CRCL 10-K & 10-Q changes, risk factors and insider trading

The market for blockchain infrastructure is highly competitive, and Arc may fail to achieve sufficient adoption to support a viable ecosystem.

The market for blockchain infrastructure is intensely competitive. We anticipate that Arc will compete with numerous established and emerging blockchain networks, many of which already have significantly larger developer communities, user bases, and ecosystem resources than Arc would have at the outset. Competing networks may develop superior technology, attract more developers, or offer more favorable economic terms to users and network participants, such as validators. New blockchain networks may also emerge that are better positioned to capture market share.

There can be no assurance that we will launch Arc on our contemplated timeline or that Arc will achieve the adoption necessary to sustain a robust ecosystem. Failure to attract a critical mass of developers, users, and/or applications could limit demand for block space and/or reduce the utility and value of our ARC Token holdings. The rapidly evolving nature of the industry means that competitive dynamics can shift quickly and unpredictably.

Moreover, although we have entered into token purchase agreements with certain institutional investors in connection with a presale of ARC Tokens, there can be no assurance that the ARC Token will ultimately be launched. The launch of the ARC Token remains subject to numerous contingencies, including continued technical development of Arc, any transition of the Arc network to a Proof-of-Stake or delegated Proof-of-Stake consensus mechanism, market conditions, business considerations, and legal, regulatory, and compliance assessments. We may determine not to proceed with the launch of the ARC Token, or to delay any such launch for an extended period of time, for any number of reasons. If we do not launch the ARC Token, or if the launch is materially delayed, we could face reputational harm, disputes with presale purchasers, and/or increased regulatory or litigation risk, and our business, financial condition, and results of operations could be adversely affected.

Arc may be subject to technical risks, including software vulnerabilities, bugs, and failures that could result in loss of assets or network downtime.

Arc, as a layer-1 blockchain network, is complex software that may contain errors, vulnerabilities, or defects that we have not detected. Blockchain protocols are a novel technology, and even extensive security audits may fail to identify all vulnerabilities in the codebase. Exploits of software vulnerabilities or other successful attacks could result in loss or theft of assets held on the network, reputational harm, legal liability, and loss of user confidence. In particular, because the security of Arc will rely on cryptographic algorithms and hash functions, advances in computing technology, including in particular the development of quantum computing and artificial intelligence, could render Arc vulnerable to attack. A sudden or unexpected rapid development in the area of quantum computing or artificial intelligence could expose Arc and its users to significant risks. Any attack on Arc could result in theft of assets, manipulation of transaction records and/or loss of user confidence. We may be required to implement emergency protocol upgrades or hard forks to address vulnerabilities, which may themselves introduce new risks, cause network disruptions, or damage our reputation. Bugs or defects in smart contracts deployed on Arc by us or third parties could also expose users to losses, and we may face reputational harm or legal liability even for vulnerabilities that originate in third-party code. Network outages or extended periods of reduced performance could harm user adoption, damage our reputation, and reduce the utility and value of the ARC Token.

Arc’s protocol may require upgrades over time to address vulnerabilities, improve performance, implement new features, or respond to regulatory requirements. Protocol upgrades, particularly those requiring a hard fork, carry significant execution risk. Hard forks can result in chain splits, creating competing versions of the network that fragment liquidity and user activity. Even soft forks and backward-compatible upgrades can cause instability if not adopted broadly by validators and node operators. In the event of significant disagreements within the validator community or the ARC Token holder base regarding proposed protocol changes, we may face governance disputes that are difficult to resolve and that damage the cohesion and credibility of our ecosystem. We may also face pressure from third parties, including large ARC Token holders or ecosystem participants, to implement protocol changes that are not in the best interests of us or our stockholders.

Furthermore, the insurance market for blockchain-related businesses remains limited and immature. We may be unable to obtain insurance coverage that adequately protects us against the risks associated with Arc operations, including losses from cybersecurity incidents, smart contract vulnerabilities, theft of digital assets, or regulatory enforcement actions. Even where insurance coverage is available, it may be subject to significant exclusions, deductibles, or limitations that reduce its practical utility. In the event of a material loss not covered by insurance, we could suffer significant financial harm.

Arc may be used to facilitate fraud, scams, sanctions violations, or other illicit or improper activity, which could subject us to liability, regulatory scrutiny, and reputational harm.

