Confidential Offering Memorandum

CONFIDENTIAL OFFERING MEMORANDUM

SkyBridge Bitcoin Fund L.P.

January 2021

This offering memorandum has been prepared solely for the consideration of prospective investors in the partnership referenced above. Except as otherwise expressly set forth herein, distribution or disclosure of any of the contents of this offering memorandum without the prior written consent of the general partner of the partnership is prohibited.

SKYBRIDGE BITCOIN FUND L.P. (A Delaware Limited Partnership)

THIS CONFIDENTIAL OFFERING MEMORANDUM (THE “OFFERING MEMORANDUM”) OFFERS LIMITED PARTNER INTERESTS (THE “INTERESTS”) IN SKYBRIDGE BITCOIN FUND L.P. (THE “PARTNERSHIP”), A DELAWARE LIMITED PARTNERSHIP. SKYBRIDGE BITCOIN GP LLC, A DELAWARE LIMITED LIABILITY COMPANY, IS THE GENERAL PARTNER OF THE PARTNERSHIP (THE “GENERAL PARTNER”). SKYBRIDGE CAPITAL II, LLC, A DELAWARE LIMITED LIABILITY COMPANY, WILL ACT AS MANAGER OF THE PARTNERSHIP (THE “MANAGER”). WHILE THE MANAGER IS REGISTERED AS AN INVESTMENT ADVISER WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) PURSUANT TO THE INVESTMENT ADVISERS ACT OF 1940, AS AMENDED (THE “ADVISERS ACT”), THE MANAGER IS NOT AND WILL NOT BE ACTING IN SUCH CAPACITY IN PROVIDING SERVICES TO THE PARTNERSHIP. AS SUCH, NEITHER THE PARTNERSHIP NOR AN INVESTOR IN THE PARTNERSHIP WILL HAVE THE PROTECTIONS AFFORDED BY THE ADVISERS ACT.

THE INTERESTS ARE BEING OFFERED TO, AND ARE SUITABLE ONLY FOR, INVESTORS WHO ARE “ACCREDITED INVESTORS” (AS DEFINED IN REGULATION D UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)). OFFERS AND SALES OF INTERESTS HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE LAWS OF ANY JURISDICTION, INCLUDING THE SECURITIES ACT, THE LAWS OF ANY STATE OF THE UNITED STATES OF AMERICA, OR THE LAWS OF ANY NON-U.S. JURISDICTION. THE PARTNERSHIP WILL NOT BE REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “INVESTMENT COMPANY ACT”). CONSEQUENTLY, INVESTORS WILL NOT BE AFFORDED THE PROTECTION OF THE INVESTMENT COMPANY ACT. THERE IS NO PUBLIC MARKET FOR THE INTERESTS, AND NO SUCH MARKET IS EXPECTED TO DEVELOP IN THE FUTURE.

THE PARTNERSHIP IS NOT A COMMODITY POOL AND WILL NOT BE REGULATED BY THE U.S. COMMODITY FUTURES TRADING COMMISSION (THE “CFTC”) UNDER THE COMMODITY EXCHANGE ACT AND THE RULES THEREUNDER. INVESTORS IN THE PARTNERSHIP WILL NOT RECEIVE THE REGULATORY PROTECTIONS AFFORDED TO INVESTORS IN REGULATED COMMODITY POOLS. THEREFORE, THIS OFFERING MEMORANDUM WILL NOT BE REQUIRED TO BE, AND WILL NOT BE, FILED WITH THE CFTC. THE CFTC DOES NOT PASS UPON THE MERITS OF PARTICIPATING IN A POOL OR UPON THE ADEQUACY OR ACCURACY OF ANY OFFERING MEMORANDUM. CONSEQUENTLY, THE CFTC HAS NOT REVIEWED OR APPROVED, AND WILL NOT REVIEW OR APPROVE, THIS OFFERING, THIS OFFERING MEMORANDUM OR ANY OTHER OFFERING MATERIALS FOR THE PARTNERSHIP.

IN MAKING AN INVESTMENT DECISION, EACH INVESTOR MUST RELY ON ITS OWN EXAMINATION OF THE PARTNERSHIP AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED, AND SHOULD CONSULT WITH ITS ATTORNEYS AND ITS INVESTMENT, ACCOUNTING, REGULATORY, ERISA (AS DEFINED BELOW) AND TAX ADVISORS TO DETERMINE THE CONSEQUENCES OF AN INVESTMENT IN THE PARTNERSHIP. PROSPECTIVE INVESTORS IN THE PARTNERSHIP ARE NOT TO CONSTRUE THE CONTENTS OF THIS OFFERING MEMORANDUM OR ANY PRIOR OR SUBSEQUENT COMMUNICATIONS FROM OR ON BEHALF OF THE PARTNERSHIP AS LEGAL, ACCOUNTING, INVESTMENT, REGULATORY, ERISA OR TAX ADVICE.

THIS OFFERING MEMORANDUM HAS BEEN PREPARED SOLELY FOR THE CONSIDERATION OF PROSPECTIVE INVESTORS IN THE PARTNERSHIP. DISTRIBUTION OR DISCLOSURE OF ANY OF THE CONTENTS OF THIS OFFERING MEMORANDUM WITHOUT THE PRIOR WRITTEN CONSENT OF THE GENERAL PARTNER IS PROHIBITED. EACH RECIPIENT HEREOF, BY ACCEPTING DELIVERY OF THIS OFFERING MEMORANDUM, AGREES TO PROMPTLY RETURN IT AND ALL RELATED MATERIALS TO THE GENERAL PARTNER IF SUCH RECIPIENT DOES NOT UNDERTAKE TO PURCHASE ANY INTERESTS. THE DELIVERY OF THIS OFFERING

MEMORANDUM DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE ON THE COVER HEREOF. NO PERSON OTHER THAN THE GENERAL PARTNER HAS BEEN AUTHORIZED IN CONNECTION WITH THIS OFFERING TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN AS CONTAINED IN THIS OFFERING MEMORANDUM. THIS OFFERING MEMORANDUM DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY STATE OR OTHER JURISDICTION TO ANY PERSON OR ENTITY TO WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH STATE OR JURISDICTION.

THE INTERESTS HAVE NOT BEEN RECOMMENDED BY ANY UNITED STATES FEDERAL OR STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS OFFERING MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE INTERESTS ARE SUBJECT TO THE RESTRICTIONS ON TRANSFERABILITY AND RESALE CONTAINED IN THE AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF THE PARTNERSHIP (AS AMENDED OR RESTATED FROM TIME TO TIME, THE “PARTNERSHIP AGREEMENT”) AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE PARTNERSHIP AGREEMENT AND IN COMPLIANCE WITH THE SECURITIES ACT AND THE APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF AN INVESTMENT FOR AN INDEFINITE PERIOD.

CERTAIN STATEMENTS CONTAINED IN THIS OFFERING MEMORANDUM CONSTITUTE “FORWARD-LOOKING STATEMENTS,” WHICH CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS “MAY,” “WILL,” “SHOULD,” “EXPECT,” “ANTICIPATE,” “ESTIMATE,” “AIM,” “PROJECT,” “TARGET,” “INTEND,” “CONTINUE” OR “BELIEVE,” THE NEGATIVES THEREOF, OTHER VARIATIONS THEREON OR OTHER COMPARABLE TERMINOLOGY. DUE TO VARIOUS RISKS AND UNCERTAINTIES, INCLUDING THOSE LISTED HEREIN IN “IV. RISK FACTORS AND CONFLICTS OF INTEREST,” ACTUAL EVENTS OR RESULTS, OR THE ACTUAL PERFORMANCE OF THE PARTNERSHIP, MAY DIFFER MATERIALLY FROM WHAT IS REFLECTED OR CONTEMPLATED IN SUCH FORWARD- LOOKING STATEMENTS. AS USED HEREIN, “$” OR “DOLLARS” MEANS U.S. DOLLARS, AND “BUSINESS DAY” MEANS ANY DAY EXCEPT A SATURDAY, SUNDAY OR OTHER DAY ON WHICH COMMERCIAL BANKS IN NEW YORK CITY ARE AUTHORIZED BY LAW TO CLOSE.

REFERENCES HEREIN TO “EXPERTISE,” ANY PARTY BEING AN “EXPERT,” OR AWARDS RECEIVED, DEGREES CONFERRED OR OTHER PARTICULAR SKILLSETS, ARE BASED SOLELY ON THE BELIEF OF THE GENERAL PARTNER AND ARE PROVIDED ONLY TO INDICATE PROFICIENCY AS COMPARED TO AN AVERAGE PERSON. SUCH REFERENCES IN NO WAY LIMIT THE EXCULPATION PROVISIONS AND RELATED STANDARD OF CARE AS MORE FULLY DESCRIBED HEREIN. SUCH REFERENCES SHOULD NOT BE CONSTRUED OR RELIED UPON AS AN INDICATION OF FUTURE PERFORMANCE OR OTHER FUTURE OUTCOMES. SIMILARLY, REFERENCES HEREIN TO “UNIQUE” AND SIMILAR EXPRESSIONS AND DERIVATIONS ARE ALSO BASED SOLELY ON THE BELIEF OF THE GENERAL PARTNER AND ARE NOT INTENDED TO REFER TO AN EXCLUSIVELY SINGULAR PRACTICE, BUT TO POSSESSING CHARACTERISTICS OF DISTINCTIVENESS NOT FOUND UNIVERSALLY IN THE MARKET.

NOTWITHSTANDING ANY OTHER STATEMENT IN THIS OFFERING MEMORANDUM, THE GENERAL PARTNER, THE MANAGER AND THEIR RESPECTIVE AFFILIATES, ADVISORS, MEMBERS, PARTNERS, OFFICERS, DIRECTORS, EMPLOYEES AND PRINCIPALS AUTHORIZE EACH INVESTOR AND EACH INVESTOR’S EMPLOYEES, REPRESENTATIVES OR OTHER AGENTS, FROM AND AFTER THE COMMENCEMENT OF ANY DISCUSSIONS WITH ANY SUCH PARTY, TO DISCLOSE TO ANY AND ALL PERSONS, WITHOUT LIMITATION OF ANY KIND, THE TAX TREATMENT AND TAX STRUCTURE OF THE PARTNERSHIP AND ANY TRANSACTION ENTERED INTO BY THE PARTNERSHIP AND ALL MATERIALS OF ANY KIND (INCLUDING

OPINIONS OR OTHER TAX ANALYSES) RELATING TO SUCH TAX TREATMENT OR TAX STRUCTURE THAT ARE PROVIDED TO SUCH INVESTOR, EXCEPT FOR ANY INFORMATION IDENTIFYING THE GENERAL PARTNER, THE MANAGER OR THEIR RESPECTIVE AFFILIATES, ADVISORS, MEMBERS, PARTNERS, OFFICERS, DIRECTORS, EMPLOYEES AND PRINCIPALS, THE INVESTORS, THE PARTNERSHIP, ANY FEEDER FUND, ANY INVESTOR IN ANY FEEDER FUND OR (EXCEPT TO THE EXTENT RELEVANT TO SUCH TAX STRUCTURE OR TAX TREATMENT) ANY NONPUBLIC COMMERCIAL OR FINANCIAL INFORMATION.

TABLE OF CONTENTS

PAGE I. OVERVIEW OF THE INVESTMENT PROGRAM ...... 1 II. MANAGEMENT ...... 2 III. SUMMARY OF PRINCIPAL TERMS ...... 4 IV. RISK FACTORS AND CONFLICTS OF INTEREST ...... 23 V. ADMINISTRATOR ...... 57 VI. CERTAIN TAX AND REGULATORY CONSIDERATIONS ...... 58 APPENDIX A: SELLING LEGENDS ...... A-1

I. OVERVIEW OF THE INVESTMENT PROGRAM

The following description of the investment strategy, program and process of SkyBridge Bitcoin Fund L.P. (the “Partnership”), a Delaware limited partnership, is general in nature and is not exhaustive. The Partnership’s investment strategy, program and process are proprietary. The Manager (as defined below) reserves the right to alter any investment program or process of the Partnership as deemed appropriate from time to time in its discretion without obtaining investor approval, provided such changes are consistent with the investment objectives of the Partnership as described below. There can be no assurance that the following investment objectives will be achieved, and results may vary. Please see “IV. Risk Factors and Conflicts of Interest” for a detailed discussion of the risks and conflicts of interests associated with an investment in the Partnership.

INVESTMENT PROGRAM AND GUIDELINES

The Partnership’s investment strategy is designed to provide exposure to bitcoin, the largest and most liquid digital asset, through an institutional-grade fund. The Partnership will invest directly in bitcoin, and the Partnership’s portfolio will be priced based on the Bloomberg Bitcoin Cryptocurrency Fixing Rate (the “XBT”), provided that the General Partner (as defined below), in its discretion, may elect to use a different pricing source for the Partnership’s portfolio.

The Partnership’s investment program is speculative and entails substantial risks. There can be no assurance that the investment objectives of the Partnership will be achieved. See “IV. Risk Factors and Conflicts of Interest.”

The Partnership offers investors liquid exposure to bitcoin through a traditional private fund structure managed by SkyBridge Capital II, LLC (the “Manager”). The Partnership is designed to provide exposure to bitcoin in a fund structure that is familiar to investors and that provides regular monthly statements and standard tax documentation.

The Manager typically will cause the Partnership to purchase and sell bitcoin to account for flows of capital into or out of the Partnership as a result of subscriptions or withdrawals. Under the oversight of the Portfolio Managers, the Manager’s personnel may retain discretion as to the timing, price or manner of execution of purchase and sale transactions.

1 II. MANAGEMENT

SkyBridge Bitcoin GP LLC, a Delaware limited liability company, is the general partner of the Partnership. The Partnership has retained the Manager to manage the Partnership’s bitcoin holdings. The Manager has also been retained to provide support services to the Partnership, including certain administrative, accounting, investor relations and other services. While the Manager is registered as an investment adviser with the U.S. Securities and Exchange Commission (the “SEC”) pursuant to the Investment Advisers Act of 1940, as amended (the “Advisers Act”), the Manager is not and will not be acting in such capacity in providing services to the Partnership. As such, neither the Partnership nor an investor in the Partnership will have the protections afforded by the Advisers Act. For example, in managing the Partnership, the Manager will not be subject to the Advisers Act’s requirements with respect to the custody of client assets or transactions with affiliates.

Management and Key Executives

Anthony Scaramucci. Mr. Scaramucci is the Founder and Managing Partner of SkyBridge Capital and Portfolio Manager of the Fund. Prior to founding SkyBridge in 2005, he co-founded investment partnership Oscar Capital Management, which was sold to Neuberger Berman, LLC in 2001. Earlier, he was a vice president in Private Wealth Management at Goldman Sachs & Co. In 2016, Mr. Scaramucci was ranked #85 in Worth Magazine’s Power 100: The 100 Most Powerful People in Global Finance. In 2011, he received Ernst & Young’s “Entrepreneur of the Year – New York” Award in the Financial Services category. He the author of three books: The Little Book of Hedge Funds, Goodbye Gordon Gekko, Hopping Over the Rabbit Hole (a 2016 Wall Street Journal best seller), and Trump: The Blue Collar President. Mr. Scaramucci is a member of the Council on Foreign Relations (CFR), vice chair of the Kennedy Center Corporate Fund Board, a board member of both The Brain Tumor Foundation and Business Executives for National Security (BENS), and a Trustee of the United States Olympic & Paralympic Foundation. He was a member of the New York City Financial Services Advisory Committee from 2007 to 2012. In November 2016, he was named to President-Elect Trump’s 16-person Presidential Transition Team Executive Committee. In June 2017, he was named the Chief Strategy Officer of the EXIM Bank. He served as the White House Communications Director for a period in July 2017. Mr. Scaramucci, a native of Long Island, New York, holds a Bachelor of Arts degree in Economics from Tufts University and a Juris Doctor from Harvard Law School.

Brett S. Messing. Mr. Messing is Partner, President and Chief Operating Officer of SkyBridge Capital and Portfolio Manager of the Fund. He began his career at Goldman Sachs where he held various positions including Vice President and Co-Head of the Restricted Stock Group. Thereafter, he was a partner at Oscar Capital Management, which was acquired by Neuberger Berman, LLC. Following the successful integration of the business, Mr. Messing founded GPS Partners, a $2.5 billion hedge fund at its peak, which focused primarily in the energy infrastructure sector. Mr. Messing was the firm’s Managing Partner and Chief Investment Officer. Thereafter, Mr. Messing worked for Los Angeles Mayor Antonio R. Villariagosa as Co- Chief Operating Officer responsible for economic and business policy. Mr. Messing served as a Senior Advisor to Mayor Michael R. Bloomberg at C40 Cities, a joint venture with the Clinton Climate Initiative. Mr. Messing is the co-author of The Forewarned Investor and contributed to Learning from the Global Financial Crisis – Creatively, Reliably and Sustainably, a compendium published by Stanford Business School. Mr. Messing received his A.B. from Brown University, magna cum laude, and his Juris Doctor from Harvard Law School.

Raymond C. Nolte. Mr. Nolte is Partner and Co-Chief Investment Officer of SkyBridge Capital. Prior to SkyBridge’s acquisition of the Hedge Fund Management Group of Citigroup Alternative Investments, LLC in June 2010, Mr. Nolte served as Chief Executive Officer and Chief Investment Officer of the group as well as Chairman of its Investment Committee. Earlier, Mr. Nolte worked at Deutsche Bank, where he served as the Global Head and CIO of the DB Absolute Return Strategies Fund-of-Funds business, Chairman of its Investment Committee and Vice Chairman of DB ARS and Head of the Single Manager Hedge Fund business. Mr. Nolte started his career at Bankers Trust Company in 1983 and was named head of Global Portfolio Management in 1994. He launched the bank’s Fund-of-Funds group in 1996. Mr. Nolte received his B.B.A. in Finance from George Washington University.

2 Troy A. Gayeski, CFA. Mr. Gayeski is a Partner and Co-Chief Investment Officer of SkyBridge Capital. Mr. Gayeski manages the firm’s discretionary fund of hedge fund portfolios and institutional separate accounts. Mr. Gayeski’s responsibilities include portfolio management, manager sourcing, research and due diligence across a wide variety of alternative investment strategies. A regular speaker and commentator, Mr. Gayeski appears as a frequent guest on various broadcast networks including Bloomberg News, Fox Business Network, and CNBC. Prior to joining SkyBridge in June 2010, he performed similar duties in the Hedge Fund Management Group at Citigroup Alternative Investments (CAI), Bank of America and Yankee Advisers. Mr. Gayeski received a B.S. in Chemical Engineering from MIT and is a CFA charterholder.

Daniel Barile, CFA. Mr. Barile is Partner, Portfolio Manager and Senior Investment Analyst at SkyBridge. Mr. Barile is responsible for fund of hedge fund manager sourcing, research and due diligence across a wide variety of alternative investment strategies as well as the real estate strategy. Prior to joining SkyBridge in June 2010, Mr. Barile was responsible for manager due diligence in the Hedge Fund Management Group at Citigroup Alternative Investments, LLC. Prior to joining CAI, Mr. Barile covered traditional and alternative asset managers from a variety of perspectives at Fitch Ratings and Merrill Lynch Investment Managers (now BlackRock). Mr. Barile received a B.S. in Management with a concentration in Finance from Binghamton University and holds the Chartered Financial Analyst (CFA) and Chartered Alternative Investment Analyst (CAIA) designations.

Jason Wright. Mr. Wright is a Senior Partner and Global Head of Marketing at SkyBridge Capital. Prior to SkyBridge, Mr. Wright was Managing Director of Business Development at Soleil Securities Group. He was also Managing Director at SoundView Ventures from 2000 to 2003 and Director at Wit Capital Group from 1996 to 2000.

Robert Phillips. Mr. Phillips is a Partner and the Chief Financial Officer at SkyBridge Capital. Prior to joining SkyBridge in 2007, Mr. Phillips served as the Executive Vice-President and Chief Financial Officer of two investment management companies—Lucerne Management, LLC and Coventry Capital, LLC. Prior to 2001, Mr. Phillips served as the Executive Vice-President and Chief Financial Officer of a publicly held bio-pharmaceutical contract service organization where he was responsible for all finance, accounting, SEC reporting, and investor relation functions. Mr. Phillips began his career as an auditor and spent eight years with BDO Seidman, LLP, a national professional services firm which provides assurance, tax, financial advisory and consulting services to a wide range of publicly traded and privately held companies. Mr. Phillips earned a B.A. degree in Accounting from Upsala College in 1984 and is a certified public accountant.

A. Marie Noble. Ms. Noble is a Partner, Chief Compliance Officer and General Counsel at SkyBridge Capital. Prior to joining SkyBridge in November 2010, Ms. Noble was an Associate General Counsel at Citigroup Alternative Investments, LLC, where she was lead counsel supporting various hedge fund platforms managed by Citi’s registered investment adviser. Ms. Noble joined Citi in 2006 after spending six and a half years practicing corporate law in the New York and London Offices of Cleary, Gottlieb, Steen & Hamilton, where her primary focus was on domestic and international securities transactions. Ms. Noble is a member of the board of directors of Volunteer Lawyers for the Arts, a preeminent legal aid organization providing pro bono legal representation to artists, designers and nonprofit arts and cultural organizations. Ms. Noble received a B.A. degree magna cum laude and Phi Beta Kappa from Bucknell University and a Juris Doctor degree cum laude from Boston University where she served as Note Editor on the Boston University Law Review.

