Key Risks

The following is a summary of key risks. Full risk factors are provided in the Subscription Agreement.

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Risk Summary

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1. Total Loss Risk

The issuer does not guarantee the return of any capital. The Notes may become worthless. Investors should only invest funds that they can afford to lose in their entirety.

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2. No Guarantee of Target Returns

The target return of 4-6% net annualized (BTC-denominated) is not a guarantee, forecast, projection, or promise of future performance. Actual returns may be:

• Significantly lower than the target
• Zero
• Negative, resulting in loss of capital

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3. Unsecured Creditor Status

Holders of iBTCY are unsecured creditors of the issuer. The Notes:

• Are not secured by any collateral
• Do not represent equity interests in the issuer
• Do not represent ownership of underlying assets
• Do not benefit from any third-party guarantee
• Are not insured by any government agency

In the event of issuer insolvency, holders rank behind secured creditors and may recover less than their investment or nothing at all.

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4. Liquidity Risk

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Buffer-Based Liquidity

• Instant redemptions available only up to buffer capacity (32% target)
• Buffer has a 10% hard floor policy

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Redemption Delays

Indicative timelines vary by scenario. Full settlement may take significantly longer than ninety (90) days, and in extreme circumstances may take one hundred eighty (180) days or longer. Redemptions may also be suspended indefinitely.

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SSBAF Fund-Level Gate

The underlying fund imposes an 80% fund-level gate per dealing window. If triggered, all redemptions may be processed pro-rata across multiple months.

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5. Single Strategy Concentration

iBTCY allocates the yield-generating portion of NAV to a single yield source (Starboard Sygnum BTC Alpha Fund), alongside a liquidity buffer that earns no yield. There is no diversification across yield strategies. If SSBAF underperforms, closes, or becomes unavailable, the product’s value proposition is directly impacted.

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6. Limited Track Record

SSBAF as a fund vehicle launched in October 2025. References to strategy experience prior to that date relate to the manager’s operation of substantially similar approaches in other structures and are not a representation of SSBAF or iBTCY performance statistics. Past performance is not indicative of future results.

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7. Smart Contract Risk

iBTCY and BTCY are implemented as smart contracts on Ethereum. Risks include:

• Code vulnerabilities or bugs
• Exploits or attacks
• Unexpected behavior in certain conditions

Smart contracts have been audited by Cyfrin. Audits reduce but do not eliminate risk.

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8. Counterparty Risk

The product depends on multiple third parties. Archax Ltd is the primary custody and settlement provider for both buffer BTC and SSBAF fund shares, creating custodian concentration risk: failure at Archax could impair liquidity and yield-related positions simultaneously. Failure of any counterparty could disrupt operations or result in loss. The issuer targets no single investor holding more than approximately 25% of total supply; this is a policy goal, not a binding cap. Large concentrated positions could stress the liquidity buffer.

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9. Regulatory Risk

The regulatory status of iBTCY varies by jurisdiction. Regulatory changes could:

• Require structural changes
• Restrict operations
• Force wind-down

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10. BTC Price Volatility

iBTCY is denominated in BTC. While the product aims to grow BTC holdings, the USD value fluctuates with BTC price. A 50% BTC decline means a 50% USD value decline, regardless of iBTCY yield.

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11. No Insurance

The product does not carry insurance against smart contract exploits, custodian failures, operational losses, or other risks. There is no deposit insurance, investor compensation scheme, or guarantee fund covering iBTCY.

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12. Contractual Limitations on Holder Remedies

Under the Deed Poll constituting the Notes, holders acknowledge meaningful limitations including: limited recourse (claims only against the issuer and only to available assets); shortfall extinguishment if assets are insufficient; non-petition undertakings against certain insolvency proceedings; and no personal liability for directors, officers, or shareholders. Full text is in the Transaction Documents.

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13. Issuer Compliance and Wallet Powers

The issuer retains powers to freeze or compulsorily redeem Notes / restrict wallet services where required by law, sanctions, AML, breaches of representations, transfer restrictions, or where the issuer determines in good faith that action is necessary for compliance, legal, or risk-management reasons (subject to the Transaction Documents). Immediate action may apply for sanctions scenarios. These powers attach to iBTCY layer services (KYC-gated onboarding, unwrap, redemption). BTCY at the ERC-4626 layer is designed for permissionless transfer under normal operations; an emergency pause mechanism may still apply at the vault contract level for critical security events.

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Important Notices

• iBTCY is NOT a stablecoin
• iBTCY is NOT a deposit or bank account
• iBTCY is NOT a fund unit or equity interest
• iBTCY is NOT insured or guaranteed

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