Public blockchain networks and digital assets have in the past, and may continue to be, attractive targets for bad actors seeking to engage in fraud, money laundering, sanctions evasion, theft, market manipulation, scams, or other illicit or improper activity. Arc may host third-party applications, tokens, or other activity that we do not control and that may be used in unlawful, deceptive, or harmful ways. If Arc and/or ARC Tokens are used to facilitate such activity, we may face user complaints, litigation, regulatory investigations, enforcement actions, reputational harm, and increased compliance and monitoring costs.

In addition, privacy-enhancing or similar features may increase the difficulty of monitoring transactions and enforcing legal or compliance controls. Although we expect to implement and refine policies, controls, tooling, and governance mechanisms intended to address misuse of Arc and ARC Tokens, there can be no assurance that those measures will be effective or that regulators will view them as sufficient. Any such measures, including sanctions-screening, deny-list, or similar controls, may be difficult to design and administer effectively, may increase perceptions of centralization or censorship, and may adversely affect network utility or user adoption.

A determination that the ARC Token is a “security” or that an activity in which we engage with respect to the ARC Token involves a “securities transaction” for purposes of the securities laws could adversely affect the value of the ARC Token and/or have adverse regulatory consequences for us.

We have taken the position that the ARC Token is not a “security,” and that transactions in the ARC Token, except for the presale transactions closed on May 8, 2026, are not “securities transactions,” as defined under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This determination is based on our analysis of existing case law, regulatory guidance and the structural characteristics of the ARC Token, including its utility functions and the degree to which its value is expected to depend on factors other than our managerial efforts, or those of our affiliates (including our subsidiary that is expected to act as the issuer of the Arc Token, or other identifiable third parties. We believe that our process reflects a thoughtful analysis that is reasonably designed to facilitate the application of available legal guidance to the ARC Token and transactions in the ARC Token to determine whether it is a security or, they are securities transactions, respectively, under the federal securities laws. However, this position is not free from doubt, and there can be no assurance that the SEC or a court of competent jurisdiction would agree with our characterization. In addition, even if the ARC Token itself were not characterized as a security, one or more offers, sales, distributions, staking arrangements, governance arrangements, treasury activities, or other transactions involving the ARC Token could be characterized as securities transactions or otherwise give rise to securities law obligations.

The SEC and its staff have previously taken the position that a range of digital assets, transactions in digital assets, products, and services fall within the definition of a “security” under the U.S. federal securities laws. Despite the SEC being the principal federal securities law regulator in the United States, whether or not an asset, product, or service is a security or constitutes the offer or sale of a security under federal securities laws is ultimately determined by a federal court. The legal test for determining whether any given digital asset, product, or service is an “investment contract” was set forth in the 1946 Supreme Court case SEC v. W.J. Howey Co. and whether any given digital asset, product, or service is a “note” in the 1990 Supreme Court case Reves v. Ernst & Young. The legal tests for determining whether any given digital asset, product, or service is a security or constitutes the offer or sale of a security require a highly complex, fact-driven analysis. Accordingly, whether offers or sales of the ARC Token would ultimately be deemed by a federal court to be securities transactions, or the ARC Token deemed to be a security, is uncertain and difficult to predict notwithstanding the conclusions of the SEC or any conclusions we may draw based on our assessment regarding the likelihood that the ARC Token could be deemed a “security” or that offers or sales of the ARC Token could be deemed securities transactions under applicable laws. Any enforcement action by the SEC or another regulatory authority asserting that a digital asset is a security or sold in a securities transaction, or a court decision to that effect, would be expected to have an immediate material adverse impact on the trading value of that digital asset, and depending on the specific characteristics of the digital asset, could have adverse spillover effects on the trading values of other digital assets perceived to share similar characteristics. The classification of a digital asset or transactions in that digital asset as a security or securities transaction under the federal securities laws has wide-ranging implications for the regulatory obligations that flow from the offer, sale, trading, clearing and holding of such assets, and any such classification with respect to the ARC Token would have adverse consequences to our business, financial condition and results of operations.

While the above description of adverse regulatory consequences focuses on the federal securities laws, state regulators and jurisdictions outside the United States retain independent authority to enforce their own securities laws, which may differ from or be interpreted more expansively than federal law. As a result, a state regulator or foreign jurisdiction could determine that the ARC Token constitutes a security under applicable law, even if the SEC has elected not to pursue enforcement action, the SEC has provided informal guidance or assurances to the contrary, or the ARC Token is otherwise excluded from the definition of a security at the federal level. Moreover, private litigants may assert claims under federal or state securities laws based on similar theories, regardless of the positions taken by federal regulators.