Christopher Hutt. Mr. Hutt is a Partner and the Head of Hedge Fund Administration and Operations at SkyBridge Capital. Mr. Hutt is responsible for managing the operations for the SkyBridge product suite and is also the product manager for the fund of hedge fund products and managed accounts. Prior to this role, Mr. Hutt was Director of Hedge Fund Operations within the HFMG at CAI. Prior to joining CAI in 2004, Mr. Hutt held various product management positions at Morgan Stanley & Co. and JPMorgan Chase over an eight-year span. Mr. Hutt received a B.A. from the State University of New York at Cortland.

3 III. SUMMARY OF PRINCIPAL TERMS

The following is a summary of certain information that will be set forth more fully in the Amended and Restated Agreement of Limited Partnership of the Partnership (as may be amended or restated from time to time, the “Partnership Agreement”), the form of which will be made available to each prospective investor upon request. This summary is qualified by, and should be read in conjunction with, such more detailed information.

The Partnership: SkyBridge Bitcoin Fund L.P. (the “Partnership”) is a Delaware limited partnership.

Investment Objective: The Partnership’s investment strategy is designed to provide exposure to bitcoin, the largest and most liquid digital asset, through an institutional-grade fund. The Fund will not borrow money or use derivatives to obtain leveraged economic exposure to bitcoin. The Fund may borrow for short term purposes to facilitate settlement of the Fund’s transactions.

Pricing Source The Partnership’s portfolio will be priced based on the Bloomberg Bitcoin Cryptocurrency Fixing Rate (the “XBT”); provided that the General Partner (as defined below), in its discretion, may elect to use a different pricing source for the Partnership’s portfolio.

General Partner: SkyBridge Bitcoin GP LLC, a Delaware limited liability company, is the general partner of the Partnership (the “General Partner”).

Manager: The Partnership has retained SkyBridge Capital II, LLC (the “Manager”), a Delaware limited liability company, to manage the Partnership’s bitcoin holdings, as well as to provide support services to the Partnership, including certain administrative, accounting, investor relations and other services. While the Manager is an investment adviser registered with the U.S. Securities and Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), the Manager is not and will not be acting in such capacity in providing services to the Partnership. As such, neither the Partnership nor an investor in the Partnership will have the protections afforded by the Advisers Act. For example, in managing the Partnership, the Manager will not be subject to the Advisers Act’s requirements with respect to the custody of client assets or transactions with affiliates.

Feeder Funds: The Manager reserves the right to establish funds that will invest directly or indirectly in the Partnership (each, a “Feeder Fund”). The Feeder Funds may be subject to terms and conditions that are different from those that are applicable to the Partnership.

4 Interests: Pursuant to this Offering Memorandum, the Partnership is offering limited partner interests (the “Interests”) to certain eligible investors on the terms described herein.

The Partnership may without notice to, or consent of, any Limited Partner establish and issue from time to time one or more separate classes or series of Limited Partner Interests with terms and conditions that may vary from those of the Interests described herein.

Eligibility: Investors admitted to the Partnership will acquire Interests and become limited partners in the Partnership (the “Limited Partners”) at the sole discretion of the General Partner. The Limited Partners and the General Partner are referred to herein as the “Partners.” Limited Partners must be “accredited investors” under the U.S. Securities Act of 1933, as amended (the “Securities Act”). This offering is being made to investors pursuant to Rule 506(c) of Regulation D under the Securities Act.

Minimum Initial Investment: The minimum initial investment for an Interest is $50,000. The General Partner may adjust the minimum investment requirement in any particular case.

Minimum Additional Investment: The minimum additional investment by any Limited Partner is $25,000, subject to waiver of this requirement at the discretion of the General Partner.

Subscriptions: The General Partner has the right, in its sole and absolute discretion, to accept, or to decline to accept, any capital contribution to the Partnership (a “Capital Contribution”), in whole or in part, for any or no reason. Capital Contributions generally will be permitted each Business Day or any other times as determined by the General Partner (each such date, a “Subscription Date”). In general, Capital Contributions to the Partnership must be made in U.S. dollars; provided that the General Partner, in its discretion, may determine to accept in- kind subscriptions of bitcoin.

The General Partner may, in its sole discretion, “close” the Partnership at any time by refusing to (i) allow the admission of new Limited Partners and/or (ii) accept additional Capital Contributions by existing Limited Partners, in either case without notice to the Limited Partners. Notwithstanding the foregoing, the General Partner may reopen the Partnership on any date in its sole discretion.

Completed subscription materials with respect to any initial or additional Capital Contribution by a Limited Partner must generally be received by the Administrator (as defined below) at least two Business Days prior to the relevant Subscription Date (not including such Subscription Date). An application for a subscription will not be deemed received until it has been accepted in writing by the Administrator and the Administrator has confirmed that all required documentation has been provided. Any subscription application received after the deadline will be

5 treated as an application for the next Subscription Date, unless otherwise agreed by the General Partner.

Unless otherwise agreed by the General Partner, amounts in respect of Capital Contributions must be made in cash by wire transfer and transferred to the Partnership’s subscription/redemption account at least two Business Days prior to the relevant Subscription Date (not including such Subscription Date), and such amounts will be held without interest until contributed to the Partnership as of the Subscription Date. Capital Contributions must be remitted from a bank or securities account in the name of the investor. Unless otherwise agreed by the General Partner and the Administrator, funds or other assets remitted by a third-party will not be accepted. In the event that the General Partner permits a Capital Contribution to be made in bitcoin, the prospective investor must submit a transaction history report in a form reasonably satisfactory to the General Partner or its designee connecting the investor’s bank account to such proposed Capital Contribution of bitcoin to the Partnership as well as such other information requested by the General Partner or its designee.

“Business Day” means any day on which banks in New York are open for business or such other day as the General Partner in its sole discretion may determine.

Allocation of Profits and Losses: For each Partner, the Partnership will maintain a capital account (a “Capital Account”). At the end of each Accounting Period (as defined below), each Partner’s Capital Account will be credited or debited, as the case may be, with such Partner’s Partnership Percentage (as defined below), calculated as of the beginning of such Accounting Period, of the Partnership’s net realized and unrealized profits and losses for such Accounting Period. These allocations do not take into account fees and expenses, including the Fees (as defined below). For a discussion of the allocation of expenses to the Capital Accounts, see “— Management Fee; Placement Fee,” “—Withdrawals,” and “— Expenses.” The Partnership’s profits, losses and expenses will be determined based on the accrual method of accounting in accordance with U.S. generally accepted accounting principles (“GAAP”), other than as noted in “— Expenses,” below.

A Partner’s “Partnership Percentage” with respect to any Accounting Period is the percentage derived by dividing (x) the balance of such Limited Partner’s Capital Account as of the first day of such Accounting Period, reduced by such Partner’s share of the Fees for such Accounting Period, by (y) the aggregate Capital Account balances of all Partners as of the first day of such Accounting Period, reduced by the Fees for such Accounting Period, in each case, after taking into account any Capital Contributions made to the Partnership at such time.

As used herein, “Accounting Period” refers to the following periods. Each Accounting Period will begin immediately after the end of the immediately preceding Accounting Period (or in the case of the first Accounting Period, as of the opening of business on the first Subscription Date) and will close at 5:00

6 p.m. (New York time), or such other time chosen by the General Partner, on the first to occur of (i) the last day of the next succeeding calendar month, (ii) the day immediately preceding the effective date of the admission of any Limited Partner, (iii) the day immediately preceding the effective date of an additional capital contribution to the Partnership, (iv) the effective date of any withdrawal by, in whole or in part, or distribution to, a Limited Partner or the General Partner, (v) the date on which the Partnership dissolves and (vi) any other date determined by the General Partner in its discretion.

Management Fee; Placement Fee: Pursuant to the Management Agreement, the Partnership will pay to the Manager, monthly in advance as of the first day of each calendar month, or such later day as the Manager may determine in its sole discretion, a fixed fee for management services (the “Management Fee”). In general, the Management Fee for any month will be equal to 0.0625% (0.75% per annum) of the aggregate balances of the Limited Partners’ Capital Accounts as of the beginning of such month. In addition, the Partnership will pay any Placement Agent (as defined below) a placement fee in respect of Limited Partners that have been introduced to the Partnership by such Placement Agent (such Limited Partners, “Placement Class Limited Partners”). In respect of each Placement Class Limited Partner, the Partnership will pay the respective Placement Agent a monthly fee (a) equal to (i) the rate set forth in the Subscription Agreement for such Placement Class Limited Partner multiplied by (ii) the balance of such Placement Class Limited Partner’s Capital Account at the beginning of the month and (b) otherwise calculated in the same manner as the Management Fee (the “Placement Fee” and, together with the Management Fee, the “Fees”). For the avoidance of doubt, the Placement Fee will not offset or otherwise reduce the Management Fee and the Fees in respect of a Placement Class Limited Partner for a given period will be calculated without reduction for the effect of either Fee. Each Limited Partner’s Capital Account will be debited with the portion of the Fees attributable to such Capital Account (including the Placement Fees attributable to such Limited Partner if such Limited Partner is a Placement Class Limited Partner). If the General Partner permits a Limited Partner to make a withdrawal from its Capital Account other than as of the last day of a calendar month, an appropriate portion of any advance payment of the Fees for such month will be repaid to the Partnership and credited to such Limited Partner’s Capital Account. In case of a Capital Contribution by any Limited Partner on any day other than the first day of a calendar month, Fees will be charged for such month in respect of such Capital Contribution on a prorated basis. The Manager, in its sole discretion, may waive or reduce the portion of the Fees otherwise due with respect to any Limited Partner, including with respect to any affiliate, without any notice to any other Limited Partner. For the avoidance of doubt, the General Partner will not bear any portion of the Fees.

7 Withdrawals: Subject to the right of the General Partner to suspend or limit withdrawals discussed in “—Suspension” and the other restrictions and obligations described below, a Limited Partner may make a withdrawal from its Capital Account, in whole or in part, as of the last day of any calendar quarter (a “Withdrawal Date”) by providing at least 30 calendar days’ prior written notice to the Administrator. The General Partner has the right to permit withdrawals at other times and upon such notice as determined in its discretion. Except as set forth herein, each notice of withdrawal delivered to the Administrator by any Limited Partner will be irrevocable unless the General Partner determines otherwise in its discretion.

Unless otherwise determined by the General Partner, a Limited Partner must provide notice of a withdrawal request by delivering an executed electronic or facsimile copy of a withdrawal form to the Administrator in compliance with the applicable notice requirement. Unless otherwise determined by the General Partner, the Partnership will not pay withdrawal proceeds to a Limited Partner unless the Administrator receives the notice of withdrawal by such deadline. The Administrator will not be responsible in the event that it does not receive any withdrawal request.

Consistent with applicable anti-money laundering requirements, withdrawal payments will generally be made only to the bank account from which the relevant Capital Contribution was received. Payments to other accounts held in the name of the registered owner of the relevant Interest will be made only if approved by the General Partner in its discretion. The Partnership will not make withdrawal payments to accounts held in the name of any person other than the registered owner of the relevant Interest unless the General Partner determines otherwise in its discretion.

A partial withdrawal from a Capital Account will be permitted only in an amount equal to or greater than $25,000, unless otherwise permitted by the General Partner in its discretion. A partial withdrawal by a Limited Partner will not be permitted if such withdrawal would cause the remaining balance of the Limited Partner’s Capital Account to fall below the required minimum initial investment for an Interest, subject to the General Partner’s right to waive such minimum investment in its discretion.

Withdrawal proceeds are generally expected to be paid to the Limited Partner within five Business Days after the relevant Withdrawal Date. Subject to the Partnership’s right to retain a Reserve Amount (as defined below), in the case of a withdrawal by a Limited Partner of more than 95% of the balance of its Capital Account as of any Withdrawal Date, at least 95% of the amount withdrawn will, to the fullest extent permitted by law, generally be paid to such Limited Partner within five Business Days after the relevant Withdrawal Date and the balance, subject to any audit adjustments (and without any interest) will, to the fullest extent permitted by law, be paid within 30 calendar days

8 following the completion of the audit of the Partnership for the fiscal year end in which the withdrawal is effective. If a Limited Partner seeks to withdraw more than 95%, in the aggregate, of its Capital Account balance during a fiscal year by means of more than one withdrawal, this “holdback” may be applied by reference to the aggregate amounts withdrawn from such Capital Account during such fiscal year.

Certain expenses (including expenses that are actually paid or payable or that are reasonably capable of being accurately estimated by the Manager) incurred by the Partnership as a result of withdrawals may, in the discretion of the General Partner, be debited from the withdrawal proceeds otherwise distributable to the withdrawing Limited Partners. Because withdrawal expenses will vary on a case-by-case basis, the General Partner cannot predict the maximum charge.

The Partnership generally expects to make distributions of withdrawal proceeds in U.S. dollars, and will use commercially reasonable efforts to do so. However, the General Partner may determine that all or a portion of such withdrawal payments will not be made in U.S. dollars, but instead will be made in digital currency. In that case, either (i) such withdrawal payment will be transferred to a special-purpose vehicle established for the benefit of the withdrawing Limited Partners and interests in such special- purpose vehicle will be distributed to the withdrawing Limited Partners in proportion to their respective shares of the in-kind withdrawal payment or (ii) at the discretion of the General Partner, such in-kind withdrawal payment may be retained in the Partnership, in which case a new class of interests in the Partnership will be issued to the withdrawing Limited Partners in respect of such retained amount. Any such in-kind withdrawal payment will be made to the withdrawing Limited Partners pro rata in accordance with the respective amounts of withdrawal proceeds such Limited Partners are receiving at such time. The General Partner will provide the withdrawing Limited Partner at least ten calendar days’ notice prior to the applicable Withdrawal Date of its intent either to distribute an interest in such a special- purpose vehicle or to cause the Partnership to issue such new class of interests. Within five calendar days of receiving such notice, the withdrawing Limited Partner may provide written notice to the General Partner that it elects instead to receive such withdrawal payment in digital currency, in which case the General Partner will use reasonable efforts to effect the transfer of the appropriate amount of digital currency to the investor as promptly as practicable following the calculation of the Net Asset Value (as defined below) for the applicable Withdrawal Date.

In the event that the Partnership transfers digital currency to a special-purpose vehicle and distributes interests in such special- purpose vehicle to withdrawing Limited Partners, (i) the assets of the special-purpose vehicle will be sold by the General Partner or its designee for the benefit of the withdrawing Limited Partners, (ii) payment to a Limited Partner of the portion of such Limited Partner’s withdrawal proceeds that was transferred to the special- purpose vehicle will be delayed until such time as the digital

9 currency can be sold and (iii) the amount ultimately paid to such Limited Partner in respect of the digital currency transferred in- kind to such special-purpose vehicle will be equal to the net sales proceeds ultimately received for such digital currency which may be less than the withdrawal price on the Withdrawal Date. The foregoing will apply to the issuance of any class of interests in the Partnership in lieu of the creation of a special purpose vehicle. Any such special-purpose vehicle will bear any costs associated with the carrying and liquidation of the digital currency held by such special-purpose vehicle. Assets held by a special-purpose vehicle will be subject to a management fee (and Placement Fees) payable to the Manager or its affiliates (unless waived by the Manager), which will be calculated and paid in the manner described above, mutatis mutandis. Additionally, any such special-purpose vehicle will bear any other organizational and operating expenses incurred in respect of such special-purpose vehicle.

In the event a Limited Partner makes a withdrawal request, the General Partner may cause the Partnership to withhold a portion of the withdrawal proceeds otherwise distributable to such Limited Partner (the “Reserve Amount”) in order to make such provisions as the General Partner, in its discretion, deems necessary or advisable to create a reserve for any and all liabilities and obligations, contingent or otherwise, of the Partnership, regardless of whether any such reserve is required by GAAP. The General Partner will notify a withdrawing Limited Partner of its Reserve Amount, if any. Any Reserve Amount will be a general liability of the Partnership and will not participate in the profits and losses of the Partnership. After the payment or settlement of all liabilities and obligations for which a Reserve Amount (or any portion thereof) was withheld, the Partnership will distribute to the withdrawing Limited Partner the amount, if any, of such Reserve Amount (or portion thereof) that was not applied to such payment or settlement.

The General Partner may make withdrawals from its Capital Account at any time in its discretion and without notice to the Limited Partners.

Suspension: The General Partner may at any time prior to the payment of withdrawal proceeds suspend the calculation of the Net Asset Value of the Partnership, suspend or limit the right of all Limited Partners to make withdrawal requests, suspend or limit the right of all Limited Partners to receive withdrawal proceeds and/or reduce the amount that may be withdrawn from the Partnership if the General Partner determines that any of the following has occurred and is continuing:

(i) calculation of the XBT (or such other pricing source that the General Partner has selected for pricing the Partnership’s portfolio) has been suspended for any reason by Bloomberg (or the sponsor or calculation agent of such other pricing source);

(ii) the closure of, or systemic delays or other material changes with respect to, any exchange or market on

10 which bitcoin is quoted, other than for ordinary holidays and weekends, or the restriction or suspension of transactions on any such exchanges;

(iii) a “hard fork” of the blockchain with respect to bitcoin (e.g., in the event a developer or group of developers proposes a modification to the bitcoin network that is not accepted by a majority of miners and users, but that is nonetheless accepted by a substantial plurality of miners and users and, as a result, two or more competing and incompatible blockchain implementations result);

(iv) the existence of any state of affairs that constitutes a state of emergency, period of extreme volatility or other exigent circumstance as a result of which the disposition of the investments of the Partnership necessitated by giving effect to requested withdrawals, when aggregated with other amounts requested to be withdrawn on the same withdrawal date, would result in (A) the Partnership’s realizing less than the fair value, as determined by the General Partner in its sole discretion, of the disposed investments or (B) a significant decline in the prices or values of the bitcoin retained by the Partnership following such dispositions;

(v) the breakdown of the means of communication normally employed in determining the prices or values of the bitcoin held by the Partnership or the breakdown of the dissemination of prices quoted on any exchange on which any of the bitcoin held by the Partnership is quoted;

(vi) systemic delays in the recording and confirmation of transactions on the blockchain applicable to bitcoin;

(vii) the determination by the General Partner that, for any reason, the prices or values of the investments of the Partnership cannot reasonably be promptly and accurately ascertained;

(viii) the termination of the Partnership or the declaration by the General Partner of its intent to terminate the Partnership and/or effect an orderly liquidation of the Partnership’s assets;

(ix) the determination by the General Partner that the withdrawal by any Limited Partner of all or any portion of its capital account balance could have a material adverse effect on the Partnership or the interests of the withdrawing or remaining Limited Partners, including, without limitation, by resulting in any regulatory, legal or tax violation, penalty or other material impact to the Partnership, the General Partner or any Limited Partner; or

(x) the determination by the General Partner that the suspension of the calculation of the Net Asset Value of

11 the Partnership and/or the suspension or restriction of the right of any Limited Partner to make withdrawals and/or to receive withdrawal proceeds would be in the best interest of the Partnership.

If the General Partner has suspended the right to make withdrawals from the Partnership, it may in its discretion determine not to permit any subsequent withdrawals but instead deliver a notice of termination of the Partnership.

A withdrawal request by a Limited Partner that is not satisfied as of the applicable Withdrawal Date because of the foregoing restrictions will be satisfied as of a date promptly following the date as of which the General Partner determines that the condition giving rise to the suspension or limitation has ceased to exist and no other condition under which suspension or limitation is authorized exists, unless the General Partner determines to liquidate and dissolve the Partnership. The General Partner will provide Limited Partners with written notice of the next date as of which Limited Partners will be permitted to withdraw and pending withdrawal requests will be honored. Pending withdrawal requests will not be satisfied in preference to later withdrawal requests, but will be satisfied pari passu with them. Amounts not withdrawn from the Partnership due to the foregoing restrictions will remain invested in the Partnership’s investment program and will remain exposed to, and will participate in, the profits, losses and expenses of the Partnership until the effective date of withdrawal.

Required Withdrawals: The General Partner may, in its sole discretion, require a Limited Partner to withdraw all or a portion of the balance of its Capital Account, in whole or in part, at any time and for any or no reason upon at least five calendar days’ prior written notice to such Limited Partner. Distributions in respect of any such required withdrawals will be made in the manner described above under “—Withdrawals.” Mandatory withdrawals may be subject to holdback for a Reserve Amount.

In addition, a Limited Partner may be required to withdraw all or a portion of the balance of its Capital Account immediately, upon written notice, if the General Partner determines, in its discretion, that such withdrawal may prevent or mitigate any (i) violation of any law or regulation of the United States of America or any state thereof or of any non-U.S. jurisdiction or (ii) material adverse effect, significant delay, extraordinary expense, or any regulatory, pecuniary or taxation disadvantage to the Partnership, the General Partner, the Manager or any of their respective affiliates.

Distributions: It is not expected that the Partnership will make any distributions to the Limited Partners other than as described herein. Instead, in general, all realized gains and income will be retained by the Partnership for reinvestment or applied to pay expenses. The General Partner may, however, cause the Partnership to make distributions to some or all Limited Partners at any time.

12 Valuation of Assets and In general, the net asset value of the Partnership will be equal to Liabilities: the fair market value of such entity’s assets less the amount of its liabilities (such entity’s “Net Asset Value”). The Net Asset Value of the Partnership will be calculated by the Administrator (or any party designated by the General Partner) as of the end of each Accounting Period (each a “Valuation Date”).

The assets and liabilities of the Partnership will be valued and taken into account in accordance with GAAP unless otherwise determined by the Manager pursuant to policies established from time to time by the Manager or otherwise described herein (see “—Expenses” below). The Manager’s Valuation Policy is available to Limited Partners and prospective limited partners upon request. As discussed above in “—Investment Objective,” the Partnership’s bitcoin portfolio will be priced based on the XBT unless otherwise determined by the General Partner in its discretion. See “IV. Risk Factors and Conflicts of Interest – Risks Related to the Pricing Source” below.

