to significantly increase or decrease their holdings in Bitcoin, new sources of demand for Bitcoin) or based
on the dissemination of false and misleading information; (6) manipulative activity involving purported “stablecoins,”
including Tether; and (7) fraud and manipulation at digital asset markets. The use or presence of such acts and practices in the
digital asset markets could, for example, falsely inflate the volume of Bitcoin present in the digital asset markets or cause distortions
in the price of Bitcoin, among other things that could adversely affect the companies in which we invest. Moreover, tools to detect and
deter fraudulent or manipulative trading activities, such as market manipulation, front-running of trades, and wash-trading, may not be
available to or employed by digital asset markets, or may not exist at all. Many digital asset markets also lack certain safeguards put
in place by exchanges for more traditional assets to enhance the stability of trading on the exchanges and prevent “flash crashes,”
such as limit-down circuit breakers. As a result, the prices of digital assets on such markets may be subject to larger and/or more frequent
sudden declines than assets traded on more traditional exchanges.
In
addition, over the past several years, some digital asset trading platforms have been closed, been subject to criminal and civil
litigation and have entered into bankruptcy proceedings due to fraud and manipulative activity, business failure and/or security breaches.
In many of these instances, the customers of such digital asset trading platforms were not compensated or made whole for the partial or
complete losses of their account balances in such digital asset trading platforms. While smaller digital asset trading platforms are less
likely to have the infrastructure and capitalization that make larger digital asset trading platforms more stable, larger digital asset
trading platforms are more likely to be appealing targets for hackers and malware and their shortcomings or ultimate failures are more
likely to have contagion effects on the digital asset ecosystem, and therefore may be more likely to be targets of regulatory enforcement
action.
Negative
perception, a lack of stability and standardized regulation in the digital asset markets and/or the closure or temporary shutdown of digital
asset trading platforms due to fraud, business failure, security breaches or government mandated regulation, and associated losses by
customers, may reduce confidence in and diminish the value of the digital asset service and technology companies in which we invest. These
potential consequences of such a digital asset trading platform’s failure could adversely affect the value of our assets and consequently
our shares. We
may invest in companies that hold, rely on, or provide services and technology related to stablecoins, and the value of such portfolio
companies may be impacted by the activities of stablecoin issuers and their regulatory treatment.
While
the Company will not directly invest in stablecoins, the companies in which we invest may hold, rely on, or provide services and technology
related to stablecoins. As a result, we may be exposed to these and other risks that stablecoins pose for the digital asset market, generally,
and digital asset services and technology companies, specifically. Stablecoins are digital assets designed to have a stable value over
time as compared to typically volatile digital assets, and are typically marketed as being pegged to a fiat currency, such as the U.S.
dollar, at a certain value. Although the prices of stablecoins are intended to be stable, in many cases their prices fluctuate, sometimes
significantly. This volatility has in the past impacted the prices of certain digital assets, and has at times caused certain stablecoins
to lose their “peg” to the underlying fiat currency. Stablecoins are a relatively new phenomenon, and it is impossible to
know all of the risks that they could pose to participants in the digital asset markets. For instance, stablecoins are reliant on the
U.S. banking system and U.S. treasuries, and the failure of either to function normally could impede the function of stablecoins or lead
to outsized redemption requests, and therefore could adversely affect the value of our investments in companies exposed to stablecoins
and consequently the value of our shares.
Some
stablecoins have been asserted to be securities under the federal securities laws. For example, in 2023, the SEC alleged that certain
stablecoins, such as BUSD and USDT, have been offered and sold as the subject of investment contracts, and therefore subject to regulation
as a security under applicable federal securities laws. A determination that a popular stablecoin is a security could lead to outsized
redemption requests, and therefore could adversely affect the broader value of the Shares. Given
the role that stablecoins play in global digital asset markets, their fundamental liquidity can have a dramatic impact on the broader
digital asset market, including the companies in which we intend to invest. Because a large portion of the digital asset market still
depends on stablecoins such as Tether and USDC, there is a risk that a disorderly de-pegging or a run on Tether or USDC could lead to
dramatic market volatility in, and/or materially and adversely affect the prices of, digital assets more broadly, which could materially
and adversely affect the value of the companies in which we intend to invest.
Volatility
in stablecoins, operational issues with stablecoins (for example, technical issues that prevent settlement), concerns about the sufficiency
of any reserves that support stablecoins, or regulatory concerns about stablecoin issuers or intermediaries could adversely affect the
price of digital assets and the value of digital asset companies in which we invest and in turn the value of our shares.
The
future development and growth of the digital asset industry is subject to a variety of factors that are difficult to predict and evaluate.
If the digital asset industry does not grow as we expect, the value our investments in digital asset companies, and in turn of your shares
in us, could be adversely affected.
Digital
assets built on blockchain technology were only recently introduced and remain in the early stages of development. In addition, different
digital assets are designed for different purposes. Bitcoin, for instance, was designed to serve as a peer-to-peer electronic cash system,
while Ethereum was designed to be a smart contract and decentralized application platform. Many other digital asset networks — ranging
from cloud computing to tokenized securities networks — have only recently been established. The further growth and
development of any digital assets and their underlying networks and other cryptographic and algorithmic protocols governing the creation,
transfer, and usage of digital assets represent a new and evolving paradigm that is subject to a variety of factors that are difficult
to evaluate, including:
•
many
digital asset networks have limited operating histories, have not been validated in production, and are still in the process of developing
and making significant decisions that will affect the design, supply, issuance, functionality, and governance of their respective digital
assets and underlying blockchain networks, any of which could adversely affect their respective digital assets;
•
many
digital asset networks are in the process of implementing software upgrades and other changes to their protocols, which could introduce
bugs, security risks, or adversely affect the respective digital asset networks;
•
several
large networks, including Bitcoin and Ethereum, are developing new features to address fundamental speed, scalability, and energy usage
issues. If these issues are not successfully addressed, or are unable to receive widespread adoption, it could adversely affect the underlying
digital assets;
•
security
issues, bugs, and software errors have been identified with many digital assets and their underlying blockchain networks, some of which
have been exploited by malicious actors. There are also inherent security weaknesses in some digital assets, such as when creators of
certain digital asset networks use procedures that could allow hackers to counterfeit tokens. Any weaknesses identified with a digital
asset could adversely affect its price, security, liquidity, and adoption. If a malicious actor or botnet (a volunteer or hacked collection
of computers controlled by networked software coordinating the actions of the computers) obtains a majority of the compute or staking
power on a digital asset network, as has happened in the past, it may be able to manipulate transactions, which could cause financial
losses to holders, damage the network’s reputation and security, and adversely affect its value;
•
the
development of new technologies for mining, such as improved application-specific integrated circuits (commonly referred to as ASICs),
or changes in industry patterns, such as the consolidation of mining power in a small number of large mining farms, could reduce the security
of blockchain networks, lead to increased liquid supply of digital assets, and reduce a digital asset’s price and attractiveness;
•
if
rewards and transaction fees for miners or validators on any particular digital network are not sufficiently high to attract and retain
miners, a digital asset network’s security and speed may be adversely affected, increasing the likelihood of a malicious attack;
•
many
digital assets have concentrated ownership or an “admin key,” allowing a small group of holders to have significant unilateral
control and influence over key decisions related to their digital asset networks, such as governance decisions and protocol changes, as
well as the market price of such digital assets;
•
the
governance of many decentralized blockchain networks is by voluntary consensus and open competition, and many developers are not directly
compensated for their contributions. As a result, there may be a lack of consensus or clarity on the governance of any particular digital
asset network, a lack of incentives for developers to maintain or develop the network, and other unforeseen issues, any of which could
result in unexpected or undesirable errors, bugs, or changes, or stymie such network’s utility and ability to respond to challenges
and grow; and
•
many
digital asset networks are in the early stages of developing partnerships and collaborations, all of which may not succeed and adversely
affect the usability and adoption of the respective digital assets.
Various
other technical issues have also been uncovered from time to time that resulted in disabled functionalities, exposure of certain users’
personal information, theft of users’ assets, and other negative consequences, and which required resolution with the attention
and efforts of their global miner, user, and development communities. If any such risks or other risks materialize, and in particular
if they are not resolved, the development and growth of the digital asset industry may be significantly affected, and, as a result, the
business, operating results, and financial condition and value of the digital asset companies in which we invest could be adversely affected,
resulting in a decrease in the value of our shares and your investment in us. There
are many public, permissionless blockchains that can vary by, among other things, technical design, consensus mechanism, decentralization,
security, scalability, the use cases and applications supported. The use of public, permissionless blockchains is novel, untested and
may contain inherent flaws or limitations.
Blockchain
is an emerging technology that offers new capabilities which are not fully proven in use. The term “blockchain” refers to
a peer-to-peer distributed ledger that is secured using cryptography. A distributed ledger is a shared electronic database where information
is recorded and stored across multiple computers; a blockchain is one type of distributed ledger. A blockchain may be open and permissionless
or private and permissioned. The Bitcoin and Ethereum blockchains are examples of open, public, permissionless blockchains. Blockchain
derives its name from the way it stores transaction data in “blocks” that are linked together to form a chain. As the number
of transactions grows, so does the blockchain. Blocks record and confirm the time and sequence of transactions, which are then logged
into the blockchain network, which is, with respect to public blockchains, governed by rules agreed on by the network participants.
There
are many public, permissionless blockchains that can vary by, among other things, technical design, consensus mechanism, decentralization,
security, scalability, the use cases and applications supported. For example, there are numerous differences between the Bitcoin blockchain
and Ethereum blockchain set forth in the table below:
The
differences between the Bitcoin blockchain and Ethereum blockchain is exemplary of the many differences among the vast number of public,
permissionless blockchains, and underscores that blockchain technology is currently novel, untested and may contain inherent flaws or
limitations. In most cases, software used by digital asset issuing entities will be in an early development stage and still unproven.
As with other novel software products, the computer code underpinning blockchains may contain errors, or function in unexpected ways.
Therefore, there are unknown risks associated with blockchain technology, and therefore, investing in digital assets, even indirectly,
is subject to increased risk compared to traditional investments. Known risks associated with blockchain technology include:
•
a
blockchain may be vulnerable to attacks to the extent that, in terms of a proof-of-work blockchain, a “miner” or group of
“miners” possesses more than 50% of the blockchain’s “hashing” power or that, in terms of a proof-of-stake
blockchain, there is concentration in the ownership and/or staking of the blockchain’s native crypto asset;
•
proposed
changes to a blockchain’s protocol may not be adopted by a sufficient number of users and validators or users and miners, respectively,
which may result in competing blockchains with different native crypto assets and sets of participants (also known as a “fork”);
•
that
a blockchain’s protocol, including the code of any smart contracts running on the blockchain, may contain flaws that can be exploited
by attackers;
•
that
these blockchains have historically faced scalability challenges as they seek to increase their number of users. A greater number of users
increases the number of “nodes” that are involved in the processing and maintenance of particular blockchain, and an increase
in nodes decreases the network’s efficiency in processing transactions and may result in slowness of transaction processing and
finality. A greater number of users also gives rise to variability of transaction fees, and volatility of digital asset prices; and
•
that
the native crypto assets of these blockchains are bearer assets that can be irrevocably lost or stolen to the extent that the “private
keys” securing the assets are lost or stolen.
Our
portfolio companies will be subject to an extensive, highly evolving and uncertain regulatory landscape and any adverse changes to, or
their failure to comply with, any laws and regulations could adversely affect their brand, reputation, business, operating results, and
financial condition and the value of our investments.
The
digital asset companies in which we invest are subject to extensive laws, rules, regulations, policies, orders, determinations, directives,
treaties, and legal and regulatory interpretations and guidance in the markets in which they operate, which may include those governing
financial services and banking, federal government contractors, trust companies, securities, derivative transactions and markets, broker-dealers
and ATSs, commodities, credit, digital asset custody, exchange, and transfer, cross-border and domestic money and digital asset transmission,
commercial lending, usury, foreign currency exchange, privacy, data governance, data protection, cybersecurity, fraud detection, payment
services (including payment processing and settlement services), consumer protection, escheatment, antitrust and competition, bankruptcy,
tax, anti-bribery, economic and trade sanctions, anti-money laundering, and counter-terrorist financing. Many of these legal and regulatory
regimes were adopted prior to the advent of the internet, mobile technologies, digital assets, generative artificial intelligence (“AI”)
and related technologies. As a result, some applicable laws and regulations do not contemplate or address unique issues associated with
the digital asset economy, are subject to significant uncertainty, and vary widely across U.S. federal, state, and local and international
jurisdictions. These legal and regulatory regimes, including the laws, rules, and regulations thereunder, evolve frequently and may be
modified, interpreted, and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another. Moreover,
the complexity and evolving nature of the digital asset industry and the significant uncertainty surrounding the regulation of the digital
asset economy requires our
portfolio companies to exercise judgment as to whether certain laws, rules, and regulations apply to their businesses, and it is possible
that governmental bodies and regulators may disagree with their conclusions. To the extent our portfolio companies have not complied with
such laws, rules, and regulations, they could be subject to significant fines, revocation of licenses, limitations on or temporary or
permanent suspensions of their products and services, reputational harm, and other regulatory consequences, each of which may be significant
and could adversely affect our each of our portfolio companies’ business, operating results, and financial condition.
Additionally,
various governmental and regulatory bodies, including legislative and executive bodies, in the United States and in other countries may
adopt new laws and regulations, the direction and timing of which may be influenced by changes in the governing administrations and major
events in the digital asset economy.
Moreover,
our portfolio companies may offer products and services whose functionality or value depends in part on our management of token transaction
smart contracts, liquid staking, asset tracking, or other applications that provide novel forms of customer engagement and interaction
delivered via blockchain protocols. Our portfolio companies may also offer products and services whose functionality or value depends
on their ability to develop, integrate, or otherwise interact with such applications within the bounds of our legal and compliance obligations.
The legal and regulatory landscape for such products, including the law governing the rights and obligations between and among smart contract
developers and users and the extent to which such relationships entail regulated activity is uncertain and rapidly evolving. Our portfolio
companies’ interaction with those applications, and the interaction of other blockchain users with any smart contracts or assets
they may generate or control, could present legal, operational, reputational, and regulatory risks for their businesses.
Because
our portfolio companies may include businesses that offer a variety of innovative products and services to customers, many of their offerings
may be subject to significant regulatory uncertainty and they from time-to-time face regulatory inquiries regarding their current and
planned products. For instance, our portfolio companies may facilitate or engage in transactions involving certain stablecoin digital
assets. The regulatory treatment of fiat-backed stablecoins is highly uncertain and has drawn significant attention from legislative and
regulatory bodies around the world. The issuance and resale of such stablecoins may implicate a variety of banking, deposit, money transmission,
prepaid access and stored value, anti-money laundering, commodities, securities, sanctions, and other laws and regulations in the United
States and in other jurisdictions. There are substantial uncertainties on how these requirements would apply in practice, and our portfolio
companies may face substantial compliance costs to operationalize and comply with these rules. Moreover, our portfolio companies may offer
products and services that incorporate digital engagement, including recommendations, incentives, notifications, educational content and
relevant news. Legislators and regulators in jurisdictions in which our portfolio companies may operate have solicited comment from the
public or proposed or adopted laws or regulations relating to the use of gamification, predictive analytics or other digital engagement
features or practices in various products and services, including potential conflicts of interest that may arise as a result of such practices.
If such laws or regulations are adopted in jurisdictions in which our portfolio companies operate and deemed to apply to the products
and services they offer, our portfolio companies could be required to change the way they market their offerings and interact with existing
and prospective customers or modify certain features contained within their products and services, any of which could adversely impact
their business, operating results and financial condition. Certain products and services offered by our portfolio companies may be deemed
to be engaged in a form of regulated activity for which licensure is required or cause certain portfolio companies to become subject to
new and additional forms of regulatory oversight. Additionally, our portfolio companies may offer various staking, rewards, and lending
products, all of which are subject to significant regulatory uncertainty, and could implicate a variety of laws and regulations worldwide.
For example, there is regulatory uncertainty regarding the status of staking, lending, rewards, and other yield-generating activities
under the U.S. federal and state securities laws. Even if our portfolio companies implement policies and procedures, including geofencing
for certain products and services, designed to help monitor for and ensure compliance with existing and new laws and regulations, there
can be no assurance that our portfolio companies and their employees, contractors, and agents will not violate or otherwise fail to comply
with such laws and regulations. To the extent that our portfolio companies or their employees, contractors, or agents are deemed or alleged
to have violated or failed to comply with any laws or regulations, including related interpretations, orders,
determinations,
directives, or guidance, they could be subject to a litany of civil, criminal, and administrative fines, penalties, orders and actions,
including being required to suspend or terminate the offering of certain products and services. Moreover, to the extent our portfolio
companies’ customers nevertheless access their platforms, products or services outside of jurisdictions where our portfolio companies
have obtained required governmental licenses and authorization, they could similarly be subject to a variety of civil, criminal, and administrative
fines, penalties, orders and actions as a result of such activity.
Due
to their business activities, our portfolio companies may be subject to ongoing examinations, oversight, and reviews and currently are,
and expect in the future, to be subject to investigations and inquiries, by U.S. federal and state regulators and foreign financial service
regulators, many of which have broad discretion to audit and examine their businesses. Our portfolio companies may be periodically subject
to audits and examinations by these regulatory authorities. As a result of findings from these audits and examinations, regulators have,
are, and may in the future require our portfolio companies to take certain actions, including amending, updating, or revising their compliance
measures from time to time, limiting the kinds of customers that they provide services to, changing, terminating, or delaying their licenses
and the introduction of their existing or new product and services, and undertaking further external audit or being subject to further
regulatory scrutiny, including investigations and inquiries. Our portfolio companies may receive, examination reports citing violations
of rules and regulations, inadequacies in existing compliance programs, and requiring them to enhance certain practices with respect to
their compliance programs, including due diligence, monitoring, training, reporting, and recordkeeping. Implementing appropriate measures
to properly remediate these examination findings may require our portfolio companies to incur significant costs, and if they fail to properly
remediate any of these examination findings, they could face civil litigation, significant fines, damage awards, forced removal of certain
employees including members of their executive teams, barring of certain employees from participating in their businesses in whole or
in part, revocation of existing licenses, limitations on existing and new products and services, reputational harm, negative impact to
their existing relationships with regulators, exposure to criminal liability, or other regulatory consequences. Further, we believe increasingly
strict legal and regulatory requirements and additional regulatory investigations and enforcement, any of which could occur or intensify,
may continue to result in changes to our portfolio companies’ businesses, as well as increased costs, and supervision and examination
for portfolio companies, their agents, and service providers. Moreover, new laws, regulations, or interpretations may result in additional
litigation, regulatory investigations, and enforcement or other actions, including preventing or delaying our portfolio companies from
offering certain products or services offered by their competitors or could impact how our portfolio companies offer such products and
services.
Adverse
changes to, or our portfolio companies’ failure to comply with, any laws and regulations, may have an adverse effect on their reputations
and brands and their businesses, operating results, and financial conditions and consequently on the value of our shares.
To
the extent our portfolio companies have international activities, they will be obligated to comply with the laws, rules, regulations,
and policies of a variety of jurisdictions and may be subject to inquiries, investigations, and enforcement actions by U.S. and/or non-U.S.
regulators and governmental authorities, including those related to sanctions, export control, and anti-money laundering.
To
the extent our portfolio companies have international activities, they will be obligated to comply with the laws, rules, regulations,
policies, and legal interpretations of the jurisdictions in which they operate. For instance, financial regulators outside the United
States have increased their scrutiny of digital asset trading platforms over time, such as by requiring digital asset trading platforms
operating in their local jurisdictions to be regulated and licensed under local laws. Moreover, laws regulating financial services, the
internet, mobile technologies, digital assets, and related technologies outside of the United States are highly evolving, extensive and
often impose different, more specific, or even conflicting obligations, as well as broader liability. In addition, to the extent our portfolio
companies are based in the United States and have international activities, they may be required to comply with laws and regulations related
to economic sanctions and export controls enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”),
the U.S. Department of Commerce’s Bureau of Industry and Security, and U.S. anti-money laundering and counter-terrorist financing
laws and regulations, enforced by the U.S. Financial Crimes Enforcement Network (“FinCEN”) and certain state financial services
regulators. U.S. sanctions and export control laws and regulations generally restrict dealings by persons subject to U.S. jurisdiction
with certain
jurisdictions that are the target of comprehensive embargoes, currently the Crimea Region, the Donetsk People’s Republic, and the
Luhansk People’s Republic of Ukraine, Cuba, Iran, North Korea, and Syria, as well as with persons, entities, and governments identified
on certain prohibited party lists. Moreover, as a result of the Russian invasion of Ukraine, the United States, the E.U., the United Kingdom,
and other jurisdictions have imposed wide-ranging sanctions on Russia and Belarus and persons and entities associated with Russia and
Belarus. There can be no certainty regarding whether such governments or other governments will impose additional sanctions, or other
economic or military measures against Russia or Belarus. While we intend to invest in companies with robust compliance programs, there
can be no guarantee that our portfolio companies’ compliance programs will prevent transactions with particular persons or addresses
or prevent every potential violation of OFAC sanctions. Any present or future government inquiries of our portfolio companies relating
to sanctions could result in negative consequences, including costs related to government investigations, financial penalties, and harm
to our reputation. The impact on us related to such matters could be substantial.
Regulators
worldwide frequently study each other’s approaches to the regulation of the digital asset economy. Consequently, developments in
any jurisdiction may influence other jurisdictions. New developments in one jurisdiction may be extended to additional services and other
jurisdictions. As a result, the risks created by any new law or regulation in one jurisdiction are magnified by the potential that they
may be replicated, affecting the business of our portfolio companies in another place or involving another service. Conversely, if regulations
diverge worldwide, our portfolio companies may face difficulty adjusting their products, services, and other aspects of their businesses
with the same effect. These risks will be heightened to the extent our portfolio companies face increased competitive pressure from other
similarly situated businesses that engage in regulatory arbitrage to avoid the compliance costs associated with regulatory changes. These
regulatory risks related to international activities may have an adverse effect on our portfolio companies’ businesses, operating
results, and financial conditions and consequently on the value of our shares. To
the extent any of our portfolio companies fail to safeguard and manage their and their customers’ fiat currencies and digital assets,
such failure could adversely impact such portfolio company’s business, operating results, and financial condition.
We
may invest in portfolio companies that hold cash and safeguard digital assets on behalf of their customers and hold fiat and digital assets
for corporate investment and operating purposes. Safeguarding customers’ cash and digital assets is integral to building trust with
customers.
We
and our portfolio companies may rely on vendors or financial partners’ abilities to manage and accurately hold fiat currency and
digital assets, and such management and custody requires a high level of internal controls. We and our portfolio companies are limited
in our ability to influence or manage the controls and processes of third-party partners or vendors and may be dependent on our partners’
and vendors’ operations, liquidity and financial condition to manage these risks. As we and our portfolio companies grow and expand,
we also must scale and strengthen our internal controls and processes, and monitor our third party partners’ and vendors’
ability to similarly scale and strengthen. Failure to do so could adversely impact our and our portfolio companies’ business, operating
results, and financial condition. This is important both to the actual controls and processes and the public perception of the same.
Any
inability by us or our portfolio companies to maintain safeguarding procedures, perceived or otherwise, could harm our business, operating
results, and financial condition.
Any
material failure by our portfolio companies or their partners to maintain the necessary controls, policies, procedures or to manage digital
assets they hold could also adversely impact such portfolio company’s business, operating results, and financial condition. Moreover,
because custodially held digital assets may be considered to be the property of a bankruptcy estate, in the event of a bankruptcy, digital
assets our portfolio companies hold in custody on behalf of their customers could be subject to bankruptcy proceedings and such customers
could be treated as general unsecured creditors.
We
expect that the digital assets companies in which we invest will have developed and maintained administrative, technical, and physical
safeguards designed to comply with applicable legal requirements and industry standards. However, it is nevertheless possible that hackers,
employees or service providers acting contrary
to such policies, or others could circumvent these safeguards to improperly access our portfolio companies’ systems or documents,
or the systems or documents of their business partners, agents, or service providers, and improperly access, obtain, or misuse customer
digital assets and funds. The methods used to obtain unauthorized access, disable, or degrade service or sabotage systems are also constantly
changing and evolving and may be difficult to anticipate or detect for long periods of time. Insurance coverage for security breaches
and security related matters in the digital asset sector is limited and may not cover the extent of loss nor the nature of such loss.