We intend to distribute ARC Tokens through multiple channels, which could result in exposure to liability or other adverse consequences.

We intend to distribute ARC Tokens through multiple channels, which may include, among others, token sales and presales, developer grants, network growth programs and other participation mechanisms. Each of these potential distribution methods could involve complex and potentially unsettled questions carrying distinct legal risks and uncertainties, and there can be no assurance that all such distribution activities will be found to comply with applicable law. Adverse determinations with respect to one or more of them could result in exposure to material liability or otherwise adversely affect our business.

In particular, we have conducted a presale of ARC Tokens to institutional investors. While we have taken the position that ARC Tokens are not securities, we treated the offer and sale of the ARC Tokens pursuant to the token purchase agreements as transactions involving investment contracts and conducted the transaction pursuant to an exemption from registration under the Securities Act of 1933, as amended, in reliance on Section 4(a)(2) thereof and Rule 506(b) of Regulation D promulgated thereunder. There can be no assurance that such exemptions will be available or that our conduct of the presale will satisfy all of the conditions required therefor. If the presale is deemed a non-exempt offer or sale of securities, we may be subject to rescission claims from purchasers, which would require the issuer to refund the consideration received plus interest, in addition to potential civil and criminal liability under the securities laws. Even if we believe the presale qualifies for an applicable exemption, the SEC or other regulatory authorities may disagree. Any enforcement action or adverse determination with respect to the presale could result in exposure to material liability or otherwise adversely affect our business.

Further, we have allocated or intend to allocate a portion of the ARC Token supply to strategic counterparties, including ecosystem developers, prospective validators and other participants, in connection with services to be rendered or partnerships to be formed. The SEC or other regulators may characterize these allocations as compensatory arrangements that constitute sales of securities, or as part of a broader integrated distribution plan subject to registration requirements. If such characterizations were to prevail, we could face liability for failure to register the allocation as a sale to comply with applicable exemptions, and strategic counterparties who received ARC Token allocations could seek rescission of those arrangements.

The market price of ARC Tokens could be highly volatile and may decline significantly, which could impact our business and financial condition given our anticipated ARC Token holdings. In addition, future sales or distributions of ARC Tokens by us or other large holders could depress the price of ARC Tokens.

We expect to hold a material number of ARC Tokens on our consolidated balance sheet, including both our long-term holdings and tokens held in treasury with the intention of benefiting the Arc community for ecosystem or reserve purposes. The trading price of ARC Tokens, to the extent a liquid market develops, may be highly volatile and subject to wide fluctuations. The price of ARC Tokens may be influenced by a variety of factors that are beyond our control, including speculative trading activity, demand (or lack thereof) for use of Arc, regulatory developments or enforcement actions, macroeconomic conditions, technological developments relating to competing blockchains, changes in the total supply of ARC Tokens, changes in market sentiment and/or the actions of large ARC Token holders or other Arc ecosystem participants.

Digital asset markets have historically experienced periods of extreme volatility and are susceptible to market manipulation. There can be no assurance that a liquid trading market for the ARC Token will develop or be sustained. If the ARC Token declines significantly in value or becomes illiquid, our business model, to the extent it depends on the ARC Token, could be materially harmed.

Because of our anticipated ownership of a material portion of the total ARC Token supply, sales or other dispositions of ARC Tokens by us, or other distributions from the ARC Token treasury that we hold, could increase the supply of ARC Tokens available in the market and exert downward pressure on the price of ARC Tokens. Similarly, the vesting and release of ARC Tokens allocated to presale purchasers and strategic counterparties could result in significant market selling pressure. There can be no assurance that the market will be able to absorb such sales without a material decline in the price of ARC Tokens. A sustained decline in ARC Token prices could impair the utility and adoption of our network, reduce the value of our ARC Token holdings and harm our business.

Arc and ARC Token may expose us to additional regulatory risks.