The General Partner may declare a suspension of the calculation of the Net Asset Value of the Partnership under certain circumstances. See “—Suspension” above.

Expenses: In consideration for the Management Fee, the Manager (i) will render certain investment advisory, administrative and managerial services to the Partnership and (ii) will bear certain administrative expenses of the Partnership. The Manager will be responsible for its overhead expenses, including office rent; the cost of furniture and fixtures; the cost of stationery; employee salaries, benefits, travel expenses associated with the marketing of Interests in the Partnership, payroll taxes and other related expenses; and entertainment expenses.

The Partnership will be responsible for all other expenses attributable to the Partnership (such expenses, “Partnership Expenses”), including the following expenses incurred by, or allocable to, the Partnership: (i) Organizational Expenses (as defined below) and offering expenses, other than placement fees (if any), and including expenses attributable to compliance with private placement, lobbying law and distribution rules in the U.S. and other foreign jurisdictions and compliance with anti-money laundering laws and know-your-customer requirements, including those required for compliance with Rule 506(c) (including related software and license costs); (ii) expenses incurred by the Partnership or by the General Partner, the Manager or their affiliates, in connection with the investments of the Partnership, including brokerage commissions; transaction costs; ticket charges; clearing and settlement charges; custodial fees; interest expenses and other financing charges (including initial and variation margin); expenses related to the formation and operation of the Partnership and any vehicle through which the Partnership may hold investments; (iii) the Fees; (iv) other expenses incurred in connection with the ongoing operations of the Partnership, including costs relating to communications with Limited Partners (including printing, mailing, investor web portal and other costs of information dissemination); fees

13 charged by the Administrator (including for certain information technology services and middle-office trade support services, as well as for accounting, reporting, tax, compliance and audit services and software); third-party accounting, tax compliance and related expenses (including expenses incurred in connection with the annual audit of the Partnerships, any “surprise” audit, tax filings, preparation of tax information and audits) and costs of valuation and pricing services; (v) third-party legal and compliance fees and related expenses, including fees and expenses related to (A) filings, documents and registrations relating to the Partnership with the SEC, CFTC and/or other foreign or domestic regulators (including the Form PF, if relevant), short and long exposure and/or ownership filings with U.S. and foreign regulators, but excluding expenses related to preparation of the Manager’s Form ADV, (B) compliance with U.S. federal, state, local, non-U.S. and other laws and regulations (including, but not limited to, securities laws, the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”), Department of Labor, SEC and CFTC rules and regulations), (C) side letters with Limited Partners and compliance therewith and (D) agreements related to products and/or services for the benefit of the Partnership and compliance therewith; (vi) expenses related to litigation and threatened litigation, if any, and expenses related to legal inquiries (formal and informal), including regulatory “sweeps”; (vii) insurance premiums paid by the Partnership, the General Partner, the Manager and/or their officers, principals and partners with regard to losses, claims, damages, liabilities and expenses that would otherwise be indemnification expenses; (viii) indemnification expenses; provided, for the avoidance of doubt, that any such expenses being paid or reimbursed as the result of a request for indemnification pursuant to the terms of the Partnership Agreement will be subject to the terms of such indemnification (see “—Exculpation and Indemnification” below); (ix) registered office, corporate licensing, corporate secretarial and other similar expenses; (x) taxes and other governmental charges that may be payable by the Partnership and that are not attributable to any Partner (e.g., sales and transfer taxes); (xi) expenses related to proxy voting research, reporting, execution and recordkeeping services; (xii) fees and expenses associated with the preparation of amendments and revisions to the offering memoranda, operating agreements and subscription agreements of the Partnership and the solicitation of consent to such amendments; (xiii) fees and expenses associated with any transfer of Interests, as described under “—Transferability of Interests” below, including with respect to transfer documentation and legal and tax analysis; (xiv) expenses incurred in connection with liquidating the Partnership; (xv) extraordinary expenses; and (xvi) other similar expenses. The Partnership may reimburse the General Partner and the Manager for advances they make to pay for Partnership Expenses.

Organizational expenses and initial offering expenses (collectively, “Organizational Expenses”) will be amortized over a 60-month period (or such other period as may be determined by the General Partner in its discretion) from the

14 initial closing, even though such treatment may not be in accordance with GAAP. The General Partner believes that such amortization treatment is more equitable than requiring the initial investors to bear all of the Partnership’s organizational expenses and offering expenses as would otherwise be required by GAAP.

At the end of each Accounting Period, each Partner’s Capital Account will be debited with such Partner’s share of the expenses taken into account by the Partnership for such Accounting Period. In general, each Limited Partner will bear its Partnership Percentage, calculated as of the beginning of the relevant Accounting Period, of expenses taken into account by the Partnership in such Accounting Period, other than the Fees.

In the event that a Feeder Fund is formed, expenses attributable to such Feeder Fund (other than taxes) will constitute Partnership Expenses and will be allocated solely to such Feeder Fund. For a description of the allocation of deductions attributable to the Fees, see “—Management Fee; Placement Fee.” The General Partner may allocate expenses on another basis, however, including by allocating certain expenses to certain (but not all) Capital Accounts, if the General Partner determines that such an allocation is more equitable.

Each Partner or former Partner will be required to bear the economic burden of, and to indemnify the Partnership for, any taxes attributable to such Partner or former Partner. If the Partnership is unable to recover the amount of any such tax from the relevant Partner or former Partner, however, the amount of such unrecovered tax will be treated as a Partnership expense.

Term and Dissolution: The Partnership will continue in perpetuity until dissolved by operation of law or at the sole discretion of the General Partner.

The Partnership will be dissolved and its affairs wound up upon the earliest of:

(i) any time that the General Partner determines, in its discretion, to liquidate and dissolve the Partnership;

(ii) an event of withdrawal of the General Partner under Delaware law unless certain conditions are met;

(iii) an entry of a decree of judicial dissolution under Delaware law; and

(iv) any time there are no Limited Partners in the Partnership unless the Partnership is continued without dissolution in accordance with Delaware law.

Upon the dissolution of the Partnership, the General Partner (or its designee) will liquidate the Partnership in an orderly manner. The General Partner will not be required to complete such liquidation or to wind up the affairs of the Partnership within a specified period of time.

15 Functional Currency: The functional currency of the Partnership (i.e., the currency in which the Partnership will maintain its books, records, and financial statements) is the U.S. dollar.

Transferability of Interests: Limited Partners may not directly or indirectly sell, transfer or assign any of their Interests, rights or obligations in the Partnership, in whole or in part, without the express written consent of the General Partner, which consent may be withheld in the sole discretion of the General Partner. All costs relating to any transfer will be payable by the transferee. The General Partner does not intend to consent to any transfer of an Interest unless it determines, in its sole discretion, that such transfer will not cause the Partnership to be treated as a “publicly traded partnership” for U.S. federal income tax purposes. Each assignee or transferee will be required to deliver transfer documentation (including a transfer agreement, a prospective investor questionnaire and know your customer and other required information) that is satisfactory to the General Partner, agree to be bound by the Partnership Agreement and certify that such assignee or transferee is qualified to hold Interests and agree in writing to adhere to the restrictions on transfer of the Interests set forth herein.

Amendments: The Partnership Agreement may be amended by the General Partner with the approval of Limited Partners representing more than 50% of the aggregate Capital Account balances of all Limited Partners (including Affiliates), provided that amendments to certain terms as described in the Partnership Agreement will need the approval of all of the affected Limited Partners. Notwithstanding the foregoing, the General Partner may amend or waive any provision of the Partnership Agreement without the approval of any Limited Partner if, in the reasonable opinion of the General Partner, the amendment or waiver is not materially adverse to any Limited Partner.

Voting and Consent: For purposes of any vote or consent sought by the General Partner in connection with the Partnership, as the case may be, the General Partner may require a response within a specified reasonable time. For any vote or consent sought by the General Partner, subject to the proviso set forth in the next paragraph, if a Limited Partner’s vote or consent has not been received prior to the date specified in the request, such Limited Partner will be deemed, for purposes of calculating the percentage required for such approval, to have given approval with respect to the proposed amendment.

The vote or consent of more than 50% of the aggregate Capital Account balances of the Limited Partners will be binding upon the Partnership and each Limited Partner; provided that any proposed amendment, modification or waiver that would materially adversely affect any Limited Partner by (i) altering the limited liability of such Limited Partner under the laws of the jurisdiction of formation of the Partnership, or (ii) changing the rights of such Limited Partner to make withdrawals will require (A) the affirmative consent of such Limited Partner or (B) that such Limited Partner be given the opportunity, upon reasonable

16 notice, to withdraw from the Partnership prior to the effectiveness of such proposed amendment, modification or waiver.

In addition, the General Partner may, in its sole discretion, adjust or remove the voting power of any Limited Partner in order to avoid adverse tax, legal or regulatory consequences to the Partnership or any direct or indirect holder of an Interest or its affiliates, the effect of which will be that the vote of such Limited Partner will not be included (or will be included in a diminished manner) in any such vote or consent.

Notwithstanding any other statement in this Offering Memorandum, the General Partner may, without the approval of any Limited Partner, amend or waive any provision of this Agreement if the General Partner provides notice at least 45 calendar days prior to such amendment and permits any Limited Partner that would be materially adversely affected by such amendment to elect to withdraw the balance of its Capital Account, in whole or in part. See “—Withdrawals.”

Exculpation and Indemnification: To the fullest extent permitted by law, none of the General Partner, the Manager, any liquidator of the Partnership or any of such entities’ or persons’ respective affiliates or any of such entities’ or persons’ respective members, officers, principals, directors, partners, managers, shareholders, employees, agents, advisors or representatives (each such person, an “Indemnified Person”) will be liable in damages or otherwise to the Partnership or the Limited Partners for any act or omission by it, except for any liability that results from the Indemnified Person’s gross negligence, willful misconduct, actual fraud or willful and material breach of the Partnership Agreement or the Management Agreement if such breach has a material adverse effect on the Partnership’s business or affairs. Any Indemnified Person will be fully protected from liability from the Partnership and its respective partners in relying in good faith upon information, opinions, reports or statements of legal counsel (as to matters of law) and accountants (as to matters of accounting or tax); provided that the Indemnified Person reasonably believes that such matters are within such counsel’s or accountant’s professional or expert competence. Additionally, no Indemnified Person will be liable for any acts or omissions of any broker, agent or service provider of or for the Partnership; provided that such broker, agent or service provider was selected by the Manager or the General Partner in good faith. The Partnership will indemnify each Indemnified Person for any losses, claims, damages, liabilities or expenses incurred by the Indemnified Person in connection with the Partnership Agreement or the Partnership’s activities, except for losses, claims, damages or liabilities attributable to the Indemnified Person’s gross negligence, willful misconduct, actual fraud or willful and material breach of the Partnership Agreement or the Management Agreement if such breach has a material adverse effect on the Partnership’s business or affairs.

17 The Partnership will, at the request of the General Partner, advance amounts and/or pay expenses as incurred in connection with the indemnification obligations herein; provided that the recipient of such advances has agreed to repay such amounts to the extent it is finally determined that such recipient is not entitled to such payments.

For the avoidance of doubt, to the fullest extent permitted by law, no Indemnified Person will be liable for trade errors and similar human errors that result from ordinary negligence, such as errors in the rebalancing process (e.g., a transaction being effected in violation of the Partnership’s investment guidelines), in the trade process (e.g., a buy order being entered instead of a sell order, key stroke errors that occur when entering trades into an electronic trading system, typographical or drafting errors related to derivatives contracts or similar agreements, the wrong asset being purchased or sold, or an asset being purchased or sold in an amount or at a price other than the correct amount or price) or other operational errors. Additionally, for the avoidance of doubt, no Indemnified Person will be liable for damages or other costs related to any cyber-attack, hack or security breach of the Manager, any of its affiliates or any service provider of the Partnership, provided that such Indemnified Person acted in good faith.

To the fullest extent permitted by law, under no circumstances (including due to fraud, gross negligence, willful misconduct or willful and material breach of the Partnership Agreement or the Management Agreement) will any Indemnified Persons be responsible for any consequential or special damages.

Nothing contained herein or in the Partnership Agreement will constitute a waiver or limitation of any Limited Partner’s rights under U.S. federal or state securities laws or similar laws of any other jurisdiction. In the event that the indemnification obligations described herein are deemed to be unenforceable, whether in whole or in part, such unenforceable portion will be stricken or modified so as to give effect to the obligation intended to the fullest extent permitted by law.

Confidentiality: The Limited Partners will keep confidential all matters relating to the Partnership and its affairs (including communications from the General Partner and the Manager), except as otherwise required by law; provided that a Limited Partner may make such disclosure to the extent that (i) the information being disclosed is publicly known at the time of proposed disclosure by such Limited Partner or its employees, agents, advisors (including financial and legal advisors) or representatives responsible for matters relating to the Partnership (each such person being hereinafter referred to as an “Authorized Representative”), (ii) the information subsequently becomes publicly known through no act or omission of such Limited Partner or Authorized Representative, (iii) the information otherwise is or becomes legally known to such Limited Partner other than through disclosure by the Partnership, the General Partner, the Manager or by a source the Limited Partner knew or should have known

18 was bound by a confidentiality obligation, (iv) such disclosure, in the written opinion of legal counsel reasonably acceptable to the General Partner (unless the General Partner determines in its discretion that such opinion is not necessary), is required by law or regulation, (v) such disclosure, in the written opinion of legal counsel reasonably acceptable to the General Partner (unless the General Partner determines in its discretion that such opinion is not necessary), is required by any regulatory authority or self- regulatory organization having jurisdiction over such Limited Partner and (vi) such disclosure is approved in advance and in writing by the General Partner. Prior to making any disclosure required by law, regulation, regulatory authority or self- regulatory organization, each Limited Partner will, to the extent permitted by law, notify the General Partner in writing of such disclosure and deliver to the General Partner a copy of the opinion referred to above (unless the Partnership determines in its sole discretion that such opinion is not necessary) and will cooperate with the General Partner to the maximum extent permitted by applicable law to prevent such disclosure as requested by the General Partner. Prior to any disclosure to any Authorized Representative, each Limited Partner will (x) advise such Authorized Representative of the obligations set forth in this paragraph, (y) cause each Authorized Representative to agree to be bound by confidentiality obligations substantially similar to those which apply to the Limited Partner and (z) prohibit each Authorized Representative from using any disclosed information except in connection with the Limited Partner’s interest.

The General Partner and the Manager may, to the maximum extent permitted by applicable law, keep confidential from any Limited Partner any information, subject to certain limitations, the disclosure of which (i) is prohibited or restricted under any law, governmental regulations or agreement applicable to the Partnership, the General Partner, the Manager or any of their respective affiliates or (ii) the General Partner or the Manager reasonably believes may have an adverse effect on the Partnership, the General Partner, the Manager or any of their respective affiliates. The Manager or the General Partner may elect to withhold information on a Limited Partner-by-Limited Partner basis, including with respect to a Limited Partner that is subject to any “freedom of information,” “sunshine” or other law, rule or regulation that imposes upon such Limited Partner an obligation to make certain information available to the public.

19 any information identifying the General Partner, the Manager or their respective affiliates, advisors, members, partners, officers, directors, employees and principals, the Limited Partners, the Partnership, any Limited Partner or (except to the extent relevant to such tax structure or tax treatment) any nonpublic commercial or financial information.

Reports: Each Limited Partner will receive the following regular reports:

(i) an unaudited monthly statement of the balance of such Limited Partner’s Capital Account;

(ii) an annual audited financial statement within approximately 120 calendar days after the end of each fiscal year of the Partnership or, in the case of an audit delay, as soon as practicable thereafter (beginning with the 2021 fiscal year); and

(iii) a Schedule K-1 for each taxable year as soon as reasonably practicable following such taxable year.

The Partnership’s delivery of Schedules K-1 will be subject to delay in the event of the Partnership’s late receipt of necessary information. The Limited Partners should be prepared to obtain extensions of the filing deadline for their federal, state, and local income tax returns.

The Partnership may offer certain Limited Partners additional information and reporting that other Limited Partners do not receive. Such information may affect a Limited Partner’s decision to request a withdrawal from the Partnership.

Fiscal Year of the Partnership: The fiscal year of the Partnership will end on December 31 of each calendar year or such other date as may be required for U.S. federal tax purposes. If permitted by U.S. federal tax law, the General Partner may change the fiscal year end of the Partnership as it deems appropriate in its sole discretion.

Investment by the General The General Partner, the Manager and their respective members, Partner, the Manager and its officers, principals, directors, employees, partners, agents, Affiliates and Employees: representatives, managed investment funds, employee-related investment vehicles and affiliates and the family members and estate-planning vehicles of such persons and various funds and accounts composed of such persons (collectively, “Affiliates”) will invest in the Partnership and may represent a material portion of the Partnership’s assets. Affiliates have access to information regarding the investments and performance of the Partnership’s portfolio that might not be generally available to other Limited Partners. Affiliates may increase the amount of their respective investments or withdraw or transfer all or any portion of their respective investments without notice to the other Limited Partners and their access to information about the Partnership may influence their decisions to invest or withdraw. The Partnership intends to issue to Affiliates interests that are not subject to Fees or that are subject to reduced Fees. See “IV. Risk

20 Factors and Conflicts of Interest – Investments by Manager or Related Entities” for more detail.

Side Letters: Each of the General Partner, the Manager, and the Partnership may enter into written arrangements with certain Limited Partners that have the effect of altering or supplementing the terms of such persons’ investments in the Partnership, including, but not limited to, arrangements with respect to waivers or reductions of the Fees, access to portfolio information, rights to make withdrawals, notice periods required for withdrawals and circumstances under which withdrawals may be required.

ERISA and Other Tax-Exempt Subject to the eligibility requirements under the heading “— Entities: Admission of Limited Partners,” entities subject to ERISA, and other tax-exempt entities may purchase Interests. Trustees or administrators of such entities are urged to carefully review the matters discussed in this Offering Memorandum. The General Partner will use its reasonable best efforts to avoid the result that the Partnership’s assets will be deemed to be “plan assets” subject to the fiduciary and prohibited transaction provisions of ERISA or Section 4975 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) by limiting investments by “Benefit Plan Investors” (as defined in Section 3(42) of ERISA) so that such investors do not equal or exceed 25% of the value of any class of Interests. Each Benefit Plan Investor must also ensure that its acquisition and holding of such Interest is consistent with the investment objectives of such Constituent Plans. The General Partner, in its sole discretion, may determine that it is not in the Partnership’s best interest to allow individual retirement accounts to purchase Interests, and if such determination is made, will reject all such investors’ subscriptions for Interests. See “VI. Certain Tax and Regulatory Considerations—B. Certain Regulatory Considerations—Benefit Plan Investor Considerations” for important disclosures regarding ERISA.

Auditor: Ernst & Young

Administrator: MG Stover & Co. (the “Administrator”) has been retained by the Partnership pursuant to an administration agreement to perform certain services that are typical of a fund administrator. See “V. Administrator.”

Custodian (U.S. Dollars): The custodian for the Partnership’s cash holdings is Silvergate Bank. The Partnership may retain additional custodians from time to time pursuant to a custodian agreement to perform certain services that are typical of a custodian. The General Partner may, in its sole discretion, add or terminate custodians at any time. Additionally, the General Partner or its affiliates may, from time to time in the ordinary course of its operations, take custody of certain assets.

Bitcoin Custodians and Security The custodian for the Partnership’s bitcoin holdings is Fidelity Service Providers: Digital Asset Services, LLC.

The Manager may, in its discretion, change the custodian for the Partnership’s bitcoin holdings, but it will have no obligation

21 whatsoever to do so or to seek better terms for the Partnership from other such custodians. The Partnership, the Manager or affiliates of the Manager may use affiliates for the provision of the services to the Partnership, and/or third-party custodians or vendors, except that the Partnership, Manager and affiliates of the Manager are not anticipating acting as custodians. The bitcoin held by the Partnership may be custodied or secured in different ways (e.g., a portion of the Partnership’s holdings may be custodied by one third-party custodian while another portion is custodied by another third-party custodian). Over time, the Partnership may choose to change a custody or security arrangement.

The Manager will decide the appropriate security and custody arrangements for the bitcoin based on the availability of qualified and experienced custodians, the Partnership’s ability to securely safeguard the bitcoin and other factors.

Bitcoin Trading Counterparty: The Partnership will place its orders to buy or sell bitcoin through one or more trading counterparties, as selected by the Manager, in its sole discretion. While the Manager will seek in good faith to select appropriate trading counterparties for the Partnership, no assurances can be given that the counterparties selected by the Manager will provide the most favorable execution terms available to the Partnership. In selecting such trading counterparties, the Manager may take into account benefits received by the Manager or its affiliates from such counterparties, such as research services.

Counsel to the General Partner Davis Polk & Wardwell LLP and the Manager:

22 IV. RISK FACTORS AND CONFLICTS OF INTEREST

An investment in the Partnership involves substantial risks, including, but not limited to, those described below. There can be no assurance that the Partnership’s investment objectives will be achieved or that there will be any return of capital, and investment results may vary. Interests are a potentially suitable investment only for sophisticated investors for whom an investment in the Partnership does not represent a complete investment program and who, in consultation with their own investment and tax advisors, fully understand and are capable of assuming the risks of an investment in the Interests. In addition, there are significant actual and potential conflicts of interest that arise in connection with the Partnership. Investors should be aware of such conflicts as set forth under “—Conflicts of Interest” below. Terms not defined here have the meaning set forth in “III. Summary of Principal Terms.”