The ability to maintain insurance is also subject to the insurance carriers’ ongoing underwriting criteria. Any loss of customer
cash or digital assets could result in a subsequent lapse in insurance coverage, which could cause a substantial business disruption,
adverse reputational impact, inability to compete with competitors, and regulatory investigations, inquiries, or actions. Additionally,
to the extent our portfolio companies conduct transactions through our websites or other electronic channels, such transactions may create
risks of fraud, hacking, unauthorized access or acquisition, and other deceptive practices. Any security incident resulting in a compromise
of customer assets could result in substantial costs and require the notification of impacted individuals, and in some cases regulators,
of a possible or actual incident, exposure to regulatory enforcement actions, including substantial fines, limit the ability to provide
services, result in litigation, significant financial losses, reputational damage, and adversely affect business, operating results, financial
condition, and cash flows of our portfolio companies and consequently will have a corresponding negative impact on the value of our shares.
We
may invest in portfolio companies that are at risk of being exploited to facilitate illegal activity such as fraud, money laundering,
gambling, tax evasion, and scams. If any of our portfolio companies’ platforms are exploited such illegal activities, our business
could be adversely affected.
We
may invest in portfolio companies that facilitate digital asset transactions and are at risk of being exploited to facilitate illegal
activity including fraud, money laundering, gambling, tax evasion, and scams. Such companies may be specifically targeted by individuals
seeking to conduct fraudulent transfers, and it may be difficult or impossible to detect and avoid such transactions in certain circumstances.
The use of a portfolio company’s platform for illegal or improper purposes could subject it to claims, individual and class action
lawsuits, and government and regulatory investigations, prosecutions, enforcement actions, inquiries, or requests that could result in
liability and reputational harm for such portfolio company. Moreover, certain activities that may be legal in one jurisdiction may be
illegal in another jurisdiction, and certain activities that are at one time legal may in the future be deemed illegal in the same jurisdiction.
As a result, there is significant uncertainty and cost associated with detecting and monitoring transactions for compliance with local
laws. In the event that a customer of one of our portfolio companies is found responsible for intentionally or inadvertently violating
the laws in any jurisdiction, such portfolio company may be subject to governmental inquiries, enforcement actions, prosecuted, or otherwise
held secondarily liable for aiding or facilitating such activities. Changes in law have also increased the penalties for money transmitters
for certain illegal activities, and government authorities may consider increased or additional penalties from time to time.
Owners
of intellectual property rights or government authorities may seek to bring legal action against money transmitters, for involvement in
the sale of infringing or allegedly infringing items. Any threatened or resulting claims against one of our portfolio companies could
result in reputational harm, and any resulting liabilities, loss of transaction volume, or increased costs could harm to such portfolio
company.
Moreover,
while fiat currencies can be used to facilitate illegal activities, digital assets are relatively new and, in many jurisdictions, may
be lightly regulated or largely unregulated. Many types of digital assets have characteristics, such as the speed with which digital currency
transactions can be conducted, the ability to conduct transactions without the involvement of regulated intermediaries, the ability to
engage in transactions across multiple jurisdictions, the irreversible nature of certain digital asset transactions, and encryption technology
that anonymizes these transactions, that make digital assets susceptible to use in illegal activity. U.S. federal and state and foreign
regulatory authorities and law enforcement agencies, such as the DOJ, SEC, CFTC, FTC, FinCEN, or the Internal Revenue Service (“IRS”),
and various state securities and financial regulators have taken and continue to take legal action against persons and entities alleged
to be engaged in fraudulent schemes or other illicit activity involving digital assets. Some digital assets that incorporate privacy-enhancing
features that obscure the identities of sender and receiver, and may prevent law enforcement officials
from tracing the source of funds on the blockchain. As a result, facilitating transactions in these digital assets may lead to increased
risk of liability arising out of anti-money laundering and economic sanctions laws and regulations.
We
cannot ensure that our portfolio companies will be able to detect all illegal activity using their products or services. If any of our
portfolio companies’ customers use their products or services to further such illegal activities, our portfolio companies’
business could be adversely affected having an adverse impact on their operations and the value of their shares which in turn would have
a corresponding adverse effect on the value of our shares and could cause you to lose all or substantially all of the value of your investment
in us. We
may invest in portfolio companies that hold their investments in DeFi protocols and our portfolio companies may suffer losses if such
protocols do not function as expected.
We
may invest in portfolio companies that hold their investments in various DeFi protocols. These protocols typically achieve their investment
purposes through self-executing smart contracts that allow users to invest digital assets in a pool from which other users can borrow
without requiring an intermediate party to facilitate these transactions. These investments typically earn interest to the investor based
on the rates at which borrowers repay the loan, and can generally be withdrawn with no restrictions. However, these DeFi protocols are
subject to various risks, including uncertain regulatory and compliance conditions in large markets such as the United States, the risk
that the underlying smart contract is insecure, the risk that borrowers may default and the investor will not be able to recover its investment,
the risk that any underlying collateral may experience significant volatility, and the risk of certain core developers with protocol administration
rights can make unauthorized or harmful changes to the underlying smart contract. If any of these risks materialize, our portfolio companies’
investments in these DeFi protocols may be adversely impacted, which may in-turn adversely affect the value of our shares.
Due
to unfamiliarity and some negative publicity associated with digital asset platforms, confidence or interest in digital asset platforms
may decline.
We
may invest in portfolio companies that provide, rely on, or relate to digital asset trading platforms and other digital asset platforms.
Digital asset platforms are relatively new and may be operating out of compliance with regulation, and do not provide the public with
significant information regarding their ownership structure, management team, corporate practices, cybersecurity, and regulatory compliance.
As a result, customers and the general public may lose confidence or interest in digital asset platforms.
Since
the inception of the digital asset economy, numerous digital asset platforms have been sued, investigated, or shut down due to fraud,
manipulative practices, business failure, and security breaches. In many of these instances, customers of these platforms were not compensated
or made whole for their losses. Larger platforms are more appealing targets for hackers and malware, and may also be more likely to be
targets of regulatory enforcement actions.
In
addition, there have been reports that a significant amount of digital asset trading volume on digital asset platforms is fabricated and
false in nature, with a specific focus on unregulated platforms located outside the United States. Such reports may indicate that the
market for digital asset platform activities is significantly smaller than otherwise understood.
Negative
perception, a lack of stability and standardized regulation in the digital asset economy, and the closure or temporary shutdown of digital
asset platforms due to fraud, business failure, hackers or malware, or government mandated regulation, and associated losses suffered
by customers may continue to reduce confidence or interest in the digital asset economy and result in greater volatility of the prices
of assets, including significant depreciation in value. Any of these events could have an adverse impact on the business and perception
of our portfolio companies, which could adversely affect the value of our portfolio companies, which would in-turn adversely affect the
value of our shares. The
digital asset economy is novel. As a result, policymakers are just beginning to consider what a regulatory regime for digital assets would
look like and the elements that would serve as the foundation for such a regime. This less developed consideration of digital assets may
make it difficult to effectively react to proposed legislation and regulation of digital assets or digital asset platforms adverse to
our business.
As
digital assets have grown in both popularity and market size, various U.S. federal, state, and local and foreign governmental organizations,
consumer agencies and public advocacy groups have been examining the operations of digital asset networks, users and platforms, with a
focus on how digital assets can be used to launder the proceeds of illegal activities, fund criminal or terrorist enterprises, and the
safety and soundness of platforms and other service providers that hold digital assets for users. Many of these entities have called for
heightened regulatory oversight, and have issued consumer advisories describing the risks posed by digital assets to users and investors.
For instance, in 2022, the White House published a fact sheet described as the first-ever “Comprehensive Framework for Responsible
Development of Digital Assets,” which encouraged “agencies to issue guidance and rules to address current and emergent risks
in the digital asset ecosystem.”
Competitors,
including traditional financial services, have spent years cultivating professional relationships with relevant policymakers on behalf
of their industry so that those policymakers may understand that industry, the current legal landscape affecting that industry, and the
specific policy proposals that could be implemented in order to responsibly develop that industry. The lobbyists working for these competitors
have similarly spent years developing and working to implement strategies to advance these industries. Members of the digital asset
economy have started to engage policymakers directly and with the help of external advisors and lobbyists. However, this work is in a
relatively nascent stage. As a result, new laws and regulations may be proposed and adopted in the United States and internationally,
or existing laws and regulations may be interpreted in new ways, that harm the digital asset economy or digital asset platforms, which
could adversely impact the business of our portfolio companies, have an adverse impact on their operations and the value of their shares
and in turn have a corresponding adverse effect on the value of our shares and cause you to lose all or substantially all of the value
of your investment in us. General
Market and Regulatory Risks
Political
and economic risks
Downgrades
by rating agencies to the U.S. government’s credit rating or concerns about its credit and deficit levels in general could cause
interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms. In
addition, a decreased U.S. government credit rating could create broader financial turmoil and uncertainty, which may weigh heavily on
our financial performance and the value of our Common Shares.
Deterioration
in the economic conditions in the Eurozone and other regions or countries globally and the resulting instability in global financial markets
may pose a risk to our business. Financial markets have been affected at times by a number of global macroeconomic events, including the
following: large sovereign debts and fiscal deficits of several countries in Europe and in emerging markets jurisdictions, levels of non-performing
loans on the balance sheets of European banks, the effect of the United Kingdom (the “U.K.”) leaving the European Union (the
“EU”), instability in the Chinese capital markets and pandemics such as COVID-19. Global market and economic disruptions have
affected, and may in the future affect, the U.S. capital markets, which could adversely affect our business, financial condition or results
of operations. We cannot assure you that market disruptions in Europe and other regions or countries, including the increased cost of
funding for certain governments and financial institutions, will not impact the global economy, and we cannot assure you that assistance
packages will be available, or if available, be sufficient to stabilize countries and markets in Europe or elsewhere affected by a financial
crisis. To the extent uncertainty regarding any economic recovery in Europe or elsewhere negatively impacts consumer confidence and consumer
credit factors, our and our portfolio companies’ business, financial condition and results of operations could be significantly
and adversely affected. Moreover, there is a risk of both industry-specific and broad-based corrections and/or downturns in the equity
and credit markets. Any of the foregoing could have a significant impact on the markets in which we operate and could have a material
adverse impact on our business prospects and financial condition. Various
social and political circumstances in the United States and around the world (including wars and other forms of conflict, terrorist acts,
security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics), may
also contribute to increased market volatility and economic uncertainties or deterioration in the United States and worldwide. Such events,
including rising trade tensions between the United States and China, other uncertainties regarding actual and potential shifts in U.S.
and foreign, trade, economic and other policies with other countries, the war between Russia and Ukraine and the conflict in Israel, could
adversely affect our business, financial condition or results of operations. These market and economic disruptions could negatively impact
the operating results of our portfolio companies.
Additionally,
the Federal Reserve has raised interest rates multiple times since 2022. These developments, along with the United States government’s
credit and deficit concerns, global economic uncertainties and market volatility, could cause interest rates to be volatile, which may
negatively impact our performance. Inflation
may adversely affect the business, results of operations and financial condition of our portfolio companies.
Certain
of our portfolio companies may be impacted by inflation. If such portfolio companies are unable to pass any increases in their costs along
to their customers, it could adversely affect their results, which could in turn adversely impact our results of operations. In addition,
any projected future decreases in our portfolio companies’ operating results due to inflation could adversely impact the fair value
of our investments. Any decreases in the fair value of our investments could result in future unrealized losses and therefore reduce our
net assets resulting from operations. Additionally, the Federal Reserve has raised, and has indicated its intent to continue raising,
certain benchmark interest rates in an effort to combat inflation. There is no guarantee that the actions taken by the Federal Reserve
will reduce or eliminate inflation. Legal
and regulatory risks
Government
counterparties may have the discretion to change or increase regulation of a portfolio company’s operations, or implement laws or
regulations affecting the portfolio company’s operations, separate from any contractual rights it may have. A portfolio company
also could be materially and adversely affected as a result of statutory or regulatory changes or judicial or administrative interpretations
of existing laws and regulations that impose more comprehensive or stringent requirements on such company. Governments have considerable
discretion in implementing regulations that could impact a portfolio company’s business, and because its business may provide basic,
everyday services, and face limited competition, governments may be influenced by political considerations and may make decisions that
adversely affect a portfolio company’s business. There can be no assurance that the relevant governmental entities will not legislate,
impose regulations or change applicable laws or act contrary to the law in a way that would materially and adversely affect the business
of our investments.
We
may seek to acquire a significant stake in certain securities or instruments and may invest in certain industries that are subject to
special regulatory oversight. In such event, we may be required to file a notification with a governmental agency, seek regulatory approval
or comply with other regulatory requirements. These requirements may result in a delay in, or prohibit, the acquisition of an investment.
Compliance with regulatory requirements may result in additional costs to us. Such restrictions may also restrict or delay our ability
to liquidate an investment. Investment
and trading risks
All
investments risk the loss of capital. No guarantee or representation is made that our investment program will be successful. There is
no assurance that we will be able to generate positive returns for our investors or that the returns will be commensurate with the risks
of investing in companies, securities and instruments and strategies described herein. There can be no assurance that our returns will
not be correlated with a traditional portfolio of stocks or bonds. Our investment program may utilize investment techniques such as investing
in preferred shares and convertible debt, and limited diversification, which practices can, in certain circumstances, magnify the adverse
impact of market moves to which we may be subject or cause our net assets to appreciate or depreciate at a greater rate. We may invest
in highly volatile securities or markets, which could impair our profitability or result in losses. Adverse
developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance
by financial institutions, could adversely affect our portfolio companies’ current and projected business, financial condition and
results of operations and result in a decline in the valuation of our investments.
Actual
events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or other
companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these
kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10,
2023, Silicon Valley Bank (SVB) was closed by the California Department of Financial Protection and Innovation, which appointed the Federal
Deposit Insurance Corporation (FDIC) as receiver. Similarly, on March 12, 2023, Signature Bank and Silvergate Capital Corp. were
each swept into receivership. Although a statement by the Department of the Treasury, the Federal Reserve and the FDIC indicated that
all depositors of SVB would have access to all of their money after only one business day of closure, including funds held in uninsured
deposit accounts, borrowers under credit agreements, letters of credit and certain other financial instruments with SVB, Signature Bank
or any other financial institution that is placed into receivership by the FDIC may be unable to access undrawn amounts thereunder. Although
we are not a borrower or party to any such instruments with SVB, Signature Bank or any other financial institution currently in receivership,
if any of our portfolio companies are parties to such instruments and are unable to access funds pursuant to such instruments or lending
arrangements with such a financial institution, such portfolio companies’ business, financial condition and results of operations
could be adversely affected, which could, in turn, result in a decline in the valuation of our investments.
Organizational
Risks
Indemnification
We
have indemnification obligations. Such liabilities may be material and have an adverse effect on the returns to investors. Our indemnification
obligations would be payable from our assets, and such indemnification obligations will survive the winding-up and dissolution of the
Company. Potential
conflicts of interest
Instances
may arise where the interests of the Adviser and its affiliates may potentially or actually conflict with our interests and the interests
of our stockholders. The following discussion enumerates certain potential conflicts of interest that should be carefully evaluated before
making an investment in our shares. The discussion below does not seek to exhaustively describe all potential conflicts of interest.
The
Adviser’s Investment Committee will have substantial responsibilities in connection with the management of other investment funds,
accounts and investment vehicles. Members of the Investment Committee serve, or may serve, as officers, directors, members, or principals
of entities that operate in the same or a related line of business as we do, or of investment funds, accounts, or investment vehicles
managed by the Adviser. Similarly, the principals of our Sponsor, and their respective affiliates may have other funds with similar, different
or competing investment objectives, and such funds may not all be affiliated. For example, our co-founders Dr. Najamul Hasan Kidwai,
Michael (Xu) Zhao, Michael Lempres and David Hytha have invested in early-stage digital asset services and technology companies and, subject
to the Adviser’s conflicts of interest procedures, we may seek to invest in the same companies. In serving in these multiple capacities,
they may have obligations to other investors in those entities, the fulfillment of which may not be in the best interests of us or our
stockholders. These activities also may distract them from sourcing or servicing new investment opportunities for us or slow our rate
of investment. Any failure to manage our business and our future growth effectively could have a material adverse effect on our business,
financial condition, results of operations and cash flows.
The
Adviser’s Investment Committee members, officers and employees, and the Sponsor’s controlling shareholders, managers, officers
and employees are investors in private companies, BDCs, ETFs and ETPs and in the future may become investors in additional private companies,
BDCs, ETFs and ETPs and may receive investment opportunities, such as opportunities to invest in new private companies, BDCs, ETFs and
ETPs having desirable growth potential, that we may not have access to or which may not be appropriate for us to consider.
In
addition, Dr. Kidwai is a shareholder of Forge Global Holdings, Inc. (“Forge Global”), the parent of Forge Securities
LLC (“Forge Securities”), a registered broker-dealer that operates as an ATS, on which we intend to purchase securities in
private transactions as part of our principal investment strategy. Dr. Kidwai owns less than 1% of Forge Global. He is not employed
by Forge Global or Forge Securities and is not in a control relationship with these entities. Consistent with its duty of best execution,
the Adviser’s decision to select a particular private secondary marketplace, including Forge Securities, to facilitate a purchase
or sale transaction for us will not be affected by any special compensation arrangement. No special compensation relationship exists between
Forge Securities and the Adviser. The Adviser may select Forge Securities to facilitate any such transaction simply because it believes
Forge Securities will provide the best execution for our transaction in the circumstances.
In
connection with our Investment Advisory Agreement, we have agreed to indemnify and hold harmless the Adviser and its and its affiliates’
respective directors, officers, Investment Committee members, employees, members, managers, partners and stockholders (collectively, with
the Adviser, the “Adviser Affiliates”) against all claims or liabilities (including reasonable attorneys’ fees) and
other expenses an Adviser Affiliate reasonably incurs in any actual or threatened legal or other proceeding arising out of or in connection
with providing investment advisory services to us. We will not be obligated to indemnify the Adviser Affiliates if such liability arises
out of willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations under the Investment Advisory Agreement.
Possession
of material non-public information
The
Investment Committee members may have access to material nonpublic information of portfolio companies in which we invest. In the event
that we become subject to trading restrictions under the internal trading policies of those companies or as a result of applicable law
or regulations, we could be prohibited for a period of time from purchasing or selling the securities of such companies, and this prohibition
may have an adverse effect on our ability to achieve our investment objective. Risks
related to co-investments
We
may be prohibited under the Investment Company Act from conducting certain transactions with our affiliates without the prior approval
of our directors who are not interested persons and, in some cases, the prior approval of the SEC. We may co-invest with our Adviser or
our officers and directors in a manner consistent with guidance promulgated under the no-action position of the SEC set forth in Mass
Mutual Life Ins. Co. (SEC No-Action Letter, June 7, 2000), on which similarly situated funds like us rely in order to co-invest in
a single class of privately placed securities so long as certain conditions are met, including that our investment adviser or an affiliate,
acting on our behalf and on behalf of other clients, negotiates no term other than price. We do not have a co-investment arrangement with
our Adviser or our officers and directors and we have no present intention to co-invest with our Adviser or our officers and directors.
In the event that we seek to make such co-investments, we would only do so in reliance of the Mass Mutual no-action letter or file an
application with the SEC seeking an order granting us relief to do so. Further, in the event that we seek to make such co-investments,
our Board including a majority of our independent directors would approve an allocation policy to ensure equitable treatment among the
co-investment participants. Provisions
of the Maryland General Corporation Law and our organizational documents could deter takeover attempts and have an adverse impact on the
prices of our Common Shares.
The
Maryland General Corporation Law and our organizational documents contain provisions that may discourage, delay or make more difficult
a change in control or the removal of our directors. Our Board has adopted a resolution that any business combination between us and any
other person is exempted from the provisions of the Business Combination Act, provided that the business combination is first approved
by the Board, including a majority of the directors who are not interested persons as defined in the Investment Company Act. This resolution
may be altered or repealed in whole or in part at any time; however, our Board will adopt resolutions so as to make us subject to the
provisions of the Maryland Business Combination Act only if our Board determines that it would be in our best interests and if the SEC
staff does not object to our determination that being subject to the Business Combination Act does not conflict
with
the Investment Company Act. If this resolution is repealed, or the Board does not otherwise approve a business combination, the statute
may discourage others from trying to acquire control and increase the difficulty of consummating any offer.
Our
Board could also amend our bylaws to opt into the Maryland Control Share Acquisition Act; provided, however we would only do so if our
Board determines that it would be in our best interests and if it is determined that opting into the Maryland Control Share Acquisition
Act does not conflict with the Investment Company Act. The Maryland Control Share Acquisition Act also may make it more difficult for
a third party to obtain control and increase the difficulty of consummating such a transaction. Recent federal court decisions, however,
have decided that an opt into the Maryland Control Share Acquisition Act violates certain requirements of the Investment Company Act.
Risks
Related to the Listing of Our Shares
Our
stock price may be volatile, and could decline significantly and rapidly.
If
the trading price of our Common Shares is above the level that investors determine is reasonable for our Common Shares, some investors
may attempt to short our Common Shares after trading begins, which would create additional downward pressure on the trading price of our
Common Shares, and there will be more ability for such investors to short our Common Shares in early trading than is typical for an underwritten
public offering given the limited amount of contractual lock-up agreements or other restrictions on transfer.
•
The
trading price of our Common Shares following the listing also could be subject to wide fluctuations in response to numerous factors in
addition to the ones described in the preceding risk factors, many of which are beyond our control, including:
•
actual
or anticipated fluctuations in our financial condition, results of operations, or operating metrics and those of our competitors; the
number of shares of our Common Shares made available for trading;
•
failure
of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our
company, or variance in our financial performance from expectations of securities analysts;
•
changes
in our projected operating and financial results;
•
future
sales of our Common Shares by us or our stockholders;
•
changes
in our board of directors, senior management, or key personnel;
•
the
trading volume of our Common Shares;
•
general
economic and market conditions; and
•
other
events or factors, including those resulting from war, incidents of terrorism, pandemics, elections, or responses to these events.
An
active, liquid, and orderly market for our Common Shares may not develop or be sustained. You may be unable to sell your Common Shares
at or above the price at which you purchased them.
We
currently expect our Common Shares to be listed and traded on NYSE within 60 days following the effectiveness of this Registration
Statement on Form N-2. We will obtain approval from the NYSE to list the Common Shares prior to seeking effectiveness of this Registration
Statement. Prior to listing on NYSE, there has been no public market for our Common Shares. Moreover, consistent with Regulation M
and other federal securities laws applicable to our listing, the Company has no specific plans to sell shares in the public market following
the listing. It is possible that the underwriters sale of our common stock will result in an oversupply of our common stock on NYSE, which
may cause the price of our Common Shares to decrease. In the case of a lack of demand for our common stock, the trading price of our Common
Shares could decline significantly and rapidly after our listing. In the case of a lack of supply of our Common Shares, the trading price
of our Common Shares may rise to an unsustainable level. Further, institutional investors
may be discouraged from purchasing our Common Shares if they are unable to purchase a block of our Common Shares in the open market in
a sufficient size for their investment objectives. If institutional investors are unable to purchase our Common Shares in a sufficient
amount for their investment objectives, the market for our Common Shares may be more volatile without the influence of long-term institutional
investors holding significant amounts of our Common Shares. Therefore, an active, liquid, and orderly trading market for our Common Shares
may not initially develop or be sustained, which could significantly depress the trading price of our Common Shares and/or result in significant
volatility, which could affect your ability to sell your Common Shares. Risks
Related to Our Securities and This Offering
Common
stock of closed-end management investment companies has in the past frequently traded at discounts to their NAVs, and we cannot assure
you that the market price of our shares will not decline below our NAV per share.
Common
stock of closed-end management investment companies has in the past frequently traded at discounts to their respective NAVs and our Common
Shares may also be discounted in the market. This characteristic of closed-end management investment companies is separate and distinct
from the risk that our NAV per share may decline. We cannot predict whether shares of our Common Shares will trade above, at or below
our NAV per share. In addition, if our Common Shares trade below our NAV per share, we will generally not be able to sell additional Common
Shares to the public at market price except (1) in connection with a rights offering to our existing stockholders, (2) with
the consent of the majority of our common stockholders, (3) upon the conversion of a convertible security in accordance with its
terms or (4) under such circumstances as the SEC may permit. If
we issue preferred stock, the NAV and market value of our Common Shares will likely become more volatile.