The legal and regulatory status of digital assets, including the ARC Token, varies significantly across jurisdictions and continues to evolve rapidly. In many countries, the issuance, distribution, trading and use of digital assets are subject to licensing, registration or authorization requirements, or have been partially or wholly restricted or prohibited. We may not be in compliance with, or may be unable to comply with, the applicable laws and regulations of every jurisdiction in which the ARC Token is or may be held, traded or used, particularly as such laws continue to develop and as Arc grows. For example, in certain jurisdictions, digital assets may be subject to financial services regulation, anti-money laundering requirements, state money transmission or virtual currency business requirements, and other obligations that could restrict the permissible uses of the ARC Token or impose substantial compliance costs, or may implicate other regulatory regimes such as the Investment Company Act of 1940, as amended. Regulators, including the Financial Crimes Enforcement Network (“FinCEN”), the Office of Foreign Assets Control (“OFAC”), state regulators, and foreign equivalents, may view certain activities on Arc or related protocols as creating regulatory obligations for us. Further, we cannot predict how legislative and regulatory developments will affect Arc. New or amended laws or regulations, or developments in the interpretation or application of existing laws and regulations, such as those currently being considered in the United States by Congress, could require us to obtain licenses or registrations that may be difficult or impossible to obtain, such as under the Investment Company Act of 1940, restrict or prohibit certain uses of ARC Tokens or Arc, or impose compliance obligations relating to know-your-customer and AML requirements, or adversely affect features such as privacy, interoperability, or stablecoin-based fee mechanics. Our failure to comply with applicable laws and regulations could result in enforcement actions, fines, penalties, restrictions on our operations, or reputational harm in those markets.

We will have significant influence over Arc governance decisions and such decisions may be perceived to favor ARC Token holders in ways that conflict with, or are not in the best interests of, our stockholders.

Over time, we anticipate that Arc will transition from a Proof-of-Authority (“PoA”) consensus model to a Proof-of-Stake (“PoS”) or delegated Proof-of-Stake (“dPoS”) consensus mechanism. However, for so long as Arc remains a PoA consensus mechanism in which we retain control of the network’s consensus mechanism, we will have significant influence over governance decisions, including decisions regarding network upgrades, fee structures, validator selection, token economics and protocol parameters. Even after a potential transition to a PoS or dPoS consensus mechanism, we expect to retain control over certain decisions, such as validator selection or network upgrades, and may also control or influence certain other decisions, such as token economics, through our ownership of ARC Tokens or validator operations. Accordingly, there is a risk that decisions we make and/or influence via our control may not be perceived to be in the best interests of our stockholders.

In addition, because we will hold a significant number of ARC Tokens, we will have a direct financial interest in the success of Arc and the ARC Tokens. This interest may influence our business decisions and affect how we prioritize Arc relative to other corporate objectives, and may create conflicts of interest with respect to decisions affecting the ARC Token or Arc. For example, we may be incentivized to make governance decisions, allocate resources, or pursue strategic partnerships related to Arc at the expense of other business priorities. Our stockholders, who participate in the equity value of Circle but not directly in Arc or the ARC Token (except to the extent of our ARC Token holdings), may have different views about how these trade-offs should be managed. Our Board of Directors and management will need to exercise careful judgment in navigating these conflicts, and there can be no assurance that they will always do so to the satisfaction of our stockholders.

These conflicts of interest may be difficult to manage and may give rise to stockholder claims or regulatory scrutiny. Our directors and officers have fiduciary duties to our stockholders under applicable corporate law, and those duties may at times be perceived to conflict with actions that we take in our role as the initial creator and steward of Arc. There can be no assurance that our stockholders will agree that we are managing these conflicts effectively, which could subject us to litigation, regulatory action, or reputational harm. Our stockholders may also disagree with governance decisions we make with respect to Arc, which could harm our stock price and negatively affect our relationship with investors.

The planned transition of certain decisions relating to Arc to a distributed governance model may not occur on the timeline we anticipate or at all, and may create risks during or after the transition period.

We intend for governance of certain decisions relating to Arc to progressively transition to a distributed model in which ARC Token holders, Arc validators, and a security council exercise meaningful control over protocol decisions. However, this transition involves significant technical, legal, and operational challenges. The pace and extent of decentralization will depend on factors including the development of appropriate governance infrastructure, the diversity and engagement of the ARC Token holder community, regulatory developments and our own strategic decisions. There can be no assurance that such decentralization will occur on the timeline we anticipate or at all.