Risk Factors

General Risks

Investment-Related Risks. Investing in bitcoin is speculative, prices are volatile, and market movements are difficult to predict. Supply and demand for bitcoin can change rapidly and is affected by a variety of factors, including regulation and general economic trends. In addition to these general investment risks, the Manager may use investment techniques that subject the Partnership to certain risks; some, but not all, of these risks are summarized below.

Risks Related to the Pricing Source. As set forth under “III. Summary of Principal Terms – Investment Objective,” the Partnership’s portfolio will be priced, including for purposes of determining the Partnership’s Net Asset Value, based upon the Bloomberg Bitcoin Cryptocurrency Fixing Rate (the “XBT”). The XBT is calculated using Bloomberg’s Bloomberg Generic Price (“BGN”) as its primary input. BGN is a pricing algorithm that uses bid and ask quotes derived from multiple pricing services approved by Bloomberg. The XBT is calculated as a simple average of BGN pricing sources over a 15-minute window between 4:00 p.m. and 4:15 p.m. XBT prices are available once per day, Monday through Friday, following its calculation window. For more details, see the description of the XBT calculation methodology at: https://data.bloomberglp.com/professional/sites/10/CFIX-Methodology.pdf. Such description has been prepared by Bloomberg and neither the Manager nor the Partnership makes any representations or warranties as to the accuracy of such description.

As the XBT is calculated as an average of those pricing sources selected by Bloomberg, it will not necessarily be reflective of the price of bitcoin available on any given exchange or other venue where the Partnership’s trades are executed. In addition, the XBT is available once per day, whereas bitcoin trades 24 hours a day. As such, the XBT may not be reflective of market events and other developments that occur after its pricing window and thus the XBT may not be reflective of the then-available market price of bitcoin in periods between its calculation. For example, subscriptions will be processed each Business Day, based off of an opening Net Asset Value that reflects the XBT calculation from the immediately preceding date on which the XBT was calculated. The Manager does not intend, and disclaims any obligation, to determine whether the XBT accurately reflects the value of bitcoin or the price at which market transactions in bitcoin could be readily effected at any given time.

Because the NAV of the Partnership will be based almost entirely on the value of the Partnership’s bitcoin portfolio as determined by reference to the XBT, and subscriptions and redemptions are processed based on the NAV of the Partnership, if the XBT does not accurately reflect the value of bitcoin, at a given time, subscription and redemption transactions will be effected at prices that may adversely affect the Limited Partner and the Partnership. For example, if the accurate value of bitcoin is less than the XBT at the time in question, investors will effectively overpay when they subscribe to the Partnership, and the Partnership will effectively overpay when it redeems a Limited Partner (thereby diluting the remaining Limited Partners). Conversely, if the accurate value of bitcoin is greater than the XBT at the time in question, Limited Partners will effectively underpay when they subscribe to the Partnership (thereby diluting existing Limited Partners), and Limited Partners will be effectively underpaid when they redeem from the Partnership.

23 Investment Risks Generally. An investment in the Partnership involves a high degree of risk, including the risk that the entire amount invested may be lost. The Partnership will invest in bitcoin using strategies and investment techniques with significant risk characteristics, including risks arising from the volatility of the global digital asset markets and the risk of loss from counterparty defaults. The Partnership’s investment program may use investment techniques that involve substantial volatility and can, in certain circumstances, substantially increase the adverse impact to which the Partnership may be subject. All investments made by the Partnership will risk the loss of capital. No guarantee or representation is made that the Partnership’s investment program will be successful, that the Partnership will achieve its investment objective or that there will be any return of capital invested to Limited Partners, and investment results may vary.

Different from Directly Owning Bitcoin. The performance of the Partnership will not reflect the specific return an investor would realize if the investor actually purchased bitcoin. Limited Partners will not have any rights that bitcoin holders have. See “—Network Forks” and “—Air Drops” below.

No Operating History of the Partnership. The Partnership is a newly formed entity and has no operating history on which prospective investors can base an evaluation of future performance.

Reliance on the Portfolio Managers, the Manager. The success of the Partnership depends in large part upon the skill, knowledge, judgment, experience and expertise of the Portfolio Managers to develop and implement investment strategies that achieve the Partnership’s investment objective. There can be no assurance that the Portfolio Managers or any other senior executives or employees of the Manager will continue to be associated with the Partnership or the Manager. In the event a Portfolio Manager ceases to devote sufficient time to the management of the Partnership as the General Partner, in its reasonable judgment, determines necessary to accomplish the purposes of the Partnership, there might be an adverse effect on the Partnership. See “III. Summary of Principal Terms—Manager.”

The Partnership is subject to management risk because it relies on the Manager’s ability to achieve its investment objective. The Partnership runs the risk that the Manager’s management techniques will fail to produce desired results and cause the Partnership to incur significant losses. Any imperfections, errors, or limitations in quantitative analyses and models used by the Manager as part of its management process could affect the Partnership’s performance. The techniques chosen by the Manager could adversely impact the Partnership’s ability to achieve its investment objectives.

Limited Liquidity of Interests. An investment in the Partnership provides limited liquidity because interests in the Partnership are not freely transferable and generally a Limited Partner has limited rights to withdraw any or all of its interests in the Partnership. See “III. Summary of Principal Terms—Withdrawals.” In addition, the General Partner may limit or suspend the rights of the Limited Partners to make withdrawals in certain circumstances. See “III. Summary of Principal Terms—Suspension.” The Partnership is intended for long-term investors who can accept the risks associated with investing primarily in assets that involve a high degree of financial risk and are potentially illiquid. There is no public market for the Interests and no such market is expected to develop in the future. Limited Partners may not sell, transfer, exchange, assign, pledge, hypothecate or otherwise dispose of their interests in the Partnership (or any portion thereof) without the consent of the General Partner, which may be withheld for any reason or no reason.

In addition, while the Partnership intends to use commercially reasonable efforts to make withdrawal payments in cash upon a withdrawal from a Limited Partner’s Capital Account, there can be no assurance that the Partnership will have sufficient cash to satisfy withdrawal requests, or that it will be able to liquidate investments at favorable prices at the time of such withdrawal request. Substantial withdrawals by Limited Partners within a limited period of time could require the liquidation of positions more rapidly than would otherwise be desirable, which could adversely affect the value of the equity interests of both withdrawing Limited Partners and remaining Limited Partners.

Under the foregoing circumstances, and under other circumstances deemed appropriate by the General Partner, the General Partner may (but is not required to) cause the Partnership to make in-kind withdrawal payments from its portfolio. Such investments so distributed may not be readily marketable or salable and may have to be held by such Limited Partner for an indefinite period of time. As described above under “III. Summary of Principal Terms—Withdrawals,” and unless withdrawing Limited Partners elect to receive

24 withdrawal payments in kind, the General Partner may cause the Partnership to make an in-kind distribution of interests or shares of a special purpose vehicle (“SPV”) established for the benefit of the withdrawing Limited Partners or retain such in-kind payment. Any risk of loss and delay in liquidating these investments will be borne by the withdrawing Limited Partners, with the result that each such Limited Partner may receive less cash than it would have received on the date of withdrawal. The General Partner will determine the percentage of any distribution to be made in cash and the percentage to be made in kind, as well as the particular assets, if any, to be distributed; provided, however, that at the time a distribution in-kind is being made, no Limited Partner receiving such distribution will receive a distribution in-kind in excess of its pro rata share of the investments distributed in kind at such time.

Mandatory Withdrawal. The General Partner may require a Limited Partner to make a withdrawal from the Partnership (in whole or in part) under certain circumstances. Such mandatory withdrawal may create adverse tax and/or economic consequences to the Investor depending on the timing thereof.

Recourse to the Partnership’s Assets. The assets of the Partnership, including any investments and any cash held by the Partnership, are available to satisfy all liabilities and other obligations of the Partnership. If the Partnership becomes subject to a liability, parties seeking to have the liability satisfied may have recourse to the Partnership’s assets generally and not be limited to any particular asset.

Capital Accounts are not Separate Legal Entities. As among the Limited Partners, the appreciation and depreciation attributable to a particular capital account will be allocated only to such capital account. However, a creditor of the Partnership generally will not be bound to satisfy its claims from assets attributable to a particular capital account. Rather, such creditor generally may seek to satisfy its claims from the assets of the Partnership as a whole.

Absence of Regulatory Oversight. The Partnership is not registered as an investment company under the Investment Company Act and, accordingly, the provisions of the Investment Company Act (which, among other things, require investment companies to have a majority of disinterested directors, provide limitations on leverage, limit transactions between investment companies and their affiliates and regulate the relationship between the advisor and the investment company) are not applicable.

No Guarantee of Return or Performance. The obligations or performance of the Partnership or the returns on investments in the Partnership are not guaranteed in any way. Any losses of the Partnership will be borne solely by the Limited Partners. Ownership interests in the Partnership are not insured by the Federal Deposit Insurance Corporation, and are not deposits, obligations of, or endorsed or guaranteed in any way, by any banking entity.

Legal and Regulatory Risks; Enhanced Scrutiny and Regulation of Private Funds. In the wake of the global financial crisis, widespread legislative and regulatory actions were taken by numerous governments and their agencies, including in the United States the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). The Dodd-Frank Act significantly revised and expanded the rulemaking, supervisory and enforcement authority of federal bank, securities and commodities regulators and imposed enhanced recordkeeping and reporting obligations on investment advisers in respect of private funds. The Dodd-Frank Act also established a general framework for systemic regulation. Although U.S. regulators have largely implemented key provisions of the Dodd-Frank Act, certain final regulations have only been in place a short period of time and others have not been finalized. Future regulatory actions authorized by the Dodd-Frank Act could adversely affect the Partnership. Legal, tax and regulatory developments are likely to continue to occur during the term of the Partnership, and such developments may adversely affect the Partnership. Additionally, the bitcoin market is subject to substantial regulatory uncertainty. The regulatory environment for private funds is evolving, and currently there are numerous legislative and regulatory proposals in the United States, Europe and other countries that could affect the Partnership and its activities. Changes in the regulation of private funds and their activities may adversely affect the ability of the Partnership to pursue its investment strategy, its ability to obtain leverage and financing and the value of investments held by the Partnership. There has been an increase in governmental, as well as self-regulatory, scrutiny of the alternative investment industry in general. Such scrutiny may increase the Partnership’s exposure to potential liabilities and to legal, compliance, and other related costs. Increased regulatory oversight may also impose additional administrative burdens on the General Partner and

25 the Manager, including responding to examinations and investigations, implementing new policies and procedures, and complying with recordkeeping and reporting obligations. Such burdens may divert the General Partner’s and the Manager’s time, attention, and resources from portfolio management activities. It is impossible to predict what, if any, changes in laws and regulations may occur, but any laws and regulations which restrict or limit the ability of the Partnership to invest or the ability of the Partnership to employ, or brokers and other counterparties to extend, credit in its trading (as well as other regulatory changes that result) could have a material adverse impact on the Partnership’s portfolio.

The Partnership and the Manager are also subject to regulation in foreign jurisdictions in which they engage in business. Therefore, the Partnership may be subject to new or additional regulatory constraints in the future. This Offering Memorandum cannot address or anticipate every possible current or future regulation that may affect the Partnership, the General Partner, the Manager or their businesses. Such regulations may have a significant impact on the Limited Partners or the operations of the Partnership, including, without limitation, imposing restrictions on the markets in which the Partnership can trade bitcoin and requiring the Partnership to disclose the identity of its investors. The General Partner or the Manager may cause the Partnership to be subject to such regulations if it believes that an investment or business activity which may trigger such regulation is in the Partnership’s interest, even if such regulations may have a detrimental effect on one or more Limited Partners. Prospective investors are encouraged to consult their own advisors regarding an investment in the Partnership.

Further, regulatory changes or actions may restrict the use of bitcoin or the operation of the bitcoin network or exchanges in a manner that adversely affects the value of the bitcoin held, and as a result, adversely affects an investment in the Interests. See “— Regulatory Risks” below.

Employee Misconduct. The Manager’s reputation is critical to maintaining and developing relationships with existing and prospective investors, as well as with the numerous third parties with which the Manager, the General Partner and the Partnership do business. In recent years, there have been a number of highly publicized cases involving fraud, conflicts of interest, or other misconduct by individuals in the financial services industry, and there is a risk that an employee of or contractor to the Manager, the General Partner or any of their affiliates could engage in misconduct that adversely affects the investment strategies implemented by the Manager or the General Partner. It is not always possible to deter such misconduct, and the precautions the General Partner or the Manager takes to detect and prevent such misconduct may not be effective in all cases. Misconduct by an employee of or contractor to the General Partner, the Partnership or the Manager or any of their affiliates, or even unsubstantiated allegations of such misconduct, could result in both direct financial harm to the Manager, the General Partner and the Partnership, as well as harm to the reputations of the Manager, the General Partner and the Partnership, which would have a materially adverse effect on the Partnership.

Counterparty Credit Risk. Because certain purchases, sales, financing arrangements, derivative transactions and other transactions in which the Partnership may engage involve instruments that are not traded on an exchange, but are instead traded between counterparties based on contractual relationships, the Partnership may be subject to the risk that a counterparty will not perform its obligations under the related contracts. Similarly, bitcoin exchanges that the Partnership may trade on are not SEC or CFTC-regulated and may subject the Partnership to counterparty risks similar to those of trading with other counterparties. Although the Partnership intends to enter into transactions only with counterparties or on exchanges that the Manager believes to be creditworthy, there can be no assurance that a counterparty will not default and that the Partnership will not sustain a loss on a transaction as a result. Such risks may differ materially from those entailed in exchange-traded transactions that generally are backed by clearing organization guarantees, daily marking-to-market and settlement of positions and segregation and minimum capital requirements applicable to intermediaries.

In situations where the Partnership places assets in the care of a custodian (which may include a bitcoin exchange) or is required to post margin or other collateral with a counterparty, the custodian or the counterparty may fail to segregate such assets or collateral, as applicable, or may commingle the assets or collateral with the relevant custodian’s or counterparty’s own assets or collateral, as applicable, even if contractually limited or prohibited from doing so. As a result, in the event of the bankruptcy or insolvency of any custodian or counterparty, the Partnership’s excess assets and collateral may be subject to the

26 conflicting claims of the creditors of the relevant custodian or counterparty, and the Partnership may be exposed to the risk of a court treating the Partnership as a general unsecured creditor of such custodian or counterparty, rather than as the owner of such assets or collateral, as the case may be. In certain cases, assets of the Partnership may be placed in the care of a non-U.S. custodian. In any such case, the bankruptcy or insolvency of such custodian will be governed under the laws of the local jurisdiction, which may be less favorable to the Partnership or provide less protection to the Partnership’s assets than U.S. law.

The Partnership may be subject to the risk that issuers of the instruments in which it invests may default on their obligations under those instruments, and that certain events may occur which have an immediate and significant adverse effect on the value of those instruments. There can be no assurance that an issuer of an instrument in which the Partnership invests will not default, or that an event which has an immediate and significant adverse effect on the value of an instrument will not occur, and that the Partnership will not sustain a loss on a transaction as a result.

Transactions entered into by the Partnership may be executed on various U.S. and non-U.S. exchanges, and cleared and settled through various clearing houses, custodians, depositories and prime brokers throughout the world. Although the Partnership will attempt to execute, clear and settle the transactions through entities the Manager believes to be sound, there can be no assurance that a failure by any such entity will not lead to a loss to the Partnership.

Accounting for Uncertainty in Income Taxes. The Financial Accounting Standards Board has released Accounting Standards Codification Topic 740 (“ASC 740”) (formerly known as “FIN 48”) to provide consistent guidance on the recognition of uncertain tax positions. ASC 740 prescribes, among other things, the minimum recognition threshold that a tax position is required to meet before being recognized in an entity’s financial statements. ASC 740, as interpreted and applied by the Manager, could have the effect of reducing the Partnership’s Net Asset Value. Any such reduction of Net Asset Value could adversely affect certain Limited Partners, depending upon the timing of their investments in, and withdrawal from, the Partnership.

Risks Related to Bitcoin

The further development and acceptance of bitcoin is subject to a variety of factors that are difficult to evaluate. The slowing or stopping of the development or acceptance of bitcoin may adversely affect an investment in the Interests.

The use of bitcoin to, among other things, buy and sell goods and services is part of the new, experimental and rapidly evolving digital asset industry. While bitcoin is a prominent part of this industry, it is not the only part. The growth of this industry, as well as bitcoin’s continued dominance, is subject to a high degree of uncertainty. The factors affecting the bitcoin’s further growth and development, as well as its continued dominance, include, but are not limited to:

 continued worldwide growth in the adoption and use of bitcoin;

 government and quasi-government regulation of bitcoin and its use, or restrictions on or regulation of access to and operation of the bitcoin network;

 changes in consumer demographics and public tastes and preferences;

 the maintenance and development of the open-source software protocol of the bitcoin network;

 the availability and popularity of other forms or methods of buying and selling goods and services, including other digital assets and new means of using fiat currencies;

 the further development of “second-layer” applications and scaling solutions, such as the Lightning Network; and

27  general economic conditions and the regulatory environment relating to bitcoin and other digital assets, and negative consumer or public perception of bitcoin or digital assets generally.

Bitcoin Generally. Bitcoin is loosely regulated and there is no central marketplace for currency exchange. Supply is determined by a computer code, not by a central bank, and prices can be extremely volatile. Additionally, exchanges may suffer from operational issues, such as delayed execution, that could have an adverse effect on the Partnership. Digital asset exchanges have been closed due to fraud, failure or security breaches. Any of the Partnership’s funds that reside on an exchange that shuts down or suffers a breach may be lost.

Several factors may affect the price of bitcoin, including, but not limited to: supply and demand, investors’ expectations with respect to the rate of inflation, interest rates, currency exchange rates or future regulatory measures (if any) that restrict the trading of bitcoin or the use of bitcoin as a form of payment. There is no assurance that bitcoin will maintain its long-term value in terms of purchasing power in the future, or that acceptance of bitcoin payments by mainstream retail merchants and commercial businesses will continue to grow.

Bitcoin is created, issued, transmitted, and stored according to protocols run by computers in the bitcoin network. It is possible the bitcoin protocol has undiscovered flaws which could result in the loss of some or all assets held by the Partnership. There may also be network-scale attacks against the bitcoin protocol, which result in the loss of some or all of assets held by the Partnership. Advancements in quantum computing could break bitcoin’s cryptographic rules. The Partnership makes no guarantees about the reliability of the cryptography used to create, issue, or transmit bitcoin held by the Partnership.

Volatility. Bitcoin’s value has historically been highly volatile. For instance, during the period from December 17, 2017 to February 5, 2018, bitcoin experienced a decline of roughly 60%. The value of the bitcoin held by the Partnership could decline rapidly, including to zero.

Momentum Pricing. The value of bitcoin as represented by the price for bitcoin may be subject to momentum pricing due to speculation regarding future appreciation in value. Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing public, is impacted by anticipated future appreciation in value. Momentum pricing may result in speculation regarding future appreciation in the value of digital assets, which inflates prices and leads to increased volatility. As a result, bitcoin may be more likely to fluctuate in value due to changing investor confidence in future appreciation or depreciation in prices, which could adversely affect an investment in the Partnership.

Limited Use. Bitcoin has only recently become accepted as a means of payment for goods and services by certain major retail and commercial outlets, and use of bitcoin by consumers to pay such retail and commercial outlets remains limited. Price volatility undermines bitcoin’s utility as a medium of exchange, and use of bitcoin as a medium of exchange and payment method may always be low. A lack of continued growth as a medium of exchange and payment method, or a contraction of such use, may result in increased volatility or a reduction in the value of bitcoin, either of which could adversely impact an investment in the Interests. There can be no assurance that such acceptance will grow, or not decline, in the future.

Scaling Obstacles. Many digital asset networks face significant scaling challenges. As of November 2020, bitcoin could handle, on average, five to seven transactions per second. For several years, participants in the bitcoin ecosystem debated potential approaches to increasing the average number of transactions per second that the bitcoin network could handle. As of August 2017, bitcoin was upgraded with a technical feature known as “segregated witness” that, among other things, would potentially approximately double the transactions per second that can be handled on-chain. More importantly, segregated witness also enables so- called second layer solutions, such as the Lightning Network or payment channels, that could potentially allow greater transaction throughput.

An increasing number of wallets and digital asset intermediaries, such as exchanges, have begun supporting segregated witness and the Lightning Network, or similar technology. However, the Lightning Network has not yet seen significant and widespread use, and there are open questions about Lightning Network services, such its cost and who will serve as lightning intermediaries.

28 As the use of digital asset networks increases without a corresponding increase in through put of the networks, average fees and settlement times can increase significantly. Bitcoin’s network has been, at times, at capacity, which has led to increased transaction fees and decreased settlement speeds. For example, bitcoin transaction fees increased from $0.98 per bitcoin transaction on September 19, 2020, on average, to a high of $14.77 per transaction on November 5, 2020, on average. As of November 13, 2020, bitcoin transaction fees stood at $13.33 per bitcoin transaction, on average.

Increased fees and decreased settlement speeds could preclude certain use cases for bitcoin (e.g., micropayments), and can reduce demand for and the price of bitcoin, which could adversely impact an investment in the Interests.

There is no guarantee that any of the mechanisms in place or being explored for increasing the scale of settlement of transactions in bitcoin will be effective, or how long these mechanisms will take to become effective, which could adversely impact an investment in the Interests.

Private Keys. Digital assets, including bitcoin, are controllable only by the possessor of both the unique public key and private key or keys relating to the “digital wallet” in which the digital asset is held. Private keys must be safeguarded and kept private in order to prevent a third-party from accessing the digital asset while held in such wallet. To the extent a private key is lost, destroyed or otherwise compromised and no backup of the private key is accessible, the Partnership will be unable to access, and will effectively lose, the bitcoin held in the related digital wallet. Any loss of private keys relating to digital wallets used to store the Partnership’s bitcoin would adversely affect an investment in the Interests.

