Bgin Blockchain Ltd. Class A (BGIN) Risk Analysis

On January 13, 2024, the board of directors of Bgin Trading declared a dividend with an aggregate amount of US$17,005,000, payable in USDT coins to Bgin Rig, which has been paid to Bgin Rig in full. On January 14, 2024, the sole director of Bgin Rig declared a dividend with an aggregate amount of US$17,000,000, payable in USDT coins to the Company, which has been paid in full. On January 15, 2024, our board of directors declared a final dividend with an aggregate amount of US$5,000,000, payable in USDT coins to our shareholders of record as of December 31, 2023, to be paid on or before February 29, 2024. As of February 2024, all of the US$5,000,000 of the declared dividend had been paid. On March 12, 2024, our board of directors passed resolutions reclassifying the dividend as an interim dividend rather than a final dividend. On March 15, 2024, our shareholders unanimously passed written resolutions ratifying, approving and confirming in all respects the reclassification by the board of directors of the dividend as an interim dividend rather than a final dividend. On June 2, 2025, the board of directors of Bgin Trading declared a dividend with an aggregate amount of US$5,005,000, payable in USDT coins to Bgin Rig, which has been paid to Bgin Rig in full. On June 3, 2025, the sole director of Bgin Rig declared a dividend with an aggregate amount of US$5,000,000, payable in USDT coins to the Company, which has been paid to the Company in full. On June 6, 2025, our board of directors recommended a final dividend with an aggregate amount of US$5,000,000 be declared by ordinary resolution of the shareholders of the Company and that any such dividend declared by the shareholders of the Company be settled in cash. On June 21, 2025, our board of directors passed further resolutions updating the recommendation of June 6, 2025, to recommend that a final dividend with an aggregate amount of US$5,000,000 be declared by ordinary resolution of the shareholders of the Company and that any such dividend declared by the shareholders of the Company be settled in cash or by a distribution in specie of USDT coins, in each case at the sole discretion of the shareholder entitled to payment of the said final dividend. On June 21, 2025, our board of directors passed resolutions recommending that a final dividend with an aggregate amount of US$5,000,000 be declared by ordinary resolution of the shareholders of the Company, and that any such dividend declared by the shareholders of the Company be settled either in cash or by a distribution in specie of USDT coins, in each case at the sole discretion of the shareholder entitled to payment of the said final dividend, to our shareholders of record as of December 31, 2024. On June 23, 2025, our shareholders unanimously passed written resolutions declaring a final dividend with an aggregate amount of US$5,000,000 to be paid, at the election of each relevant shareholder, in either cash or by a distribution in specie of USDT coins. As of June 30, 2025, all US$5,000,000 of the declared final dividend had been paid to the shareholders, among which US$949,000 was paid in USDT coins. In addition, certain PRC service providers who have entered into service or freelancer agreements with Bgin HK are compensated, in part, through direct transfers of USDT from Bgin HK's cold wallet to the relevant individual. Such compensation may alternatively be settled in Renminbi by Bgin HK through a third-party payment institution, or in Hong Kong dollars paid directly to such individuals' bank accounts in Hong Kong. To the extent that compensation is settled in USDT, such transfers may constitute a "sale" or "delivery" of a security within the meaning of Section 5 of the Securities Act if USDT were to be deemed a security thereunder. See "Item 3. Key Information-D. Risk Factors - Risks Related to Doing Business in Hong Kong and Mainland China - The compensation to the PRC service providers and procurement and service fees to our affiliated entity are and were paid through one or more of the following methods: (i) in Renminbi by Bgin HK through a third-party payment institution; (ii) in USDT transferred directly from Bgin HK's cold wallet to the relevant individual; or (iii) in Hong Kong dollars by Bgin HK to such individuals' bank accounts in Hong Kong. If the third-party payment institution providing service for us fails to hold the relevant licenses for cross-border payment business, we shall have to make arrangements with other qualified third-party payment institutions or otherwise make the cross-border payments through a bank." On April 4, 2025, the SEC's Division of Corporation Finance issued guidance clarifying that certain "covered" U.S. dollar-backed stablecoins, including USDT, are not considered securities under existing federal law, based on the conditions that such stablecoins are "marketed solely for use in commerce, as a means of making payments, transmitting money, and/or storing value, and not as investments." In the event that USDT fail to satisfy such conditions at a future time and it were to be deemed a "security" under the Securities Act in the future, we may have retroactive liabilities arising out of a possible violation of Section 5 of the Securities Act in connection with distributing unregistered USDT coins to shareholders from this dividend distribution, or in connection with compensating certain service providers in USDT, or incur similar liabilities under any similar dividend distributions or compensation arrangements in the future, including civil penalties or monetary fines, injunctions and cease-and-desist orders imposed by the SEC, disgorgement of any profits from distributing the USDT coins, and criminal penalties. Additionally, our reputation may be harmed and the trading price of our Class A ordinary shares might decline in value or become worthless in the event we are deemed to have liability, and our financial condition may be materially and adversely affected if we were required to make payments or face sanctions in connection with the potential claims described above.

