Gemini Space Station (GEMI) risk factors, FY2025 10-K

Risks Relating to Our Business and Industry

1. 01The slowing or stopping of the development or acceptance of blockchain networks and blockchain-based assets could have a material adverse effect on the successful development and adoption of our business
2. 02The future development and growth of the digital asset industry is subject to a variety of factors that are difficult to predict and evaluate
3. 03Our operating results have and will significantly fluctuate, due to inherent volatility associated with the digital asset industry including, but not limited to, the price of digital assets, regulatory scrutiny of certain digital assets or related products and services, or changes in applicable laws
4. 04A significant amount of the trading volume on our platform is derived from a relatively small number of institutional market makers, and the loss of these market makers, or a reduction in their trading volume, could have an adverse effect on our business, operating results, and financial condition
5. 05Our operating expenses may increase in the future, and absent corresponding revenues we may not be able to achieve profitability or positive cash flow from operations, which may cause our business, operating results, and financial condition to be adversely impacted
6. 06Adverse economic conditions may adversely affect our business
7. 07Fluctuations in currency exchange rates could harm our operating results and financial condition
8. 08Interest rate fluctuations could negatively impact us
9. 09Our failure to safeguard and manage our and our users’ fiat currencies and digital assets could adversely impact our business, operating results, and financial condition
10. 10Cyberattacks and security breaches—whether affecting our platform, our employees, our users, or third parties—could adversely impact our brand and reputation and our business, operating results, and financial condition
11. 11Custody services, and any blockchain technology on which they rely, may be the target of cyberattacks or may contain exploitable flaws in their underlying code, which may result in security breaches and the loss or theft of digital assets that are held or deposited
12. 12Any significant disruption in our products and services, in our information technology systems, or in any of the blockchain networks we support, could result in a loss of users or funds and adversely impact our brand and reputation and our business, operating results, and financial condition
13. 13Our platform may be exploited to facilitate illegal activity such as fraud, money laundering, terrorist financing, proliferation financing, tax evasion, and scams. If any of our users use our platform to further such illegal activities, our business could be adversely affected
14. 14From time to time, we may encounter technical issues in connection with the integration of supported digital assets and changes and upgrades to their underlying networks, which could adversely affect our business
15. 15Our insurance coverage is limited, may not cover all losses, and could be hard to maintain in the future
16. 16We also compete against an increasing number of DeFi and noncustodial platforms, including DEXs and DAOs. On these platforms, users can interact directly with a market-making smart contract or onchain trading mechanism to exchange one type of digital asset for another without any centralized intermediary
17. 17If we cannot keep pace with rapid industry changes to provide new and innovative products and services, the use of our products and services, and consequently our net revenue, could decline, which could adversely impact our business, operating results, and financial condition
18. 18If we fail to effectively manage our growth, scale our operations, or implement workforce changes as needed, our business and operating results could be adversely affected
19. 19We remain open to, and continue to consider, opportunistic acquisitions and investments, which could require significant management attention, disrupt our business and, if consummated, result in dilution to our stockholders and adversely affect our financial results
20. 20Operating and maintaining subsidiaries outside the United States exposes us to significant regulatory, operational, and compliance risks
21. 21We may not realize the anticipated benefits of our planned exit and wind down of operations in the United Kingdom, the European Union, and Australia, including our related reduction in force
22. 22Our strategy and focus on delivering high-quality, compliant, easy-to-use, and secure crypto-related financial services may not maximize short-term or medium-term financial results
23. 23If we fail to retain existing users or add new users, or if our users decrease their level of engagement with our products, services, and platform, our business, operating results, and financial condition may be materially and adversely affected
24. 24Disputes with our users could adversely impact our brand and reputation and our business, operating results, and financial condition
25. 25If we fail to develop, maintain, and enhance our brand and reputation, our business, operating results, and financial condition may be adversely affected
26. 26We are leveraging AI technologies in the development of certain of our products and processes. These technologies may present business, compliance, and reputational risks
27. 27The use of AI-powered solutions has resulted in, and may in the future result in, data breaches and cybersecurity incidents that implicate the personal data of users of AI-powered solutions
28. 28Banking relationships in the digital asset space have historically been difficult to obtain and maintain. Loss of a critical banking or insurance relationship could adversely impact our business, operating results, and financial condition
29. 29We currently rely on third-party service providers for certain aspects of our operations, and any interruptions in services provided by these third parties may impair our ability to support our users
30. 30We may suffer losses as a result of our staking activity and related user services
31. 31We may provide loans to our users, which would expose us to credit risks and may cause us to incur financial or reputational harm
32. 32We rely on our agreement with WebBank to offer the Gemini Credit Card. If our relationship with WebBank were to end, the ability to continue to offer the Gemini Credit Card would be affected
33. 33The Gemini Credit Card business relies on the integrity of borrower information, including income, employment status, and identity, to assess creditworthiness and manage risk across the credit card program
34. 34There can be no assurance that our launch of our co-branded credit cards will be successful in generating a recurring stream of revenue
35. 35We hold certain investments in various crypto assets and may suffer losses
36. 36There can be no assurance that Gemini Predictions will gain sufficient user adoption or market share, and there is no guarantee that it will generate meaningful revenue for our business
37. 37ability to attract and retain users and to gain market share. Gemini Predictions may not achieve sufficient market acceptance, user adoption, or market share to generate meaningful revenue for our business
38. 38The redemption risk and regulatory risk associated with stablecoins may adversely affect our business and financial position
39. 39Due to unfamiliarity and some negative publicity associated with digital asset platforms, existing and potential users may lose confidence in digital asset platforms
40. 40reportedly lost approximately $1.5 billion in Ether through a hacker-induced transfer from its cold wallet to a wallet address said to be associated with the Lazarus Group (a hacker group believed to be run by the government of North Korea). Such attacks could cause users to lose confidence in digital asset platforms
41. 41A temporary or permanent blockchain fork to any supported digital asset could adversely affect our business
42. 42We currently support, and expect to continue to support, certain smart contract-based digital assets. If the underlying smart contracts for these digital assets do not operate as expected, or if the fundamental premise of smart contract acceptance or function shifts, our business, could be adversely affected
43. 43Failure to maintain adequate recordkeeping of electronic communications could expose the Company to regulatory risks, operational liabilities and reduce our ability to address legal actions
44. 44If miners or validators of any supported digital asset demand high transaction fees, our operating results may be adversely affected
45. 45Future developments regarding the tax treatment of digital assets could adversely impact our business
46. 46Our tax information reporting obligations with respect to digital asset transactions are subject to change
47. 47The nature of our business requires the application of complex financial accounting rules, and there is limited guidance from accounting standard setting bodies on certain topics. If financial accounting standards undergo significant changes, our operating results could be adversely affected
48. 48accurate financial information, which could adversely affect our financial statements, result in a loss of investor confidence, and more generally impact our business, operating results, and financial condition