Irrevocable Nature of Blockchain-Recorded Transactions. Bitcoin transactions recorded on the bitcoin blockchain are not, from an administrative perspective, reversible without the consent and active participation of the recipient of the transaction or, in theory, control or consent of a majority of the bitcoin network’s aggregate hashrate. Once a transaction has been verified and recorded in a block that is added to the blockchain, an incorrect transfer of bitcoin or a theft of bitcoin generally will not be reversible, and the Partnership may not be capable of seeking compensation for any such transfer or theft. It is possible that, through computer or human error, or through theft or criminal action, the Partnership’s bitcoin could be transferred from custody accounts in incorrect quantities or to unauthorized third parties. To the extent that the Partnership is unable to seek a corrective transaction with such third-party or is incapable of identifying the third-party that has received the Partnership’s bitcoin through error or theft, the Partnership will be unable to revert or otherwise recover incorrectly transferred bitcoin. To the extent that the Partnership is unable to seek redress for such error or theft, such loss could adversely affect an investment in the Interests.

Internet Disruptions. A significant disruption in Internet connectivity could disrupt the bitcoin network’s operations until the disruption is resolved, and such disruption could have an adverse effect on the price of bitcoin. In particular, some digital assets have experienced a number of denial-of-service attacks, which have led to temporary delays in block creation and digital asset transfers. While in certain cases in response to an attack, an additional “hard fork” has been introduced to increase the cost of certain network functions, the relevant network has continued to be the subject of additional attacks. Moreover, it is possible that as bitcoin increases in value, they may become bigger targets for hackers and subject to more frequent hacking and denial-of-service attacks.

Digital assets are also susceptible to border gateway protocol hijacking, or BGP hijacking. Such an attack can be a very effective way for an attacker to intercept traffic en route to a legitimate destination. BGP hijacking impacts the way different nodes and miners are connected to one another to isolate portions of them from the remainder of the network, which could lead to a risk of the network allowing double-spending and other security issues. If BGP hijacking occurs on the bitcoin network, participants may lose faith in the security of bitcoin, which could affect bitcoin’s value and consequently the value of the Interests.

Any future attacks that impact the ability to transfer bitcoin could have a material adverse effect on the price of bitcoin and the value of an investment in the Interests.

29 Malicious Attacks on the Network. Digital asset networks, including the bitcoin network, are subject to control by entities that capture a significant amount of the network’s processing power or a significant number of developers important for the operation and maintenance of such digital asset network.

Control of Processing Power. The bitcoin network is secured by a proof-of-work algorithm, whereby the collective strength of network participants’ processing power protects the network. If a malicious actor or botnet (i.e., a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains a majority of the processing power dedicated to mining on the bitcoin network, it may be able to construct fraudulent blocks or prevent certain transactions from completing, either in a timely manner or at all. The malicious actor or botnet could control, exclude or modify the ordering of transactions. While a malicious actor would not be able to generate new bitcoin interests or transactions using such control, it could “double-spend” its own bitcoin interests (i.e., spend the same interests in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintained control. To the extent that such malicious actor or botnet did not yield its control of the processing power on the bitcoin network or the network community did not reject the fraudulent blocks as malicious, reversing any changes made to the blockchain may not be possible. Further, a malicious actor or botnet could create a flood of transactions in order to slow down confirmations of transactions on the bitcoin network.

Recently, some digital asset networks have been subject to malicious activity achieved through control over 50% of the processing power on the network. For example, on May 24, 2018, it was reported that attackers compromised the Bitcoin Gold network in this manner and were successfully able to double-spend interests of Bitcoin Gold in a series of transactions over the course of at least one week and in a total amount of at least $18 million. Other digital assets, such as Verge, Monacoin and Electoneum, have also recently suffered similar attacks. Although there have been no reports of such activity on the bitcoin network, it is believed that certain mining pools may have exceeded the 50% threshold on the bitcoin network. The possible crossing of the 50% threshold indicates a greater risk that a single mining pool could exert authority over the validation of digital asset transactions, and this risk is heightened if over 50% of the processing power on the bitcoin network falls within the jurisdiction of a single governmental authority. For example, it is believed that more than 50% of the processing power on the bitcoin network is now or at one time was located in China. Because the Chinese government has subjected digital assets to heightened levels of scrutiny recently, forcing several digital asset exchanges to shut down and has begun to crack down on mining activities, there is a risk that the Chinese government could also achieve control over more than 50% of the processing power on the bitcoin network. To the extent that the bitcoin ecosystem, including the core developers and the administrators of mining pools, does not act to ensure greater decentralization of mining processing power, the feasibility of a malicious actor obtaining control of the processing power on the bitcoin network will increase, which may adversely affect an investment in the Interests.

Control of Developers. A malicious actor may also obtain control over the bitcoin network through its influence over core or influential developers. For example, this could allow the malicious actor to stymie legitimate network development efforts or attempt to introduce malicious code to the network under the guise of a software improvement proposal by such a developer. Any actual or perceived harm to the bitcoin network as a result of such an attack could result in a loss of confidence in the source code or cryptography underlying the bitcoin network, which could negatively impact the demand for bitcoin and therefore adversely affect an investment in the Interests.

Faulty Code. In the past, flaws in the source code for digital assets have been exposed and exploited, including those that exposed users’ personal information and/or resulted in the theft of users’ digital assets. Several errors and defects have been publicly found and corrected, including those that disabled some functionality for users and exposed users’ personal information. Discovery of flaws in, or exploitations of, the source code that allow malicious actors to take or create money in contravention of known network rules have occurred. In addition, the cryptography underlying bitcoin could prove to be flawed or ineffective, or developments in mathematics and/or technology, including advances in digital computing, algebraic geometry and quantum computing, could result in such cryptography becoming ineffective. In any of these circumstances, a malicious actor may be able to steal the Partnership’s bitcoin, which would adversely affect an investment in the Interests. Even if the affected digital asset is not bitcoin, any reduction in confidence in

30 the source code or cryptography underlying digital assets generally could negatively impact the demand for bitcoin and therefore adversely affect an investment in the Interests.

Network Development and Support. The bitcoin network operates based on open-source protocol maintained by a group of core developers. As the bitcoin network protocol is not sold and its use does not generate revenues for development teams, core developers may not be directly compensated for maintaining and updating the bitcoin network protocol. Consequently, developers may lack a financial incentive to maintain or develop the network, and the core developers may lack the resources to adequately address emerging issues with the network. There can be no guarantee that developer support will continue or be sufficient in the future. Additionally, some development and developers are funded by companies whose interests may be at odds with other participants in the network or with investors’ interests. To the extent that material issues arise with the bitcoin network protocol and the core developers and open-source contributors are unable or unwilling to address the issues adequately or in a timely manner, the bitcoin network and an investment in the Interests may be adversely affected.

Network Governance. Governance of decentralized networks, such as the bitcoin network, is achieved through voluntary consensus and open competition. In other words, bitcoin has no central decision-making body or clear manner in which participants can come to an agreement other than through overwhelming consensus. The lack of clarity on governance may adversely affect bitcoin’s utility and ability to grow and face challenges, both of which may require solutions and directed effort to overcome problems, especially long-term problems. For example, a seemingly simple technical issue once divided the bitcoin community: namely, whether to increase the block size of the blockchain or implement another change to increase the scalability of bitcoin, known as “segregated witness,” and help it continue to grow. See “– Scaling Obstacles” below.

Should a lack of clarity in bitcoin’s network governance slow the network’s development and growth, the value of the Interests may be adversely effected.

Network Forks. Bitcoin is open source, meaning that any user can download the software, modify it and then propose that the users and miners of bitcoin adopt the modification. When a modification is introduced and a substantial majority of users and miners consent to the modification, the change is implemented and the bitcoin network remains uninterrupted. However, if less than a substantial majority of users and miners consent to the proposed modification, and the modification is not compatible with the software prior to its modification, the result is a so-called “fork” of the network. In other words, two incompatible networks would then exist: (1) one network running the pre-modified software and (2) another network running the modified software. The effect of such a fork would be the existence of two versions of bitcoin running in parallel, yet lacking interchangeability.

Forks occur for a variety of reasons. First, forks may occur after a significant security breach. For example, in June of 2016, a smart contract using the Ethereum network was hacked, which resulted in most participants in the Ethereum ecosystem electing to adopt a proposed fork designed to effectively reverse the hack. However, a minority of users continued to develop the old blockchain, now referred to as “Ethereum Classic” with the digital asset on that blockchain now referred to as Classic Ether, or ETC. Classic Ether remains traded on several digital asset exchanges.

Second, forks could be introduced by an unintentional, unanticipated software flaw in the multiple versions of otherwise compatible software users run. Such a fork could adversely affect the digital asset’s viability. It is possible, however, that a substantial number of users and miners could adopt an incompatible version of the digital asset while resisting community-led efforts to merge the two chains. This would result in a permanent fork, as in the case of Ether and Classic Ether, as detailed above. If a permanent fork were to occur, then the Partnership could hold amounts of both bitcoin and the new alternative. As described below, the Partnership will hold bitcoin, the new alternative, or both, based on the Manager’s determination as to whether the new alternative is an appropriate medium for investment.

Third, forks may occur as a result of disagreement among network participants as to whether a proposed modification to the network should be accepted. For example, in July 2017, bitcoin “forked” into bitcoin and a new digital asset, Bitcoin Cash, as a result of a several-year dispute over how to increase the rate of

31 transactions that the bitcoin network can process. Since then, bitcoin has been forked several times to launch new digital assets, such as Bitcoin Gold, Bitcoin Silver and Bitcoin Diamond.

Furthermore, certain forks can introduce new security risks. For example, when Ether and Classic Ether split in July 2016, “replay attacks” (i.e., attacks in which transactions from one network were rebroadcast to nefarious effect on the other network) plagued Ethereum exchanges for a period of at least a few months. One such exchange lost roughly 40,000 Classic Ether, which was worth about $100,000 at that time, as a result of replay attacks.

Another possible result of a hard fork is an inherent decrease in the level of security. After a hard fork, it may become easier for an individual miner or mining pool’s hashing power to exceed 50% of the processing power of the digital asset network, thereby making digital assets that rely on proof of work more susceptible to attack. See “– Malicious Attacks on the Network” above.

If bitcoin were to fork into two digital assets, the Partnership would be expected to hold an equivalent amount of bitcoin and new asset following the hard fork. However, the Partnership may not be able, or it may not be practical, to secure or realize the economic benefit of the new asset for various reasons. For instance, a custodian or security service provider may not agree to provide the Partnership access to the new asset. In addition, the Partnership may determine that there is no safe or practical way to custody the new asset, or that trying to do so may pose an unacceptable risk to the Partnership’s holdings in bitcoin, or that the costs of taking possession and/or maintaining ownership of the new digital asset exceed the benefits of owning the new digital asset.

The timing of any such occurrence is uncertain, and the Manager has sole discretion whether to claim a new asset created through a fork of the bitcoin network, subject to certain restrictions that may be put in place by the Partnership’s service providers. In exercising such discretion, the Manager may consider a variety of factors, including whether claiming such asset could require the Partnership to register under the Investment Company Act or subject the operations of the Partnership to the provisions of the Advisers Act. It is expected that the Manager will not claim any asset that would require such registration or compliance.

Forks in the bitcoin network could adversely affect an investment in the Interests or the ability of the Partnership to operate. Additionally, laws, regulation or other factors may prevent the Partnership’s Interests from benefitting from the new asset even if there is a safe and practical way to custody and secure the new asset. For example, it may be illegal for the Partnership to sell the new asset, or there may not be a suitable market into which the Partnership can sell the new asset (either immediately after the fork or ever). Forks in the bitcoin network may also result in taxable income to the Partnership (and, therefore, the Limited Partners). See “ – Certain Tax and Regulatory Considerations – Certain Tax Considerations – Certain United States Federal Income Tax Considerations” below.

Air Drops. Bitcoin may become subject to an occurrence similar to a fork, which is known as an “air drop.” In an air drop, the promotors of a new digital asset announce to holders of another digital asset that they will be entitled to claim a certain amount of the new digital asset for free. For example, in March 2017 the promoters of Stellar Lumens announced that anyone that owned bitcoin as of June 26, 2017 could claim, until August 27, 2017, a certain amount of Stellar Lumens. For the same reasons as described above with respect to hard forks, the Partnership may or may not choose, or be able, to participate in an air drop, or may or may not be able to realize the economic benefits of holding the new digital asset. The timing of any such occurrence is uncertain, and the Manager has sole discretion whether to claim a new asset created through an airdrop. In exercising such discretion, the Manager may consider a variety of factors, including whether claiming such asset could require the Partnership to register under the Investment Company Act or subject the operations of the Partnership to the provisions of the Advisers Act. It is expected that the Manager will not claim any asset that would require such registration. Any inability to recognize the economic benefit of a hard fork or an air drop could adversely impact an investment in the Interests. Air drops may also result in taxable income to the Partnership (and, therefore, the Limited Partners). See “ – Certain Tax and Regulatory Considerations – Certain Tax Considerations – Certain United States Federal Income Tax Considerations” below.

32 Intellectual Property. Code underlying the bitcoin networks is available under open source licenses and as such the code is generally open to use by the public. Additionally, according to publicly-available United States Patent and Trademark Office and United States Copyright Office databases, the Bitcoin Foundation does not own any issued patents or registered copyrights in the United States in connection with the code relating to bitcoin. Moreover, the Bitcoin Foundation has indicated interest in preserving “bitcoin” as a generic term. Nonetheless, other third parties may assert intellectual property claims relating to the holding and transfer of bitcoin and its source code. Regardless of the merit of any intellectual property or other legal action, any threatened action that reduces confidence in long-term viability or the ability of end-users to hold and transfer bitcoin may adversely affect an investment in the Interests. Additionally, a meritorious intellectual property claim could prevent the Partnership and other end-users from accessing, holding, or transferring bitcoin, which could force the liquidation of the Partnership’s holdings of bitcoin (if such liquidation is possible). As a result, an intellectual property claim against the Partnership or other large bitcoin network participants could adversely affect an investment in the Interests.

Mining Incentives. Miners generate revenue from both newly created bitcoins, known as the “block reward” and from fees taken upon verification of transactions. If the aggregate revenue from transaction fees and the block reward is not sufficient to support the miner’s ongoing operating costs, the miner may cease operations. If the award of new interests of bitcoin for solving blocks declines and/or the difficulty of solving blocks increases, and transaction fees voluntarily paid by participants are not sufficiently high, miners may not have an adequate incentive to continue mining and may cease their mining operations. The current fixed reward for solving a new block on the bitcoin network is 6.25 bitcoins per block, which decreased from 12.5 bitcoins in May 2020. It is estimated that it will halve again in or around March 2024. This reduction may result in a reduction in the aggregate hashrate of the bitcoin network as the incentive for miners decreases. Miners ceasing operations would reduce the collective processing power on the bitcoin network, which would adversely affect the confirmation process for transactions (i.e., temporarily decreasing the speed at which blocks are added to the blockchain until the next scheduled adjustment in difficulty for block solutions) and make the bitcoin network more vulnerable to a malicious actor or botnet obtaining sufficient control to manipulate the blockchain and hinder transactions. Any reduction in confidence in the confirmation process or processing power of the bitcoin network may adversely affect an investment in the Interests.

Mining Collusion. Miners, functioning in their transaction confirmation capacity, collect fees for each transaction they confirm. Miners validate unconfirmed transactions by adding the previously unconfirmed transactions to new blocks in the blockchain. Miners are not forced to confirm any specific transaction, but they are economically incentivized to confirm valid transactions as a means of collecting fees. Miners have historically accepted relatively low transaction confirmation fees. If miners collude in an anticompetitive manner to reject low transaction fees, then bitcoin users could be forced to pay higher fees, which could result in reduced confidence in, and use of, the bitcoin network. Any collusion among miners may adversely impact the attractiveness of the bitcoin network and may adversely impact an investment in the Interests or the ability of the Partnership to operate.

Unforeseeable Risks. Bitcoin has gained commercial acceptance only within recent years and, as a result, there is little data on its long-term investment potential. Additionally, due to the rapidly evolving nature of the bitcoin market, including advancements in the underlying technology, changes to bitcoin may expose Limited Partners to additional risks which are impossible to predict as of the date of this Memorandum. This uncertainty makes an investment in the Partnership very risky.

Unregulated Market Venues. The venues through which bitcoin and other digital assets trade are new and, in many cases, largely unregulated. Furthermore, many such venues, including digital asset exchanges and over-the-counter market venues, do not provide the public with significant information regarding their ownership structure, management teams, corporate practices or regulatory compliance. As a result, the marketplace may lose confidence in, or may experience problems relating to, these venues. These market venues may impose daily, weekly, monthly or customer-specific transaction or withdrawal limits or suspend withdrawals entirely, rendering the exchange of bitcoin for fiat currency difficult or impossible. Participation in these market venues requires users to take on credit risk by transferring bitcoin from a personal account to a third party’s account.

33 Over the past several years, a number of digital asset exchanges have been closed due to fraud, failure or security breaches. In many of these instances, the customers of such digital asset exchanges were not compensated or made whole for the partial or complete losses of their account balances in such digital asset exchanges. While smaller digital asset exchanges are less likely to have the infrastructure and capitalization that make larger digital asset exchanges more stable, larger digital asset exchanges are more likely to be appealing targets for hackers and “malware” (i.e., software used or programmed by attackers to disrupt computer operation, gather sensitive information or gain access to private computer systems).

For example, in 2014, the largest bitcoin exchange at the time, Mt. Gox, filed for bankruptcy in Japan amid reports the exchange lost up to 850,000 bitcoins, valued then at over $450 million. In January 2015, Bitstamp, a large digital asset exchange, announced that approximately 19,000 bitcoin had been stolen from its operational or “hot” wallets. In August 2016, it was reported that almost 120,000 bitcoins worth around $78 million were stolen from Bitfinex, another large digital asset exchange. The value of bitcoin immediately decreased by more than 10% following reports of the theft at Bitfinex.

In December 2017, Yapian, the operator of Seoul-based digital asset exchange Youbit, suspended digital asset trading and filed for bankruptcy following a hack that resulted in a loss of 17% of Yapian’s assets. Following the hack, Youbit users were allowed to withdraw approximately 75% of the digital assets in their exchange accounts, with any potential further distributions to be made following Yapian’s pending bankruptcy proceedings.

In January 2019, QuadrigaCX, a Canadian digital asset exchange, ceased operations and the company was declared bankrupt. The company’s CEO and founder, Gerald Cotten, reportedly died unexpectedly in December 2018, after traveling to India. Up to $190 million owed to 115,000 customers was discovered missing or could not be accessed because only Cotten held the password to the affected wallets. In a report released in April 2019, the auditing firm Ernst and Young said it had determined Cotten was mixing his personal and corporate finances, noting that some QuadrigaCX funds may have been used to buy assets held outside the business.

In May 2019, Binance, one of the world’s largest digital asset exchanges, revealed that it had been the victim of a “large scale security breach” in which hackers had stolen 7,000 bitcoin worth around $40 million at the time. Binance reported that the hackers “used a variety of techniques, including phishing, viruses and other attacks” and structured their transaction in a way that passed its existing security checks.

Some academics and market observers have put forth evidence to support claims that manipulative trading activity has occurred on certain digital asset exchanges. For example, in a 2017 paper titled “Price Manipulation in the bitcoin Ecosystem” sponsored by the Interdisciplinary Cyber Research Center at Tel Aviv University, a group of researchers used publicly available trading data, as well as leaked transaction data from a 2014 Mt. Gox security breach, to identify and analyze the impact of “suspicious trading activity” on Mt. Gox between February and November 2013, which, according to the authors, caused the price of bitcoin to increase from around $150 to more than $1,000 over a two-month period. In August 2017, it was reported that a trader or group of traders nicknamed “Spoofy” was placing large orders on Bitfinex without actually executing them, presumably in order to influence other investors into buying or selling by creating a false appearance that greater demand existed in the market. In December 2017, an anonymous blogger (publishing under the pseudonym Bitfinex’d) cited publicly available trading data to support his or her claim that a trading bot nicknamed “Picasso” was pursuing a paint-the-tape-style manipulation strategy on GDAX by buying and selling bitcoin and Bitcoin Cash between affiliated accounts in order to create the appearance of substantial trading activity and thereby influence the price of such assets.

Additionally, the SEC has continuously cited concerns over the integrity of digital asset exchanges. For example, in declining to approve any rule change applications that would allow for exchange traded funds holding economic exposure to bitcoin, either directly or through futures contracts, the SEC has noted that these markets have low liquidity, which makes them more susceptible to price manipulation. This risk is heightened by the fact that a significant amount of the trading volume occurs outside of the United States. Further, in a public statement issued in March 2018, the SEC noted that these exchanges may lack necessary safeguards to protect investors from fraudulent practices and losses due to operational and security issues.

34 Digital asset exchanges that are regulated typically must comply with minimum net worth, cybersecurity, and anti-money laundering requirements, but are not typically required to protect customers or their markets to the same extent that regulated securities exchanges or futures exchanges are required to do so. For example, U.S. state and federal regulatory regimes for digital asset exchanges generally have no specific requirements that exchanges detect, report or prevent manipulative trading activity, such as spoofing. However, in February 2018, the New York State Department of Financial Services issued guidance that directed “virtual currency entities” to adopt a written policy to address: (1) fraud-related and similar risk areas, including market manipulation; (2) effective procedures and controls; (3) allocation of responsibility for risk monitoring; and (4) investigation procedures in the case of suspected, or actual, fraud and other wrongdoing, including market manipulation.