Mr. Qiuhua Li has served as the supervisor of Shenzhen Bgin since 2018. Mr. Qi Shao, our chief technology officer, serves as the general manager of Shenzhen Bgin and oversees the operations of the company. As of the date of this annual report, we are not aware of any conflicts between Mr. Qi Shao and our Company or between Mr. Li and our Company. However, Mr. Shao or Mr. Li may, however, have actual or potential conflicts of interest with us in the future. In the event that any such conflict of interest arises between Shenzhen Bgin and the Company, Mr. Shao and/or Mr. Li may not act in the best interests of the Company. We cannot assure you that, when conflicts of interest arise, Mr. Shao and/or Mr. Li will act in the best interests of the Company or that such conflicts will be resolved in our favor. On January 1, 2025, we entered into a Conflict of Interests Agreement with Shenzhen Bgin, pursuant to which Mr. Qi Shao agrees to act in the best interests of the Company, devote sufficient time, effort and resources to fulfill his obligations as the chief technology officer of the Company, and, without the prior written approval of our board of directors, not to engage in or facilitate any business operations of Shenzhen Bgin that would compete with the Company's business operations. Mr. Qi Shao also agreed to disclose to us any actual or potential conflicts of interest arising from his role at Shenzhen Bgin as they arise and, in the event that we experience any damages as a result of Mr. Qi Shao's conflict of interests as a result of his ownership in Shenzhen Bgin, Mr. Qi Shao agrees to indemnify us for such damages in an amount to be determined by our board of directors or an independent third-party auditor. This agreement remains in effect during the term in which Mr. Shao serves as our chief technology officer and holds an equity interest in Shenzhen Bgin. If we cannot resolve a conflict of interest or dispute between us and Mr. Shao and/or Mr. Li, we may lose the services of Mr. Shao and/or Mr. Li, together with the industry expertise they possess, and we may have to rely on legal proceedings, which could result in disruption of our business and subject us to substantial uncertainty as to the outcome of any such legal proceedings.

A portion of our business operations relate to the mining of alternative cryptocurrencies. Alternative cryptocurrencies are generally considered to have more growth potential with higher risks compared to large-cap cryptocurrencies. To mitigate such risks and maximize profit potential, our subsidiaries adopt a flexible approach to mining operations by monitoring mining results on a daily basis and, on an as-needed basis, adjusting the ratio of cryptocurrencies to be mined. Inherent in this business model is the possibility that we may switch the type of cryptocurrencies mined from time to time, and, accordingly, we are subject to the risk, with respect to each such cryptocurrency, that it may be deemed a "security" within the meaning of Section 2(a)(1) of the Securities Act. We have internal procedures in place for analyzing whether a particular cryptocurrency that we intend to mine, invest in, or transact is a "security" within the meaning of Section 2(a)(1) of the Securities Act. Once we identify a cryptocurrency as potentially mineable, we will submit information relating to such cryptocurrency to our internal legal counsel for review, who will provide an assessment as to the likelihood of such cryptocurrency being deemed a "security" within the meaning of Section 2(a)(1) of the Securities Act, based on the state of the law and any guidance available at the time of determination. Additionally, we plan to take steps to implement internal compliance procedures for this purpose. Any such policies and procedures do not constitute a legal standard but rather represent a framework for our analysis, which permits us to make a risk-based assessment regarding the likelihood that a particular cryptocurrency could be deemed a "security" under applicable laws. Our risk-based assessments do not constitute a legal determination binding on regulators or the courts and do not preclude legal or regulatory action. In the event that we are determined to have participated in the unregistered issuance or distribution of securities, we may be deemed as in violation of Section 5 of the Securities Act and become subject to significant legal and regulatory consequences, which may have a material and adverse impact on our business operations, financial condition, and results of operations. For instance, Section 12(a)(1) allows any purchaser of such unregistered securities to bring a lawsuit to rescind the purchase of the securities or to receive the damages suffered from the purchase. The SEC may also initiate a civil cause of action against the issuer who issues or distributes unregistered securities in violation of Section 5 of the Securities Act. We may also experience adverse publicity arising from any such non-compliance, which could negatively affect our brand and reputation.