We
cannot assure you that the issuance of preferred stock would result in a higher yield or return to our stockholders. The issuance of preferred
stock would likely cause the NAV and market value of our Common Shares to become more volatile. If the dividend rate on the preferred
stock were to approach the net rate of return on our investment portfolio, the benefit of leverage to the holders of our Common Shares
would be reduced. If the dividend rate on the preferred stock were to exceed the net rate of return on our portfolio, the leverage would
result in a lower rate of return to the holders of our Common Shares than if we had not issued preferred stock. Any decline in the NAV
of our investments would be borne entirely by the holders of our Common Shares. Therefore, if the market value of our portfolio were to
decline, the leverage would result in a greater decrease in NAV to the holders of our Common Shares than if we were not leveraged through
the issuance of preferred stock. This greater NAV decrease would also tend to cause a greater decline in the market price for our Common
Shares. We might be in danger of failing to maintain the required asset coverage of the preferred stock or of losing our ratings, if any,
on the preferred stock or, in an extreme case, our current investment income might not be sufficient to meet the dividend requirements
on the preferred stock. In order to counteract such an event, we might need to liquidate investments in order to fund a redemption of
some or all of the preferred stock. In addition, we would pay (and the holders of our Common Shares would ultimately bear) all costs and
expenses relating to the issuance and ongoing maintenance of the preferred stock, including higher advisory fees if our total return exceeds
the dividend rate on the preferred stock. Risks
Related to U.S. Federal Income Tax
We
will be subject to U.S. federal income tax at corporate rates if we are unable to qualify and maintain our tax treatment as a RIC under
Subchapter M of the Code.
To
maintain RIC tax treatment under the Code, we must meet the following minimum annual distribution, income source and asset diversification
requirements. See “Certain U.S. Federal Income Tax Considerations.”
The
Annual Distribution Requirement for a RIC will be satisfied if we timely distribute to our stockholders on an annual basis at least the
sum of (i) 90% of our “investment company taxable income,” which
is generally our net ordinary income (but without regard to the deduction for dividends paid) plus the excess, if any, of realized net
short term capital gains over realized net long term capital losses, and (ii) 90% of our net tax-exempt income for that taxable year.
In addition, a RIC may, in certain cases, satisfy the 90% distribution requirement by distributing dividends relating to a taxable year
after the close of such taxable year under the “spillback dividend” provisions of Subchapter M. We would be taxed, at U.S.
federal corporate rates, on retained income and/or gains, including any short term capital gains or long term capital gains. Because we
may use debt financing, we may be subject to (i) an asset coverage ratio requirement under the Investment Company Act and may, in
the future, be subject to (ii) certain financial covenants under loan and credit agreements that could, under certain circumstances,
restrict us from making distributions necessary to satisfy the distribution requirements. If we are unable to obtain cash from other sources,
or choose or are required to retain a portion of our taxable income or gains, we could (1) be required to pay excise taxes or (2) fail
to qualify for RIC tax treatment, and thus become subject to U.S. federal income tax at corporate rates on our taxable income.
The
income source requirement will be satisfied if we obtain at least 90% of our annual gross income from dividends, interest, payments with
respect to securities loans, gains from the sale of stock or securities or foreign currencies, net income from an interest in a qualified
publicly traded partnership, or other income derived from the business of investing in stock or securities or currencies.
The
asset diversification requirement will be satisfied if we meet certain asset diversification requirements at the end of each quarter of
our taxable year. Specifically, at least 50% of the value of our assets must consist of cash, cash equivalents (including receivables),
U.S. government securities, securities of other RICs, and other acceptable securities if such securities of any one issuer do not represent
more than 5% of the value of our assets or more than 10% of the outstanding voting securities of the issuer; and no more than 25% of the
value of our assets can be invested in (i) the securities, other than U.S. government securities or securities of other RICs, of
any one issuer, (ii) the securities, other than securities of other RICs, of two or more issuers that are controlled, as determined
under applicable Code rules, by us and that are engaged in the same or similar or related trades or businesses, or (iii) the securities
of certain “qualified publicly traded partnerships.” Failure to meet these requirements may result in our having to dispose
of certain investments quickly in order to prevent the loss of RIC status. Because we intend to invest in a small number of issuers and
the investments may be relatively illiquid, we may be unable to dispose of investments quickly enough to meet the asset diversification
requirement at the end of a quarter or obtain cash from other sources in order to meet the annual distribution requirement. In that case,
we may fail to qualify for special tax treatment accorded to RICs and, thus, be subject to U.S. federal income tax at corporate rates.
If
we fail to qualify for or maintain RIC tax treatment for any reason and are subject to U.S. federal income tax at corporate rates, the
resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution, and the amount of
our distributions.
We
may invest in certain foreign debt and equity investments that could be subject to foreign taxes (such as income tax, withholding, and
value added taxes) for which a foreign tax credit is not available. Future
tax changes may affect us or our stockholders.
Legislative
or other actions relating to taxes could have a negative effect on us. The rules dealing with U.S. federal income taxation are constantly
under review by persons involved in the legislative process, by the courts, and by the IRS and the U.S. Treasury Department. We cannot
predict with certainty how any changes in the tax laws might affect us or our stockholders. New legislation and any U.S. Treasury regulations,
administrative interpretations or court decisions interpreting such legislation could significantly and negatively affect us and our stockholders.
Stockholders are urged to consult with their tax adviser regarding tax legislative, regulatory, or administrative developments and proposals.
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| No Public Trading [Text Block] | No established public trading market for our Common Shares currently exists | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| No Trading History [Text Block] | Common Shares have no history of trading in private transactions. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Capital Stock, Long-Term Debt, and Other Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Capital Stock [Table Text Block] |
DESCRIPTION
OF OUR CAPITAL STOCK
The
following description is based on relevant portions of the Maryland General Corporation Law (the “MGCL”) and on our Articles
of Amendment and Restatement (the “Charter”) and our Bylaws (“Bylaws”). This summary may not contain all of the
information that is important to you, and we refer you to our Charter and Bylaws for a more detailed description of the provisions summarized
below.
General
Under
the terms of our Charter, our authorized capital stock consists of 500,000,000 shares of common stock, par value $0.00001 per share.
There
are no outstanding options or warrants to purchase our stock.
Under
Maryland law, our stockholders generally are not personally liable for our debts or obligations.
Under our Charter, the Board is authorized to classify and reclassify any authorized but unissued shares of stock into other classes or
series of stock and authorize the issuance of the shares of stock without obtaining stockholder approval. As permitted by the MGCL, our
Charter provides that the Board, without any action by our stockholders, may amend the Charter from time to time to increase or decrease
the aggregate number of shares of stock or the number of shares of stock of any class or series that we have authority to issue.
The
following presents our outstanding classes of securities as of June 30, 2025:
(1)
Upon
the issuance of 6,000,000 Common Shares at the closing of this offering, the Sponsor shall forfeit 1,788,899 Common Shares. If the over-allotment
option expires without exercise, the Sponsor shall forfeit an additional 100,000 Common Shares, such that the Sponsor will own 10% of
the outstanding Common Shares of the Company, whether the over-allotment option is exercised or expires unexercised.
Common
Stock
All
Common Shares will have equal rights as to earnings, assets, voting, and distributions and other distributions and, when they are issued,
will be duly authorized, validly issued, fully paid and nonassessable. Distributions
may be paid to the holders of our Common Shares if, as and when authorized by the Board and declared by us out of funds legally available
therefor.
The
shares of our Common Shares have no preemptive, exchange, conversion or redemption rights and are freely transferable, except where their
transfer is restricted by federal and state securities laws or by contract.
In
the event of our liquidation, dissolution or winding up, each Common Shares would be entitled to share ratably in all of our assets that
are legally available for distribution after we pay all debts and other liabilities and subject to any preferential rights of holders
of our preferred stock, if any preferred stock is outstanding at such time.
Each
Common Shares is entitled to one vote on all matters submitted to a vote of stockholders, including the election of directors. Except
as provided with respect to any other class or series of stock, the holders of our common stock possess exclusive voting power.
Preferred
Stock
Our
Charter authorizes our Board to classify and reclassify any unissued shares of stock into other classes or series of stock, including
preferred stock. The cost of any such reclassification would be borne by our existing common stockholders. Prior to issuance of shares
of each class or series, our Board is required by Maryland law and by our Charter to set the terms, preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of
redemption
for each class or series. Thus, our Board could authorize the issuance of shares of preferred stock with terms and conditions which could
have the effect of delaying, deferring or preventing a transaction or a change in control that might involve a premium price for holders
of our Common Shares or otherwise be in their best interest. You should note, however, that any issuance of preferred stock must comply
with the requirements of the Investment Company Act. The Investment Company Act requires, among other things, that (1) immediately
after issuance and before any dividend or other distribution is made with respect to our Common Shares and before any purchase of Common
Shares is made, such preferred stock together with all other senior securities must not exceed an amount equal to 50% of our gross assets
after deducting the amount of such dividend, distribution or purchase price, as the case may be, and (2) the holders of shares of
preferred stock, if any are issued, must be entitled as a class to elect two directors at all times and to elect a majority of the directors
if dividends on such preferred stock are in arrears by two full years or more. Certain matters under the Investment Company Act require
the separate vote of the holders of any issued and outstanding preferred stock. We believe that the availability for issuance of preferred
stock will provide us with increased flexibility in structuring future financings and acquisitions. However, we do not currently have
any plans to issue preferred stock. Limitation
on Liability of Directors and Officers; Indemnification and Advance of Expenses
Maryland
law permits a Maryland corporation to include in its charter a provision limiting the liability of its present and former directors and
officers of the corporation and its stockholders for money damages except for liability resulting from (a) actual receipt of an improper
benefit or profit in money, property or services or (b) active and deliberate dishonesty established by a final judgment as being
material to the cause of action. Our Charter contains such a provision which eliminates directors’ and officers’ liability
for money damages to the maximum extent permitted by Maryland law, provided that such limitation of liability shall not apply to with
respect to liability arising under federal securities law, including the Securities Act, the Securities Exchange Act, and the Investment
Company Act, to the extent such limitation of liability is not permitted thereunder.
Maryland
law requires a corporation (unless its charter provides otherwise, which our Charter does not) to indemnify a director or officer who
has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she is made, or threatened to be made,
a party by reason of his or her service in that capacity. Maryland law permits a corporation to indemnify its present and former directors
and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection
with any proceeding to which they may be made, or threatened to be made, a party by reason of their service in those or other capacities
unless it is established that (a) the act or omission of the director or officer was material to the matter giving rise to the proceeding
and (1) was committed in bad faith or (2) was the result of active and deliberate dishonesty, (b) the director or officer
actually received an improper personal benefit in money, property or services or (c) in the case of any criminal proceeding, the
director or officer had reasonable cause to believe that the act or omission was unlawful. However, under Maryland law, a Maryland corporation
may not indemnify for an adverse judgment in a suit by or in the right of the corporation or for a judgment of liability on the basis
that a personal benefit was improperly received unless, in either, case a court orders indemnification, and then only for expenses. In
addition, Maryland law permits a corporation to advance reasonable expenses to a director or officer in advance of final disposition of
a proceeding upon the corporation’s receipt of (a) a written affirmation by the director or officer of his or her good faith
belief that he or she has met the standard of conduct necessary for indemnification by the corporation and (b) a written undertaking
by him or her or on his or her behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the
standard of conduct was not met.
Our
Charter obligates us, to the maximum extent permitted by Maryland law and subject to the requirements of the Investment Company Act, to
indemnify any present or former director or officer or any individual who, while serving as our director or officer and at our request,
serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other
enterprise as a director, officer, partner or trustee, from and against any claim or liability to which that person may become subject
or which that person may incur by reason of his or her service in any such capacity and to pay or reimburse their reasonable expenses
in advance of final disposition of a proceeding. Our Charter also provides that, to the maximum extent permitted by Maryland law, we may
pay certain expenses incurred
by any such indemnified person in advance of the final disposition of a proceeding upon receipt of (i) a written affirmation by such
person of his or her good faith belief the standard of conduct necessary for indemnification of such person by the Company has been met,
and (i) an undertaking by or on behalf of such indemnified person to repay amounts we have so paid if it is ultimately determined
that indemnification of such expenses is not authorized under the MGCL. In accordance with the Investment Company Act, we will not indemnify
any person for any liability to which such person would be subject by reason of such person’s willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or her office.
Our
insurance policy does not currently provide coverage for claims, liabilities and expenses that may arise out of activities that our present
or former directors or officers have performed for another entity at our request. There is no assurance that such entities will in fact
carry such insurance. However, we note that we do not expect to request our present or former directors or officers to serve another entity
as a director, officer, partner or trustee unless we can obtain insurance providing coverage for such persons for any claims, liabilities
or expenses that may arise out of their activities while serving in such capacities.
Nothing
in the Articles of Incorporation modifying, restricting, or eliminating the duties or liabilities of directors or officers in the Articles
of Incorporation shall apply to, or in any way limit, the duties (including state law fiduciary duties of loyalty and care) or liabilities
of such persons with respect to matters arising under the federal securities laws. Certain
Provisions of the MGCL and Our Charter and Bylaws; Anti-Takeover Measures
The
MGCL, including Subtitle 8 of Title 3, contains provisions that could make it more difficult for a potential acquirer to acquire us by
means of a tender offer, proxy contest or otherwise. Our Charter and Bylaws also contain provisions that could make it more difficult
for a potential acquirer to acquire us by means of a tender offer, proxy contest or otherwise. These provisions of the MGCL and our Charter
and Bylaws are expected to discourage certain coercive takeover practices and inadequate takeover bids and to encourage persons seeking
to acquire control of us to negotiate first with the Board. These measures may delay, defer or prevent a transaction or a change in control
that might otherwise be in the best interests of our stockholders. These provisions could have the effect of depriving stockholders of
an opportunity to sell their shares at a premium over prevailing market prices by discouraging a third party from seeking to obtain control
over us. Such attempts could have the effect of increasing our expenses and disrupting our normal operations. We believe that the benefits
of these provisions outweigh the potential disadvantages of discouraging any such acquisition proposals because, among other things, the
negotiation of such proposals may improve their terms. Our Board has considered these provisions and has determined that the provisions
are in the best interests of us and our stockholders generally.
Classified
Board of Directors
The
Board is divided into three classes of directors serving staggered three-year terms. Directors of each class are elected to serve for
three-year terms and until their successors are duly elected and qualify and each year one class of directors is elected by the stockholders.
Additionally, under the MGCL, a director serving on a classified board may only be removed for cause. A classified board may render a
change in control of us or removal of our incumbent management more difficult. We believe, however, that the longer time required to elect
a majority of a classified Board will help to ensure the continuity and stability of our management and policies.
Election
of Directors
Our
Bylaws provide that, subject to the special rights of the holders of any class or series of preferred stock to elect directors, each director
is elected by a plurality of all the votes cast at a meeting of stockholders duly called and at which a quorum is present. There is no
cumulative voting in the election of directors. Pursuant to our Charter, the Board may amend the Bylaws to alter the vote required to
elect directors.
Number
of Directors; Vacancies; Removal
Our
Charter provides that the number of directors will be set by the Board in accordance with our Bylaws. Our Bylaws provide that a majority
of our entire Board may at any time increase or decrease the number
of directors, provided however, that the number of directors may never be less than the minimum number required by the MGCL or the Investment
Company Act. Our Bylaws provide that, except as may be provided by the Board in setting the terms of any class or series of preferred
stock, any and all vacancies on the Board may be filled only by the affirmative vote of a majority of the remaining directors in office,
even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy will serve for the remainder of
the full term of the class in which the vacancy occurred and until a successor is elected and qualifies, subject to any applicable requirements
of the Investment Company Act.
Our
Charter provides that a director may be removed only for cause, as defined in our Charter, and then only by the affirmative vote of at
least two-thirds of the votes entitled to be cast in the election of directors.
Action
by Stockholders
Under
the MGCL, stockholder action can be taken only at an annual or special meeting of stockholders or by unanimous written consent in lieu
of a meeting (unless the charter provides for stockholder action by less than unanimous written consent, which our Charter does not).
These provisions, combined with the requirements of our Bylaws regarding the calling of a stockholder-requested special meeting of stockholders
discussed below, may have the effect of delaying consideration of a stockholder proposal indefinitely. Advance
Notice Provisions for Stockholder Nominations and Stockholder Proposals
Our
Bylaws provide that with respect to an annual meeting of stockholders, nominations of persons for election to the Board and the proposal
of business to be considered by stockholders at an annual meeting, may be made (1) pursuant to our notice of the meeting, (2) by
the Board or (3) by a stockholder who is entitled to vote at the meeting, who has complied with the advance notice procedures of
our Bylaws and who is a stockholder of record at the time of the annual meeting and at the time of giving notice pursuant to the advance
notice procedures of our Bylaws. With respect to special meetings of stockholders, only the business specified in our notice of the meeting
may be brought before the meeting. Nominations of persons for election to the Board at a special meeting may be made only (1) pursuant
to our notice of the meeting, (2) by the Board or (3) provided that the Board has determined that directors will be elected
at the meeting, by a stockholder who is entitled to vote at the meeting, who has complied with the advance notice provisions of the Bylaws
and who is a stockholder of record at the time of the special meeting and at the time of giving notice pursuant to the advance notice
procedures of our Bylaws.
The
purpose of requiring stockholders to give us advance notice of nominations and other business is to afford the Board a meaningful opportunity
to consider the qualifications of the proposed nominees and the advisability of any other proposed business and, to the extent deemed
necessary or desirable by the Board, to inform stockholders and make recommendations about such qualifications or business, as well as
to provide a more orderly procedure for conducting meetings of stockholders. Although our Bylaws do not give the Board any power to disapprove
stockholder nominations for the election of directors or proposals recommending certain action, they may have the effect of precluding
a contest for the election of directors or the consideration of stockholder proposals if proper procedures are not followed and of discouraging
or deterring a third-party from conducting a solicitation of proxies to elect its own slate of directors or to approve its own proposal
without regard to whether consideration of such nominees or proposals might be harmful or beneficial to us and our stockholders.
Calling
of Special Meetings of Stockholders
Our
Bylaws provide that special meetings of stockholders may be called by the Board and certain of our officers. Additionally, our Bylaws
provide that, subject to the satisfaction of certain procedural and informational requirements by the stockholders requesting the meeting,
a special meeting of stockholders will be called by the secretary of the Company upon the written request of stockholders entitled to
cast not less than a majority of all the votes entitled to be cast at such meeting.
Approval
of Extraordinary Corporate Action; Amendment of Charter and Bylaws
Under
Maryland law, a Maryland corporation generally cannot dissolve, amend its charter, merge, sell all or substantially all of its assets,
engage in a share exchange or engage in similar transactions outside the ordinary
course of business, unless approved by the affirmative vote of stockholders entitled to cast at least two-thirds of the votes entitled
to be cast on the matter. However, a Maryland corporation may provide in its charter for approval of these matters by a greater or lesser percentage,
but not less than a majority of all of the votes entitled to be cast on the matter. Our Charter provides that, except as specifically
provided elsewhere in the Charter, any action to be taken or approved by the affirmative vote of stockholders entitled to cast a greater
number of votes, under the MGCL, will be effective and valid if declared advisable by the Board of Directors and taken or approved by
the affirmative vote of stockholders entitled to caste a majority of all the votes entitled to be cast. Our Charter also provides that
certain charter amendments, any proposal for our conversion, whether by charter amendment, merger or otherwise, from a closed-end company
to an open-end company and any proposal for our liquidation or dissolution requires the approval of the stockholders entitled to cast
at least 80% of the votes entitled to be cast on such matter. However, if such amendment or proposal is approved by a majority or more
of our continuing directors (in addition to approval by the Board), such amendment or proposal may be approved by a majority of the votes
entitled to be cast on such a matter. The “continuing directors” are defined in our Charter as (1) our current directors,
(2) those directors whose nomination for election by the stockholders or whose election by the directors to fill vacancies is approved
by a majority of our current directors then on the Board or (3) any successor directors whose nomination for election by the stockholders
or whose election by the directors to fill vacancies is approved by a majority of continuing directors or the successor continuing directors
then in office.
Our
Charter and Bylaws provide that the Board will have the exclusive power to adopt, alter, amend or repeal any provision of our Bylaws and
to make new Bylaws.
No
Appraisal Rights or Preemptive Rights
Our
Charter provides that, except as may be provided by the Board in setting the terms of shares of preferred stock, stockholders will not
be entitled to any preemptive rights or to exercise appraisal rights. Control
Share Acquisitions
The
MGCL allows closed-end funds to opt into the Maryland’s control share statute (the “Control Share Acquisition Act”),
which allows a corporation to limit the voting rights of shares acquired by certain large stockholders. We have not opted into, and do
not expect to opt into, the Control Share Acquisition Act unless the Board determines (which it presently has not) that doing so is not
inconsistent with the Investment Company Act. However, the Board may adopt a resolution at any time choosing to opt into and make us subject
to, the Control Share Acquisition Act. Important provisions of the Control Share Acquisition Act, which would apply if the Company opted
to be subject to the act, are described below.
The
Control Share Acquisition Act provides that control shares of a Maryland corporation acquired in a control share acquisition have no voting
rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquiror,
by officers or by directors who are employees of the corporation are excluded from shares entitled to vote on the matter. Control shares
are voting shares of stock which, if aggregated with all other shares of stock owned by the acquiror or in respect of which the acquiror
is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquiror
to exercise voting power in electing directors within one of the following ranges of voting power:
•
one-tenth
or more but less than one-third;
•
one-third
or more but less than a majority; or
•
a
majority or more of all voting power.
The
requisite stockholder approval must be obtained each time an acquiror crosses one of the thresholds of voting power set forth above. Control
shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval.
A control share acquisition means the acquisition of control shares, subject to certain exceptions.
A
person who has made or proposes to make a control share acquisition may compel the board of directors of the corporation to call a special
meeting of stockholders to be held within 50 days of demand to
consider the voting rights of the shares. The right to compel the calling of a special meeting is subject to the satisfaction of certain
conditions, including an undertaking to pay the expenses of the meeting. If no request for a meeting is made, the corporation may itself
present the question at any stockholders meeting.
If
voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required by
the statute, then the corporation may redeem for fair value any or all of the control shares, except those for which voting rights have
previously been approved. The right of the corporation to redeem control shares is subject to certain conditions and limitations. Fair
value is determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition
by the acquirer or of any meeting of stockholders at which the voting rights of the shares are considered and not approved. If voting
rights for control shares are approved at a stockholders meeting and the acquirer becomes entitled to vote a majority of the shares entitled
to vote, all other stockholders may exercise appraisal rights. The fair value of the shares as determined for purposes of appraisal rights
may not be less than the highest price per share paid by the acquirer in the control share acquisition.
Potentially
inhibiting a closed-end investment company’s ability to utilize the Control Share Acquisition Act is Section 18(i) of the Investment
Company Act which provides that “every share of stock . . . issued by a registered management company . . . shall be a voting stock
and have equal voting rights with every other outstanding voting stock,” thereby preventing the Company from issuing a class of
shares with voting rights that vary within that class. There are currently different views, however, on whether or not the Control Share
Acquisition Act conflicts with Section 18(i) of the Investment Company Act. One view is that implementation of the Control Share
Acquisition Act would conflict with the Investment Company Act because it would deprive certain shares of their voting rights. Another
view is that implementation of the Control Share Acquisition Act would not conflict with the Investment Company Act because it would limit
the voting rights of shareholders who choose to acquire shares of stock that put them within the specified percentages of ownership
rather than limiting the voting rights of the shares themselves. The Control Share Acquisition Act does not apply (a) to shares acquired
in a merger, consolidation or share exchange if the corporation is a party to the transaction or (b) to acquisitions approved or
exempted by the charter or bylaws of the corporation.
A
November 15, 2010 letter from the staff of the SEC’s Division of Investment Management took the position that a closed-end
fund, by opting in to the Control Share Acquisition Act, would be acting in a manner inconsistent with Section 18(i) of the Investment
Company Act. However, on May 27, 2020, the staff of the SEC’s Division of Investment Management published an updated statement
(the “2020 Control Share Statute Relief”) withdrawing the November 15, 2010 letter and replacing it with a new no-action
position allowing a closed-end fund under Section 18(i) to opt-in to the Control Share Acquisition Act, provided that the decision
to do so was taken with reasonable care in light of (1) the board’s fiduciary duties, (2) applicable federal and state
law, and (3) the particular facts and circumstances surrounding the action. The 2020 Control Share Statute Relief reflects only the
enforcement position of the Staff and is not binding on the SEC or any court. Recent federal court decisions, however, have found that
an opt into the Maryland Control Share Acquisition Act violates the Investment Company Act.