Furthermore, many digital asset exchanges lack certain safeguards put in place by more traditional exchanges to enhance the stability of trading on the exchange and prevent flash crashes, such as limit-down circuit breakers. As a result, the prices of digital assets, such as bitcoin on digital asset exchanges, may be subject to larger and/or more frequent sudden declines than assets traded on more traditional exchanges. For example, on June 21, 2017, at approximately 3:30 p.m., the price of Ether on the GDAX exchange declined from $317.81 to $0.10 and then recovered to prices above $300, all within the span of approximately 10 seconds.

A lack of stability in digital asset exchanges, manipulation of bitcoin markets by digital asset exchange customers and/or the closure or temporary shutdown of such exchanges due to fraud, business failure, hackers or malware, or government-mandated regulation may reduce confidence in bitcoin generally and result in greater volatility in the market price of bitcoin. Furthermore, the closure or temporary shutdown of a digital asset exchange may impact the Partnership’s ability to determine the value of its bitcoin holdings or to purchase or sell bitcoin. These potential consequences of an exchange’s failure or failure to prevent market manipulation could adversely affect an investment in the Interests.

Other Bitcoin Investment Funds. The Partnership will compete with other current and future financial vehicles and investment funds that offer economic exposure to the price of bitcoin. Such competitors may invest in bitcoin, including through securities backed by or linked to bitcoin, such as exchange-traded products or ETPs. Other competitors may invest in derivative financial products, which utilize bitcoin as the underlying asset. Market and financial conditions, and other conditions beyond the Partnership’s control, may make it more attractive for investors to redeem interests in the Partnership in order to invest in other such financial vehicles, which could adversely affect LPs remaining in the Partnership. Furthermore, more attractive investment products not currently on the market could develop, which may also lead to investors redeeming interests in the Partnership.

If other financial vehicles or investment funds tracking the price of bitcoin are formed and come to represent a significant proportion of the demand for bitcoin, large redemptions of the securities of such competitors could result in large scale bitcoin liquidations. This could, in turn, negatively affect bitcoin prices, the Partnership’s holding of bitcoin and the value of the Interests. In addition, these financial vehicles and other entities with substantial holdings in bitcoin may engage in large-scale hedging, sales or distributions which could also negatively impact the value of the Interests. See “– Large-Scale Sales or Distributions” for more information.

Additionally, there have been a growing number of attempts to list on national securities exchanges the shares of funds that hold digital assets or that have exposures to digital assets through derivatives. These investment vehicles attempt to provide institutional and retail investors exposure to the markets for digital assets, including bitcoin and related products. The SEC has repeatedly denied such requests of funds that have attempted to list their shares on exchanges. On January 18, 2018, the SEC’s Division of Investment Management outlined several questions that sponsors would be expected to address before it would consider granting approval for funds holding “substantial amounts” of cryptocurrencies or “cryptocurrency-related products.” The questions, which focus on specific requirements of the Investment Company Act, generally address five key areas: valuation, liquidity, custody, arbitrage and potential manipulation. The SEC has not explicitly stated which of these questions would also need to be addressed by entities with similar products and investment strategies that instead pursue registered offerings under the Securities Act. If sponsors of these funds are eventually successful in listing such products, exchange-listed digital asset fund shares would

35 create more opportunities for institutional and retail investors to invest in the digital asset market, including in bitcoin. Alternatively, if exchange-listed digital asset funds continue to be denied SEC approval, increased investment interest by institutional or retail investors could fail to materialize, which could reduce the demand for bitcoin or digital assets generally and therefore adversely affect an investment in the Interests.

Large-Scale Sales or Distributions. Some entities hold large amounts of bitcoin relative to other market participants, and to the extent such entities engage in large-scale hedging, sales or distributions on nonmarket terms, or sales in the ordinary course, it could result in a reduction in the price of bitcoin and adversely affect an investment in the Interests. For example, in March 2018, it was reported that the trustee overseeing the bankruptcy of the Mt. Gox exchange had recently sold roughly $400 million worth of bitcoin and Bitcoin Cash belonging to the Mt. Gox bankruptcy estate. While the trustee has publicly stated that the sale was conducted in a manner that would avoid affecting the market price, others have speculated that certain reductions in the trading price of bitcoin were a result of these large sales. It has been reported that, as of March 2018, at least $1.3 billion worth of bitcoin and Bitcoin Cash remains in the Mt. Gox bankruptcy estate, and the trustee has publicly stated that a process for selling the estate’s remaining bitcoin and Bitcoin Cash has not yet been determined.

Additionally, political or economic crises may motivate large-scale acquisitions or sales of such digital assets, including bitcoin, either globally or locally. Such large-scale sales or distributions could result in selling pressure that may reduce the price of bitcoin and adversely affect an investment in the Interests.

Risks of Political or Economic Crises. Political or economic crises may motivate large-scale sales of digital assets, which could result in a reduction price of digital assets and adversely affect an investment in the Interests. As an alternative to fiat currencies that are backed by central governments, digital assets, such as bitcoin, which are relatively new, are subject to supply and demand forces based upon the desirability of an alternative, decentralized means of buying and selling goods and services, and it is unclear how such supply and demand will be affected by geopolitical events. Nevertheless, political or economic crises may motivate large-scale acquisitions or sales of bitcoin either globally or locally. Large-scale sales of bitcoin would result in a reduction in the price and adversely affect an investment in the Interests.

Outbreaks of Infectious or Contagious Diseases. Pandemics and other widespread public health emergencies have and are resulting in market volatility and disruption, including in the markets for digital assets, and future such emergencies have the potential to materially and adversely impact economic production and activity in ways that are impossible to predict, all of which could result in significant losses to the Partnership.

An ongoing outbreak of the novel coronavirus (“COVID-19”) has caused a worldwide public health emergency, straining healthcare resources and resulting in extensive and growing numbers of infections, hospitalizations and deaths. In an effort to contain COVID-19, national, regional and local governments, as well as private businesses and other organizations, have taken severely restrictive measures, including instituting local and regional quarantines, restricting travel (including closing certain international borders), prohibiting public activity (including “stay-at-home” and similar orders), and ordering the closure of a large numbers of offices, businesses, schools, and other public venues. As a result, COVID-19 has significantly diminished global economic production and activity of all kinds and has contributed to severe volatility and uncertainty in all financial markets, including the markets for digital assets.

The extent of COVID-19’s impact will depend on many factors, including the ultimate duration and scope of the public health emergency and the restrictive countermeasures being undertaken, as well as the effectiveness of other governmental, legislative and financial and monetary policy interventions designed to mitigate the crisis and address its negative externalities, all of which are evolving rapidly and could have unpredictable results. Even if and as the spread of the COVID-19 virus itself is substantially contained and economies are able to “re-open,” it will be difficult to assess what the longer-term impacts of an extended period of unprecedented economic dislocation and disruption will be on future macro- and micro-economic developments, the health of certain industries and businesses, and commercial and consumer behavior.

The ongoing COVID-19 crisis and any other public health emergency could have a significant adverse impact on financial markets, including the markets for digital assets, and result in significant losses to the Partnership.

36 The extent of the impact on the Partnership’s operational and financial performance will depend on many factors, all of which are highly uncertain and cannot be predicted. The operations of the Partnership, the General Partner and the Manager generally could be significantly impacted, or even temporarily or permanently halted, as a result of government quarantine measures, restrictions on travel and movement, remote-working requirements and other factors related to a public health emergency, including its potential adverse impact on the health of any such entity’s personnel. These measures could also hinder such entities’ ability to conduct their affairs and activities as they normally would, including by impairing usual communication channels and methods, hampering the performance of administrative functions such as processing payments and invoices, and diminishing their ability to make accurate and timely projections of financial performance. As of the date of this Offering Memorandum, the Manager and its affiliates have transitioned employees across their offices to remote work-from-home arrangements and imposed travel and related restrictions due to the outbreak of COVID-19. While our employees are accustomed to working remotely or working with other remote employees, our workforce has not historically been fully remote. Prior to the COVID-19 pandemic, certain of our employees traveled frequently to establish and maintain relationships with one another and with our investors. Suspending travel and doing business in- person on a long-term basis could negatively impact our business. Additionally, extended periods of time in remote working environments are expected to increase risks relating to cybersecurity, data protection, document retention, employee supervision, workforce engagement and cohesion of operations. While the Manager and its affiliates will endeavor to appropriately protect against these risks, there can be no assurance that the operations of the Partnership will not be adversely affected.

Banking Services. A number of companies that provide bitcoin-related services have been unable to find banks that are willing to provide them with bank accounts and banking services. Similarly, a number of such companies have had their existing bank accounts closed by their banks. Banks may refuse to provide bank accounts and other banking services to bitcoin-related companies or companies that accept bitcoin for a number of reasons, such as perceived compliance risks or costs. The difficulty that many businesses that provide bitcoin-related services have and may continue to have in finding banks willing to provide them with bank accounts and other banking services may be currently decreasing the usefulness of bitcoin as a payment system and harming public perception of bitcoin or could decrease its usefulness and harm its public perception in the future. Similarly, the usefulness of bitcoin as a payment system and the public perception of bitcoin could be damaged if banks were to close the accounts of many or of a few key businesses providing bitcoin-related services. This could decrease the value of the bitcoin held by the Partnership and therefore adversely affect an investment in the Interests.

Access Loss or Theft. There is a risk that some or all of the Partnership’s holdings of bitcoin could be lost, stolen, destroyed or inaccessible, potentially by the loss or theft of the private keys held by custodians associated with the public addresses that hold the Partnership’s bitcoin. Multiple thefts of bitcoin and other digital assets from other holders have occurred in the past. Because of the decentralized process for transferring bitcoin, thefts can be difficult to trace, which may make bitcoin a particularly attractive target for theft. The Manager has adopted security procedures intended to protect the Partnership’s assets, but there can be no assurance that those procedures will be successful in preventing such loss, theft or restriction on access. You should not invest unless you understand the risk that the Partnership may lose possession or control of its assets. Access to the Partnership’s bitcoin could be restricted by natural events (such as an earthquake or flood) or human actions (such as a terrorist attack). The Partnership’s bitcoin held in custody accounts will likely be an appealing target for hackers or malware distributors seeking to destroy, damage or steal the Partnership’s bitcoin or private keys.

Security breaches, cyber-attacks, computer malware and computer hacking attacks have been a prevalent concern for the digital asset exchanges on which bitcoin trades. Any cyber security breach caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses, could harm the Partnership’s business operations or reputation, resulting in loss of the Partnership’s assets. Digital asset exchanges may in particular be at risk of cyber security breaches orchestrated or funded by state actors. For example, it has been reported that South Korean digital asset exchanges have been subject to cybersecurity attacks by North Korean state actors with the intent of stealing digital assets, including bitcoin, possibly with the intention of evading international economic

37 sanctions. Any problems relating to the performance and effectiveness of security procedures used by the Partnership and its custodians to protect the Partnership’s bitcoin, such as algorithms, codes, passwords, multiple signature systems, encryption and telephone call-backs will have an adverse impact on an investment in the Interests. Furthermore, as the Partnership’s bitcoin holdings grow, the Partnership and its custodians may become a more appealing target for cyber security threats such as hackers and malware. Furthermore, cybersecurity attacks orchestrated or funded by state actors may be particularly difficult to defend against because of the resources that state actors have at their disposal.

No storage system is impenetrable, and storage systems employed by the Partnership or its custodians may not be free from defect or immune to force majeure events. Any loss due to a security breach, software defect or force majeure event generally will be borne by the Partnership.

Such storage systems and operational infrastructure may be breached due to the actions of outside parties, error or insider malfeasance of an employee of the Manager or its custodians, or otherwise, and, as a result, an unauthorized party may obtain access to the Manager’s, the Partnership’s or the Partnership’s custodians’ or security vendors’ storage systems, private keys, data or bitcoin. Additionally, outside parties may attempt to fraudulently induce employees of the custodians or the Manager to disclose sensitive information in order to gain access to the Partnership’s infrastructure. The Manager, its custodians or any technological consultant engaged by them may periodically examine and propose modifications to storage systems, protocols and internal controls to address the use of new devices and technologies to safeguard the Partnership’s systems and bitcoin. As the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, or may be designed to remain dormant until a predetermined event and often are not recognized until launched against a target, the Manager may be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of a storage system occurs, a loss of confidence in the bitcoin network may decrease the market price of the Partnership’s investments. An actual or perceived breach may also cause Limited Partners to seek redemption of their Interests, which may harm the Partnership’s investment performances. In the event of an actual or perceived security breach of a storage system, the Partnership may cease operations.

If the Partnership’s holdings of bitcoin are lost, stolen or destroyed under circumstances rendering a party liable to the Partnership, the responsible party may not have the financial resources sufficient to satisfy the Partnership’s claim. For example, as to a particular event of loss, the only source of recovery for the Partnership may be limited to the relevant custodian or, to the extent identifiable, other responsible third parties (for example, a thief or terrorist), any of which may not have the financial resources (including liability insurance coverage) to satisfy a valid claim of the Partnership. Similarly, as noted below, the Partnership’s custodians have extraordinarily limited liability to the Partnership, which will adversely affect the Partnership’s ability to seek recovery from them, even when they are at fault.

It may not be possible, either because of a lack of available policies or because of prohibitive cost, for the Partnership to obtain insurance that would cover losses of bitcoin. If an uninsured loss occurs or a loss exceeds policy limits, the Partnership could lose all of its assets.

Bitcoin Custodians’ Limited Operating History. Custody and security services for the Partnership’s bitcoin will be provided by one or more custodians. Bitcoin held by the Partnership may be custodied or secured in different ways (for example, a portion of the Partnership’s bitcoin holdings may be custodied by a particular custodian and another portion by a third-party custodian). Over time, the Partnership may change the custody or security arrangement for all or a portion of its holdings. The Manager will decide the appropriate custody and arrangements based on, among other factors, the availability of experienced custodians and the Partnership’s ability to securely safeguard the bitcoin.

Many custodians have limited operating experience in choosing security or custody arrangements for bitcoin. A loss of confidence or breach in the Partnership’s security and technology policies may adversely affect the Partnership and the value of an investment in the Interests.

Technological Change. Large holders of bitcoin and digital asset exchanges on which bitcoin trades and must adapt to technological change in order to secure and safeguard client accounts. The ability of the Partnership’s custodians and security vendors to safeguard the bitcoin that the Partnership holds from theft,

38 loss, destruction or other issues relating to hackers and technological attack is based upon known technology and threats. As technological change occurs, such threats will likely adapt, and previously unknown threats may emerge. Furthermore, the Partnership may become a more appealing target of security threats as the size of the Partnership’s bitcoin holdings grows. If the Manager, the Partnership or the Partnership’s custodian or security vendor is unable to identify and mitigate or stop new security threats, the custodial bitcoin may be subject to theft, loss, destruction or other attack, which could have a negative impact on the performance of the Interests or result in loss of the Partnership’s assets.

Lack of Recourse. The Partnership’s bitcoin custodians may have limited liability impairing the ability of the Partnership to recover losses relating to its bitcoin and any recovery may be limited, even in the event of fraud. In addition, a custodian may not be liable for any delay in performance of any of its custodial obligations by reason of any cause beyond its reasonable control, including force majeure events, war or terrorism, and may not be liable for any system failure or third-party penetration of its systems, unless such system failure or third-party penetration is the result of gross negligence, willful misconduct or fraud on the part of the custodian. As a result, the recourse of the Partnership or the investor to such custodians may be limited. A loss of confidence or breach in the Partnership’s security and technology policies may adversely affect the Partnership and the value of an investment in the Interests.

Service Providers are Not Fiduciaries. The service providers, including custodians and security vendors, that the Partnership employs or may employ in the future are not trustees for, and owe no fiduciary duties to, the Partnership or the Limited Partners. In addition, service providers employed by the Partnership have no duty to continue to act as the custodians of the bitcoin held by the Partnership. Current or future service providers, including custodians and security vendors, can terminate their role as custodian or security vendor for any reason whatsoever upon the notice period provided under the relevant custody agreement. A service provider may also be terminated by the Manager. The Manager, in its discretion, will determine the compensation of custodians and other service providers, which compensation, without limitation, may consist of fixed payments or variable fees based on the Partnership’s net asset value or other metrics.

Risks Related to the Partnership and the Interests

Risks Related to Lending Transactions. The Partnership may engage in bitcoin lending transactions, which could result in losses for the Partnership if any borrower under such transactions fails to perform or fails financially. Moreover, lending of bitcoin may be treated as a taxable disposition of bitcoin for U.S. federal income tax purposes, with the result that the Partnership would recognize gain if it loaned appreciated bitcoin. The Partnership may earn additional income from lending its bitcoin, although such transactions increase the Partnership’s risk of loss. In a bitcoin lending transaction, the Partnership will lend bitcoin to a borrower, and the Partnership may be compensated for such loan. Upon termination of a bitcoin lending transaction, the borrower is obligated to return the borrowed bitcoin to the Partnership. This obligation of the borrower to return the loaned bitcoin gives the Partnership credit exposure to the borrower, and there is no limit on the amount of the Partnership’s bitcoin that may be lent at any one time. To the extent the Partnership loans a portion of its bitcoin, the Partnership will generally receive collateral from the borrower of the bitcoin. As with other extensions of credit, there are risks of delay and costs involved in recovery of loaned bitcoin or even loss of rights in the bitcoin loaned or sold or in the collateral if the borrower fails to perform under the terms of the bitcoin lending transaction or fails financially. If the borrower fails to perform under the terms of the bitcoin lending transaction or fails financially, the collateral held by the Partnership may not be sufficient to cover any losses suffered by the Partnership. The Partnership may engage an agent to arrange loans of bitcoin by the Partnership (a “lending agent”), and that lending agent, which may be an affiliate of the Manager, may be paid a fee by the Partnership or may otherwise share in the profits from the Partnership’s bitcoin lending transactions. This fee or share of profits may represent a material portion of the income generated by the Partnership by entering into bitcoin lending transactions. The market for bitcoin lending transactions is new and evolving, and may be riskier than the more traditional securities lending market, and may expose the Partnership to unforeseen risks. The Partnership may also sell its bitcoin in bitcoin reverse repurchase transactions to the extent that a market develops for such transactions, or may enter into other transactions with similar effect to bitcoin lending transactions or reverse repurchase transactions.

Engaging in bitcoin lending transactions could increase the risk that the Partnership’s bitcoin are lost or stolen. The storage systems and security measures employed by the Partnership and its custodians to secure the

39 Partnership’s private keys are generally most vulnerable to security breaches, cyber-attacks, computer malware or other forms of attack, and the private keys are also more vulnerable to be lost or compromised due to operational error, at points in time when the Partnership is using its private keys to effect transactions in bitcoin held by the Partnership. If the Partnership engages in bitcoin lending transactions, the Partnership will be required to access its private keys more frequently than it would if it did not engage in such transactions, because bitcoin lending transactions require the lender of the bitcoin to use its private keys to effect a transfer of the bitcoin to the borrower. As a result, engaging in bitcoin lending transactions could increase the risk that the Partnership’s bitcoin are lost or stolen.

If the Partnership engages in bitcoin lending transactions, sales of bitcoin by the borrowers under such bitcoin lending transactions could decrease the trading prices of the bitcoin held by the Partnership and therefore adversely affect an investment in the Interests. The market for bitcoin lending transactions is new and evolving, and the Partnership’s willingness to lend its bitcoin may materially increase the supply of bitcoin available for borrowing by market participants. If the Partnership engages in bitcoin lending transactions, it is likely that the borrower in such bitcoin lending transactions are borrowing such bitcoin in order to engage in short sales of such bitcoin. This selling activity by borrowers of the Partnership’s bitcoin could decrease the trading prices of the currencies currently held by the Partnership and therefore adversely affect an investment in the Interests.

Illiquidity Risk. The Partnership’s investments in bitcoin may be illiquid. Illiquidity risk is the risk that the investments held by the Partnership may be difficult or impossible to sell at the time that the Partnership would like or at the price that the Partnership believes the currencies are currently worth. The Partnership’s ability to realize full value in the event of the need to liquidate certain currencies may be impaired and/or result in losses to the Partnership. The Partnership may be unable to sell its investments, even under circumstances when the Manager believes it would be in the best interests of the Partnership to do so. Investments may also be difficult to value and their pricing may be more volatile than more liquid investments, which could adversely affect the price at which the Partnership is able to sell such instruments. Illiquidity risk also may be greater in times of financial stress. The risks associated with such investments may be particularly acute in situations in which the Partnership’s operations require cash (such as in connection with repurchase offers) and could result in the Partnership borrowing to meet its short-term needs or incurring losses on the sale of instruments.

Regulatory Risks

Uncertain Regulatory Environment. As digital assets, including bitcoin, have grown in both popularity and market size, the U.S. Congress and a number of U.S. federal and state agencies have been examining the operations of digital asset networks, digital asset users and the digital asset exchange market. Many of these state and federal agencies have issued consumer advisories regarding the risks posed by digital assets to investors. Ongoing and future regulatory actions with respect to digital assets generally or any single digital asset in particular may alter, perhaps to a materially adverse extent, the nature of an investment in the Interests or the ability of the Partnership to continue to operate.