Risks Relating to Regulatory and Legal Matters

1. 49It may be illegal now, or in the future, to acquire, own, hold, sell, or use bitcoin or other digital assets, participate in blockchains or utilize similar digital assets in one or more countries, which would adversely affect our business operations
2. 50The tokenization of securities could introduce substantial risks and uncertainties
3. 51The applicability of certain preexisting laws and regulations to our prediction markets business is uncertain and Gemini Predictions could become subject to, or the target of, a regulatory or enforcement action
4. 52The Gemini Credit Card is subject to various laws, regulations, and industry standards, all of which are subject to change and some of which are subject to uncertain interpretation
5. 53We are continuously monitoring the state of regulation in each jurisdiction in which we operate. We cannot guarantee that we will be able to comply with all new and existing regulations being implemented with respect to digital asset service providers
6. 54Our compliance and risk management methods might not be effective and may result in a regulatory enforcement action and other outcomes that could adversely affect our reputation, operating results, and financial condition
7. 55and quality control practices are not effective in preventing failures. In addition, we may elect to adjust our risk management policies and procedures to allow for an increase in risk tolerance, which could expose us to the risk of greater losses
8. 56Our consolidated balance sheets may not contain sufficient amounts or types of regulatory capital to meet the changing requirements of our various regulators worldwide, which could adversely affect our business, operating results, and financial condition
9. 57We are subject to significant legal and compliance risks and expenses relating to the NYDFS Cybersecurity Regulation
10. 58Any failure to obtain or maintain necessary money transmission registrations and licenses could adversely affect our operations
11. 59We obtain and process a large amount of personal data, including sensitive data. Any real or perceived improper use of, disclosure of, or access to such data could harm our reputation, as well as have an adverse effect on our business
12. 60Our acceptance of various payment methods exposes us to evolving rules, regulations, and compliance requirements. Non-compliance may adversely affect our business, operating results, and financial condition
13. 61If we were deemed to be an investment company under the Investment Company Act of 1940 (the “1940 Act”), applicable restrictions likely would make it impractical for us to continue our business as currently contemplated