Business
Combinations
Under
Maryland law, “business combinations” between a corporation and an interested stockholder or an affiliate of an interested
stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder
(the “Business Combination Act”). These business combinations include a merger, consolidation, share exchange or, in circumstances
specified in the statute, an asset transfer or issuance or reclassification of equity securities. An interested stockholder is defined
as:
•
any
person who beneficially owns 10% or more of the voting power of the corporation’s outstanding voting stock; or
•
an
affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial
owner of 10% or more of the voting power of the then outstanding voting stock of the corporation. A
person is not an interested stockholder under this statute if the board of directors approved in advance the transaction by which the
stockholder otherwise would have become an interested stockholder. However, in approving a transaction, the board of directors may provide
that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board.
After
the five-year prohibition, any business combination between the corporation and an interested stockholder generally must be recommended
by the board of directors of the corporation and approved by the affirmative vote of at least:
•
80%
of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and
•
two-thirds
of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with
whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder.
These
super-majority vote requirements do not apply if the corporation’s common stockholders receive a minimum price, as defined under
Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder
for its shares.
The
statute permits various exemptions from its provisions, including business combinations that are exempted by the board of directors before
the time that the interested stockholder becomes an interested stockholder. The Board has adopted a resolution that the Business Combination
Act shall not apply to the Company, any stockholder of the Company, nor any business combination with the Company, to the fullest extent
permitted by Maryland law; provided, however, that the Board may revoke this resolution, thereby, subjecting the Company and its stockholders
to the Maryland Business Combination Act at any time with or without notice. If this resolution is revoked or the Board does not otherwise
approve a business combination, the statute may discourage others from trying to acquire control of us and increase the difficulty of
consummating any offer.
Conflict
with the Investment Company Act
If
and to the extent that any provision of the MGCL, including the Control Share Acquisition Act (if we adopt a resolution to be subject
thereto) and the Business Combination Act, or any provision of our Charter or Bylaws conflicts with any provision of the Investment Company
Act, the applicable provision of the Investment Company Act will control.
Exclusive
Forum
Our
Charter requires that, unless we consent in writing to the selection of an alternative forum, and except for any claims or actions made
under the federal securities laws, the Circuit Court for Baltimore City (or, if that Court does not have jurisdiction, the United States
District Court for the District of Maryland, Northern Division) shall be the sole and exclusive forum for (i) any Internal Corporate
Claim (as such term is defined in the MGCL), (ii) any derivative action or proceeding brought on behalf of the Company, (iii) any
action asserting a breach of the standard of conduct by a director or a claim of breach of any duty owed by a director or officer of the
Company to the Company or to the directors or stockholders of the Company, or (iv) any action asserting a claim against the Company
or any director or officer or other employee of the Company arising pursuant to any provision of the MGCL, the bylaws, or this charter,
or (v) any other action asserting a claim against the Company or any director or officer or other employee of the Company that is
governed by the internal affairs doctrine under Maryland law. This exclusive forum provision does not apply to claims arising under the
federal securities law. This provision may increase costs for stockholders in bringing a claim against us or our directors, officers or
other agents. Any investor purchasing or otherwise acquiring our shares is deemed to have notice of and consented to the foregoing provision.
The
exclusive forum selection provision in our Charter may limit our stockholders’ ability to obtain a favorable judicial forum for
disputes with us or our directors, officers or other agents, which may discourage lawsuits against us and such persons. It is also possible
that, notwithstanding such exclusive forum selection provision, a court could rule that such provision is inapplicable or unenforceable.
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| Security Liabilities [Text Block] |
Limitation
on Liability of Directors and Officers; Indemnification and Advance of Expenses
Maryland
law permits a Maryland corporation to include in its charter a provision limiting the liability of its present and former directors and
officers of the corporation and its stockholders for money damages except for liability resulting from (a) actual receipt of an improper
benefit or profit in money, property or services or (b) active and deliberate dishonesty established by a final judgment as being
material to the cause of action. Our Charter contains such a provision which eliminates directors’ and officers’ liability
for money damages to the maximum extent permitted by Maryland law, provided that such limitation of liability shall not apply to with
respect to liability arising under federal securities law, including the Securities Act, the Securities Exchange Act, and the Investment
Company Act, to the extent such limitation of liability is not permitted thereunder.
Maryland
law requires a corporation (unless its charter provides otherwise, which our Charter does not) to indemnify a director or officer who
has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she is made, or threatened to be made,
a party by reason of his or her service in that capacity. Maryland law permits a corporation to indemnify its present and former directors
and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection
with any proceeding to which they may be made, or threatened to be made, a party by reason of their service in those or other capacities
unless it is established that (a) the act or omission of the director or officer was material to the matter giving rise to the proceeding
and (1) was committed in bad faith or (2) was the result of active and deliberate dishonesty, (b) the director or officer
actually received an improper personal benefit in money, property or services or (c) in the case of any criminal proceeding, the
director or officer had reasonable cause to believe that the act or omission was unlawful. However, under Maryland law, a Maryland corporation
may not indemnify for an adverse judgment in a suit by or in the right of the corporation or for a judgment of liability on the basis
that a personal benefit was improperly received unless, in either, case a court orders indemnification, and then only for expenses. In
addition, Maryland law permits a corporation to advance reasonable expenses to a director or officer in advance of final disposition of
a proceeding upon the corporation’s receipt of (a) a written affirmation by the director or officer of his or her good faith
belief that he or she has met the standard of conduct necessary for indemnification by the corporation and (b) a written undertaking
by him or her or on his or her behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the
standard of conduct was not met.
Our
Charter obligates us, to the maximum extent permitted by Maryland law and subject to the requirements of the Investment Company Act, to
indemnify any present or former director or officer or any individual who, while serving as our director or officer and at our request,
serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other
enterprise as a director, officer, partner or trustee, from and against any claim or liability to which that person may become subject
or which that person may incur by reason of his or her service in any such capacity and to pay or reimburse their reasonable expenses
in advance of final disposition of a proceeding. Our Charter also provides that, to the maximum extent permitted by Maryland law, we may
pay certain expenses incurred
by any such indemnified person in advance of the final disposition of a proceeding upon receipt of (i) a written affirmation by such
person of his or her good faith belief the standard of conduct necessary for indemnification of such person by the Company has been met,
and (i) an undertaking by or on behalf of such indemnified person to repay amounts we have so paid if it is ultimately determined
that indemnification of such expenses is not authorized under the MGCL. In accordance with the Investment Company Act, we will not indemnify
any person for any liability to which such person would be subject by reason of such person’s willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or her office.
Our
insurance policy does not currently provide coverage for claims, liabilities and expenses that may arise out of activities that our present
or former directors or officers have performed for another entity at our request. There is no assurance that such entities will in fact
carry such insurance. However, we note that we do not expect to request our present or former directors or officers to serve another entity
as a director, officer, partner or trustee unless we can obtain insurance providing coverage for such persons for any claims, liabilities
or expenses that may arise out of their activities while serving in such capacities.
Nothing
in the Articles of Incorporation modifying, restricting, or eliminating the duties or liabilities of directors or officers in the Articles
of Incorporation shall apply to, or in any way limit, the duties (including state law fiduciary duties of loyalty and care) or liabilities
of such persons with respect to matters arising under the federal securities laws. |
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| Security Preemptive and Other Rights [Text Block] |
No
Appraisal Rights or Preemptive Rights
Our
Charter provides that, except as may be provided by the Board in setting the terms of shares of preferred stock, stockholders will not
be entitled to any preemptive rights or to exercise appraisal rights. |
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| Security Obligations of Ownership [Text Block] | Under Maryland law, our stockholders generally are not personally liable for our debts or obligations. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rights Subject to Other than Majority Vote [Text Block] |
Action
by Stockholders
Under
the MGCL, stockholder action can be taken only at an annual or special meeting of stockholders or by unanimous written consent in lieu
of a meeting (unless the charter provides for stockholder action by less than unanimous written consent, which our Charter does not).
These provisions, combined with the requirements of our Bylaws regarding the calling of a stockholder-requested special meeting of stockholders
discussed below, may have the effect of delaying consideration of a stockholder proposal indefinitely. |
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| Other Security, Description [Text Block] | There are no outstanding options or warrants to purchase our stock. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Outstanding Securities [Table Text Block] |
(1)
Upon
the issuance of 6,000,000 Common Shares at the closing of this offering, the Sponsor shall forfeit 1,788,899 Common Shares. If the over-allotment
option expires without exercise, the Sponsor shall forfeit an additional 100,000 Common Shares, such that the Sponsor will own 10% of
the outstanding Common Shares of the Company, whether the over-allotment option is exercised or expires unexercised.
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| No Operating History As Closed End Investment Company Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
No
operating history as a closed-end investment company
We
are a non-diversified, closed-end management investment company with no operating history. As a result, we are subject to all of the business
risks and uncertainties associated with any new business, including the risk that we will not achieve our investment objective and that
the value of your investment could decline substantially or become worthless. |
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| Operating As Non Diversified Management Investment Company Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Risk
of operating as a non-diversified, management investment company
We
are classified as a non-diversified, management investment company within the meaning of Section 5(b)(2) of the Investment Company
Act. As such, we do not have the benefits the Investment Company Act provides for a management company that is diversified in the manner
provided in Section 5(b)(1) of this Act. Section 5(b)(1) requires at least 75% of the value of total assets of a diversified
company to consist of cash and cash items (including receivables), Government securities, securities of other investment companies, and
other securities. In addition, Section 5(b)(1) provides that in calculating the 75% amount, the management investment company may
not invest more than 5% of the value of its total assets in any one issuer, and may not acquire more than 10% of the outstanding voting
securities of this issuer. As a non-diversified management investment company, therefore, we are exposed to the risks that arise from
investing in issuers beyond the limits set forth in Section 5(b)(1). |
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| No Assurance Of Investment Return Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
No
assurance of investment return
The
types of investments that we make involve a high degree of risk. Financial and operating risks confronting our portfolio companies can
be significant. We cannot provide assurance that we will be able to choose, make or realize investments in any particular company or portfolio
of companies. Moreover, while the type of investments that we make offers the possibility of substantial returns, such investments also
involve a high degree of financial risk and can result in substantial or total capital losses.
In
addition, there can be no assurance that we will be able to generate returns for our investors or that the returns will be commensurate
with the risks of investing in the type of companies and transactions described in this prospectus. The performance and appreciation of
the investments that comprise our portfolio will depend on the successful operation of the companies in which we invest, prevailing interest
rates, and other market conditions over which we and the Adviser will have no control. Returns generated from our investments may not
adequately compensate investors for the business and financial risks assumed, and an investor may lose all or a part of its investment
in our shares. |
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| Reliance On Adviser Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Reliance
on the Adviser
The
Adviser is a newly formed entity and has no prior experience managing a registered closed-end investment company. The Adviser provides
us with management and advisory services and makes investment decisions on our behalf. Investors will have no role in making decisions
with respect to the management, disposition or other realization of any investment, or decisions regarding our business and affairs. Consequently,
our success will depend, in large part, upon the skill and expertise of the Adviser and its Investment Committee. Furthermore, the Investment
Committee members will not focus exclusively on our operations and may have responsibility for other managed investment funds.
The
Investment Committee, acting on behalf of the Adviser, will evaluate, negotiate, structure, close and monitor our investments in accordance
with the terms of this prospectus. The Investment Committee is currently composed of Dr. Najamul Hasan Kidwai, Michael (Xu) Zhao,
Michael Lempres, and Elliot Han, who are all accomplished investment professionals. There can be no assurance that these persons will
continue to be associated with the Adviser while the Adviser serves as our investment adviser. Our future success will depend to a significant
extent on the continued service and coordination of these persons while serving as members of the Investment Committee. If Dr. Kidwai
and Messrs. Zhao, Lempres and Han do not maintain their existing relationships with sources of investment opportunities and do not develop
new relationships with other sources of investment opportunities available to us, we may not be able to grow our investment portfolio.
In addition, individuals with whom the members of the Investment Committee have relationships are not obligated to provide us with investment
opportunities. Therefore, the Adviser can offer no assurance that such relationships will generate investment opportunities for us. Furthermore,
the Adviser cannot assure investors that the Adviser will remain our investment adviser or that we will continue to have access to the
members of the Investment Committee or their information and deal flow. |
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| Investment Due Diligence And Investment Research May Not Reveal All Relevant Facts Regarding Investment Opportunities Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Investment
due diligence and investment research may not reveal all relevant facts regarding investment opportunities.
When
conducting due diligence and investment research, the Adviser may be required to evaluate important and complex business, financial, tax,
accounting, and legal metrics. Outside consultants, legal advisors, accountants and investment banks may be involved in the due diligence
and investment research process in varying degrees depending on the type of investment. When conducting due diligence and investment research
and making an assessment regarding an investment, the Adviser may rely on information provided by such persons, or by the management of
the target of the investment or their advisors. The due diligence investigation and investment research that the Adviser carries out with
respect to any investment opportunity may not reveal or highlight all relevant facts that may be necessary or helpful in evaluating such
investment opportunity, may lead to inaccurate or incomplete conclusions, or may be manipulated by fraud. Moreover, such an investigation
will not necessarily result in the investment being successful. |
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| Competition For Investment Opportunities Difficulty Of Locating Suitable Investments And Meeting Investment Objective Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Competition
for investment opportunities; difficulty of locating suitable investments and meeting investment objective.
A
large number of entities compete with us to make the types of direct equity investments that we target as part of our business strategy.
We compete for such investments with a large number of private equity and venture capital funds, other equity and non-equity based investment
funds, investment banks and other sources of financing, including traditional financial services companies such as commercial banks and
specialty finance companies. Many of our competitors are substantially larger than we are and have considerably greater financial, technical
and marketing resources than we do. We may be at a competitive disadvantage with our competitors in a particular industry or investment,
as some of them have greater capital, lower targeted returns, a greater willingness to take on risk, more personnel or greater sector
or investment strategy specific expertise. We and the Adviser may be unable to find a sufficient number of attractive opportunities to
meet our investment objective and there is no assurance as to the timing of investments. The Adviser expects us to benefit from its relationships
and experience making investments; however, there can be no assurance that the Adviser will be able to maintain or draw upon such relationships,
which could have an adverse effect on our ability to find suitable investments and otherwise achieve our investment objective. Furthermore,
the Adviser will emphasize or de-emphasize different aspects of its investment strategy from time to time, and refine or add to our investment
strategy, to respond to changes in market conditions, and there can be no assurance that the Adviser will follow the investment strategy
and process described herein for every investment. |
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| Non United States Investments Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Non-U.S.
investments risk
Non-U.S.
securities involve certain factors not typically associated with investing in U.S. securities, including risks relating to the following:
(i) currency exchange matters, including fluctuations in the rate of exchange between the U.S. dollar and the various foreign currencies
in which foreign investments are denominated, and costs associated with conversion of investment principal and income from one currency
into another; (ii) inflation matters, including rapid fluctuations in inflation rates; (iii) differences between the
U.S.
and foreign securities markets, including potential price volatility in and relative liquidity of some foreign securities markets, the
absence of uniform accounting, auditing and financial reporting standards, practices and disclosure requirements and the potential of
less government supervision and regulation; (iv) economic, social and political risks, including potential exchange control regulations
and restrictions on foreign investment and repatriation of capital, the risks of political, economic or social instability and the possibility
of expropriation or confiscatory taxation; (v) the possible imposition of foreign taxes on income and gains recognized with respect
to such securities; and (vi) difficulties in enforcing legal judgements in foreign courts. Laws and regulations of foreign countries
may impose restrictions that would not exist in the United States and may require financing and structuring alternatives that differ significantly
from those customarily used in the United States. No assurance can be given that a change in political or economic climate, or particular
legal or regulatory risks, including changes in regulations regarding foreign ownership of assets or repatriation of funds or changes
in taxation might not adversely affect an investment by us. |
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| Global Economic Conditions Including Those From Macro Trends And Global Events May Adversely Affect Our Investments Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Global
economic conditions, including those from macro-trends and global events, may adversely affect our investments.
Because
we intend to invest in companies located in various nations, our overall performance depends in part on worldwide economic conditions.
Global financial developments, downturns, and global health crises or pandemics may harm us, including due to disruptions or restrictions
on our employees’ ability to work and travel. The economies of the regions in which we intend to invest have been affected from
time to time by falling demand for a variety of goods and services, restricted credit, poor liquidity, reduced corporate profitability,
volatility in credit, equity, and foreign exchange markets, bankruptcies, labor shortages, labor unrest, pandemics, natural disasters,
supply chain disruptions, inflation, and overall uncertainty with respect to the economy, including with respect to tariff and trade issues.
Ongoing
armed conflicts around the world, such as the invasion of Ukraine by Russia and recently, the conflict in and adjacent to Israel, could
create or exacerbate risks facing our business. The Russia-Ukraine conflict specifically results in numerous countries, including the
United States, imposing significant new sanctions and export controls against Russia, Russian banks, and certain Russian individuals.
These armed conflicts have resulted and could continue to result in, disruptions to trade, commerce, pricing stability, and/or supply
chain continuity, and have introduced significant uncertainty into the global markets. If global economic conditions remain uncertain
or deteriorate further, particularly to the extent such conflicts escalate to involve additional countries, we could see potential scenarios
having a material adverse effect on the businesses in which we intend to invest.
We
believe that other potential conflicts could result in similar disruptions in the regions in which we intend to invest. Such potential
conflicts could include a military conflict between mainland China and Taiwan. While we do not intend to invest in China, a conflict between
China and Taiwan, or any other conflict involving China, could adversely affect global economic conditions and the companies in which
we invest. Moreover, a military conflict between China and Taiwan could disrupt the supply of goods and products relied on by companies
in the digital asset services and technology industry, such as advanced semiconductor chips and other products that are sourced from Taiwan.
Such a conflict would also likely limit access to key Chinese ports and exporters due to both military actions and potential international
sanctions, which could adversely affect the global economy, generally, and companies in which we intend to invest, specifically.
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| Our Investment Portfolio Will Be Recorded At Fair Value As Uncertainty As To Value Of Our Portfolio Investments Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Our
investment portfolio will be recorded at fair value as determined in good faith in accordance with procedures established by our Board
and, as a result, there is and will be uncertainty as to the value of our portfolio investments.
Under
the Investment Company Act, we are required to carry our portfolio investments at market value or, if there is no readily available market
value, at fair value as determined in good faith in accordance with policies and procedures established by our Board pursuant to the requirements
of Rule 2a-5 under the Investment Company Act. There may not be a public or active secondary market for certain of the types of investments
that we hold and intend to make. Our principal investments will not be publicly traded on a securities exchange but, instead, may be quoted
on a private secondary marketplace that is registered as a broker-dealer and operated as an ATS in accordance with the requirements of
Regulation ATS under the Securities Exchange Act or may be offered through electronic (or other) platforms that are registered as
broker-dealers
but not operated as alternative trading systems. As a result, we will value these investments quarterly at fair value as determined in
good faith in accordance with valuation policies and procedures meeting the requirements of Rule 2a-5 under the Investment Company
Act.
Our
valuation policies and procedures, as adopted by the Board, are designed to achieve the following objectives: (1) to periodically
assess any material risks associated with the determination of the fair value of our investments and to manage these risks; (2) to
select and apply a methodology for determining the fair value of our investments and to periodically review the appropriateness and accuracy
of this methodology, as well as to monitor for circumstances that may necessitate the use of fair value; (3) to test the appropriateness
and accuracy of the fair value methodology that has been selected; and (4) to oversee pricing service providers, if used, including
establishing the process for approving, monitoring, and evaluating each pricing service provider. Consistent with applicable requirements,
the Board has designated the Adviser as Valuation Designee (“Valuation Designee”) under our valuation policies and procedures
to perform the fair value determination for all our investments. The Board will retain responsibility to oversee the Adviser in performing
its role as Valuation Designee. The Adviser, however, will be required to submit quarterly and annual reports relating to its function
as Valuation Designee. In addition, it will be required to promptly notify the Board if matters that materially affect the fair value
of the portfolio of investments occur, including a significant deficiency or material weakness in the design or effectiveness of the Adviser’s
fair valuation determination process or material errors in the calculation of net asset value within five days after the Adviser becomes
aware of the matter.
The
determination of fair value, and thus the amount of unrealized appreciation or depreciation we may recognize in any reporting period,
is to a degree subjective, and the Adviser may have a conflict of interest in making fair value determinations. To minimize the possibility
of conflict, however, the Adviser will specify the titles of persons responsible for determining the fair value of particular investments
(including by specifying the particular functions for which they are responsible) and will reasonably segregate fair value determinations
from the portfolio management function by mandating that portfolio managers may not determine, or effectively determine by exerting substantial
influence on, the fair values ascribed to our investments. |
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| Any Unrealized Losses We Experience On Our Portfolio May Be Indication Of Future Realized Losses Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Any
unrealized losses we experience on our portfolio may be an indication of future realized losses.
As
a registered closed-end management investment company, we are required to carry our investments at market value or, if no market value
is ascertainable, at the fair value as determined in good faith by the Adviser as the valuation designee pursuant to policies and procedures
approved by our board of directors. Decreases in the market values or fair values of our investments are recorded as unrealized depreciation.
Any unrealized losses in our portfolio could be an indication of an issuer’s inability to meet its repayment obligations. This could
result in realized losses in the future. |
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| Efforts To Comply With Sarbanes Oxley Act Will Involve Significant Expenditures And Non Compliance With Such Regulations May Adversely Affect United States Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Efforts
to comply with the Sarbanes-Oxley Act will involve significant expenditures, and non-compliance with such regulations may adversely affect
us.
We
are subject to the Sarbanes-Oxley Act and the related rules and regulations promulgated by the SEC. We are required to periodically review
our internal control over financial reporting, and evaluate and disclose changes in our internal control over financial reporting. Developing
and maintaining an effective system of internal controls may require significant expenditures, which may negatively impact our financial
performance. This process will also result in a diversion of management’s time and attention. We cannot be certain as to the timing
of the completion of our evaluation, testing and remediation actions or the impact of the same on our operations and we may not be able
to ensure that the process is effective or that our internal control over financial reporting will be effective in a timely manner. In
the event that we are unable to develop or maintain an effective system of internal controls and maintain or achieve compliance with the
Sarbanes-Oxley Act and related rules, we may be adversely affected. |
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| If We Fail To Maintain Effective System Of Internal Control Over Financial Reporting Stockholders Could Lose Confidence In Our Financial And Or Public Reporting Which Would Harm Our Business Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
If
we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial
results or prevent fraud. As a result, stockholders could lose confidence in our financial and other public reporting, which would harm
our business.
Effective
internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure
controls and procedures, are designed to prevent fraud. Any failure to
implement required new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting
obligations. Inferior internal controls could also cause investors and lenders to lose confidence in our reported financial information,
which could have a negative effect on our ability to continue the offering. |
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| Investment Methodology Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Investment
methodology
We
may employ certain strategies that depend upon the reliability and accuracy of the Adviser’s analytical investment processes. To
the extent such investment processes (or the assumptions underlying them) do not prove to be correct, we may not perform as anticipated,
which could result in substantial losses. |
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| Identification Of Appropriate Investments Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Identification
of appropriate investments
Our
success as a whole depends on the identification and availability of suitable investment opportunities and terms. The availability and
terms of investment opportunities will be subject to market conditions, prevailing regulatory conditions in regions where we may invest,
and other factors outside our control. In addition, we may find ourselves in competition with other funds that have entered or may enter
its markets or with private equity funds and financial institutions that may be willing to extend financing on terms that are more favorable
to the portfolio company than the Adviser believes are appropriate in light of the risk of the investment. Therefore, there can be no
assurance that appropriate investments will be available to, or identified or selected by, us. |
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| Concentration Of Investments Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Concentration
of investments
The
Company’s investments will be concentrated in the digital asset services and technology industry. Under the Investment Company Act,
concentration is deemed to occur when 25% or more of the value of a management company’s total assets is invested or proposed to
be invested in a particular industry or group of industries. Under normal market conditions, we will invest at least 80% of the value
of our total assets in equity and equity-linked securities issued by the C1 Thirty companies. We may be further concentrated in the digital
asset services and technology industry because under our non-principal strategy, we may invest in (i) U.S. publicly traded equity
securities or certain non-U.S. companies that otherwise meet our investment criteria, (ii) if and when such BDCs are organized, BDCs
that invest in digital asset services and technology companies, (iii) ETFs that invest in digital asset services and technology companies
and (iv) exchange-traded products (“ETPs”) that invest in physical spot Bitcoin or Ether, which are crypto assets that
are not registered as securities. ETFs in which we may invest are registered as investment companies under the Investment Company Act
and their shares are registered under the Securities Act and listed for trading on a national securities exchange, and ETPs in which we
may invest are not registered as investment companies under the Investment Company Act but their shares are registered under the Securities
Act and listed for trading on a national securities exchange. To the extent we invest in BDCs, ETFs or ETPs, we will factor in the holdings
of such BDCs, ETFs or ETPs when determining the concentration of the Company’s investments. While we believe this investment strategy
could best achieve our investment objective, as we have indicated, we will be particularly exposed to the risks attendant to investments
in companies within this industry. An economic upturn and positive market movement for companies within this industry, could produce outsized
returns for us, as well as other investors in these companies. A significant downturn, however, and adverse market movement could result
in material losses for all such companies and investors in them. In any such case, because of our concentration, the effect on our overall
financial condition could be significant. Our ability to mitigate these risks may be impaired by our policy not to invest derivatives
and other hedging instruments. |
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| Election Not To Invest In Subsequent Financing Rounds Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Election
not to invest in subsequent financing rounds
Following
an initial investment, the issuers that we invest in may give us the opportunity to make additional investments in subsequent financing
rounds.