The trading price of our Class A ordinary shares has been and may continue to be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, including the performance and fluctuation of the market prices of other companies in the same industry. In addition to market and industry factors, the price and trading volume for our Class A ordinary shares may be highly volatile for factors specific to our own operations, including the following: - actual or anticipated variations in our revenues, earnings, cash flow, and changes or revisions of our expected results;- fluctuations in operating metrics;- announcements of new activities, investments, acquisitions, strategic partnerships, or joint ventures by us or our competitors;- announcements of expansions by us or our competitors;- changes in financial estimates by securities analysts;- announcements of studies and reports relating to the quality of our product and service offerings or those of our competitors;- changes in the economic performance or market valuations of other companies in our industry;- detrimental negative publicity about us, our competitors, or our industry;- additions or departures of key personnel;- regulatory developments affect us or our industry;- general economic or political conditions in Singapore, Hong Kong, the U.S., or elsewhere in the world;- fluctuations of exchange rates between Singapore dollars and U.S. dollars, and between Hong Kong dollars and U.S. dollars; and - potential litigation or regulatory investigations. Any of these factors may result in large and sudden changes in the volume and price at which our Class A ordinary shares trade. Furthermore, the stock market in general experiences price and volume fluctuations that are often unrelated or disproportionate to the operating performance of companies like ours. These broad market and industry fluctuations may adversely affect the market price of our Class A ordinary shares. Volatility or a lack of positive performance in the price of our Class A ordinary shares may also adversely affect our ability to retain key employees and/or PRC individuals, most of whom have been granted equity incentives. In the past, shareholders of public companies have often brought securities class action suits against companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management's attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

In recent years, there have been instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility, especially among companies with relatively smaller public floats. As a relatively small-capitalization company with a relatively small public float, we may experience greater share price volatility, extreme price run-ups, lower trading volume and less liquidity than large-capitalization companies. In particular, our Class A ordinary shares may be subject to rapid and substantial price volatility, low volumes of trades and large spreads in bid and ask prices. Such volatility, including any stock-run up, may be unrelated to our actual or expected operating performance, financial condition or prospects, making it difficult for investors to assess the rapidly changing value of our Class A ordinary shares. In addition, if the trading volumes of our Class A ordinary shares are low, persons buying or selling in relatively small quantities may easily influence prices of our Class A ordinary shares. This low volume of trades could also cause the price of our Class A ordinary shares to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Holders of our Class A ordinary shares may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our Class A ordinary shares. As a result of this volatility, investors may experience losses on their investment in our Class A ordinary shares. A decline in the market price of our Class A ordinary shares also could adversely affect our ability to issue additional Class A ordinary shares or other securities and our ability to obtain additional financing in the future. No assurance can be given that an active market in our Class A ordinary shares will develop or be sustained. If an active market does not develop, holders of our Class A ordinary shares may be unable to readily sell the shares they hold or may not be able to sell their shares at all.

The trading market for our Class A ordinary shares will be influenced by research or reports that industry or securities analysts publish about our business. If one or more analysts who cover us downgrade the Class A ordinary shares, the market price for the Class A ordinary shares would likely decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for the Class A ordinary shares to decline.

Sales of our Class A ordinary shares in the public market, or the perception that these sales could occur, could cause the market price of our Class A ordinary shares to decline. To the extent any Class A ordinary shares are sold into the market, the market price of our Class A ordinary shares could decline. Certain holders of our shares may cause us to register under the Securities Act the sale of their shares. Registration of these shares under the Securities Act would result in these Class A ordinary shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of such registration. Sales of these registered shares in the public market could cause the price of our Class A ordinary shares to decline.

Under our dual-class share structure, our ordinary shares consist of Class A ordinary shares and Class B ordinary shares. In respect of matters requiring the votes of shareholders, holders of Class B ordinary shares will be entitled to five votes per share, while holders of Class A ordinary shares will be entitled to one vote per share based on our dual-class share structure. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof, while Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Upon any sale, transfer, assignment, or disposition of any Class B ordinary shares by a holder thereof, such Class B ordinary shares are automatically and immediately converted into an equal number of Class A ordinary shares. As of the date of this annual report, Mr. Qingfeng Wu, our chief executive officer, beneficially owns all of our issued and outstanding Class B ordinary shares. These Class B ordinary shares constitute approximately 19.94% of our total issued and outstanding ordinary shares and 55.51% of the aggregate voting power of our total issued and outstanding ordinary shares, due to the disparate voting powers associated with our dual-class share structure. See "Item 6. Directors, Senior Management and Employees-E. Share Ownership." As a result of the dual-class share structure and the concentration of ownership, holders of Class B ordinary shares have considerable influence over matters such as decisions regarding mergers, consolidations, and the sale of all or substantially all of our assets, election of directors, and other significant corporate actions. Such holders may take actions that are not in the best interest of us or our other shareholders. This concentration of ownership may discourage, delay, or prevent a change in control of our Company, which could have the effect of depriving our other shareholders of the opportunity to receive a premium for their shares as part of a sale of our Company and may reduce the price of the Class A ordinary shares. This concentrated control may limit your ability to influence corporate matters and could discourage others from pursuing any potential merger, takeover, or other change of control transactions that holders of Class A ordinary shares may view as beneficial.