Risks Relating to Third Parties

1. 62Our current and future services are dependent on payment networks, and any changes to their rules or practices could adversely impact our business
2. 63We depend on major mobile operating systems and third-party platforms for the distribution of certain products. If Google Play, the Apple App Store, or other platforms prevent users from downloading our apps, our ability to grow may be adversely affected

Risks Relating to Intellectual Property

1. 64Our intellectual property rights are valuable, and any inability to protect them could adversely impact our business, operating results, and financial condition
2. 65source software licenses. Those licenses may diminish our ability, though, to counter-assert our patents against certain parties that may bring claims against us
3. 66We may be sued by third parties in the future for alleged infringement of their trademark, patent, and other intellectual and other proprietary rights
4. 67NFTs previously sold on Nifty Gateway may infringe on or otherwise violate the intellectual property rights of others, including possible copyright and trademark infringement
5. 68Our platform contains third-party open source software components, and failure to comply with the terms of the underlying open source software licenses could harm our business

Risks Relating to Our Employees and Other Service Providers

1. 69The loss of one or more of our key personnel, or our failure to attract and retain other highly qualified personnel in the future, could adversely impact our business, operating results, and financial condition
2. 70We have recently experienced senior management turnover, and our management team has limited experience operating as a public company
3. 71We try to foster a high-performance culture, and if we cannot maintain this culture, our business could be adversely impacted
4. 72In the event of employee or service provider misconduct or error, our business may be adversely impacted
5. 73Our officers, directors, employees, and large stockholders may encounter potential conflicts of interests with respect to their positions or interests in certain digital assets, entities, and other initiatives, which could adversely affect our business and reputation
6. 74A substantial number of our employees work remotely, and others work remotely some of the time. This subjects us to heightened operational risks

Risks Relating to Ownership of Our Class A Common Stock

1. 75The market price of our Class A common stock may be volatile, and could decline significantly and rapidly. Market volatility may affect the value of an investment in our Class A common stock and could subject us to litigation
2. 76We are not obligated to, and do not intend to pay dividends or make other distributions with respect to any class of our common stock for the foreseeable future
3. 77Substantial future sales of shares of our common stock by existing stockholders, or the perception that those sales may occur, could cause the market price of our Class A common stock to decline
4. 78If securities or industry analysts cease publishing research, or publish inaccurate or unfavorable research, about our business or our industry, the price of our Class A common stock and its liquidity could decline
5. 79You may be diluted by the future issuance of common stock, preferred stock, or securities convertible or exchangeable into common or preferred stock, in connection with our incentive plans, acquisitions, capital raises, or otherwise
6. 80Anti-takeover provisions in our organizational documents and Nevada law might discourage or delay attempts to acquire us that you might consider favorable
7. 81Limitations on director and officer liability and our indemnification of our directors and officers may discourage stockholders from bringing suit against a director or officer
8. 82Our co-founders control a majority of the voting power of shares eligible to vote in the election of our directors and on other matters submitted to a vote of our stockholders, and their interests may conflict with ours or yours in the future
9. 83The multiple class structure of our common stock may adversely affect the trading market for our Class A common stock
10. 84We are a “controlled company” as defined under the corporate governance rules of Nasdaq and, as a result, qualify for exemptions from certain corporate governance requirements of Nasdaq
11. 85We qualify as an emerging growth company, and any decision on our part to comply with reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors
12. 86If our estimates or judgment relating to our critical accounting estimates prove to be incorrect, our operating results could be adversely affected
13. 87We might require additional capital to support business growth, and this capital might not be available
14. 88We have historically relied on related party financing and we may not be able to secure comparable financing in the future
15. 89The requirements of being a public company may strain our resources, divert management’s attention, and affect our ability to attract and retain executive management and qualified board members
16. 90We may be adversely affected by natural disasters, pandemics, and other catastrophic events, and by man-made problems such as terrorism, that could disrupt our business operations, and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster
17. 91Key business metrics and other estimates are subject to inherent challenges in measurement and to change as our business evolves, and our business, operating results, and financial condition could be adversely affected by real or perceived inaccuracies in those metrics or any changes in metrics we disclose