We
may elect not to invest in subsequent financing rounds. We have the discretion to invest in subsequent financing rounds, subject to the
amount of capital resources available to us relative to the amount of capital desired
by the issuers that we invest in, the prospects of such a subsequent financing round, and the requirements of applicable law. Our decision
to refrain from investing in subsequent financing rounds may, in some circumstances, jeopardize the continued viability of the issuers
that we invest in and our initial investment, or may result in a missed opportunity for us to increase our participation in a successful
operation. Even if our capital resources exceeds the amount of capital desired by the issuers that we invest in, we may elect not to invest
in subsequent financing rounds because we may not want to increase our concentration of risk, we prefer other opportunities, or the investment
may not be consistent with the requirements of applicable law. We do not expect that the Company would be required to invest in a subsequent
financing round with respect to any securities that it holds, and the Company will not enter into any commitment that would obligate it
to invest in a subsequent financing round.
In
addition, we may be unable to invest in subsequent financing rounds in the issuers we invest in that have conducted an IPO as a result
of regulatory or financial restrictions. |
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| Litigation And Regulatory Investigations Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Litigation
and regulatory investigations
The
Adviser and its affiliates, from time to time, may be named as defendants in civil proceedings. Litigation or threats of litigation consume
time and resources and jeopardize the successful closing of transactions. Moreover, the outcome of such proceedings may materially adversely
affect the value of portfolio positions, may be impossible to predict, and may continue unresolved for long periods of time. The expense
of prosecuting claims, for which there is no guarantee of success, and/or the expense of defending against claims by third parties and
paying any amounts pursuant to settlements or judgments would generally be borne by us and would reduce net assets.
As
an investment adviser, the Adviser expects to have interactions with and inquiries from regulators from time to time, including but not
limited to matters related to us, the Adviser and its affiliates. |
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| Associated With Investments In Private Companies Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Risks
associated with investments in private companies.
We
will invest principally in private digital asset services and technology companies that have limited resources and operating histories.
Such investments involve a number of significant risks, including the following:
•
these
companies may have limited financial resources and may be unable to meet their obligations under their existing debt, which may lead to
equity financings, possibly at discounted valuations, in which we could be substantially diluted if we do not or cannot participate, bankruptcy
or liquidation and the reduction or loss of our equity investment;
•
they
typically have limited operating histories, narrower, less established product lines and smaller market shares than larger businesses,
which tend to render them more vulnerable to competitors’ actions, market conditions and consumer sentiment in respect of their
products or services, as well as general economic downturns;
•
they
generally have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly changing
businesses with products subject to a substantial risk of obsolescence, and may require substantial additional capital to support their
operations, finance expansion or maintain their competitive position;
•
because
they are privately owned, there is generally little publicly available information about these businesses; therefore, although the Adviser
will perform due diligence investigations on these companies, their operations and their prospects, the Adviser may not learn all of the
material information we need to know regarding these businesses and, in the case of investments we acquire on private secondary transactions,
the Adviser may be unable to obtain financial or other information regarding the companies with respect to which we invest. Furthermore,
there can be no assurance that the information that the Adviser does obtain with respect to any investment is reliable;
•
they
are more likely to depend on the management talents and efforts of a small group of persons; therefore, the death, disability, resignation
or termination of one or more of these persons could have a material adverse impact on the portfolio company and, in turn, on us; and
such
private companies frequently have much more complex capital structures than public companies, and may have multiple classes of equity
securities with differing rights, including with respect to voting and distributions. In addition, it is often difficult to obtain financial
and other information with respect to private companies, and even where we are able to obtain such information, there can be no assurance
that it is complete or accurate. In certain cases, such private companies may also have senior or pari passu
preferred stock or senior debt outstanding, which may heighten the risk of investing in the underlying equity of such private companies,
particularly in circumstances when we have limited information with respect to such capital structures. Although we believe that the Investment
Committee members have extensive experience evaluating and investing in private companies with such complex capital structures, there
can be no assurance that the Adviser will be able to adequately evaluate the relative risks and benefits of investing in a particular
class of a portfolio company’s equity securities. Any failure on the Adviser’s part to properly evaluate the relative rights
and value of a class of securities in which we invest could cause us to lose part or all of our investment, which in turn could have a
material and adverse effect on our net asset value and results of operations.
A
portfolio company’s failure to satisfy financial or operating covenants imposed by its lenders could lead to defaults and, potentially,
termination of its loans and foreclosure on its assets, which could trigger cross-defaults under other agreements and jeopardize our equity
investment in such portfolio company. We may incur expenses to the extent necessary to seek recovery of our equity investment or to negotiate
new terms with a financially distressed portfolio company. To the extent we incur such expenses, the common shareholders ultimately will
bear the cost of those expenses. |
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| Investments In Private Companies Involve Different And Additional Risk Than Risk Associated With Investments In Public Companies Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Investments
in private companies involve different and additional risks than the risks associated with investments in public companies.
Investments
in private companies involve a high degree of risk, which can result in substantial losses. There is generally no publicly available information
about the operating results and financial condition of private companies, and the Company relies significantly on the diligence of its
service providers and agents to obtain information in connection with investment decisions in private companies. If the Company is unable
to identify all material information about these private companies, the Company may fail to receive the expected return on investment,
or lose some or all of the money invested in private companies. In addition, the private companies that the Company will invest in will
usually have shorter operating histories and less experienced management than publicly traded competitors, which may adversely affect
the return on, or the recovery of, investments in such businesses.
Additionally,
private companies are more likely to depend on the management talents and efforts of a small group of persons; therefore, the death, disability,
resignation or termination of one or more of these persons could have a material adverse impact on our investment. Private companies also
generally have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly changing
businesses with products subject to a substantial risk of obsolescence and may require substantial additional capital to support their
operations, finance expansion or maintain their competitive position. |
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| Securities Of Our Portfolio Companies Are Generally Illiquid Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
The
securities of our portfolio companies are generally illiquid.
The
securities of our portfolio companies are generally illiquid, and the inability of these portfolio companies to complete an IPO or consummate
another liquidity event within our targeted time frame for that investment will extend the holding period of our investments, may adversely
affect the value of these investments, and will delay the distribution of gains, if any. The IPO market is, by its very nature, unpredictable.
A lack of IPO opportunities for privately held emerging companies could lead to companies staying longer in our portfolio as private entities
still requiring funding. This situation may adversely affect the amount of available venture capital funding to companies that cannot
complete an IPO. Such stagnation could dampen returns or could lead to unrealized depreciation and realized losses as some companies run
short of cash and have to accept lower valuations in private fundings or are not able to access additional capital at all. A lack of IPO
opportunities for privately held emerging companies may also cause some venture capital firms to change their strategies, leading some
of them to reduce funding of their portfolio companies and making it more difficult for such companies to access capital. This might result
in unrealized depreciation and realized losses in such companies by other investment funds, like us, who are co-investors in such companies.
There
can be no assurance that we will be able to achieve our targeted return on our portfolio company investments if, as and when they go public.
The
equity securities we acquire in a portfolio company are generally subject to contractual transfer limitations imposed on the portfolio
company’s stockholders as well as other contractual obligations, such as rights of first refusal and co-sale rights. These obligations
generally expire only upon an IPO by the portfolio company or the occurrence of another liquidity/exit event. As a result, prior to an
IPO or other liquidity/exit event, our ability to liquidate our private portfolio company
positions may be constrained. Transfer restrictions could limit our ability to liquidate our positions in these securities if we are unable
to find buyers acceptable to our portfolio companies, or where applicable, their stockholders. Such buyers may not be willing to purchase
our investments at adequate prices or in volumes sufficient to liquidate our position, and even where they are willing, other stockholders
could exercise their co-sale rights to participate in the sale, thereby reducing the number of shares available to sell by us. Furthermore,
prospective buyers may be deterred from entering into purchase transactions with us due to the delay and uncertainty that these transfer
and other limitations create.
If
the portfolio companies in which we invest do not perform as planned, they may be unable to successfully complete an IPO or consummate
another liquidity event within our targeted time frame, or they may decide to abandon their plans for an IPO. In such cases, we will likely
exceed our targeted holding period and the value of these investments may decline substantially if an IPO or other exit is no longer viable.
We may also be forced to take other steps to exit these investments.
The
illiquidity of our portfolio company investments, including those that are quoted on the trading platforms of private secondary marketplaces,
may make it difficult for us to sell such investments should the need arise. Also, if we were required to liquidate all or a portion of
our portfolio quickly, we may realize significantly less than the value at which we have previously recorded our investments. We will
have no limitation on the portion of our portfolio that may be invested in illiquid securities, and a substantial portion of our portfolio
may be invested in such illiquid securities at all times.
In
addition, even if a portfolio company completes an IPO, we will typically not be able to sell our position until any applicable post-IPO
lockup restriction expires. As a result of lockup restrictions, the market price of securities that we hold may decline substantially
before we are able to sell them following an IPO. There is also no assurance that a meaningful trading market will develop for our publicly
traded portfolio companies following an IPO to allow us to liquidate our position when we desire. |
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| Risks From Acquiring C1 Thirty Securities Via Purchases On Private Secondary Marketplaces, Direct Purchases In Private Offerings, And Purchases In One Off Private Transactions [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
We
will face risks associated with acquiring securities of C1 Thirty companies through (i) purchases on private secondary marketplaces,
(ii) purchases in one-off private transactions, and (iii) direct purchases in private offerings.
We
will acquire securities of C1 Thirty companies through three principal channels: (i) purchases on private secondary marketplaces,
(ii) purchases in one-off private transactions, and (iii) direct purchases in private offerings. Acquiring securities through
these channels subjects us to risks. For example, our ability to find desired investments and to achieve liquidity depends principally
on how active private secondary markets are and whether we could obtain reasonable prices for our investments, as further described in
the risk factor entitled “Risks related to investing
in securities quoted on private secondary marketplaces” below. In addition, with respect
to purchases of securities pursuant to purchase agreements that we will enter into for transactions identified through ATSs or one-off
private transactions with eligible securityholders, we may be subject to the risk that we may not timely obtain required approvals or
waivers of contractual transfer restrictions following the execution of a purchase agreement. Typically, the transfer restriction that
we will require a waiver of after the signing of a purchase agreement is the issuer’s right of first refusal (“ROFR”)
for the issuer to purchase the securities that we seek to acquire pursuant to the purchase agreement. While we expect that we will be
able to obtain required approvals or waivers of contractual transfer restrictions generally within two weeks of executing a purchase agreement,
there may be cases in which it may take us longer than two weeks to obtain the requested approval or waiver. We will structure our purchase
agreements for the acquisition of securities issued by C1 Thirty companies to provide that approval of the transfer of securities or waiver
of the transfer restrictions must be obtained within 30 days from the date of the execution. The purchase agreements will provide
that in any such case, the agreement will terminate automatically if (i) approval of the transfer of securities or waiver of the
transfer restrictions is not obtained within 30 days from
the signing of the purchase agreement, or (ii) the closing of the purchase agreement, which is completed upon the wiring and receipt
of the funds and the Company receiving written notice of the recording of the transfer of the securities on the books and records of the
issuer of the subject securities, does not occur within 35 days from the signing of the purchase agreement.
With
respect to purchase agreements that are subject to transfer restrictions (such as a ROFR) at the time of signing, we conclude that it
would be appropriate to record the purchase at the time when any and all transfer restrictions have been satisfied. Investors of our Common
Shares should understand that our conclusion is subject to different interpretations by regulatory agencies, courts and other bodies having
oversight authority. If one or more of these authorities reach a different conclusion as it pertains to recognition of purchase agreements,
it could result in us misstating the value of our assets.
In
addition, for purchases that we identify through ATSs and for some purchases conducted directly with eligible securityholders, we may
be required to pay an additional fee. For transactions identified through an ATS, the fee typically ranges from 1% to 5% of the transaction
value. For transactions conducted directly with eligible securityholders where a broker-dealer matches us with the eligible securityholder,
the fee to the broker-dealer typically ranges from 2% to 5%. We will account for these fees as a part of the total cost being paid by
the Company to acquire the particular securities. If the value of the acquired securities does not exceed our total acquisition cost of
the acquired securities, we will realize a loss on this investment when the securities are eventually sold. If the transaction does not
settle for reasons such as the issuer exercises its ROFR or if the seller breaches its obligation to sell the securities, we will not
incur these fees. |
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| Related To Investing In Securities Traded On Private Secondary Marketplaces Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Risks
related to investing in securities quoted on private secondary marketplaces.
To
acquire investments for our portfolio and to obtain liquidity for these investments, we will utilize private secondary marketplaces that
are registered as broker-dealers under Section 15 of the Securities Exchange Act and operated as ATSs in accordance with the requirements
of Regulation ATS under the Securities Exchange Act.
Our
ability to find desired investments and to achieve liquidity depends principally on how active these markets are and whether we could
obtain reasonable prices for our investments. There can be no assurance that the portfolio companies with respect to which we invest through
private secondary marketplaces will have or maintain active trading markets, and the prices of those securities may be subject to irregular
trading activity, wide bid/ask spreads and extended trade settlement periods, which may result in an inability for us to realize full
value on our investment. In addition, wide swings in market prices, which are typical of irregularly traded securities, could cause significant
and unexpected declines in the value of our portfolio investments. Further, prices in private secondary marketplaces, where limited information
is available, may not accurately reflect the true value of a portfolio company, and may overstate a portfolio company’s actual value,
which may cause us to realize future capital losses on our investment in that portfolio company.
Investments
in private companies, including through private secondary marketplaces, also entail additional legal and regulatory risks, which expose
participants to the risk of liability due to the imbalance of information among participants and participant qualification and other transactional
requirements applicable to private securities transactions, the non-compliance with which could result in rescission rights and monetary
and other sanctions. The application of these laws within the context of private secondary marketplaces and related market practices are
still evolving, and, despite our efforts to comply with applicable laws, we could be exposed to liability. The regulation of private secondary
marketplaces is also evolving. Additional state or federal regulation of these markets could result in limits on the operation of or activity
on those markets. Conversely, deregulation of these markets could make it easier for investors to invest directly in private companies
and affect the attractiveness of the Company as an access vehicle for investment in private shares. Private companies may also seek to
limit secondary trading in their stock, such as through contractual transfer restrictions (such as ROFRs), and provisions in company charter
documents, investor rights of first refusal and co-sale and/or employment and trading policies further restricting trading. To the extent
that these or other developments result in reduced trading activity and/or availability of private company shares, our ability to find
investment opportunities and to liquidate our investments could be adversely affected. Purchasing
securities that are quoted on private secondary marketplaces also subjects us to the risk that we may not timely obtain required approvals
or waivers of contractual transfer restrictions following the execution of a purchase agreement. In addition, for completed transactions
involving private secondary marketplaces, we will incur private secondary marketplace fees that we will account for as a part of the total
cost being paid by us to acquire the particular securities. These risks are described in the risk factor immediately prior to this risk
factor, on page 23. |
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| Company Is Subject To Counterparty Risk In Connection With One Off Private Transactions With Eligible Security Holders Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
The
Company is subject to counterparty risk in connection with one-off private transactions with eligible securityholders.
When
acquiring shares in private transactions with eligible securityholders of the C1 Thirty companies, the Company will be subject to counterparty
risk. Because transactions with such securityholders are not cleared through a central counterparty, the Company is subject to the risk
that a securityholder is unable or unwilling to perform required contractual obligations. Private companies may seek to limit private
transfers of their securities, such as through contractual transfer restrictions (such as ROFRs). If the securities purchased by the Company
are subject to such restrictions, or if a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial
difficulties, the Company may not to be able to secure the securities that the Company sought to acquire, or the Company may face significant
delays in obtaining such securities. There can be no assurance that a counterparty will not default. |
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| We May Not Realize Gains From Our Equity Investments Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
We
may not realize gains from our equity investments.
We
invest principally in the equity and equity-linked securities issued by up to 30 companies that our Adviser believes are among the 30
leading private digital asset services and technology companies. However, the equity interests we acquire may not appreciate in value
and, in fact, may decline in value.
In
addition, the private company securities we acquire may be subject to drag-along rights, which could permit other stockholders, under
certain circumstances, to force us to liquidate our position in a subject company at a specified price, which could be, in our opinion,
inadequate or undesirable or even below our cost basis. In this event, we could realize a loss or fail to realize gain in an amount that
we deem appropriate on our investment. Further, capital market volatility and the overall market environment may preclude our portfolio
companies from realizing liquidity events and impede our exit from these investments. Accordingly, we may not be able to realize gains
from our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset
any other losses we experience. We will generally have little, if any, control over the timing of any gains we may realize from our equity
investments unless and until the portfolio companies in which we invest become publicly traded. In addition, the portfolio companies in
which we invest may have substantial debt loads. In such cases, we would typically be last in line behind any creditors in a bankruptcy
or liquidation and would likely experience a complete loss on our investment. |
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| Lack Of Liquidity In And Potentially Extended Holding Period Of Many Of Our Investments May Adversely Affect Our Business And Will Delay Any Distributions Of Gains If Any Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
The
lack of liquidity in, and potentially extended holding period of many of our investments may adversely affect our business and will delay
any distributions of gains, if any.
Our
investments will generally not be in publicly traded securities. Although we expect that some of our equity investments will trade on
private secondary marketplaces, certain of the securities we hold will be subject to legal and other restrictions on resale or will otherwise
be less liquid than publicly traded securities. In addition, while some portfolio companies may trade on private secondary marketplaces,
we can provide no assurance that such a trading market will continue or remain active, or that we will be able to sell our position in
any portfolio company at the time we desire to do so and at the price we anticipate. The illiquidity of our investments, including those
that are quoted on private secondary marketplaces, will make it difficult for us to sell such investments if the need arises. Also, if
we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at which we have
previously recorded our investments. We have no limitation on the portion of our portfolio that may be invested in illiquid securities,
and a substantial portion or all of our portfolio may be invested in such illiquid securities from time to time.
In
addition, because we generally invest in equity and equity-linked securities, with respect to the majority of our portfolio companies,
we do not expect regular realization events, if any, to occur in the near term.
We expect that our holdings of equity securities may require several years to appreciate in value, and we can offer no assurance
that such appreciation will occur. |
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| We Will Not Hold Controlling Equity Interests In Our Portfolio Companies Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
We
will not hold controlling equity interests in our portfolio companies.
We
will not take controlling equity positions in our portfolio companies. As a result, we will be subject to the risk that a portfolio company
may make business decisions with which we disagree, and the stockholders and management of a portfolio company may take risks or otherwise
act in ways that are adverse to our interests. In addition, other stockholders, such as venture capital and private equity sponsors, that
have substantial investments in our portfolio companies may have interests that differ from that of the portfolio company or its minority
stockholders, which may lead them to take actions that could materially and adversely affect the value of our investment in the portfolio
company. Due to the lack of liquidity for the equity and equity-linked investments that we will typically hold in our portfolio companies,
we may not be able to dispose of our investments in the event we disagree with the actions of a portfolio company or its substantial stockholders,
and may therefore suffer a decrease in the value of our investments. |
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| Investments In Rights Warrants Convertible Securities And Equity Linked Securities Subject Company To Additional Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Investments
in rights, warrants, convertible securities and equity-linked securities subject the Company to additional risks.
Investments
in rights, warrants, convertible securities and equity-linked securities may subject the Company to similar risks as those associated
with investments in capital stock as well as additional risks associated with investments in derivative securities. The trading price
of rights, warrants, convertible securities and equity-linked securities may not equal the underlying value of the equity to which they
are linked. Rights, warrants and convertible securities grant their holders the option to acquire the underlying equity securities. Unlike
capital stock, they do not confer dividend or voting rights with respect to the underlying equity securities. While the value of rights,
warrants and convertible securities is based on the value of the underlying equity securities, the value of a right, warrant or convertible
security may not move in tandem with the underlying equity security and may expire worthless. Because equity-linked securities are sometimes
issued by a third party other than the issuer of the underlying equity security, the Company is subject to risks if the underlying equity
security, reference rate or index underperforms, or if the issuer defaults on the payments at maturity. In addition, the trading market
for particular equity-linked securities may be less liquid, making it difficult for the Company to dispose of a particular security when
necessary and reduced liquidity in the secondary market for any such securities may make it more difficult to obtain market quotations
for valuing the Company’s portfolio. |
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| Reliance On Portfolio Company Management Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Reliance
on portfolio company management
The
day-to-day operations of the portfolio companies in which we will invest will be the responsibility of such portfolio company’s
management team. We do not intend to seek representation on the board of directors of portfolio companies or otherwise provide management
or strategic planning assistance, and will not have an active role in the day-to-day management of the companies in which we invest. Although
the Adviser will be responsible for monitoring the performance of each investment, there can be no assurance that the existing management
team, or any successor, will be able to operate the company successfully, or in a way that is consistent with our investment objective.
To the extent that the senior management of a portfolio company performs poorly, or if a key manager of a portfolio company terminates
employment, our investment in such company could be adversely affected. There are many challenges faced by leaders of emerging private
companies, including resignations or dismissals of senior executive officers and other top managers, disputes among investors and board
members, regulatory hurdles, bad press, allegedly unethical or illegal business practices, competition from larger companies with better
resources and experience, and management complicity in discrimination and hostile workplace environments on account of race or gender.
Our returns will depend in large part on the performance of these unrelated individuals and could be substantially adversely affected
by the unfavorable performance of a small number of such individuals.
In
addition, we will generally participate in the capital structure of the portfolio companies on the basis of financial projections for
such portfolio companies. Projected operating results will normally be based in part on the judgment of the management of the portfolio
company. In all cases, projections are only estimates of future results that are based upon assumptions made at the time that the projections
are developed.
There can be no assurance that the projected results will be obtained, and actual results may vary significantly from the projections.
In circumstances in which the Adviser relies on information from corporate management, the Company may be subject to the risk of dysfunctional
or fraudulent management and/or accounting irregularities. |
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| Limited Information Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Limited
information
Only
limited information may be made available to us regarding our investments in potential portfolio companies. There generally will be little
or no publicly available information regarding the status and prospects of the portfolio company. Investment decisions may depend on the
Adviser’s ability to obtain relevant information from non-public sources, and the Adviser may be required to make decisions without
complete information or in reliance upon information provided by third parties that is impossible or impracticable to verify. There is
a risk that: (i) there are facts or circumstances pertaining to a portfolio company that the public (including us and the Adviser)
are not aware of; and (ii) publicly available information concerning the a portfolio company upon which the Adviser relies may prove
to be inaccurate, and, as a result of (i) or (ii), the investor may suffer a partial or complete loss on its investment.
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| No Guarantee Of Future Access To Information Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
No
guarantee of future access to information
Each
portfolio company is under no obligation to furnish, or may generally resist providing, information to us with respect to any securities
of the portfolio company, and we may waive or have contractual limitations with respect to such securities. Exercise and use of any information
rights with respect to the portfolio company shall be at our sole discretion. |
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| Contingent Liabilities Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Contingent
liabilities
We
will invest a substantial portion of our assets in private securities. In connection with the disposition of an investment in private
securities, we may be required to make representations about the business and financial affairs of the portfolio company typical of those
made in connection with the sale of a business. We may also be required to indemnify the purchasers of such investment to the extent that
any such representations turn out to be inaccurate or with respect to potential liabilities. These arrangements may result in contingent
liabilities that ultimately result in funding obligations that we must satisfy through our return of distributions previously made to
us. |
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| Difficulty Of Asset Valuations Or Appraisals Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Difficulty
of asset valuations or appraisals
We
hold investments that are not listed on any stock exchange and/or which may be illiquid without a readily independent market valuation.
We are required to fair value such investments and expect to conduct our own fair valuations consistent with valuation policies and procedures
adopted by the Board. The Adviser also utilizes alternative valuation methods, such as engaging third-party valuation providers or pricing
services, as it determines is necessary in order to fair value such investments. All valuation methods necessarily involve a level of
subjectivity for which objective support is unavailable. If a third party is used to assist with asset valuations, we will ultimately
be responsible for the valuation of such assets notwithstanding the assistance from an independent third party provider.