Mr. Qingfeng Wu, our chief executive officer, beneficially owns all of our issued and outstanding Class B ordinary shares. These Class B ordinary shares constitute approximately 19.94% of our total issued and outstanding ordinary shares and 55.51% of the aggregate voting power of our total issued and outstanding ordinary shares, due to the disparate voting powers associated with our dual-class share structure. See "Item 6. Directors, Senior Management and Employees-E. Share Ownership." As such, we are deemed a "controlled company" as defined under Nasdaq Listing Rules 5615(c). However, we do not intend to avail ourselves of the corporate governance exemptions afforded to a "controlled company" under the Nasdaq Listing Rules. Mr. Qingfeng Wu, as the controlling shareholder of our Company, has substantial influence over our business, including decisions regarding mergers, consolidations, and the sale of all or substantially all of our assets, election of directors, and other significant corporate actions. He may take actions that are not in the best interests of us or our other shareholders. These corporate actions may be taken even if they are opposed by our other shareholders. Further, such concentration of voting power may discourage, prevent, or delay the consummation of change of control transactions that shareholders may consider favorable, including transactions in which shareholders might otherwise receive a premium for their shares. Future issuances of Class B ordinary shares may also be dilutive to the holders of Class A ordinary shares. As a result, the market price of our Class A ordinary shares could be materially and adversely affected.

S&P Dow Jones and FTSE Russell have announced changes to their eligibility criteria for inclusion of shares of public companies in certain indices, including the S&P 500, to exclude companies with multiple classes of shares and companies whose public shareholders hold no more than 5% of total voting power from being added to such indices. In addition, several shareholder advisory firms have announced their opposition to the use of multiple class capital structures. As a result, the dual class structure of our ordinary shares may prevent the inclusion of the Class A ordinary shares in such indices and may cause shareholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure. Any such exclusion from indices could result in a less active trading market for the Class A ordinary shares. Any actions or publications by shareholder advisory firms critical of our corporate governance practices or capital structure could also adversely affect the value of the Class A ordinary shares.

We are an exempted company incorporated under the laws of the Cayman Islands with limited liability. As a result, it may be difficult for investors to effect service of process within the U.S. upon our directors or officers, or enforce judgments obtained in U.S. courts against our directors or officers. Our corporate affairs are governed by our amended and restated memorandum and articles, as amended and restated from time to time, the Companies Act (Revised) of the Cayman Islands, as may be supplemented or amended from time to time (the "Companies Act"), and the common law of the Cayman Islands. The rights of shareholders to take action against our directors, actions by our minority shareholders and the fiduciary duties of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedents in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have the standing to initiate a shareholder derivative action in a federal court of the United States. Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of the register of members of these companies. Our directors have discretion under our amended and restated memorandum and articles to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest. Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the U.S. Currently, we do not rely on home country practice with respect of any corporate governance matter. However, if we choose to follow our home country practice in the future, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers. As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of our board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States. For a discussion of significant differences between the provisions of the Companies Act  and the laws applicable to companies incorporated in the United States and their shareholders, see "Item 10. Additional Information - B. Memorandum and Articles of Association - Differences in Corporate Law."

We are a Cayman Islands exempted company and a substantial amount of our assets are located outside of the U.S. In addition, some of our current directors and officers are nationals and residents of countries other than the United States, and substantially all of the assets of such persons are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of China may render you unable to seek recognition and/or enforce a judgment against our assets or the assets of our directors and officers.

As a foreign private issuer, we are permitted to take advantage of certain provisions in the Nasdaq listing standards that allow us to follow Cayman Islands law for certain governance matters. Certain corporate governance practices in the Cayman Islands may differ significantly from corporate governance listing standards as, except for general fiduciary duties and duties of care, Cayman Islands law has no corporate governance regime which prescribes specific corporate governance standards. Currently, we do not rely on home country practice with respect to our corporate governance. However, if we choose to follow home country practice in the future, our shareholders may be afforded less protection than they otherwise would have under corporate governance listing standards applicable to U.S. domestic issuers.

Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: - the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K;- the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act;- the selective disclosure rules by issuers of material nonpublic information under Regulation FD. On December 18, 2025, the Holding Foreign Insiders Accountable Act was enacted as part of the National Defense Authorization Act for Fiscal Year 2026, mandating directors and officers of foreign private issuers to file Section 16(a) reports (Forms 3, 4, and 5) with the SEC to report beneficial ownership interests in companies, effective on March 18, 2026. Our principal shareholders who are not our officers or directors, however, will remain exempt from Section?16(a) reporting requirements. We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. Press releases relating to financial results and material events are also furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC is less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.