During the transition period, we will retain substantial control over Arc and bear the attendant legal and regulatory risks of that control. In particular, because we may act, directly or indirectly, as a developer, steward, validator operator, ARC Token holder, governance participant, security council participant, service provider, and/or other influential participant with respect to Arc or decentralized finance protocols deployed on or integrated with Arc or other blockchain networks, private plaintiffs, regulators, or other parties may assert that we had the practical ability, contractual authority, or governance influence to prevent, limit, remediate, or respond to harmful activity, and therefore should bear liability for losses or other harms arising from such activity, even if we did not exercise such influence or did not believe we had a legal obligation to do so.

A transition that occurs too quickly may leave Arc vulnerable to governance attacks, coordination failures, or the dominance of a small number of concentrated ARC Token holders. A transition that occurs too slowly may result in regulators or courts treating Arc as an extension of our business and holding us liable for network activities. In addition, as governance becomes distributed, we will have limited ability to influence protocol decisions or prevent malicious, unlawful, or economically harmful outcomes, which could result in outcomes adverse to our business interests and/or our stockholders. For example, ARC Token holders could vote to implement changes to the protocol that increase ARC Token value at the expense of network utility, impose burdensome conditions on developers or users or otherwise make decisions that harm the long-term health of the ecosystem, and we will have limited ability to prevent or reverse harmful governance decisions once Arc becomes sufficiently distributed. Further, malicious actors may seek to influence or capture governance processes through ARC Token accumulation, coordinated voting, collusion, vote buying, borrowing arrangements, or other strategies, including so-called “empty voting” attacks. Such actors may also have economic or strategic incentives that are adverse to Arc, ARC Token holders, or us.

Further, as governance becomes distributed, our ability to respond to future legislation or other regulatory developments may be limited. For example, legislation or regulation related to decentralized finance that is perceived as being overly broad or burdensome may lead users of DeFi networks, including Arc at such time, to disfavor those networks, and we may be unable to regain control of Arc to assuage any such issues due to its distributed nature. Additionally, distributed governance could limit our ability to implement compliance, sanctions-screening, deny-list, or other security controls, and efforts to implement such controls could create disputes with users, validators, governance participants, or other ecosystem actors and reduce the utility or adoption of the network.

Our relationships with validators, developers, governance participants, and other ecosystem participants could be alleged to constitute a general partnership, joint venture, or other unincorporated association, which could expose us to joint and several liability for acts or obligations that we do not control.

We expect Arc to involve coordination with a range of third parties, including validators, developers, liquidity providers, governance participants, service providers, and other ecosystem participants. Although we do not intend for these relationships to form a general partnership, joint venture, or other unincorporated association, plaintiffs, regulators, or courts could nevertheless assert that, based on the facts and circumstances, we and one or more such parties were acting together as co-owners of a business or enterprise for profit, or that we held ourself out, or permitted itself to be held out, as a partner or equivalent participant in such an arrangement. Such claims could be based on, among other things, shared economic arrangements, token allocations, coordinated governance or validator activity, joint branding or marketing, collective decision-making, or other forms of cooperation across the Arc ecosystem.

If any such theory were accepted, we could be exposed to joint and several liability, or similar liability, for obligations, losses, misconduct, or other actionable conduct attributed to the alleged partnership, joint venture, or other enterprise, including claims arising from acts or omissions of other participants that we did not control and may not have been able to prevent. For example, we could face claims relating to governance decisions, sanctions or compliance failures, misleading statements by ecosystem participants, or other conduct undertaken by persons alleged to be acting on behalf of, or in the ordinary course of business of, the alleged enterprise. Even if such claims ultimately lack merit, the assertion of them could result in litigation, investigations, indemnification demands, reputational harm, substantial defense costs, and the diversion of management attention, and could adversely affect our business, financial condition, and results of operations.

Arc will be dependent on third-party node operators and validators, and may be vulnerable to attacks that could disrupt network operations or result in loss of assets.

The security and utility of Arc will depend in significant part on the participation of validators and node operators. If Arc is unable to attract and retain a sufficient number and diversity of validators, the network could become vulnerable to consensus failures or centralization risks. Validators and node operators face operational costs, including hardware, bandwidth, and energy expenses, and may elect not to participate if the economic incentives provided by staking rewards and transaction fees are insufficient. Changes to protocol economics, competing networks, or adverse regulatory developments could reduce participation. A decline in the number or quality of network participants could impair network security, performance, and decentralization.