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| Associated With Investments In Business Development Companies Exchange Traded Funds And Exchange Traded Products [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Risks
Associated with Investments in BDCs, ETFs and ETPs
The
Company may invest, as a non-principal investment strategy, in BDCs, ETFs and ETPs. An investment in a BDC, ETF or ETP generally presents
the same principal risks as an investment in a mutual fund that has the same investment objectives, strategies, and policies. The price
of a BDC, ETF or ETP can fluctuate up or down, and the Company could lose money investing in a BDC, ETF or ETP if the prices of the securities
owned by them decrease. In addition, BDCs, ETFs and ETPs may be subject to the following risks that do not apply to conventional mutual
funds: (i) the market price of a BDC’s, ETF’s or ETP’s shares may trade above or below their NAV; (ii) an
active trading market for a BDC’s, ETF’s or ETP’s shares may not develop or be maintained; or (iii) if a BDC’s,
ETF’s or ETP’s shares are listed on an exchange, trading of such shares may be halted if the listing exchange’s officials
deem such action appropriate, the shares are delisted from the exchange, or by the activation of market-wide “circuit breakers”
(which are tied to large decreases in stock prices) that halt stock trading generally. Further, the BDCs, ETFs and ETPs in which
we
may invest are not subject to the Company’s investment policies and restrictions. The Company will generally receive information
regarding the portfolio holdings of BDCs, ETFs and ETPs only when that information is made available to the public. The Company cannot
dictate how the BDCs, ETFs and ETPs invest their assets. The BDCs, ETFs and ETPs may invest their assets in securities and other instruments
and may use investment techniques and strategies that are not described in this prospectus. Notably, unlike the Company, ETPs may invest
directly in physical spot digital assets or crypto assets and therefore they are directly subject to the risks associated with investments
digital assets or crypto assets. Common stockholders will bear two layers of fees and expenses with respect to the Company’s investments
in BDCs, ETFs and ETPs because each of the Company and the BDCs, ETFs and ETPs will charge fees and incur separate expenses.
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| Because We Intend To Invest In Digital Asset Services And Technology Companies We Expect Operations Of Such Companies To Be Subject To Risk Associated With Investments In This Industry Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Because
we intend to invest in digital asset services and technology companies, we expect the operations of such companies to be subject to risks
associated with investments in this industry.
We
intend to invest in digital asset services and technology companies.
Investments in these businesses involve special risks, including the following risks, among others, any of which could be detrimental
to the value of businesses in which we invest and consequently the value of our shares.
•
Digital
assets have been, and may be, used by bad actors to execute black market transactions, commit fraud, launder funds, evade taxes or economic
sanctions, finance terrorism and other illegal activities, which could negatively impact the reputation and business of the companies
in which we invest.
•
Digital
asset markets, trading platforms and related services are experiencing rapid technological developments and growth. However, they may
decline in popularity, or even face obsolescence, due to slowing usage or acceptance of digital assets and unexpected technical or business
incompatibilities between currencies and related trading services.
•
The
digital asset trading industry is rapidly evolving and has experienced significant uncertainty and volatility due to numerous factors
(including the risks set forth in this risk factor). We expect our portfolio companies will face significant competition, uncertainty
and volatility as digital asset trading businesses continue to evolve, which could have a material adverse effect on our business. For
example, a security breach or another incident that affects a particular digital asset such as Bitcoin or Ether may affect the digital
asset industry as a whole, thereby impacting our business. As a result, future negative developments may reduce the value of the private
digital asset services and technology companies in which we intend to invest and as a result our investments in such companies may be
over-valued.
•
Due
to unfamiliarity and negative publicity surrounding the digital asset industry and digital asset trading platforms (including the quality,
security and reliability of technologies employed by these platforms), existing and potential customers may lose confidence in the businesses
in which we invest.
•
Digital
asset trading platforms may be subject to disputes and claims from customers who incur losses related to the use of such platforms, which
could adversely affect the value of our investments in such platforms.
•
We
may invest in companies that rely on the functionality of certain “smart contract-based” digital assets. If the underlying
smart contracts for digital assets do not operate as expected, they could lose value and our investments could be adversely affected.
•
The
companies in which we invest may be required to make significant capital and other investments in their businesses and may not be able
to do so based on their operations and financial condition or at a level to remain competitive with competitors that have greater financial
resources.
•
The
companies in which we invest may be subject to stringent security requirements that impose substantial costs and could be the target of
attacks or security breaches, which could have a material adverse effect on their businesses and the value of our investments.
U.S.
and foreign governments and/or agencies may introduce increasingly complex and stringent laws, regulations and policies, which could have
a material adverse effect on the companies in which we invest.
•
The
uncertainty surrounding the adoption and implementation of new rules and regulations in the U.S. and foreign countries may lead to increased
market volatility, including significant declines in asset value of any given digital asset and the digital asset industry as a whole.
•
Several
governments and agencies, including the U.S. Federal Reserve Bank (the “Federal Reserve”), are evaluating, have announced
or are preliminarily implementing central bank digital “fiat” currencies which may be fully technically compatible. Thus,
central bank digital “fiat” currencies may adversely affect our investments by reducing the market viability of the services
provided by the companies in which we invest.
•
Increased
environmental concerns about specific digital asset mining technologies and related political actions impacting mining capabilities taken
by the U.S. or foreign governments may have a material adverse effect on the business of companies in which we invest.
•
Future
developments regarding the treatment of digital assets for U.S. federal income and/or foreign tax purposes could adversely impact the
business of companies in which we invest.
•
The
companies in which we invest may be subject to complex financial accounting rules, and there is limited guidance from accounting standard
setting bodies. If financial accounting standards undergo significant changes, the operating results of companies in which we invest could
be adversely affected.
Any
of the foregoing factors could have an adverse impact on the operations, and the value of the shares, of our portfolio companies which
in turn could have a corresponding adverse effect on the value of our shares and could cause you to lose all or substantially all of the
value of your investment in us. |
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| Recent Developments In Digital Asset Digital Asset Ecosystem Significant Negative Publicity Surrounding Digital Assets Broadly And Market Wide Declines In Liquidity Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Recent
developments in the digital asset economy have led to extreme volatility and disruption in digital asset markets, a loss of confidence
in participants of the digital asset ecosystem, significant negative publicity surrounding digital assets broadly and market-wide declines
in liquidity.
Digital
asset prices fluctuate widely. This has led to volatility and disruption in the digital asset services and technology industry and financial
difficulties for several prominent industry participants, including digital asset trading platforms, hedge funds and lending platforms.
For example, in 2022, digital asset lenders Celsius Network LLC and Voyager Digital Ltd. and digital asset hedge fund Three Arrows Capital
each declared bankruptcy. Developments like these have resulted in a loss of confidence in participants in the digital asset services
and technology industry, negative publicity surrounding digital assets more broadly and market-wide declines in digital asset trading
prices and liquidity.
Also
in 2022, FTX, one of the largest digital asset trading platforms by volume at the time, halted customer withdrawals amid rumors of the
company’s liquidity issues and likely insolvency. Shortly thereafter, FTX’s CEO resigned and FTX and several affiliates of
FTX filed for bankruptcy. The U.S. Department of Justice (“DOJ”) subsequently brought criminal charges, including charges
of fraud, violations of federal securities laws, money laundering, and campaign finance offenses, against FTX’s former CEO and others.
In November 2023, FTX’s former CEO was convicted of fraud and money laundering. Similar charges related to violations of anti-money
laundering laws were brought in November 2023 against Binance and its former CEO. FTX is also under investigation by the SEC, the
DOJ and the Commodity Futures Trading Commission (“CFTC”), as well as by various regulatory authorities in the Bahamas, Europe
and other jurisdictions. In response to these events, the digital asset markets have experienced extreme price volatility and declines
in liquidity. In addition, several other entities in the digital asset industry have filed for bankruptcy since FTX’s bankruptcy
filing, such as BlockFi Inc., Terraform Labs Pte. Ltd. and Genesis Global Capital, LLC, a subsidiary of Genesis Global Holdco, LLC.
These
events have led to a substantial increase in regulatory and enforcement scrutiny of the industry as a whole and of digital asset trading
platforms in particular, including from the DOJ, the SEC, the CFTC, the White House and Congress. For example, in June 2023, the
SEC brought charges against Binance and Coinbase,
two of the largest digital asset trading platforms, alleging that Binance and Coinbase offered and sold certain crypto assets as the subject
of investment contracts. Binance subsequently announced that it would be suspending United States dollar (“USD”) deposits
and withdrawals on Binance and that it planned to delist its USD trading pairs. In addition, in November 2023, the SEC brought similar
charges against Kraken alleging that it offered and sold certain crypto assets as the subject of investment contracts. The actions against
prominent figures in the digital asset services and technology industry, such as those against Binance, Coinbase and Kraken, have led,
and may in the future lead, to further volatility in digital asset prices and in the industry more broadly.
These
events are continuing to develop at a rapid pace and it is not possible to predict at this time all of the risks that they may pose to
us or the digital asset industry as a whole. These events also have also led to significant negative publicity around digital asset market
participants. Continued disruption and instability in the digital asset markets as these events develop could have a material adverse
effect on the operations, and the value of the shares, of our portfolio companies which in turn could have a corresponding adverse effect
on the value of our shares and could cause you to lose all or substantially all of the value of your investment in us.
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| To Extent Exchange Traded Products In Which Company Invests In Will Be Materially Adversely Affected By Manifestation Of Se All Of Described Below Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
To
the extent that we invest in ETPs that hold Bitcoin or Ether, the financial return on these products will relate directly to the value
of their digital assets, and the value of such digital assets may be highly volatile and subject to fluctuations due to a number of factors.
Therefore, valuation of the ETPs in which the Company invests in will be materially adversely affected by the manifestation of these risks
all of the risks described below.
While
we will not invest directly in any digital assets, we may from time to time, as a non-principal investment strategy, invest in ETPs that
invest in physical spot Bitcoin or Ether. The value of these ETPs relates directly to the value of the digital assets they hold, and fluctuations
in the price of such digital assets could adversely affect the value of our investments and overall value of our investment portfolio.
The market price of Bitcoin and Ether may be highly volatile, and subject to a number of factors, including:
•
an
increase in the global supply of Bitcoin and/or other digital assets;
•
manipulative
trading activity on digital asset trading platforms, which platforms, in many cases, may be operating out of compliance with regulation;
•
the
adoption of digital assets as a medium of exchange, store-of-value or other consumptive asset and the maintenance and development of open-source
software protocols on which digital assets rely;
•
forks
in the blockchains used by digital assets;
•
investors’
expectations with respect to interest rates, the rates of inflation of fiat currencies or digital assets, and digital asset trading platform
rates;
•
consumer
preferences and perceptions of Bitcoin specifically and digital assets generally;
•
fiat
currency withdrawal and deposit policies on digital asset trading platforms;
•
the
liquidity of digital asset markets and any increase or decrease in trading volume on digital asset markets;
•
investment
and trading activities of large investors that invest directly or indirectly in Bitcoin, Ether or other digital assets;
•
a
“short squeeze” resulting from speculation on the price of Bitcoin, Ether or other digital assets, if aggregate short exposure
exceeds the number of shares of the digital asset fund available for purchase;
•
an
active derivatives market for Bitcoin or Ether specifically or for digital assets generally;
•
a
determination that Bitcoin, Ether or other digital assets are, in fact, securities or changes in their status under the federal securities
laws, or that such digital assets could be offered and sold as the subject of investment contracts, and thus be subject to regulation
under applicable federal securities laws;
•
monetary
policies of governments, trade restrictions, currency devaluations and revaluations and regulatory measures or enforcement actions, if
any, that restrict the use of digital assets as a form of payment or the purchase of digital assets on the digital asset markets;
global
or regional political, economic or financial conditions, events and situations, such as the novel coronavirus outbreak;
•
fees
associated with processing digital asset transactions and the speed at which digital asset transactions are settled;
•
interruptions
in service from or closures or failures of major digital asset trading platforms;
•
decreased
confidence in digital asset trading platforms due to the platform operating out of compliance with regulation;
•
increased
competition from other forms of digital assets or payment services; and
•
the
value of digital assets has been, and may continue to be, substantially dependent on speculation, such that trading and investing in digital
assets generally may not be based on fundamental analysis.
In
addition, there is no assurance that Bitcoin or Ether will maintain their value in the long or intermediate term. In the event that the
price of Bitcoin or Ether decline, the value of ETPs in which we may invest will likely decline. |
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| Digital Assets And Or Digital Assets Mselves May Be Required To Be Registered Under Federal Securities Laws Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] | Although digital assets, such as Bitcoin and Ether, are often referred to as “cryptocurrencies,” they are not widely accepted as a means of payment. The offer and sale of such digital assets, and/or the digital assets themselves, may be required to be registered under the federal securities laws. The value of Bitcoin, Ether and other digital assets may also be subject to momentum pricing due to speculation regarding future appreciation in value, leading to greater volatility that could adversely affect the value of our shares. Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing public, accounts for future appreciation in value, if any. We believe that momentum pricing of digital assets has increased the volatility of the price of digital assets. As a result, digital asset may be more likely to fluctuate in value due to changing investor confidence, which could impact future appreciation or depreciation of the digital asset service and technology companies in which we may invest and consequently the value of our shares and your investment in us. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Experience Fraud Market Manipulation Business Failures Security Failures Or Operational Problems Which May Adversely Affect Value Of Our Investments In Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Because
digital asset trading platforms may be operating out of compliance with regulation, our portfolio companies may experience fraud, market
manipulation, business failures, security failures or operational problems, which may adversely affect the value of our investments in
them.
We
may invest in companies that provide services to, or rely on, or integrate with electronic marketplaces where trading platform participants
may trade, buy and sell digital assets. The largest digital asset trading platforms are online and typically trade on a 24-hour basis,
publishing transaction price and volume data. Digital asset trading platforms are relatively new and may be operating out of compliance
with regulation. While many prominent digital asset trading platforms provide the public with significant information regarding their
ownership structure, management teams, corporate practices and regulatory compliance, many other digital asset trading platforms do not
provide this information. Furthermore, while digital asset trading platforms are and may continue to be subject to federal and state licensing
requirements in the United States, digital asset trading platforms do not currently appear to be subject to regulation in a similar manner
as other regulated trading platforms, such as national securities exchanges or designated contract markets. As a result, the marketplace
may lose confidence in digital asset trading platforms.
Many
digital asset trading platforms may be operating out of compliance with regulation, and do not provide the public with significant information
regarding their ownership structure, management team, corporate practices, cybersecurity, and regulatory compliance. In particular, those
located outside the United States may be subject to significantly less stringent regulatory and compliance requirements in their local
jurisdictions and may take the position that they are not subject to laws and regulations that would apply to a national securities exchange
or designated contract market in the United States, or may, as a practical matter, be beyond the ambit of U.S. regulators. As a result,
trading activity on or reported by these digital asset trading platforms is generally significantly less regulated than trading activity
on or reported by regulated U.S. securities and commodities markets, and may reflect behavior that would be prohibited in regulated U.S.
trading venues. Any actual or perceived false trading in the market, and any other fraudulent or manipulative acts and practices, could
adversely affect the market perception and value of digital assets, which could in turn adversely impact the value of our shares.
The
SEC has also identified possible sources of fraud and manipulation in the digital asset markets generally, including, among others (1) “wash-trading”;
(2) persons with a dominant position in Bitcoin manipulating Bitcoin pricing; (3) hacking of the Bitcoin network and trading
platforms; (4) malicious control of the Bitcoin network; (5) trading based on material, non-public information (for example,
plans of market participants to significantly increase or decrease their holdings in Bitcoin, new sources of demand for Bitcoin) or based
on the dissemination of false and misleading information; (6) manipulative activity involving purported “stablecoins,”
including Tether; and (7) fraud and manipulation at digital asset markets. The use or presence of such acts and practices in the
digital asset markets could, for example, falsely inflate the volume of Bitcoin present in the digital asset markets or cause distortions
in the price of Bitcoin, among other things that could adversely affect the companies in which we invest. Moreover, tools to detect and
deter fraudulent or manipulative trading activities, such as market manipulation, front-running of trades, and wash-trading, may not be
available to or employed by digital asset markets, or may not exist at all. Many digital asset markets also lack certain safeguards put
in place by exchanges for more traditional assets to enhance the stability of trading on the exchanges and prevent “flash crashes,”
such as limit-down circuit breakers. As a result, the prices of digital assets on such markets may be subject to larger and/or more frequent
sudden declines than assets traded on more traditional exchanges.
In
addition, over the past several years, some digital asset trading platforms have been closed, been subject to criminal and civil
litigation and have entered into bankruptcy proceedings due to fraud and manipulative activity, business failure and/or security breaches.
In many of these instances, the customers of such digital asset trading platforms were not compensated or made whole for the partial or
complete losses of their account balances in such digital asset trading platforms. While smaller digital asset trading platforms are less
likely to have the infrastructure and capitalization that make larger digital asset trading platforms more stable, larger digital asset
trading platforms are more likely to be appealing targets for hackers and malware and their shortcomings or ultimate failures are more
likely to have contagion effects on the digital asset ecosystem, and therefore may be more likely to be targets of regulatory enforcement
action.
Negative
perception, a lack of stability and standardized regulation in the digital asset markets and/or the closure or temporary shutdown of digital
asset trading platforms due to fraud, business failure, security breaches or government mandated regulation, and associated losses by
customers, may reduce confidence in and diminish the value of the digital asset service and technology companies in which we invest. These
potential consequences of such a digital asset trading platform’s failure could adversely affect the value of our assets and consequently
our shares. |
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| Portfolio Companies May Be Impacted By Activities Of Stablecoin Issuers And Regulatory Treatment Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
We
may invest in companies that hold, rely on, or provide services and technology related to stablecoins, and the value of such portfolio
companies may be impacted by the activities of stablecoin issuers and their regulatory treatment.
While
the Company will not directly invest in stablecoins, the companies in which we invest may hold, rely on, or provide services and technology
related to stablecoins. As a result, we may be exposed to these and other risks that stablecoins pose for the digital asset market, generally,
and digital asset services and technology companies, specifically. Stablecoins are digital assets designed to have a stable value over
time as compared to typically volatile digital assets, and are typically marketed as being pegged to a fiat currency, such as the U.S.
dollar, at a certain value. Although the prices of stablecoins are intended to be stable, in many cases their prices fluctuate, sometimes
significantly. This volatility has in the past impacted the prices of certain digital assets, and has at times caused certain stablecoins
to lose their “peg” to the underlying fiat currency. Stablecoins are a relatively new phenomenon, and it is impossible to
know all of the risks that they could pose to participants in the digital asset markets. For instance, stablecoins are reliant on the
U.S. banking system and U.S. treasuries, and the failure of either to function normally could impede the function of stablecoins or lead
to outsized redemption requests, and therefore could adversely affect the value of our investments in companies exposed to stablecoins
and consequently the value of our shares.
Some
stablecoins have been asserted to be securities under the federal securities laws. For example, in 2023, the SEC alleged that certain
stablecoins, such as BUSD and USDT, have been offered and sold as the subject of investment contracts, and therefore subject to regulation
as a security under applicable federal securities laws. A determination that a popular stablecoin is a security could lead to outsized
redemption requests, and therefore could adversely affect the broader value of the Shares. Given
the role that stablecoins play in global digital asset markets, their fundamental liquidity can have a dramatic impact on the broader
digital asset market, including the companies in which we intend to invest. Because a large portion of the digital asset market still
depends on stablecoins such as Tether and USDC, there is a risk that a disorderly de-pegging or a run on Tether or USDC could lead to
dramatic market volatility in, and/or materially and adversely affect the prices of, digital assets more broadly, which could materially
and adversely affect the value of the companies in which we intend to invest.
Volatility
in stablecoins, operational issues with stablecoins (for example, technical issues that prevent settlement), concerns about the sufficiency
of any reserves that support stablecoins, or regulatory concerns about stablecoin issuers or intermediaries could adversely affect the
price of digital assets and the value of digital asset companies in which we invest and in turn the value of our shares.
|
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| Expect Value Our Investments In Digital Asset Companies And In Turn Of Your Shares In Us Could Be Adversely Affected Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
The
future development and growth of the digital asset industry is subject to a variety of factors that are difficult to predict and evaluate.
If the digital asset industry does not grow as we expect, the value our investments in digital asset companies, and in turn of your shares
in us, could be adversely affected.
Digital
assets built on blockchain technology were only recently introduced and remain in the early stages of development. In addition, different
digital assets are designed for different purposes. Bitcoin, for instance, was designed to serve as a peer-to-peer electronic cash system,
while Ethereum was designed to be a smart contract and decentralized application platform. Many other digital asset networks — ranging
from cloud computing to tokenized securities networks — have only recently been established. The further growth and
development of any digital assets and their underlying networks and other cryptographic and algorithmic protocols governing the creation,
transfer, and usage of digital assets represent a new and evolving paradigm that is subject to a variety of factors that are difficult
to evaluate, including:
•
many
digital asset networks have limited operating histories, have not been validated in production, and are still in the process of developing
and making significant decisions that will affect the design, supply, issuance, functionality, and governance of their respective digital
assets and underlying blockchain networks, any of which could adversely affect their respective digital assets;
•
many
digital asset networks are in the process of implementing software upgrades and other changes to their protocols, which could introduce
bugs, security risks, or adversely affect the respective digital asset networks;
•
several
large networks, including Bitcoin and Ethereum, are developing new features to address fundamental speed, scalability, and energy usage
issues. If these issues are not successfully addressed, or are unable to receive widespread adoption, it could adversely affect the underlying
digital assets;
•
security
issues, bugs, and software errors have been identified with many digital assets and their underlying blockchain networks, some of which
have been exploited by malicious actors. There are also inherent security weaknesses in some digital assets, such as when creators of
certain digital asset networks use procedures that could allow hackers to counterfeit tokens. Any weaknesses identified with a digital
asset could adversely affect its price, security, liquidity, and adoption. If a malicious actor or botnet (a volunteer or hacked collection
of computers controlled by networked software coordinating the actions of the computers) obtains a majority of the compute or staking
power on a digital asset network, as has happened in the past, it may be able to manipulate transactions, which could cause financial
losses to holders, damage the network’s reputation and security, and adversely affect its value;
•
the
development of new technologies for mining, such as improved application-specific integrated circuits (commonly referred to as ASICs),
or changes in industry patterns, such as the consolidation of mining power in a small number of large mining farms, could reduce the security
of blockchain networks, lead to increased liquid supply of digital assets, and reduce a digital asset’s price and attractiveness;
•
if
rewards and transaction fees for miners or validators on any particular digital network are not sufficiently high to attract and retain
miners, a digital asset network’s security and speed may be adversely affected, increasing the likelihood of a malicious attack;
•
many
digital assets have concentrated ownership or an “admin key,” allowing a small group of holders to have significant unilateral
control and influence over key decisions related to their digital asset networks, such as governance decisions and protocol changes, as
well as the market price of such digital assets;
•
the
governance of many decentralized blockchain networks is by voluntary consensus and open competition, and many developers are not directly
compensated for their contributions. As a result, there may be a lack of consensus or clarity on the governance of any particular digital
asset network, a lack of incentives for developers to maintain or develop the network, and other unforeseen issues, any of which could
result in unexpected or undesirable errors, bugs, or changes, or stymie such network’s utility and ability to respond to challenges
and grow; and
•
many
digital asset networks are in the early stages of developing partnerships and collaborations, all of which may not succeed and adversely
affect the usability and adoption of the respective digital assets.
Various
other technical issues have also been uncovered from time to time that resulted in disabled functionalities, exposure of certain users’
personal information, theft of users’ assets, and other negative consequences, and which required resolution with the attention
and efforts of their global miner, user, and development communities. If any such risks or other risks materialize, and in particular
if they are not resolved, the development and growth of the digital asset industry may be significantly affected, and, as a result, the
business, operating results, and financial condition and value of the digital asset companies in which we invest could be adversely affected,
resulting in a decrease in the value of our shares and your investment in us. |
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| Use Of Public Permissionless Blockchains Is Novel Untested And May Contain Inherent Flaws Or Limitations Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
There
are many public, permissionless blockchains that can vary by, among other things, technical design, consensus mechanism, decentralization,
security, scalability, the use cases and applications supported. The use of public, permissionless blockchains is novel, untested and
may contain inherent flaws or limitations.
