8-K: Fold Holdings Secures $45M Bitcoin-Backed Credit Facility

Fold Holdings, Inc. has secured a $45 million revolving credit facility, collateralized by bitcoin, to fund working capital and growth initiatives.

Summary

• Fold, Inc., a wholly-owned subsidiary of Fold Holdings, Inc., entered into a Master Loan Agreement with Two Prime Lending Limited on October 1, 2025.
• The agreement establishes a revolving credit facility of up to $45,000,000, with no minimum loan amount required.
• Loans under the facility will bear interest at a rate of 6.5% per annum, accruing daily and payable in USD.
• The first advance under the facility is a Fixed Term Loan with a Borrower Prepayment Option and matures on October 1, 2026.
• Amounts borrowed are expected to be used for working capital and general corporate purposes, providing non-dilutive capital to support growth and manage bitcoin treasury.
• The facility is secured by a portion of the Borrower's bitcoin, held by BitGo Trust Company, Inc. as custodian under a triparty Account Control Agreement.
• The Initial Collateral Level is 250% of the loan assets, with a Collateral Call Level of 175% and a Liquidation Level of 150%.
• If the collateralization ratio falls below 150%, an automatic event of default is triggered, allowing the lender to liquidate collateral without prior notice.
• The Borrower may request the return of excess collateral if the ratio exceeds the Collateral Refund Level of 345%.

Sentiment

Score: 7

Explanation: The securing of a substantial non-dilutive credit facility is a positive development for liquidity and growth. However, the high collateralization requirements and the risk of automatic liquidation of bitcoin collateral in a volatile market introduce a degree of caution, preventing a higher score.

Positives

• Secured a significant $45,000,000 revolving credit facility, enhancing liquidity and financial flexibility.
• The capital is non-dilutive, preserving shareholder equity by avoiding the issuance of new shares.
• Supports the company's growth and general corporate purposes, indicating strategic investment in future operations.
• Provides optionality in managing the company's bitcoin treasury, allowing it to leverage digital assets without outright sale.

Negatives

• High collateralization requirements, with an Initial Collateral Level of 250% of the loan assets.
• Significant risk of automatic liquidation of bitcoin collateral if the Collateral Level falls below 150%, potentially at unfavorable market prices.
• Late fees of 5.0% per annum accrue on unpaid sums, adding to the cost of borrowing if payments are missed.
• The lender, Two Prime Lending Limited, is a British Virgin Islands company, which may introduce complexities in legal recourse or regulatory oversight compared to a U.S.-based lender.

Risks

• Volatility of bitcoin price: A significant decrease in bitcoin value could trigger margin calls (Collateral Call Level of 175%) or automatic liquidation (Liquidation Level of 150%) of collateral, potentially at a loss.
• Regulatory or liquidity risk in relation to digital assets: The lender has the right to require prepayment if it determines there is regulatory or liquidity risk related to the digital assets or litigation against their issuer.
• Cybersecurity risks: While the lender is required to maintain cyber liability insurance, the nature of digital asset custody inherently carries cybersecurity risks.
• Events of default: Failure to repay loans, pay fees, respond to notifications, or insolvency events can lead to acceleration of the loan and liquidation of collateral.
• Borrower's lack of control over liquidation: In an event of default, the Borrower has no right to determine the digital assets to be sold or the order, manner, or price of sale.

Future Outlook

The company anticipates utilizing the funds from this facility for working capital and general corporate purposes. This non-dilutive capital is expected to support the company's growth initiatives and provide flexibility in managing its bitcoin treasury holdings.

Management Comments

• The company expects that any amounts borrowed from the Facility will be used for, without limitation, working capital and general corporate purposes.
• This Facility provides non-dilutive capital to support the Company's growth and preserves optionality with regard to managing its bitcoin treasury.

Industry Context

This agreement reflects a growing trend in the digital asset space where companies with significant cryptocurrency holdings are leveraging them to secure non-dilutive financing. Such facilities allow companies to maintain exposure to their digital assets while accessing traditional capital for operational needs, a strategy increasingly adopted by bitcoin-centric businesses to fund expansion without selling their core holdings.

Comparison to Industry Standards

• NA

Corporate Governance

Legal Proceedings

• The Master Loan Agreement mentions that the lender has the right to require prepayment if there is litigation against the issuer of the Digital Assets provided as Collateral, indicating a potential indirect legal risk related to the underlying asset.

Related Party Transactions

• The Master Loan Agreement is between Fold, Inc., a wholly-owned subsidiary of Fold Holdings, Inc., and Two Prime Lending Limited. This is a transaction involving a direct subsidiary of the registrant.

Stakeholder Impact

• Shareholders: Benefit from non-dilutive capital for growth, potentially increasing shareholder value without dilution. However, they are exposed to the risk of bitcoin price volatility impacting collateral and potential liquidation.
• Creditors: Two Prime Lending Limited gains a first-priority security interest in the bitcoin collateral, reducing its credit risk.
• Employees: Potential for increased stability and growth opportunities due to enhanced working capital.

Next Steps

• Borrower may, from time to time, request advances of funds under the facility.
• Lender and Borrower may agree upon subsequent Loan Term Sheets for additional advances.
• Borrower will continue to file quarterly and annual reports with the U.S. Securities and Exchange Commission (SEC).

Key Dates

Recommendation

The securing of a $45 million non-dilutive credit facility is a strong positive for Fold Holdings, providing substantial liquidity for working capital and growth without diluting existing shareholders. While the bitcoin collateral introduces volatility risk, the company's ability to leverage its digital assets for operational funding, rather than selling them, demonstrates strategic financial management. This move enhances the company's financial flexibility and supports future expansion, making it an attractive prospect for investors looking for growth potential.

Keywords

Bitcoin-backed loan, Revolving credit facility, Digital asset collateral, Non-dilutive financing, Working capital, Corporate growth, SEC filing, Fold Holdings, Two Prime Lending, BitGo Trust