To the extent Arc relies on a consensus mechanism to validate transactions and maintain its integrity, if a single actor or coordinated group were to acquire or control a majority of the network's consensus power, whether through stake concentration, validator collusion, or other means, they could potentially double-spend tokens, prevent confirmation of legitimate transactions, or otherwise disrupt network operations. In addition to consensus-layer attacks, Arc may be vulnerable to Sybil attacks, eclipse attacks, routing attacks and other forms of sophisticated adversarial behavior. We cannot guarantee that Arc's security model will be sufficient to prevent all such attacks, and any successful attack could result in significant harm to Arc users, the value of the ARC Token and our reputation.

If ARC Tokens sold in our presale are not delivered by the applicable deadline, if Arc has not transitioned to a Proof-of-Stake or a delegated Proof-of-Stake consensus mechanism, or if certain purchaser-specific repayment rights are exercised, we may be required to repay amounts paid by the token purchasers, which could adversely affect our liquidity, financial condition, and ability to develop Arc.

In connection with the presale of ARC Tokens pursuant to the token purchase agreements, we have agreed that, if either (i) the ARC Tokens sold in the presale are not delivered, or (ii) the Arc network has not transitioned to either a Proof-of-Stake or delegated Proof-of-Stake consensus mechanism, in each case by May 8, 2028, presale purchasers holding a majority of the ARC Tokens issuable thereunder may elect to require repayment of the purchase price. Certain related arrangements may also provide individual purchasers with repayment rights, including rights tied to specified legal, regulatory, or compliance-related conditions, or to specified changes or proposed changes to the structure, governance, procedures, or other aspects of Arc after delivery. Although we currently intend to deliver the ARC Tokens and pursue the contemplated network transition within the expected timeframe, our ability to do so will depend on a variety of factors, including technical development, regulatory developments, market conditions, governance readiness, operational preparedness, and satisfaction of applicable delivery conditions, some of which may be outside of our control.

If purchasers were to exercise these repayment rights, we could be required to return cash or USDC. Depending on the timing and amount of any such repayment, satisfying these obligations could require the use of corporate resources that otherwise would be available for operations, product development, network launch, or strategic initiatives. In addition, any delay or dispute regarding repayment obligations could result in claims by purchasers, reputational harm, or regulatory scrutiny. The existence or exercise of these repayment rights could also affect market perception of Arc, our relationship with ecosystem participants and investors, and our business, financial condition, and results of operations.

The management of gas fees, treasury assets, and related wallet arrangements for Arc may create operational, security, and liquidity risks.

The launch and operation of Arc may require digital assets, including gas fees, treasury assets, validator-related funds, reserves, or other network-related assets, to be held, transferred, secured, allocated, or otherwise managed through treasury wallets, third-party custodians, cold-storage arrangements, internal treasury systems, or other wallet infrastructure. These arrangements may involve complex operational processes, key management, access controls, funding workflows, wallet provisioning, migration of assets across networks, and coordination among technical, treasury, legal, compliance, and security teams. Any breakdown in these processes or controls, including human error, fraud, cyberattack, insider misconduct, vendor failure, key compromise, loss of access credentials, delays in funding or settlement, or failures in wallet infrastructure, could result in the loss, theft, misappropriation, unavailability, or misdirection of assets, including assets temporarily held in treasury wallets before being programmatically distributed.

In addition, if treasury, custody, or fee-management arrangements are not available when needed, are not scalable, or do not function as intended, Arc’s operations could be disrupted. For example, validators may not be compensated on the expected timeline, transactions may be delayed or fail, required network functions may not be funded when needed, or unexpected liquidity demands may arise in connection with launch, migration, operations, or incident response. Although the intent is for transaction fees to remain in any treasury wallet only briefly before being programmatically transferred onward, there can be no assurance that such arrangements will always function as intended or fully mitigate the risk of hacks, loss, or other operational failures during that period. Any of these events could adversely affect Arc’s launch and operation and our business, financial condition, and results of operations.

Other income (expense), net

Distribution, transaction and other costs

Digital assets losses (gains). Digital assets losses (gains) changed by $5.4 million, or 86.3%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to $4.5 million in losses recognized during the three months ended March 31, 2025 related to the deprecation of certain legacy products, as well as a $0.9 million decrease in losses due to changes in the prices of digital assets driven by market fluctuations.