Blockchain
is an emerging technology that offers new capabilities which are not fully proven in use. The term “blockchain” refers to
a peer-to-peer distributed ledger that is secured using cryptography. A distributed ledger is a shared electronic database where information
is recorded and stored across multiple computers; a blockchain is one type of distributed ledger. A blockchain may be open and permissionless
or private and permissioned. The Bitcoin and Ethereum blockchains are examples of open, public, permissionless blockchains. Blockchain
derives its name from the way it stores transaction data in “blocks” that are linked together to form a chain. As the number
of transactions grows, so does the blockchain. Blocks record and confirm the time and sequence of transactions, which are then logged
into the blockchain network, which is, with respect to public blockchains, governed by rules agreed on by the network participants.
There
are many public, permissionless blockchains that can vary by, among other things, technical design, consensus mechanism, decentralization,
security, scalability, the use cases and applications supported. For example, there are numerous differences between the Bitcoin blockchain
and Ethereum blockchain set forth in the table below:
The
differences between the Bitcoin blockchain and Ethereum blockchain is exemplary of the many differences among the vast number of public,
permissionless blockchains, and underscores that blockchain technology is currently novel, untested and may contain inherent flaws or
limitations. In most cases, software used by digital asset issuing entities will be in an early development stage and still unproven.
As with other novel software products, the computer code underpinning blockchains may contain errors, or function in unexpected ways.
Therefore, there are unknown risks associated with blockchain technology, and therefore, investing in digital assets, even indirectly,
is subject to increased risk compared to traditional investments. Known risks associated with blockchain technology include:
•
a
blockchain may be vulnerable to attacks to the extent that, in terms of a proof-of-work blockchain, a “miner” or group of
“miners” possesses more than 50% of the blockchain’s “hashing” power or that, in terms of a proof-of-stake
blockchain, there is concentration in the ownership and/or staking of the blockchain’s native crypto asset;
•
proposed
changes to a blockchain’s protocol may not be adopted by a sufficient number of users and validators or users and miners, respectively,
which may result in competing blockchains with different native crypto assets and sets of participants (also known as a “fork”);
•
that
a blockchain’s protocol, including the code of any smart contracts running on the blockchain, may contain flaws that can be exploited
by attackers;
•
that
these blockchains have historically faced scalability challenges as they seek to increase their number of users. A greater number of users
increases the number of “nodes” that are involved in the processing and maintenance of particular blockchain, and an increase
in nodes decreases the network’s efficiency in processing transactions and may result in slowness of transaction processing and
finality. A greater number of users also gives rise to variability of transaction fees, and volatility of digital asset prices; and
•
that
the native crypto assets of these blockchains are bearer assets that can be irrevocably lost or stolen to the extent that the “private
keys” securing the assets are lost or stolen. |
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| Brand Reputation Business Operating Results And Financial Condition And Value Of Our Investments Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Our
portfolio companies will be subject to an extensive, highly evolving and uncertain regulatory landscape and any adverse changes to, or
their failure to comply with, any laws and regulations could adversely affect their brand, reputation, business, operating results, and
financial condition and the value of our investments.
The
digital asset companies in which we invest are subject to extensive laws, rules, regulations, policies, orders, determinations, directives,
treaties, and legal and regulatory interpretations and guidance in the markets in which they operate, which may include those governing
financial services and banking, federal government contractors, trust companies, securities, derivative transactions and markets, broker-dealers
and ATSs, commodities, credit, digital asset custody, exchange, and transfer, cross-border and domestic money and digital asset transmission,
commercial lending, usury, foreign currency exchange, privacy, data governance, data protection, cybersecurity, fraud detection, payment
services (including payment processing and settlement services), consumer protection, escheatment, antitrust and competition, bankruptcy,
tax, anti-bribery, economic and trade sanctions, anti-money laundering, and counter-terrorist financing. Many of these legal and regulatory
regimes were adopted prior to the advent of the internet, mobile technologies, digital assets, generative artificial intelligence (“AI”)
and related technologies. As a result, some applicable laws and regulations do not contemplate or address unique issues associated with
the digital asset economy, are subject to significant uncertainty, and vary widely across U.S. federal, state, and local and international
jurisdictions. These legal and regulatory regimes, including the laws, rules, and regulations thereunder, evolve frequently and may be
modified, interpreted, and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another. Moreover,
the complexity and evolving nature of the digital asset industry and the significant uncertainty surrounding the regulation of the digital
asset economy requires our
portfolio companies to exercise judgment as to whether certain laws, rules, and regulations apply to their businesses, and it is possible
that governmental bodies and regulators may disagree with their conclusions. To the extent our portfolio companies have not complied with
such laws, rules, and regulations, they could be subject to significant fines, revocation of licenses, limitations on or temporary or
permanent suspensions of their products and services, reputational harm, and other regulatory consequences, each of which may be significant
and could adversely affect our each of our portfolio companies’ business, operating results, and financial condition.
Additionally,
various governmental and regulatory bodies, including legislative and executive bodies, in the United States and in other countries may
adopt new laws and regulations, the direction and timing of which may be influenced by changes in the governing administrations and major
events in the digital asset economy.
Moreover,
our portfolio companies may offer products and services whose functionality or value depends in part on our management of token transaction
smart contracts, liquid staking, asset tracking, or other applications that provide novel forms of customer engagement and interaction
delivered via blockchain protocols. Our portfolio companies may also offer products and services whose functionality or value depends
on their ability to develop, integrate, or otherwise interact with such applications within the bounds of our legal and compliance obligations.
The legal and regulatory landscape for such products, including the law governing the rights and obligations between and among smart contract
developers and users and the extent to which such relationships entail regulated activity is uncertain and rapidly evolving. Our portfolio
companies’ interaction with those applications, and the interaction of other blockchain users with any smart contracts or assets
they may generate or control, could present legal, operational, reputational, and regulatory risks for their businesses.
Because
our portfolio companies may include businesses that offer a variety of innovative products and services to customers, many of their offerings
may be subject to significant regulatory uncertainty and they from time-to-time face regulatory inquiries regarding their current and
planned products. For instance, our portfolio companies may facilitate or engage in transactions involving certain stablecoin digital
assets. The regulatory treatment of fiat-backed stablecoins is highly uncertain and has drawn significant attention from legislative and
regulatory bodies around the world. The issuance and resale of such stablecoins may implicate a variety of banking, deposit, money transmission,
prepaid access and stored value, anti-money laundering, commodities, securities, sanctions, and other laws and regulations in the United
States and in other jurisdictions. There are substantial uncertainties on how these requirements would apply in practice, and our portfolio
companies may face substantial compliance costs to operationalize and comply with these rules. Moreover, our portfolio companies may offer
products and services that incorporate digital engagement, including recommendations, incentives, notifications, educational content and
relevant news. Legislators and regulators in jurisdictions in which our portfolio companies may operate have solicited comment from the
public or proposed or adopted laws or regulations relating to the use of gamification, predictive analytics or other digital engagement
features or practices in various products and services, including potential conflicts of interest that may arise as a result of such practices.
If such laws or regulations are adopted in jurisdictions in which our portfolio companies operate and deemed to apply to the products
and services they offer, our portfolio companies could be required to change the way they market their offerings and interact with existing
and prospective customers or modify certain features contained within their products and services, any of which could adversely impact
their business, operating results and financial condition. Certain products and services offered by our portfolio companies may be deemed
to be engaged in a form of regulated activity for which licensure is required or cause certain portfolio companies to become subject to
new and additional forms of regulatory oversight. Additionally, our portfolio companies may offer various staking, rewards, and lending
products, all of which are subject to significant regulatory uncertainty, and could implicate a variety of laws and regulations worldwide.
For example, there is regulatory uncertainty regarding the status of staking, lending, rewards, and other yield-generating activities
under the U.S. federal and state securities laws. Even if our portfolio companies implement policies and procedures, including geofencing
for certain products and services, designed to help monitor for and ensure compliance with existing and new laws and regulations, there
can be no assurance that our portfolio companies and their employees, contractors, and agents will not violate or otherwise fail to comply
with such laws and regulations. To the extent that our portfolio companies or their employees, contractors, or agents are deemed or alleged
to have violated or failed to comply with any laws or regulations, including related interpretations, orders,
determinations,
directives, or guidance, they could be subject to a litany of civil, criminal, and administrative fines, penalties, orders and actions,
including being required to suspend or terminate the offering of certain products and services. Moreover, to the extent our portfolio
companies’ customers nevertheless access their platforms, products or services outside of jurisdictions where our portfolio companies
have obtained required governmental licenses and authorization, they could similarly be subject to a variety of civil, criminal, and administrative
fines, penalties, orders and actions as a result of such activity.
Due
to their business activities, our portfolio companies may be subject to ongoing examinations, oversight, and reviews and currently are,
and expect in the future, to be subject to investigations and inquiries, by U.S. federal and state regulators and foreign financial service
regulators, many of which have broad discretion to audit and examine their businesses. Our portfolio companies may be periodically subject
to audits and examinations by these regulatory authorities. As a result of findings from these audits and examinations, regulators have,
are, and may in the future require our portfolio companies to take certain actions, including amending, updating, or revising their compliance
measures from time to time, limiting the kinds of customers that they provide services to, changing, terminating, or delaying their licenses
and the introduction of their existing or new product and services, and undertaking further external audit or being subject to further
regulatory scrutiny, including investigations and inquiries. Our portfolio companies may receive, examination reports citing violations
of rules and regulations, inadequacies in existing compliance programs, and requiring them to enhance certain practices with respect to
their compliance programs, including due diligence, monitoring, training, reporting, and recordkeeping. Implementing appropriate measures
to properly remediate these examination findings may require our portfolio companies to incur significant costs, and if they fail to properly
remediate any of these examination findings, they could face civil litigation, significant fines, damage awards, forced removal of certain
employees including members of their executive teams, barring of certain employees from participating in their businesses in whole or
in part, revocation of existing licenses, limitations on existing and new products and services, reputational harm, negative impact to
their existing relationships with regulators, exposure to criminal liability, or other regulatory consequences. Further, we believe increasingly
strict legal and regulatory requirements and additional regulatory investigations and enforcement, any of which could occur or intensify,
may continue to result in changes to our portfolio companies’ businesses, as well as increased costs, and supervision and examination
for portfolio companies, their agents, and service providers. Moreover, new laws, regulations, or interpretations may result in additional
litigation, regulatory investigations, and enforcement or other actions, including preventing or delaying our portfolio companies from
offering certain products or services offered by their competitors or could impact how our portfolio companies offer such products and
services.
Adverse
changes to, or our portfolio companies’ failure to comply with, any laws and regulations, may have an adverse effect on their reputations
and brands and their businesses, operating results, and financial conditions and consequently on the value of our shares.
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| Related To Sanctions Export Control And Anti Money Laundering Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
To
the extent our portfolio companies have international activities, they will be obligated to comply with the laws, rules, regulations,
and policies of a variety of jurisdictions and may be subject to inquiries, investigations, and enforcement actions by U.S. and/or non-U.S.
regulators and governmental authorities, including those related to sanctions, export control, and anti-money laundering.
To
the extent our portfolio companies have international activities, they will be obligated to comply with the laws, rules, regulations,
policies, and legal interpretations of the jurisdictions in which they operate. For instance, financial regulators outside the United
States have increased their scrutiny of digital asset trading platforms over time, such as by requiring digital asset trading platforms
operating in their local jurisdictions to be regulated and licensed under local laws. Moreover, laws regulating financial services, the
internet, mobile technologies, digital assets, and related technologies outside of the United States are highly evolving, extensive and
often impose different, more specific, or even conflicting obligations, as well as broader liability. In addition, to the extent our portfolio
companies are based in the United States and have international activities, they may be required to comply with laws and regulations related
to economic sanctions and export controls enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”),
the U.S. Department of Commerce’s Bureau of Industry and Security, and U.S. anti-money laundering and counter-terrorist financing
laws and regulations, enforced by the U.S. Financial Crimes Enforcement Network (“FinCEN”) and certain state financial services
regulators. U.S. sanctions and export control laws and regulations generally restrict dealings by persons subject to U.S. jurisdiction
with certain
jurisdictions that are the target of comprehensive embargoes, currently the Crimea Region, the Donetsk People’s Republic, and the
Luhansk People’s Republic of Ukraine, Cuba, Iran, North Korea, and Syria, as well as with persons, entities, and governments identified
on certain prohibited party lists. Moreover, as a result of the Russian invasion of Ukraine, the United States, the E.U., the United Kingdom,
and other jurisdictions have imposed wide-ranging sanctions on Russia and Belarus and persons and entities associated with Russia and
Belarus. There can be no certainty regarding whether such governments or other governments will impose additional sanctions, or other
economic or military measures against Russia or Belarus. While we intend to invest in companies with robust compliance programs, there
can be no guarantee that our portfolio companies’ compliance programs will prevent transactions with particular persons or addresses
or prevent every potential violation of OFAC sanctions. Any present or future government inquiries of our portfolio companies relating
to sanctions could result in negative consequences, including costs related to government investigations, financial penalties, and harm
to our reputation. The impact on us related to such matters could be substantial.
Regulators
worldwide frequently study each other’s approaches to the regulation of the digital asset economy. Consequently, developments in
any jurisdiction may influence other jurisdictions. New developments in one jurisdiction may be extended to additional services and other
jurisdictions. As a result, the risks created by any new law or regulation in one jurisdiction are magnified by the potential that they
may be replicated, affecting the business of our portfolio companies in another place or involving another service. Conversely, if regulations
diverge worldwide, our portfolio companies may face difficulty adjusting their products, services, and other aspects of their businesses
with the same effect. These risks will be heightened to the extent our portfolio companies face increased competitive pressure from other
similarly situated businesses that engage in regulatory arbitrage to avoid the compliance costs associated with regulatory changes. These
regulatory risks related to international activities may have an adverse effect on our portfolio companies’ businesses, operating
results, and financial conditions and consequently on the value of our shares. |
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| Customers Fiat Currencies And Digital Assets Such Failure Could Adversely Impact Such Portfolio Companys Business Operating Results And Financial Condition Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
To
the extent any of our portfolio companies fail to safeguard and manage their and their customers’ fiat currencies and digital assets,
such failure could adversely impact such portfolio company’s business, operating results, and financial condition.
We
may invest in portfolio companies that hold cash and safeguard digital assets on behalf of their customers and hold fiat and digital assets
for corporate investment and operating purposes. Safeguarding customers’ cash and digital assets is integral to building trust with
customers.
We
and our portfolio companies may rely on vendors or financial partners’ abilities to manage and accurately hold fiat currency and
digital assets, and such management and custody requires a high level of internal controls. We and our portfolio companies are limited
in our ability to influence or manage the controls and processes of third-party partners or vendors and may be dependent on our partners’
and vendors’ operations, liquidity and financial condition to manage these risks. As we and our portfolio companies grow and expand,
we also must scale and strengthen our internal controls and processes, and monitor our third party partners’ and vendors’
ability to similarly scale and strengthen. Failure to do so could adversely impact our and our portfolio companies’ business, operating
results, and financial condition. This is important both to the actual controls and processes and the public perception of the same.
Any
inability by us or our portfolio companies to maintain safeguarding procedures, perceived or otherwise, could harm our business, operating
results, and financial condition.
Any
material failure by our portfolio companies or their partners to maintain the necessary controls, policies, procedures or to manage digital
assets they hold could also adversely impact such portfolio company’s business, operating results, and financial condition. Moreover,
because custodially held digital assets may be considered to be the property of a bankruptcy estate, in the event of a bankruptcy, digital
assets our portfolio companies hold in custody on behalf of their customers could be subject to bankruptcy proceedings and such customers
could be treated as general unsecured creditors.
We
expect that the digital assets companies in which we invest will have developed and maintained administrative, technical, and physical
safeguards designed to comply with applicable legal requirements and industry standards. However, it is nevertheless possible that hackers,
employees or service providers acting contrary
to such policies, or others could circumvent these safeguards to improperly access our portfolio companies’ systems or documents,
or the systems or documents of their business partners, agents, or service providers, and improperly access, obtain, or misuse customer
digital assets and funds. The methods used to obtain unauthorized access, disable, or degrade service or sabotage systems are also constantly
changing and evolving and may be difficult to anticipate or detect for long periods of time. Insurance coverage for security breaches
and security related matters in the digital asset sector is limited and may not cover the extent of loss nor the nature of such loss.
The ability to maintain insurance is also subject to the insurance carriers’ ongoing underwriting criteria. Any loss of customer
cash or digital assets could result in a subsequent lapse in insurance coverage, which could cause a substantial business disruption,
adverse reputational impact, inability to compete with competitors, and regulatory investigations, inquiries, or actions. Additionally,
to the extent our portfolio companies conduct transactions through our websites or other electronic channels, such transactions may create
risks of fraud, hacking, unauthorized access or acquisition, and other deceptive practices. Any security incident resulting in a compromise
of customer assets could result in substantial costs and require the notification of impacted individuals, and in some cases regulators,
of a possible or actual incident, exposure to regulatory enforcement actions, including substantial fines, limit the ability to provide
services, result in litigation, significant financial losses, reputational damage, and adversely affect business, operating results, financial
condition, and cash flows of our portfolio companies and consequently will have a corresponding negative impact on the value of our shares.
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| We May Invest In Portfolio Companies Our Portfolio Companies Platforms Are Exploited Such Illegal Activities Our Business Could Be Adversely Affected Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
We
may invest in portfolio companies that are at risk of being exploited to facilitate illegal activity such as fraud, money laundering,
gambling, tax evasion, and scams. If any of our portfolio companies’ platforms are exploited such illegal activities, our business
could be adversely affected.
We
may invest in portfolio companies that facilitate digital asset transactions and are at risk of being exploited to facilitate illegal
activity including fraud, money laundering, gambling, tax evasion, and scams. Such companies may be specifically targeted by individuals
seeking to conduct fraudulent transfers, and it may be difficult or impossible to detect and avoid such transactions in certain circumstances.
The use of a portfolio company’s platform for illegal or improper purposes could subject it to claims, individual and class action
lawsuits, and government and regulatory investigations, prosecutions, enforcement actions, inquiries, or requests that could result in
liability and reputational harm for such portfolio company. Moreover, certain activities that may be legal in one jurisdiction may be
illegal in another jurisdiction, and certain activities that are at one time legal may in the future be deemed illegal in the same jurisdiction.
As a result, there is significant uncertainty and cost associated with detecting and monitoring transactions for compliance with local
laws. In the event that a customer of one of our portfolio companies is found responsible for intentionally or inadvertently violating
the laws in any jurisdiction, such portfolio company may be subject to governmental inquiries, enforcement actions, prosecuted, or otherwise
held secondarily liable for aiding or facilitating such activities. Changes in law have also increased the penalties for money transmitters
for certain illegal activities, and government authorities may consider increased or additional penalties from time to time.
Owners
of intellectual property rights or government authorities may seek to bring legal action against money transmitters, for involvement in
the sale of infringing or allegedly infringing items. Any threatened or resulting claims against one of our portfolio companies could
result in reputational harm, and any resulting liabilities, loss of transaction volume, or increased costs could harm to such portfolio
company.
Moreover,
while fiat currencies can be used to facilitate illegal activities, digital assets are relatively new and, in many jurisdictions, may
be lightly regulated or largely unregulated. Many types of digital assets have characteristics, such as the speed with which digital currency
transactions can be conducted, the ability to conduct transactions without the involvement of regulated intermediaries, the ability to
engage in transactions across multiple jurisdictions, the irreversible nature of certain digital asset transactions, and encryption technology
that anonymizes these transactions, that make digital assets susceptible to use in illegal activity. U.S. federal and state and foreign
regulatory authorities and law enforcement agencies, such as the DOJ, SEC, CFTC, FTC, FinCEN, or the Internal Revenue Service (“IRS”),
and various state securities and financial regulators have taken and continue to take legal action against persons and entities alleged
to be engaged in fraudulent schemes or other illicit activity involving digital assets. Some digital assets that incorporate privacy-enhancing
features that obscure the identities of sender and receiver, and may prevent law enforcement officials
from tracing the source of funds on the blockchain. As a result, facilitating transactions in these digital assets may lead to increased
risk of liability arising out of anti-money laundering and economic sanctions laws and regulations.
We
cannot ensure that our portfolio companies will be able to detect all illegal activity using their products or services. If any of our
portfolio companies’ customers use their products or services to further such illegal activities, our portfolio companies’
business could be adversely affected having an adverse impact on their operations and the value of their shares which in turn would have
a corresponding adverse effect on the value of our shares and could cause you to lose all or substantially all of the value of your investment
in us. |
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| We May Invest In Portfolio Companies That Hold Investments In Decentralized Finance Protocols And Our Portfolio Companies May Suffer Losses If Such Protocols Do Not Function As Expected Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
We
may invest in portfolio companies that hold their investments in DeFi protocols and our portfolio companies may suffer losses if such
protocols do not function as expected.
We
may invest in portfolio companies that hold their investments in various DeFi protocols. These protocols typically achieve their investment
purposes through self-executing smart contracts that allow users to invest digital assets in a pool from which other users can borrow
without requiring an intermediate party to facilitate these transactions. These investments typically earn interest to the investor based
on the rates at which borrowers repay the loan, and can generally be withdrawn with no restrictions. However, these DeFi protocols are
subject to various risks, including uncertain regulatory and compliance conditions in large markets such as the United States, the risk
that the underlying smart contract is insecure, the risk that borrowers may default and the investor will not be able to recover its investment,
the risk that any underlying collateral may experience significant volatility, and the risk of certain core developers with protocol administration
rights can make unauthorized or harmful changes to the underlying smart contract. If any of these risks materialize, our portfolio companies’
investments in these DeFi protocols may be adversely impacted, which may in-turn adversely affect the value of our shares.
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| Due To Unfamiliarity And Some Negative Publicity Associated With Digital Asset Platforms Confidence Or Interest In Digital Asset Platforms May Decline Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Due
to unfamiliarity and some negative publicity associated with digital asset platforms, confidence or interest in digital asset platforms
may decline.
We
may invest in portfolio companies that provide, rely on, or relate to digital asset trading platforms and other digital asset platforms.
Digital asset platforms are relatively new and may be operating out of compliance with regulation, and do not provide the public with
significant information regarding their ownership structure, management team, corporate practices, cybersecurity, and regulatory compliance.
As a result, customers and the general public may lose confidence or interest in digital asset platforms.
Since
the inception of the digital asset economy, numerous digital asset platforms have been sued, investigated, or shut down due to fraud,
manipulative practices, business failure, and security breaches. In many of these instances, customers of these platforms were not compensated
or made whole for their losses. Larger platforms are more appealing targets for hackers and malware, and may also be more likely to be
targets of regulatory enforcement actions.
In
addition, there have been reports that a significant amount of digital asset trading volume on digital asset platforms is fabricated and
false in nature, with a specific focus on unregulated platforms located outside the United States. Such reports may indicate that the
market for digital asset platform activities is significantly smaller than otherwise understood.
Negative
perception, a lack of stability and standardized regulation in the digital asset economy, and the closure or temporary shutdown of digital
asset platforms due to fraud, business failure, hackers or malware, or government mandated regulation, and associated losses suffered
by customers may continue to reduce confidence or interest in the digital asset economy and result in greater volatility of the prices
of assets, including significant depreciation in value. Any of these events could have an adverse impact on the business and perception
of our portfolio companies, which could adversely affect the value of our portfolio companies, which would in-turn adversely affect the
value of our shares. |
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| Digital Assets May Make It Difficult To Effectively React To Proposed Legislation And Regulation Of Digital Assets Or Digital Asset Platforms Adverse To Our Business Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
The
digital asset economy is novel. As a result, policymakers are just beginning to consider what a regulatory regime for digital assets would
look like and the elements that would serve as the foundation for such a regime. This less developed consideration of digital assets may
make it difficult to effectively react to proposed legislation and regulation of digital assets or digital asset platforms adverse to
our business.
As
digital assets have grown in both popularity and market size, various U.S. federal, state, and local and foreign governmental organizations,
consumer agencies and public advocacy groups have been examining the operations of digital asset networks, users and platforms, with a
focus on how digital assets can be used to launder the proceeds of illegal activities, fund criminal or terrorist enterprises, and the
safety and soundness of platforms and other service providers that hold digital assets for users. Many of these entities have called for
heightened regulatory oversight, and have issued consumer advisories describing the risks posed by digital assets to users and investors.
For instance, in 2022, the White House published a fact sheet described as the first-ever “Comprehensive Framework for Responsible
Development of Digital Assets,” which encouraged “agencies to issue guidance and rules to address current and emergent risks
in the digital asset ecosystem.”