In 2019 guidance, the Financial Crimes Enforcement Network (“FinCEN”) explained the applicability of regulations implementing the Bank Secrecy Act (“BSA”) to a variety of business models involving convertible virtual currencies (“CVCs”). Among other things, this guidance reaffirmed the position taken by FinCEN in prior guidance issued in 2013 that any administrator or exchanger of convertible digital assets must register with FinCEN as a money transmitter and must comply with the anti-money laundering regulations applicable to money transmitters. The 2019 guidance also provides that developers and exchanges involved in the sale of tokens in an ICO (as defined below) may be required to register with FinCEN as money transmitters and comply with the anti-money laundering regulations applicable to money transmitters. Failure to comply with anti-money laundering regulations may result in civil or criminal penalties. In 2015, FinCEN assessed a $700,000 fine against Ripple Labs for violating several requirements of the Bank Secrecy Act by acting as a money services business, to which we refer herein as an MSB, and selling XRP without registering with FinCEN, and by failing to implement and maintain an adequate anti- money laundering program. In 2017, FinCEN assessed a $110 million fine against BTC-E, a now defunct digital asset, for similar violations. The requirement that exchangers that do business in the United States

40 register with FinCEN and comply with anti-money laundering regulations may increase the cost of buying and selling digital assets and therefore may adversely affect their price.

The United States Department of Treasury Office of Foreign Assets Control (“OFAC”) administers and enforces economic sanctions laws and regulations that prohibit U.S. persons from dealing with certain countries, entities, and individuals that are the targets of sanctions. The requirement to comply with sanctions applies to all transactions, including those involving digital assets. Beginning in 2018, OFAC has in some instances added digital currency addresses to the list of Specially Designated Nationals whose assets are blocked, and with whom U.S. persons are generally prohibited from dealing. Such an action by OFAC, or by similar organizations in other jurisdictions, may introduce uncertainty in the market as to whether digital assets that have in the past been associated with such addresses can be easily sold. These “tainted” digital assets may trade at a substantial discount to untainted digital assets. Additionally, reduced fungibility in the digital asset markets may reduce the liquidity of digital assets and therefore adversely affect their price.

In 2015, the New York Department of Financial Services finalized a rule that requires most businesses involved in digital asset business activity for third parties in or involving New York, excluding merchants and consumers, to apply for a license, commonly known as a BitLicense, from the NYDFS and to comply with anti-money laundering, cyber security, consumer protection, and financial and reporting requirements, among others. As an alternative to the BitLicense in New York, firms can apply for a charter to become limited purpose trust companies qualified to engage in digital asset business activity. Other states have considered regimes similar to the BitLicense, and have passed statutes, regulations or guidance indicating that certain digital asset business activities constitute money transmission requiring licensure. The inconsistency in applying money transmitting licensure requirements to certain businesses may make it more difficult for these businesses to provide services, which may affect consumer adoption of digital assets and their price. In an attempt to address these issues, the Uniform Law Commission passed a model law in July 2017, the Uniform Regulation of Virtual Currency Businesses Act, which has many similarities to the BitLicense and features a multistate reciprocity licensure feature, wherein a business licensed in one state could apply for accelerated licensure procedures in other states. It is still unclear, however, how many states, if any, will adopt some or all of the model legislation.

Further, the transparency of blockchains has facilitated investigations by law enforcement agencies. However, certain privacy-enhancing features have been or are expected to be introduced to a number of digital asset networks, and these features may provide law enforcement agencies with less visibility into transaction histories. Although no regulatory action has been taken to treat privacy-enhancing digital assets differently, this may change in the future.

The SEC and certain state regulators have determined that certain digital assets are securities. In July 2017, for instance, the SEC determined that digital assets issued by The DAO are securities under the U.S. securities laws. If the SEC were to determine that bitcoin is a security, the Partnership and the Manager would be subject to additional regulatory and compliance requirements under U.S. securities laws, including the Investment Company Act and, with respect to the Manager, the Investment Advisers Act, which could cause them to liquidate the Partnership instead of registering or being subject to such requirements even if it resulted in losses to the Partnership or the Limited Partners. See “– Regulatory Changes or Interpretations” below.

In addition, regulators in a number of foreign jurisdictions have, like the SEC, also recently opined on the sale of digital asset tokens, including through initial coin offerings (“ICOs”). Regulatory authorities in China and South Korea have banned ICOs entirely (although proposed legislation in South Korea would remove the ban if passed), and those other jurisdictions, including Canada, Singapore and Hong Kong, have opined that ICOs may constitute securities offerings subject to local securities regulations. A determination that bitcoin is a security under U.S. or foreign law could adversely affect an investment in the Interests.

Regulatory Changes or Interpretations. Current and future legislation, CFTC and SEC rulemaking and other regulatory developments may impact the manner in which bitcoin is treated for classification and clearing purposes. In particular, bitcoin may be classified by the CFTC as a “commodity interest” under the Commodities Exchange Act or may be classified by the SEC as a “security” under U.S. securities laws. As of the date of this Memorandum, the Manager is not aware of any rules that have been proposed to regulate bitcoin as a commodity interest or a security. Although several U.S. federal district courts have recently held

41 for certain purposes that bitcoin is a currency, a form of money or, more generally, a commodity, these rulings are not definitive and the Manager and the Partnership cannot be certain as to how future regulatory or legal developments will impact the treatment of bitcoin under the law. In the face of such developments, the required registrations and compliance steps may result in extraordinary, nonrecurring expenses to the Partnership. In particular, the Partnership may be required to rapidly unwind its entire position in bitcoin at potentially unfavorable prices and potentially terminate, in the event that bitcoin were determined to fall under the definition of a security under U.S. securities laws.

To the extent that bitcoin is deemed to fall within the definition of a “commodity interest” under the Commodities Exchange Act, the Partnership and the Manager may be subject to additional regulation under the Commodities Exchange Act and CFTC regulations. The Manager may be required to register as a commodity pool operator or commodity trading advisor with the CFTC and become a member of the National Futures Association and may be subject to additional regulatory requirements with respect to the Partnership, including disclosure and reporting requirements. These additional requirements may result in extraordinary, recurring and/or nonrecurring expenses of the Partnership, thereby materially and adversely impacting the Interests. If the Manager determines not to comply with such additional regulatory and registration requirements, the Manager will terminate the Partnership. Any such termination could result in the liquidation of the Partnership’s bitcoin holdings at a time that is disadvantageous to a holder of the Interests.

The SEC has not asserted regulatory authority over the bitcoin network or trading or ownership in bitcoin. However, the SEC has commented on bitcoin and bitcoin-related market developments and has taken action against investment schemes involving bitcoin. For example, in the SEC’s review of proposed rule changes to list and trade shares of certain bitcoin-related investment vehicles on public markets, the SEC staff stated that it has significant investor protection concerns regarding the markets for digital assets, including the potential for market manipulation and fraud. Additionally, in March 2018, it was reported that the SEC was examining as many as 100 investment funds with strategies focused on digital assets. The reported focus of the examinations is on the accuracy of risk disclosures to investors in these funds, digital asset pricing practices, and compliance with rules meant to prevent the theft of investor funds, as well as on information gathering so that the SEC can better understand new technologies and investment products. It has further been reported that some of these funds have received subpoenas from the SEC’s Division of Enforcement. The SEC also recently determined that certain digital assets are securities under the U.S. securities laws. In these determinations, the SEC reasoned that the unregistered sale of digital assets can, in certain circumstances, including ICOs, be considered illegal public offering of securities. The SEC could make a similar determination with respect to digital tokens distributed in other ICOs or token sales, and, in March 2018, it was reported that the SEC had issued at least 80 subpoenas to issuers of ICO tokens to gather information about potential illegal public securities offerings.

If regulatory changes or interpretations require the regulation of bitcoin by the CFTC under the Commodity Exchange Act or the SEC under the Securities Act, Advisers Act or Investment Company Act, compliance with these requirements could result in additional expenses to the Partnership or significantly limit the ability of the Partnership to pursue its investment objective.

Bans or Prohibitions Affecting Bitcoin. Digital assets including bitcoin currently face an uncertain regulatory landscape in many foreign jurisdictions such as the European Union, China, the United Kingdom, Australia, Japan, Russia, Israel, Poland, India, Hong Kong, Canada and Singapore. Various foreign jurisdictions may, in the near future, adopt laws, regulations or directives that affect bitcoin and other digital assets. Such laws, regulations or directives may conflict with those of the United States and may negatively impact the acceptance of bitcoin by users, merchants and service providers outside the United States and may therefore impede the growth or sustainability of the digital asset economy in these jurisdictions as well as in the United States and elsewhere, or otherwise negatively affect the value of bitcoin and therefore the value of the Interests.

Additionally, U.S. state and federal, and foreign regulators and legislatures have taken action against digital asset businesses or enacted restrictive regimes in response to adverse publicity arising from hacks, consumer harm, or criminal activity stemming from digital asset activity. For example, in July 2017, FinCEN assessed a $110 million fine against BTC-E, a now defunct digital asset exchange, for facilitating crimes such as drug sales and ransomware attacks. Furthermore, it has been reported that certain South Korean digital asset

42 exchanges have experienced cybersecurity attacks by North Korean state actors with the intent of stealing digital assets, possibly as a means of evading international economic sanctions. Cybersecurity attacks by state actors, particularly for the purpose of evading international economic sanctions, are likely to attract additional regulatory scrutiny to the acquisition, ownership, sale and use of digital assets, including bitcoin. Such adverse publicity or regulatory scrutiny could adversely affect the value of bitcoin, and therefore the value of the Interests.

Infrastructure Risks

Dependence on Service Providers. The General Partner and the Manager rely on service providers for certain aspects of their business, including certain financial operations, trade related activity, IT infrastructure and systems, trade reconciliation, and margin and collateral movement. The General Partner and Manager do not control or direct these service providers and have limited transparency into such businesses’ day-to-day operations. Any interruption or deterioration in the performance of such service providers could impair the quality of the General Partner and the Manager’s operations, negatively affect its performance and the reputation of the Partnership and the investment strategies of the Partnership, limit the Partnership’s potential to grow, and ultimately expose Limited Partners to losses. In addition, given the nascent digital asset industry and the overall immaturity of this market, the General Partner and the Manager may face issues in finding, selecting and retaining reputable and qualified service providers for various aspects of their business. Many of the service providers involved in the digital asset industry have minimal operating history to rely on, and thus may be more prone to the interruptions or deteriorations described above. Additionally, many of the established service providers to hedge funds and other private investment vehicles have demonstrated a reluctance to be involved with funds transacting in digital assets. This may lead to the General Partner and the Manager needing to devote more time to the selection and monitoring of service providers than would typically be expected of managers in other asset classes, or cause operational and other issues for the Partnership. See also “Risks Relating to Availability of Banking Services” and “Risks Relating to Custody of Bitcoin” above.

Technology and Security. The Partnership relies on both affiliated and third-party providers for security accounts and information and based on their input adapt to technological change in order to secure and safeguard client accounts. As technological change occurs, the security threats to the Partnership’s bitcoin will likely adapt and previously unknown threats may emerge. Furthermore, the General Partner believes that the Partnership may become a more appealing target of security threats as the size of the Partnership’s assets grows. To the extent that the Partnership is unable to identify and mitigate or stop new security threats, the Partnership’s bitcoin may be subject to theft, loss, destruction or other attack, which could have a negative impact on the performance of the Partnership or result in loss of the Partnership’s assets.

Operational Risk. The Partnership will depend on the General Partner and the Manager to develop the appropriate systems and procedures to control operational risk. Operational risks arising from mistakes made in the confirmation or settlement of transactions, from transactions not being properly booked, evaluated, or accounted for, or other similar disruption in the Partnership’s operations may cause the Partnership to suffer financial loss, the disruption of their business, liability to investors or third parties, regulatory intervention, or reputational damage. The Partnership will rely heavily on the General Partner, the Manager, the Administrator, the Manager’s IT infrastructure provider and other service providers’ financial, accounting, IT infrastructure systems and services and other data processing systems and a failure by any one or more of them could result in losses to the Partnership.

Systems Risks. The Partnership will depend on the General Partner and the Manager to develop and implement appropriate systems for the Partnership’s activities. The Partnership will rely extensively on computer programs and systems to monitor its portfolio and net capital and to generate reports that are critical to oversight of the Partnership’s activities. In addition, certain of the operations of the General Partner and the Manager interface with or depend on systems operated by third parties, including market counterparties and other service providers, and the Partnership, the General Partner or the Manager may not be in a position to verify the risks or reliability of such third-party systems. These programs or systems may be subject to certain defects, failures, or interruptions, including, but not limited to, those caused by worms, viruses, and power failures. Any such defect or failure could have a material adverse effect on the Partnership. For example, such failures could cause incorrect trades to be placed or settlement of trades to fail, lead to

43 inaccurate accounting, recording, or processing of trades, and cause inaccurate reports, which may affect the Partnership’s ability to monitor its investment portfolio. In addition, despite the security measures established by the Manager and third parties to safeguard its and their respective systems, including the information therein, such systems may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise these systems and result in the theft, loss or public dissemination of the information stored therein and could have a material adverse effect on the Partnership.

Reliance on Technology. Certain of the Partnership’s investing strategies and critical aspects of its and the Manager’s operations will be reliant on technology, including hardware, software and telecommunications systems. Significant parts of the technology used in the management of the Partnership may be provided by third parties and are therefore beyond the Manager’s direct control. Forecasting, trade execution, data gathering, risk management, portfolio management, IT infrastructure and support, compliance and accounting systems all are designed to depend upon a high degree of automation and computerization. Although, the Manager seeks, on an ongoing basis, to ensure adequate backups of software and hardware where possible and the Manager will attempt to conduct adequate due diligence and monitoring of providers, if such efforts are unsuccessful or inadequate, software or hardware errors or failures may result in errors, data loss and/or failures in trade execution, risk management, portfolio management, compliance or accounting. Errors or failures may also result in the inaccuracy of data and reporting or the unavailability of data or vulnerability of data to the risk of loss or theft. Errors may occur gradually and once in the code may be very hard to detect and can potentially affect results over a long period of time. If an unforeseeable software or hardware malfunction or problem is caused by a defect, virus or other outside force, the Partnership may be materially adversely affected.

In particular, the Manager may rely on cloud (including private and public cloud-based) technology for its daily operations, including data storage. Cloud-based technology, like any electronic data storage or processing technology, is not fail-safe. It may be subject to certain defects, failures or interruptions of service beyond the Manager’s direct control. It is also possible that such technology could be compromised by a third-party, including through the use of malicious software or programs, such as viruses, which may expose the Manager and the Partnership to theft (of data or other assets) and/or significant business interruption. In addition, a software provider may cease operations or be relatively thinly capitalized and the Manager’s and the Partnership’s ability to be made whole after any loss may be compromised as a result.

Risks Related to Security Protocols. The Partnership could experience unforeseen difficulties in operating and maintaining its security procedures or other key elements of its technical infrastructure. Security protocols have been designed specifically to provide security for the Partnership’s assets and may be expanded, updated and altered from time to time. Any effort to expand, update or alter the security system is likely to be complex, and unanticipated delays in the completion of these projects may lead to unanticipated project costs, operational inefficiencies or vulnerabilities to security breaches. In addition, there may be problems with the design or implementation of certain security protocols or with an expansion or upgrade thereto that are not evident during the testing phases of design and implementation, and that may only become apparent after the Partnership has utilized the infrastructure. Any issues relating to the performance and effectiveness of the security procedures used by the Partnership, its custodians and security vendors to protect its bitcoin, such as algorithms, codes, passwords, multiple signature systems, encryption and telephone call- backs, may have an adverse impact on an investment in the Interests.

The security procedures implemented by the Manager, Partnership and its custodians and security vendors are technical and complex, and the Partnership depends on these security procedures to protect the storage, acceptance and distribution of data relating to digital assets and the digital wallets into which the Partnership deposits its bitcoin. These security procedures may not protect against all errors, software flaws or vulnerabilities. Defects in the security procedures may only be discovered after a failure in the custodians’ and security vendors’ safekeeping and storage of the Partnership’s bitcoin. Such custody and security systems may be implemented by the Manager directly as well as by third-party custody providers.

It is not uncommon for businesses in the digital asset space to experience large losses due to fraud and breaches of their security systems. For example, in September 2015, the global bitcoin payment agent, BitPay, lost approximately $1.8 million of bitcoins due to a hacker’s fraudulent impersonation of BitPay’s Chief

44 Financial Officer, or CFO, whereby the hacker was able to access the CFO’s email account and successfully request BitPay’s custodian to transfer funds.

Furthermore, the Partnership’s private keys required to transfer the Partnership’s bitcoin could be stored on systems or vaults located across the world, depending on the practices and procedures of the Partnership’s custodians or security vendors, which could be subject to (i) hostile regulatory treatment of digital assets, (ii) unforeseen social, economic or political unrest and (iii) natural or man-made disaster.

The Partnership, the Manager, the custodians, the security vendors and each of their agents will take measures to protect the Partnership and its bitcoin from unauthorized access, damage or theft. However, it is possible that the security procedures in place may not prevent the improper access to, or damage or theft of the Partnership’s bitcoin. A security breach could harm the Partnership’s reputation or result in the loss of some or all of the Partnership’s bitcoin. A resulting perception that the security procedures do not adequately protect the Partnership’s bitcoin may have an adverse impact on an investment in the Interests.

Risks Relating to Custody of Bitcoin. Because the Partnership has a limited operating history, the Partnership has limited operating experience holding custody of bitcoin. Custody for the Partnership’s bitcoin may be provided by third-party wallet providers, exchanges, trust companies and other custodial or security service providers, or, if a third-party is not available, security services may be provided by the Partnership, Manager or affiliates of the Manager. Over time, the Partnership may choose to change a custody or security arrangement for its bitcoin.

The Partnership and the Manager have limited operating experience in choosing security or custody arrangements for bitcoin. The Manager will decide the appropriate security and custody arrangements for its bitcoin based on, among other factors, the availability of licensed and experienced custodians and the Partnership’s ability to securely safeguard the assets. Among other requirements, the Advisers Act mandates that if a registered adviser has custody of client funds and securities, it must maintain them with a “qualified custodian.” Given the characteristics of digital assets and the relative immaturity of the asset class, there are limited numbers of “qualified custodians” available at this time (if any). As the Manager is registered as an investment adviser, difficulties in finding a “qualified custodian” could have a material adverse effect on the Partnership, including potentially causing the Partnership to liquidate a substantial portion of its portfolio. There is also a risk that the SEC determines that certain custodians used by the Partnership are not, regardless of their representations to the contrary, “qualified custodians”, which would potentially require the Manager to move bitcoin and/or subject the Manager to regulatory action.

The Partnership and Manager may provide security services for some or all of its bitcoin, and in certain circumstances may be deemed to have custody of its bitcoin. The Partnership has a limited operating history providing such services for digital assets. Neither the Partnership nor the Manager currently intend to obtain insurance to cover such activities. A loss of confidence or breach in the Partnership’s security and technology policies may adversely affect the Partnership and the Limited Partners.

Risks Related to Custodians and Security Vendors. The Partnership may use one or more custodians and/or security vendors to hold custody of a portion of some times of its bitcoin. The Partnership may have a high concentration of its bitcoin in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware, or cyber-attacks as described herein. The Partnership is not required to maintain the Partnership’s bitcoin with a minimum number of custodians. Custodians and security vendors of digital assets may have limited liability, impairing the ability of the Partnership to recover losses relating to its bitcoin and any recovery may be limited, even in the event of fraud. In addition, a custodian or security vendor may not be liable for any delay in performance of any of its custodial or security vendor obligations by reason of any cause beyond its reasonable control, including acts of God, war or terrorism, and may not be liable for any system failure or third-party penetration of its systems, unless such system failure or third-party penetration is the result of gross negligence, bad faith or willful misconduct on the part of the custodian or security vendor. Similarly, Limited Partners have limited recourse against the General Partner and the Manager for any losses sustained when such party or its affiliates had custody of any assets, as described under “III. Summary of Principal Terms—Exculpation and Indemnification.” As a result, the recourse of the Partnership or the investor to such custodians or security

45 vendors may be limited. A loss of confidence or breach in the Partnership’s security and technology policies may adversely affect the Partnership and the Limited Partners.

Risk of Loss Under a Multi-Factor Security System. The ability to recover losses related to the Partnership’s bitcoin secured through a multi-factor security system may be limited. For all or a portion of its bitcoin, the Partnership may make use of a multi-factor security system under which none of the Manager, the Partnership, nor a designated security vendor has the unilateral ability to transfer the Partnership’s bitcoin. In these situations, lack of a custodian or a party that holds exclusive access to the Partnership’s bitcoin on the Partnership’s behalf, as well as limited liability of designated security vendors, may impair the ability of the Partnership to recover losses relating to its bitcoin. In addition, because the security of the Partnership’s bitcoin may be facilitated by multiple parties, it may be difficult for the Partnership to prove that any particular party caused a loss, which could limit the Partnership’s ability to recover losses relating to its bitcoin. In addition, designated security vendors may have limited liability, impairing the ability of the Partnership to recover losses relating to its bitcoin and any recovery may be limited, even in the event of fraud. Furthermore, designated security vendors may not be liable for any delay in performance of any of their obligations by reason of any cause beyond its reasonable control, including acts of God, war or terrorism, and may not be liable for any system failure or third-party penetration of its systems, unless such system failure or third-party penetration is the result of gross negligence, bad faith or willful misconduct on the part of the designated security vendor. As a result, the recourse of the Partnership or the investor may be limited. A loss of confidence or breach in the Partnership’s security and technology policies may adversely affect the Partnership and the Limited Partners.

