Derivative Liability

12 Months Ended

Dec. 31, 2025

12.

Derivative Liability

On December 20, 2024, the Company announced that it had entered into a definitive agreement (the “Transaction Agreement”) for a strategic investment of $775 million (the “Transaction”) from Tether Investments Limited (n/k/a Tether Investments S.A. de C.V.) (“Tether”) in exchange for 103,333,333 shares of Class A Common Stock. The Class A Common Stock has a par value of $0.0001 per share. The purchase price of the Class A Common Stock in the Transaction was $7.50 per share.

In connection with the Transaction Agreement, the Company executed support agreements with certain members of key management to provide a backstop to the anticipated tender offer and ensure 70,000,000 shares would be tendered and available for repurchase when the Transaction closed.

On January 3, 2025, the Company commenced a tender offer to purchase up to 70,000,000 shares of the Company’s Class A Common Stock using proceeds from the Transaction.

The Company accounted for the Transaction and support agreements as one unit of account, which met the definition of a derivative.

As a result, the Company initially recorded a gain upon recognition of a derivative asset of $9,200,000 and subsequently recorded the derivative at fair value resulting in a liability of $184,699,998 at December 31, 2024 and a change in fair value of the derivative of $184,699,998 during the year ended December 31, 2024. See Note 18 for further details.

On February 7, 2025, the Transaction closed, which resulted in the Company settling the derivative by issuing 103,333,333 shares to Tether in exchange for $775,000,000 in cash proceeds and repurchasing 70,000,000 shares from existing shareholders for $525,000,000 in cash. The net proceeds of $250,000,000, together with the fair value of the derivative on that date of $174,999,998, were recorded in additional paid-in capital, net of transaction costs of $29,429,791. The Company recognized a gain on fair value of the derivative of $9,700,000 during the year ended December 31, 2025.

- Definition

The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts.

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+ Details

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