Competitors,
including traditional financial services, have spent years cultivating professional relationships with relevant policymakers on behalf
of their industry so that those policymakers may understand that industry, the current legal landscape affecting that industry, and the
specific policy proposals that could be implemented in order to responsibly develop that industry. The lobbyists working for these competitors
have similarly spent years developing and working to implement strategies to advance these industries. Members of the digital asset
economy have started to engage policymakers directly and with the help of external advisors and lobbyists. However, this work is in a
relatively nascent stage. As a result, new laws and regulations may be proposed and adopted in the United States and internationally,
or existing laws and regulations may be interpreted in new ways, that harm the digital asset economy or digital asset platforms, which
could adversely impact the business of our portfolio companies, have an adverse impact on their operations and the value of their shares
and in turn have a corresponding adverse effect on the value of our shares and cause you to lose all or substantially all of the value
of your investment in us. |
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| Political And Economic Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Political
and economic risks
Downgrades
by rating agencies to the U.S. government’s credit rating or concerns about its credit and deficit levels in general could cause
interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms. In
addition, a decreased U.S. government credit rating could create broader financial turmoil and uncertainty, which may weigh heavily on
our financial performance and the value of our Common Shares.
Deterioration
in the economic conditions in the Eurozone and other regions or countries globally and the resulting instability in global financial markets
may pose a risk to our business. Financial markets have been affected at times by a number of global macroeconomic events, including the
following: large sovereign debts and fiscal deficits of several countries in Europe and in emerging markets jurisdictions, levels of non-performing
loans on the balance sheets of European banks, the effect of the United Kingdom (the “U.K.”) leaving the European Union (the
“EU”), instability in the Chinese capital markets and pandemics such as COVID-19. Global market and economic disruptions have
affected, and may in the future affect, the U.S. capital markets, which could adversely affect our business, financial condition or results
of operations. We cannot assure you that market disruptions in Europe and other regions or countries, including the increased cost of
funding for certain governments and financial institutions, will not impact the global economy, and we cannot assure you that assistance
packages will be available, or if available, be sufficient to stabilize countries and markets in Europe or elsewhere affected by a financial
crisis. To the extent uncertainty regarding any economic recovery in Europe or elsewhere negatively impacts consumer confidence and consumer
credit factors, our and our portfolio companies’ business, financial condition and results of operations could be significantly
and adversely affected. Moreover, there is a risk of both industry-specific and broad-based corrections and/or downturns in the equity
and credit markets. Any of the foregoing could have a significant impact on the markets in which we operate and could have a material
adverse impact on our business prospects and financial condition. Various
social and political circumstances in the United States and around the world (including wars and other forms of conflict, terrorist acts,
security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics), may
also contribute to increased market volatility and economic uncertainties or deterioration in the United States and worldwide. Such events,
including rising trade tensions between the United States and China, other uncertainties regarding actual and potential shifts in U.S.
and foreign, trade, economic and other policies with other countries, the war between Russia and Ukraine and the conflict in Israel, could
adversely affect our business, financial condition or results of operations. These market and economic disruptions could negatively impact
the operating results of our portfolio companies.
Additionally,
the Federal Reserve has raised interest rates multiple times since 2022. These developments, along with the United States government’s
credit and deficit concerns, global economic uncertainties and market volatility, could cause interest rates to be volatile, which may
negatively impact our performance. |
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| Inflation May Adversely Affect Business Results Of Operations And Financial Condition Of Our Portfolio Companies Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Inflation
may adversely affect the business, results of operations and financial condition of our portfolio companies.
Certain
of our portfolio companies may be impacted by inflation. If such portfolio companies are unable to pass any increases in their costs along
to their customers, it could adversely affect their results, which could in turn adversely impact our results of operations. In addition,
any projected future decreases in our portfolio companies’ operating results due to inflation could adversely impact the fair value
of our investments. Any decreases in the fair value of our investments could result in future unrealized losses and therefore reduce our
net assets resulting from operations. Additionally, the Federal Reserve has raised, and has indicated its intent to continue raising,
certain benchmark interest rates in an effort to combat inflation. There is no guarantee that the actions taken by the Federal Reserve
will reduce or eliminate inflation. |
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| Legal And Regulatory Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Legal
and regulatory risks
Government
counterparties may have the discretion to change or increase regulation of a portfolio company’s operations, or implement laws or
regulations affecting the portfolio company’s operations, separate from any contractual rights it may have. A portfolio company
also could be materially and adversely affected as a result of statutory or regulatory changes or judicial or administrative interpretations
of existing laws and regulations that impose more comprehensive or stringent requirements on such company. Governments have considerable
discretion in implementing regulations that could impact a portfolio company’s business, and because its business may provide basic,
everyday services, and face limited competition, governments may be influenced by political considerations and may make decisions that
adversely affect a portfolio company’s business. There can be no assurance that the relevant governmental entities will not legislate,
impose regulations or change applicable laws or act contrary to the law in a way that would materially and adversely affect the business
of our investments.
We
may seek to acquire a significant stake in certain securities or instruments and may invest in certain industries that are subject to
special regulatory oversight. In such event, we may be required to file a notification with a governmental agency, seek regulatory approval
or comply with other regulatory requirements. These requirements may result in a delay in, or prohibit, the acquisition of an investment.
Compliance with regulatory requirements may result in additional costs to us. Such restrictions may also restrict or delay our ability
to liquidate an investment. |
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| Investment And Trading Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Investment
and trading risks
All
investments risk the loss of capital. No guarantee or representation is made that our investment program will be successful. There is
no assurance that we will be able to generate positive returns for our investors or that the returns will be commensurate with the risks
of investing in companies, securities and instruments and strategies described herein. There can be no assurance that our returns will
not be correlated with a traditional portfolio of stocks or bonds. Our investment program may utilize investment techniques such as investing
in preferred shares and convertible debt, and limited diversification, which practices can, in certain circumstances, magnify the adverse
impact of market moves to which we may be subject or cause our net assets to appreciate or depreciate at a greater rate. We may invest
in highly volatile securities or markets, which could impair our profitability or result in losses. |
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| Adversely Affect Our Portfolio Companies Current And Projected Business Financial Condition And Results Of Operations And Result In Decline In Valuation Of Our Investments Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Adverse
developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance
by financial institutions, could adversely affect our portfolio companies’ current and projected business, financial condition and
results of operations and result in a decline in the valuation of our investments.
Actual
events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or other
companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these
kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10,
2023, Silicon Valley Bank (SVB) was closed by the California Department of Financial Protection and Innovation, which appointed the Federal
Deposit Insurance Corporation (FDIC) as receiver. Similarly, on March 12, 2023, Signature Bank and Silvergate Capital Corp. were
each swept into receivership. Although a statement by the Department of the Treasury, the Federal Reserve and the FDIC indicated that
all depositors of SVB would have access to all of their money after only one business day of closure, including funds held in uninsured
deposit accounts, borrowers under credit agreements, letters of credit and certain other financial instruments with SVB, Signature Bank
or any other financial institution that is placed into receivership by the FDIC may be unable to access undrawn amounts thereunder. Although
we are not a borrower or party to any such instruments with SVB, Signature Bank or any other financial institution currently in receivership,
if any of our portfolio companies are parties to such instruments and are unable to access funds pursuant to such instruments or lending
arrangements with such a financial institution, such portfolio companies’ business, financial condition and results of operations
could be adversely affected, which could, in turn, result in a decline in the valuation of our investments.
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| Indemnification Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Indemnification
We
have indemnification obligations. Such liabilities may be material and have an adverse effect on the returns to investors. Our indemnification
obligations would be payable from our assets, and such indemnification obligations will survive the winding-up and dissolution of the
Company. |
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| Potential Conflicts Of Interest Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Potential
conflicts of interest
Instances
may arise where the interests of the Adviser and its affiliates may potentially or actually conflict with our interests and the interests
of our stockholders. The following discussion enumerates certain potential conflicts of interest that should be carefully evaluated before
making an investment in our shares. The discussion below does not seek to exhaustively describe all potential conflicts of interest.
The
Adviser’s Investment Committee will have substantial responsibilities in connection with the management of other investment funds,
accounts and investment vehicles. Members of the Investment Committee serve, or may serve, as officers, directors, members, or principals
of entities that operate in the same or a related line of business as we do, or of investment funds, accounts, or investment vehicles
managed by the Adviser. Similarly, the principals of our Sponsor, and their respective affiliates may have other funds with similar, different
or competing investment objectives, and such funds may not all be affiliated. For example, our co-founders Dr. Najamul Hasan Kidwai,
Michael (Xu) Zhao, Michael Lempres and David Hytha have invested in early-stage digital asset services and technology companies and, subject
to the Adviser’s conflicts of interest procedures, we may seek to invest in the same companies. In serving in these multiple capacities,
they may have obligations to other investors in those entities, the fulfillment of which may not be in the best interests of us or our
stockholders. These activities also may distract them from sourcing or servicing new investment opportunities for us or slow our rate
of investment. Any failure to manage our business and our future growth effectively could have a material adverse effect on our business,
financial condition, results of operations and cash flows.
The
Adviser’s Investment Committee members, officers and employees, and the Sponsor’s controlling shareholders, managers, officers
and employees are investors in private companies, BDCs, ETFs and ETPs and in the future may become investors in additional private companies,
BDCs, ETFs and ETPs and may receive investment opportunities, such as opportunities to invest in new private companies, BDCs, ETFs and
ETPs having desirable growth potential, that we may not have access to or which may not be appropriate for us to consider.
In
addition, Dr. Kidwai is a shareholder of Forge Global Holdings, Inc. (“Forge Global”), the parent of Forge Securities
LLC (“Forge Securities”), a registered broker-dealer that operates as an ATS, on which we intend to purchase securities in
private transactions as part of our principal investment strategy. Dr. Kidwai owns less than 1% of Forge Global. He is not employed
by Forge Global or Forge Securities and is not in a control relationship with these entities. Consistent with its duty of best execution,
the Adviser’s decision to select a particular private secondary marketplace, including Forge Securities, to facilitate a purchase
or sale transaction for us will not be affected by any special compensation arrangement. No special compensation relationship exists between
Forge Securities and the Adviser. The Adviser may select Forge Securities to facilitate any such transaction simply because it believes
Forge Securities will provide the best execution for our transaction in the circumstances.
In
connection with our Investment Advisory Agreement, we have agreed to indemnify and hold harmless the Adviser and its and its affiliates’
respective directors, officers, Investment Committee members, employees, members, managers, partners and stockholders (collectively, with
the Adviser, the “Adviser Affiliates”) against all claims or liabilities (including reasonable attorneys’ fees) and
other expenses an Adviser Affiliate reasonably incurs in any actual or threatened legal or other proceeding arising out of or in connection
with providing investment advisory services to us. We will not be obligated to indemnify the Adviser Affiliates if such liability arises
out of willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations under the Investment Advisory Agreement.
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| Possession Of Material Non Public Information Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Possession
of material non-public information
The
Investment Committee members may have access to material nonpublic information of portfolio companies in which we invest. In the event
that we become subject to trading restrictions under the internal trading policies of those companies or as a result of applicable law
or regulations, we could be prohibited for a period of time from purchasing or selling the securities of such companies, and this prohibition
may have an adverse effect on our ability to achieve our investment objective. |
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| Related To Co Investments Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Risks
related to co-investments
We
may be prohibited under the Investment Company Act from conducting certain transactions with our affiliates without the prior approval
of our directors who are not interested persons and, in some cases, the prior approval of the SEC. We may co-invest with our Adviser or
our officers and directors in a manner consistent with guidance promulgated under the no-action position of the SEC set forth in Mass
Mutual Life Ins. Co. (SEC No-Action Letter, June 7, 2000), on which similarly situated funds like us rely in order to co-invest in
a single class of privately placed securities so long as certain conditions are met, including that our investment adviser or an affiliate,
acting on our behalf and on behalf of other clients, negotiates no term other than price. We do not have a co-investment arrangement with
our Adviser or our officers and directors and we have no present intention to co-invest with our Adviser or our officers and directors.
In the event that we seek to make such co-investments, we would only do so in reliance of the Mass Mutual no-action letter or file an
application with the SEC seeking an order granting us relief to do so. Further, in the event that we seek to make such co-investments,
our Board including a majority of our independent directors would approve an allocation policy to ensure equitable treatment among the
co-investment participants. |
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| Provisions Of Maryland General Corporation Law And Our Organizational Documents Could Deter Takeover Attempts And Have Adverse Impact On Prices Of Our Common Shares Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Provisions
of the Maryland General Corporation Law and our organizational documents could deter takeover attempts and have an adverse impact on the
prices of our Common Shares.
The
Maryland General Corporation Law and our organizational documents contain provisions that may discourage, delay or make more difficult
a change in control or the removal of our directors. Our Board has adopted a resolution that any business combination between us and any
other person is exempted from the provisions of the Business Combination Act, provided that the business combination is first approved
by the Board, including a majority of the directors who are not interested persons as defined in the Investment Company Act. This resolution
may be altered or repealed in whole or in part at any time; however, our Board will adopt resolutions so as to make us subject to the
provisions of the Maryland Business Combination Act only if our Board determines that it would be in our best interests and if the SEC
staff does not object to our determination that being subject to the Business Combination Act does not conflict
with
the Investment Company Act. If this resolution is repealed, or the Board does not otherwise approve a business combination, the statute
may discourage others from trying to acquire control and increase the difficulty of consummating any offer.
Our
Board could also amend our bylaws to opt into the Maryland Control Share Acquisition Act; provided, however we would only do so if our
Board determines that it would be in our best interests and if it is determined that opting into the Maryland Control Share Acquisition
Act does not conflict with the Investment Company Act. The Maryland Control Share Acquisition Act also may make it more difficult for
a third party to obtain control and increase the difficulty of consummating such a transaction. Recent federal court decisions, however,
have decided that an opt into the Maryland Control Share Acquisition Act violates certain requirements of the Investment Company Act.
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| Our Stock Price May Be Volatile And Could Decline Significantly And Rapidly Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Our
stock price may be volatile, and could decline significantly and rapidly.
If
the trading price of our Common Shares is above the level that investors determine is reasonable for our Common Shares, some investors
may attempt to short our Common Shares after trading begins, which would create additional downward pressure on the trading price of our
Common Shares, and there will be more ability for such investors to short our Common Shares in early trading than is typical for an underwritten
public offering given the limited amount of contractual lock-up agreements or other restrictions on transfer.
•
The
trading price of our Common Shares following the listing also could be subject to wide fluctuations in response to numerous factors in
addition to the ones described in the preceding risk factors, many of which are beyond our control, including:
•
actual
or anticipated fluctuations in our financial condition, results of operations, or operating metrics and those of our competitors; the
number of shares of our Common Shares made available for trading;
•
failure
of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our
company, or variance in our financial performance from expectations of securities analysts;
•
changes
in our projected operating and financial results;
•
future
sales of our Common Shares by us or our stockholders;
•
changes
in our board of directors, senior management, or key personnel;
•
the
trading volume of our Common Shares;
•
general
economic and market conditions; and
•
other
events or factors, including those resulting from war, incidents of terrorism, pandemics, elections, or responses to these events.
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| Active Liquid And Orderly Market For Our Common Shares May Not Develop Or Be Sustained You May Be Unable To Sell Your Common Shares At Or Above Price At Which You Purchased M Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
An
active, liquid, and orderly market for our Common Shares may not develop or be sustained. You may be unable to sell your Common Shares
at or above the price at which you purchased them.
We
currently expect our Common Shares to be listed and traded on NYSE within 60 days following the effectiveness of this Registration
Statement on Form N-2. We will obtain approval from the NYSE to list the Common Shares prior to seeking effectiveness of this Registration
Statement. Prior to listing on NYSE, there has been no public market for our Common Shares. Moreover, consistent with Regulation M
and other federal securities laws applicable to our listing, the Company has no specific plans to sell shares in the public market following
the listing. It is possible that the underwriters sale of our common stock will result in an oversupply of our common stock on NYSE, which
may cause the price of our Common Shares to decrease. In the case of a lack of demand for our common stock, the trading price of our Common
Shares could decline significantly and rapidly after our listing. In the case of a lack of supply of our Common Shares, the trading price
of our Common Shares may rise to an unsustainable level. Further, institutional investors
may be discouraged from purchasing our Common Shares if they are unable to purchase a block of our Common Shares in the open market in
a sufficient size for their investment objectives. If institutional investors are unable to purchase our Common Shares in a sufficient
amount for their investment objectives, the market for our Common Shares may be more volatile without the influence of long-term institutional
investors holding significant amounts of our Common Shares. Therefore, an active, liquid, and orderly trading market for our Common Shares
may not initially develop or be sustained, which could significantly depress the trading price of our Common Shares and/or result in significant
volatility, which could affect your ability to sell your Common Shares. |
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| Common Stock Of Closed Net Asset Values And We Cannot Assure You That Market Price Of Our Shares Will Not Decline Below Our Net Asset Value Per Share Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Common
stock of closed-end management investment companies has in the past frequently traded at discounts to their NAVs, and we cannot assure
you that the market price of our shares will not decline below our NAV per share.
Common
stock of closed-end management investment companies has in the past frequently traded at discounts to their respective NAVs and our Common
Shares may also be discounted in the market. This characteristic of closed-end management investment companies is separate and distinct
from the risk that our NAV per share may decline. We cannot predict whether shares of our Common Shares will trade above, at or below
our NAV per share. In addition, if our Common Shares trade below our NAV per share, we will generally not be able to sell additional Common
Shares to the public at market price except (1) in connection with a rights offering to our existing stockholders, (2) with
the consent of the majority of our common stockholders, (3) upon the conversion of a convertible security in accordance with its
terms or (4) under such circumstances as the SEC may permit. |
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| If We Issue Preferred Stock Net Asset Value And Market Value Of Our Common Shares Will Likely Become More Volatile Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
If
we issue preferred stock, the NAV and market value of our Common Shares will likely become more volatile.
We
cannot assure you that the issuance of preferred stock would result in a higher yield or return to our stockholders. The issuance of preferred
stock would likely cause the NAV and market value of our Common Shares to become more volatile. If the dividend rate on the preferred
stock were to approach the net rate of return on our investment portfolio, the benefit of leverage to the holders of our Common Shares
would be reduced. If the dividend rate on the preferred stock were to exceed the net rate of return on our portfolio, the leverage would
result in a lower rate of return to the holders of our Common Shares than if we had not issued preferred stock. Any decline in the NAV
of our investments would be borne entirely by the holders of our Common Shares. Therefore, if the market value of our portfolio were to
decline, the leverage would result in a greater decrease in NAV to the holders of our Common Shares than if we were not leveraged through
the issuance of preferred stock. This greater NAV decrease would also tend to cause a greater decline in the market price for our Common
Shares. We might be in danger of failing to maintain the required asset coverage of the preferred stock or of losing our ratings, if any,
on the preferred stock or, in an extreme case, our current investment income might not be sufficient to meet the dividend requirements
on the preferred stock. In order to counteract such an event, we might need to liquidate investments in order to fund a redemption of
some or all of the preferred stock. In addition, we would pay (and the holders of our Common Shares would ultimately bear) all costs and
expenses relating to the issuance and ongoing maintenance of the preferred stock, including higher advisory fees if our total return exceeds
the dividend rate on the preferred stock. |
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| We Will Be Subject To United States Federal Income Tax At Corporate Rates If We Are Unable To Qualify And Maintain Our Tax Treatment As Regulated Investment Company Under Subchapter Of Code Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
We
will be subject to U.S. federal income tax at corporate rates if we are unable to qualify and maintain our tax treatment as a RIC under
Subchapter M of the Code.
To
maintain RIC tax treatment under the Code, we must meet the following minimum annual distribution, income source and asset diversification
requirements. See “Certain U.S. Federal Income Tax Considerations.”
The
Annual Distribution Requirement for a RIC will be satisfied if we timely distribute to our stockholders on an annual basis at least the
sum of (i) 90% of our “investment company taxable income,” which
is generally our net ordinary income (but without regard to the deduction for dividends paid) plus the excess, if any, of realized net
short term capital gains over realized net long term capital losses, and (ii) 90% of our net tax-exempt income for that taxable year.
In addition, a RIC may, in certain cases, satisfy the 90% distribution requirement by distributing dividends relating to a taxable year
after the close of such taxable year under the “spillback dividend” provisions of Subchapter M. We would be taxed, at U.S.
federal corporate rates, on retained income and/or gains, including any short term capital gains or long term capital gains. Because we
may use debt financing, we may be subject to (i) an asset coverage ratio requirement under the Investment Company Act and may, in
the future, be subject to (ii) certain financial covenants under loan and credit agreements that could, under certain circumstances,
restrict us from making distributions necessary to satisfy the distribution requirements. If we are unable to obtain cash from other sources,
or choose or are required to retain a portion of our taxable income or gains, we could (1) be required to pay excise taxes or (2) fail
to qualify for RIC tax treatment, and thus become subject to U.S. federal income tax at corporate rates on our taxable income.
The
income source requirement will be satisfied if we obtain at least 90% of our annual gross income from dividends, interest, payments with
respect to securities loans, gains from the sale of stock or securities or foreign currencies, net income from an interest in a qualified
publicly traded partnership, or other income derived from the business of investing in stock or securities or currencies.
The
asset diversification requirement will be satisfied if we meet certain asset diversification requirements at the end of each quarter of
our taxable year. Specifically, at least 50% of the value of our assets must consist of cash, cash equivalents (including receivables),
U.S. government securities, securities of other RICs, and other acceptable securities if such securities of any one issuer do not represent
more than 5% of the value of our assets or more than 10% of the outstanding voting securities of the issuer; and no more than 25% of the
value of our assets can be invested in (i) the securities, other than U.S. government securities or securities of other RICs, of
any one issuer, (ii) the securities, other than securities of other RICs, of two or more issuers that are controlled, as determined
under applicable Code rules, by us and that are engaged in the same or similar or related trades or businesses, or (iii) the securities
of certain “qualified publicly traded partnerships.” Failure to meet these requirements may result in our having to dispose
of certain investments quickly in order to prevent the loss of RIC status. Because we intend to invest in a small number of issuers and
the investments may be relatively illiquid, we may be unable to dispose of investments quickly enough to meet the asset diversification
requirement at the end of a quarter or obtain cash from other sources in order to meet the annual distribution requirement. In that case,
we may fail to qualify for special tax treatment accorded to RICs and, thus, be subject to U.S. federal income tax at corporate rates.
If
we fail to qualify for or maintain RIC tax treatment for any reason and are subject to U.S. federal income tax at corporate rates, the
resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution, and the amount of
our distributions.
We
may invest in certain foreign debt and equity investments that could be subject to foreign taxes (such as income tax, withholding, and
value added taxes) for which a foreign tax credit is not available. |
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| Future Tax Changes May Affect Us Or Our Stockholders Risk [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Description of Registrant [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk [Text Block] |
Future
tax changes may affect us or our stockholders.
Legislative
or other actions relating to taxes could have a negative effect on us. The rules dealing with U.S. federal income taxation are constantly
under review by persons involved in the legislative process, by the courts, and by the IRS and the U.S. Treasury Department. We cannot
predict with certainty how any changes in the tax laws might affect us or our stockholders. New legislation and any U.S. Treasury regulations,
administrative interpretations or court decisions interpreting such legislation could significantly and negatively affect us and our stockholders.
Stockholders are urged to consult with their tax adviser regarding tax legislative, regulatory, or administrative developments and proposals.
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| Common Shares [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Capital Stock, Long-Term Debt, and Other Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Security Title [Text Block] | Common Stock | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Security Dividends [Text Block] | Distributions may be paid to the holders of our Common Shares if, as and when authorized by the Board and declared by us out of funds legally available therefor. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Security Voting Rights [Text Block] | Each Common Shares is entitled to one vote on all matters submitted to a vote of stockholders, including the election of directors. Except as provided with respect to any other class or series of stock, the holders of our common stock possess exclusive voting power. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Security Liquidation Rights [Text Block] | In the event of our liquidation, dissolution or winding up, each Common Shares would be entitled to share ratably in all of our assets that are legally available for distribution after we pay all debts and other liabilities and subject to any preferential rights of holders of our preferred stock, if any preferred stock is outstanding at such time. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Security Preemptive and Other Rights [Text Block] | The shares of our Common Shares have no preemptive, exchange, conversion or redemption rights and are freely transferable, except where their transfer is restricted by federal and state securities laws or by contract. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Outstanding Security, Title [Text Block] | Common Stock | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Outstanding Security, Authorized [Shares] | 500,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Outstanding Security, Held [Shares] | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Outstanding Security, Not Held [Shares] | [5] | 2,555,565 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Shares [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Capital Stock, Long-Term Debt, and Other Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Security Title [Text Block] | Preferred Stock | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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