Changing Security Needs. The Partnership’s custodians’ and security vendors’ ability to adopt technology in response to changing security needs or trends poses a challenge to the safekeeping of the Partnership’s bitcoin. Digital asset exchanges and large holders of digital assets must adapt to technological change in order to secure and safeguard client accounts. The ability of the custodians and security vendors that are or will be employed by the Partnership (including, potentially, the Partnership itself, the Manager, or affiliates of the Manager) to safeguard the bitcoin that the Partnership holds from theft, loss, destruction or other issues relating to hackers and technological attack, is based upon known technology and threats. As technological change occurs, the security threats to the custodial bitcoin will likely adapt and previously unknown threats may emerge. Furthermore, the Manager believes that the Partnership may become a more appealing target of security threats as the size of the Partnership’s assets grows. If a custodian or security vendor is unable to identify and mitigate or stop new security threats, the custodial bitcoin may be subject to theft, loss, destruction or other attack, which could have a negative impact on the performance of the Partnership or result in loss of the Partnership’s assets.

Trade Execution Risk. The Partnership’s investment strategies depend on its ability to establish and maintain an overall market position in a combination of financial instruments selected by the Manager in furtherance of the Partnership’s investment objectives. The Partnership’s trading orders may not be executed in a timely and efficient manner due to various circumstances, including, without limitation, transaction volume surges or systems failures attributable to the Partnership, the Manager, the Partnership’s counterparties, brokers, dealers, agents, or other market participants or personnel being unavailable. In such event, the Partnership might be able to acquire or dispose of only some, but not all, of the components of such position, or if the overall position were to need adjustment, the Partnership might not be able to make such adjustment. As a result, the Partnership would not be able to achieve the market position selected by the Manager, which may result in a loss.

Trade Errors. On occasion, errors may occur with respect to transactions executed on behalf of the Partnership. Trade errors can result from a variety of situations, including, for example, when the wrong asset is purchased or sold, when the correct asset is purchased or sold but for the wrong account and when the wrong quantity is purchased or sold. Trade errors frequently result in losses but may, occasionally, result in gains. Per the Manager’s policies, the Partnership will not be reimbursed for losses resulting from most trade errors.

Cyber Security, Other Breaches and Identity Theft. Cyber security incidents and cyber-attacks have been occurring globally at a more frequent and severe level and will likely continue to increase in frequency in the future. The Manager’s and its service providers’ information and technology systems may be vulnerable to

46 damage or interruption from computer viruses and other malicious code, network failures, computer and telecommunication failures, infiltration by unauthorized persons and security breaches (by physical or electronic means), usage errors by their respective users or service providers, power, communications or other service outages and catastrophic events such as fires, tornadoes, floods, hurricanes and earthquakes. In addition, as discussed above under “—Outbreaks of Infectious or Contagious Diseases,” extended periods of time in which the Manager’s employees are in remote working environments are expected to increase risks relating to cybersecurity and data protection. If unauthorized parties gain access to such information and technology systems, they may be able to steal, publish, delete or modify private and sensitive information. Although the Manager has implemented, and service providers may implement, various measures to manage risks relating to these types of events, such systems could be inadequate and, if compromised, could become inoperable for extended periods of time, or cease to function properly or fail to adequately secure private information. Breaches such as those involving covertly introduced malware, impersonation of authorized users and industrial or other espionage may not be identified even with sophisticated prevention and detection systems, potentially resulting in further harm and preventing it from being addressed appropriately. The Manager may have to make a significant investment to fix or replace any inoperable or compromised systems. The failure of these systems and/or of disaster recovery plans for any reason could cause significant interruptions in the Manager’s operations and result in a failure to maintain the security, confidentiality or privacy of sensitive data, including personal information relating to Limited Partners (and the beneficial owners of Limited Partners) and the intellectual property and trade secrets of the Manager. Such a failure could harm the Manager’s reputation, subject the Manager and its affiliates (including the Partnership) to legal claims and otherwise affect their business and financial performance.

Dependence on Certain Third Parties. The Partnership is dependent upon its counterparties and the businesses that are not controlled by the Manager that provide services to the Partnership. Examples of service providers include accountants, administrators, bankers, lenders, brokers, attorneys, consultants and investment banking firms. Errors are inherent in the business and operations of any business, and although the Manager will adopt measures to prevent and detect errors by, and misconduct of, counterparties and service providers, and transact with counterparties and service providers it believes to be reliable, such measures may not be effective in all cases. Errors or misconduct could have a material adverse effect on the Partnership. Absent a direct contractual relationship between a Limited Partner and the relevant service provider, no Limited Partner will have any contractual claim against any service provider for any reason related to its services to the Partnership. Instead, the proper plaintiff in an action in respect of which a wrongdoing is alleged to have been committed against the Partnership, as the case may be, by the relevant service provider is, prima facie, the Partnership, as the case may be.

Data Protection Regulations. The Partnership’s and the Manager’s reliance on technology, including third- party processors and cloud-based services to, among other things, store and maintain personal data, imposes regulatory risks. Legal requirements relating to the collection, storage, handling, and transfer of personal data continue to evolve. The Partnership and the Manager may become subject to new legislation or regulation concerning the information they may store or maintain. For example, the General Data Protection Regulation, which became effective in May 2018, creates a range of new compliance obligations regarding the handling of personal data, and increases financial penalties for non-compliance significantly. The Partnership and the Manager intend to comply with any obligations arising out of data protection regulations that are applicable to them, but may not be able to accurately anticipate the way in which regulators and courts will apply or interpret such regulations, including its applicability to the Partnership and/or the Manager. If any such regulations are implemented, interpreted or applied in a manner inconsistent with the Partnership’s and/or the Manager’s policies and practices, they may be fined or ordered to change their business practices in a manner that adversely impacts their operating results.

The Partnership and the Manager may also be subject to U.S. state and local data protection laws. The U.S. legal and regulatory landscape governing data privacy and security is in a period of considerable flux. In recent years, state legislatures have passed a number of important new laws, including the California Consumer Privacy Act (“CCPA”), which became effective on January 1, 2020, and the New York SHIELD Act, which took effect in part on October 23, 2019 and in other parts on March 21, 2020. As of November 1, 2020, a number of states (including Arizona, Illinois, Iowa, Maryland, Minnesota, New Jersey, New York,

47 South Carolina and Washington) were considering proposals for comprehensive data privacy laws. Additionally, California voters approved a new privacy law, the California Privacy Rights Act (“CPRA”), in the November 3, 2020 election. Effective starting on January 1, 2023, the CPRA will significantly modify the CCPA, including by expanding consumers’ rights with respect to certain sensitive personal information and creating a new state agency vested with authority to implement and enforce the CPRA. At the federal level, the United States Congress is also considering various proposals for data privacy and security legislation. The cumulative effects of the CCPA, the CPRA and other recently adopted data privacy and security laws include an increased ability of individuals, relative to companies, to control the use of their personal information; increased obligations of companies to maintain the privacy and security of data; and increased exposure to fines, damages or reputational harm for companies that do not afford individuals their specified privacy rights, that experience data breaches or that do not maintain cybersecurity practices at certain required levels. The Partnership will endeavor to implement and maintain systems designed to promote compliance with the CCPA, the CPRA and these other laws, both those adopted to date and those that may be adopted in the future, but there can be no assurance that these systems will be effective in mitigating the business impact of individuals’ increased privacy rights or in ensuring compliance with the CCPA, the CPRA and such other laws. In the event of fines, damages or reputational harm due to noncompliance with such privacy and security laws or a data breach, there may be a business impact on the Partnership.

Fund Risks

Right of General Partner to Force Redemption. The General Partner, in its sole discretion, may redeem at any time all the Interests held by a Limited Partner for any reason or no reason.

Conflicts of Interest. There are a number of conflicts of interest associated with the Partnership, including but not limited to the fact that the General Partner and the Manager may be engaged in other activities, are not obligated to present all investment opportunities to the Partnership, and may aggregate orders for different funds. See “– Conflicts of Interest” below. These and other conflicts may have an adverse impact on the Partnership and its ability to achieve its investment objectives, as well as on the Limited Partners.

Conflicting Interests of Limited Partners. The Partnership is likely to have a diverse range of Limited Partners that may have conflicting interests that stem from differences in investment preferences, tax status and regulatory status. The Manager will consider the objectives of the Partnership as a whole when making decisions with respect to the selection, structuring and sale of portfolio investments. However, such decisions may be more beneficial for one Limited Partner than for another Limited Partner.

Transaction Costs. Transaction costs will be borne by the Partnership regardless of whether the Partnership is profitable. Each of the General Partner and Manager is entitled to cause the Partnership to effect transactions with certain brokers and venues that charge commission rates to the Partnership higher than those charged elsewhere due to such brokers’ or venues’ offering proprietary services or capabilities to the General Partner, the Manager or the Partnership, including services that would otherwise be obtained by the General Partner or the Manager at their own expense.

Waivers. The General Partner, in its sole discretion, may agree with a particular Limited Partner to waive a variety of provisions of the Partnership Agreement with respect to that Limited Partner, including but not limited to waiving all or a portion of the Fees. The benefits of such waivers would not be available to other Limited Partners.

Broad Indemnification. The Partnership Agreement contains provisions that may provide a broader indemnification of the General Partner against claims or lawsuits arising out of the Partnership’s activities than would apply in the absence of such provisions. If the Partnership were called upon to perform under its indemnification obligations, then the portion of its assets expended in such fashion would reduce the amount otherwise available for Partnership operations.

48 Management Fees Payable Regardless of Partnership’s Performance. The Manager is entitled to a Management Fee even if the Partnership’s performance is negative.

Tax Risks

Uncertain U.S. Federal Income Tax Treatment of Digital Currencies. Due to the new and evolving nature of digital currencies and the absence of comprehensive guidance with respect to digital currencies, many significant aspects of the U.S. federal income tax treatment of digital currencies are uncertain. The General Partner does not intend to request a ruling from the Internal Revenue Service (the “IRS”) on these issues. Rather, the General Partner will cause the Partnership to take positions that it believes to be reasonable. There can be no assurance, however, that the IRS will agree with the positions the Partnership takes, and it is possible that the IRS will successfully challenge the Partnership’s positions.

In 2014, the IRS released a notice (the “Notice”) discussing certain aspects of “convertible virtual currency” (that is, digital currency that has an equivalent value in fiat currency or that acts as a substitute for fiat currency) for U.S. federal income tax purposes and, in particular, stating that such digital currency (i) is “property,” (ii) is not “currency” for purposes of the rules relating to foreign currency gain or loss and (iii) may be held as a capital asset. In 2019, the IRS released a revenue ruling and a set of “Frequently Asked Questions” (the “Ruling & FAQs”) that provide some additional guidance, including guidance to the effect that, under certain circumstances, hard forks of digital currencies are taxable events giving rise to ordinary income and guidance with respect to the determination of the tax basis of digital currency. However, the Notice and the Ruling & FAQs do not address other significant aspects of the U.S. federal income tax treatment of digital currencies. Moreover, although the Ruling & FAQs address the treatment of hard forks, there continues to be uncertainty with respect to the timing and amount of the income inclusions.

There can be no assurance that the IRS will not alter its position with respect to digital currencies in the future or that a court would uphold the treatment set forth in the Notice and the Ruling & FAQs. It is also unclear what additional guidance on the treatment of digital currencies for U.S. federal income tax purposes may be issued in the future. Any such alteration of the current IRS positions or additional guidance could result in adverse tax consequences for investors in the Partnership and could have an adverse effect on the value of bitcoin. Because of the evolving nature of digital currencies, it is not possible to predict potential future developments that may arise with respect to digital currencies. Such developments may increase the uncertainty with respect to the treatment of digital currencies for U.S. federal income tax purposes. For example, the Notice addresses only digital currency that is “convertible virtual currency,” and it is conceivable that, as a result of a fork, air drop or similar occurrence, the Partnership will hold certain types of digital currency that are not within the scope of the Notice.

State, Local and Non-U.S. Tax Treatment of Digital Currencies. The taxing authorities of certain states (i) have announced that they will follow the Notice with respect to the treatment of digital currencies for state income tax purposes and/or (ii) have issued guidance exempting the purchase and/or sale of digital currencies for fiat currency from state sales tax. It is unclear what further guidance on the treatment of digital currencies for state tax purposes may be issued in the future. Any future guidance on the treatment of digital currencies for state or local tax purposes could result in adverse tax consequences for investors in the Partnership and could have an adverse effect on the value of bitcoin.

The treatment of digital currencies for tax purposes by non-U.S. jurisdictions may differ from the treatment of digital currencies for U.S. federal, state or local tax purposes. It is possible, for example, that a non-U.S. jurisdiction would impose sales tax or value-added tax on purchases and sales of digital currencies for fiat currency. If a foreign jurisdiction with a significant share of the market of bitcoin users imposes onerous tax burdens on digital currency users, or imposes sales or value-added tax on purchases and sales of digital currency for fiat currency, such actions could result in decreased demand for bitcoin in such jurisdiction, which could adversely affect the price of bitcoin.

Imposition of Tax Regardless of Distributions. A Limited Partner that is subject to U.S. federal income tax will be required to include its share of the Partnership’s taxable income for each taxable year in determining its own U.S. federal income tax liability, regardless of whether the Limited Partner receives any distributions from the Partnership. The Partnership will generally not make distributions to the Limited Partners other than

49 in connection with redemptions of Interests. As a consequence, a non-redeeming Limited Partner will generally be required to use cash from other sources in order to pay tax in respect of its share of the Partnership’s taxable income.

UBTI. A U.S. tax-exempt investor may recognize “unrelated business taxable income” (“UBTI”) as a consequence of an investment in the Partnership. In particular, in the absence of guidance to the contrary, it is possible that a Tax-Exempt Investor’s share of any income arising from a fork, air drop or similar occurrence would be treated as UBTI.

Non-U.S. Investors. The Ruling & FAQs do not address whether income recognized by a non-U.S. investor as a result of a fork, air drop or similar occurrence could be subject to the 30% withholding tax imposed on U.S.-source “fixed or determinable annual or periodical” income. In the absence of guidance, it is likely that the Partnership will withhold 30% from each non-U.S. investor’s share of any income recognized by the Partnership as a result of a fork, air drop or similar occurrence.

Delayed Schedules K-1. The Partnership will file an information return on IRS Form 1065 for each of its taxable years and provide a Schedule K-1 to each Limited Partner as soon as reasonably practicable after the end of each taxable year. It is possible, however, that the Schedules K-1 for a taxable year will not be delivered to the Limited Partners until after April 15 of the following year. It is therefore possible that, in any taxable year, the Limited Partners will need to apply for extensions of time to file their tax returns.

Tax Audits of the Partnership and Indemnification for Taxes. Under the rules applicable to U.S. federal audits of partnership tax returns for taxable years beginning after December 31, 2017, any tax arising from an audit of a tax return of the Partnership, as well as any resulting interest and penalties, will generally be payable by the Partnership in the year in which the determination becomes final unless the Partnership elects to send statements to its Partners for the audited year informing them of their shares of the adjustments made on audit, in which case those Partners and former Partners will generally be required to pay their respective shares of any such tax, interest and/or penalties.

If the Partnership pays any tax, interest and/or penalties as a result of an audit of a Partnership tax return, each Limited Partner and former Limited Partner to which such payment is attributable will be required to bear the economic burden of, and to indemnify the Partnership for, the portion of the payment that is attributable to such Limited Partner or former Limited Partner. A Limited Partner’s obligation to indemnify the Partnership for any such taxes, interest and penalties will survive the Limited Partner’s withdrawal from the Partnership and the dissolution of the Partnership. If a Limited Partner or former Limited Partner fails to indemnify the Partnership for the payment of any tax, interest and/or penalties that is attributable to such Limited Partner or former Limited Partner, a portion of the economic burden of any such payment will be borne by each then-current Limited Partner.

Conflicts of Interest

There are certain inherent and potential conflicts of interest among the General Partner, the Manager and their respective members, officers, directors, employees and principals on the one hand, and the Partnership on the other that are both inherent to the investment management industry generally and specific to the Manager. Among the factors that should be considered by each prospective investor are the following:

Side-by-Side Investments, Managed Accounts and Side Letter Arrangements. The General Partner, the Manager, and/or the Portfolio Managers may in the future manage assets for one or more advisory clients through a managed account or similar arrangement employing an investment strategy investing in parallel with, or similar to, the strategy of the Partnership. Such arrangements may afford those clients different terms from the terms of the Partnership with respect to liquidity, fees and expenses, subscription rights and the content and frequency of reports. Advisory clients that have been granted additional access to portfolio information or enhanced transparency may be able to make investment decisions, including, without limitation, making additional capital contributions, making withdrawals and entering into hedging transactions designed to offset such client’s exposure to investment positions taken by the managed account (which may be the same investment positions taken by the Partnership), based on information not generally available to other Limited Partners. In addition, certain Limited Partners have and may in the future negotiate

50 side letter arrangements that provide similar benefits to such persons. See “III. Summary of Principal Terms—Side Letters.” Any such investment decisions made by these advisory clients on the basis of such information, including any substantial withdrawals, could adversely affect the market value of the Partnership’s portfolio and therefore the value of the Interests.

Agreements with Certain Investors. Certain Limited Partners, including affiliates of the Manager, may invest pursuant to agreements that have the effect of altering or supplementing the material terms of such Limited Partners’ investments causing them to differ from the terms of other Limited Partners’ investments. The Limited Partners that are party to such agreements may be granted rights not otherwise afforded to other investors, including, without limitation, with respect to the right to purchase additional Interests, the right to withdraw Interests with limited notice to the Partnership, or on a more frequent basis or in different amounts than other Limited Partners, the right to receive reports on a more frequent basis or to receive reports that include information not provided to other Limited Partners (including valuation and other information relating to the Partnership’s investments), the right to bear or pay reduced Fees, the right to receive a share of the Management Fees earned by the Manager, and/or such other more favorable terms as may be negotiated by such Limited Partners. The Partnership will not be required to disclose any such agreements to other investors, unless otherwise required to do so pursuant to applicable law or regulation. Limited Partners that are granted such rights may include, without limitation, individuals affiliated with the Manager. To the extent that compliance with any of the provisions of any such agreement would cause the Partnership, the General Partner, the Manager or any of their respective affiliates to violate their respective fiduciary obligations to other clients or to violate any applicable laws, the Partnership, the General Partner or the Manager will not comply with any such provision and any such non-compliance will not be deemed to be a breach of such agreement.

Allocation of Investment Opportunities. The General Partner, the Manager, the Portfolio Managers and/or any of their respective members, officers, directors, employees, principals or affiliates manage, or may in the future manage, other alternative investment funds and/or separate accounts focused on investments in digital assets (collectively, the “Other Funds”). The allocation of investment opportunities among the Partnership and the Other Funds with investment objectives similar to or overlapping with the Partnership may reduce the number, size and type of investment opportunities available to the Partnership, especially given some of the characteristics of the marketplace for bitcoin previously discussed. While certain of the Other Funds may have investment parameters that are somewhat different from those of the Partnership, in situations where the investment in question may be deemed to satisfy the investment objectives of the Other Funds and the Partnership, there will be conflicts of interests between the Other Funds and the Partnership regarding which of such entities will be given the opportunity to make any investment with limited capacity and, if such investment is to be made by the Other Funds and the Partnership, the proportions in which such investment will be allocated between the Other Funds and the Partnership.

The General Partner, the Manager and/or any of their respective members, officers, directors, employees, principals or affiliates will attempt to allocate investment opportunities in a manner that they determine is fair and equitable as measured over time. However, neither the Manager, the General Partner nor any of their respective members, officers, directors, employees, principals or affiliates have any obligation to engage in any transaction for the Partnership’s account or to recommend any transaction to the Partnership, and may engage in transactions for their own accounts or the accounts of other persons, even if such transactions are appropriate for the Partnership, except as otherwise required by applicable law. Where there are conflicts of interest in allocating a particular investment between any of the Other Funds and the Partnership, there can be no assurance that the Partnership will make such investment, even if the investment satisfies the Partnership’s investment objectives. An investment may be allocated (i) wholly or primarily to an Other Fund, with the Partnership being unable to participate in such investment opportunity or participating only on a limited basis or (ii) wholly or primarily to the Partnership, with any Other Fund not sharing the risks of such investment. In addition, in circumstances in which the Partnership may make an investment that the Other Funds already have made, or concurrently will make or seek to make, liquidity and concentration considerations may limit the Partnership’s participation in such investment or its ability to dispose of the investment readily. Furthermore, in such circumstances, the Partnership, on the one hand, and the Other Funds, on the other hand, may have conflicting interests and investment objectives, including with respect to the targeted returns from the investment and the timeframe for disposing of the investment, and therefore,

51 the General Partner, the Manager or their respective affiliates may take action with respect to an investment on behalf of one of the Other Funds and the Partnership that differs from the action taken with respect to the investment on behalf of any other of the Other Funds and the Partnership. It is possible that an action taken on behalf of an Other Fund with respect to an investment could have a material adverse effect on the Partnership. If an Other Fund participates in a particular investment that is also held by the Partnership, there can be no assurance that the returns on such investment by the Partnership will be equivalent to or better than the returns obtained by such Other Fund on such investment.

Allocation of Time and Attention. The Manager will devote as much of its time and effort to the affairs of the Partnership as it deems necessary and appropriate. The employees and executives of the Manager, including the Portfolio Managers, may have conflicts of interest in allocating their time and activity between the Partnership and other entities; none of the Portfolio Managers or the other employees and executives of the Manager are required to devote a majority of their business time and attention to the affairs of the Partnership.

Conflicts of Interest Among Strategies. If the General Partner, the Manager or any of their respective members, officers, directors, employees, principals or affiliates determine that an investment opportunity is only appropriate for certain accounts for which he or she exercises investment responsibility, he or she may place separate transactions for one or more accounts, which may affect the market price of the investment or the execution of the transaction, or both, to the detriment or benefit of one or more other accounts. Similarly, the General Partner, the Manager or any of their respective members, officers, directors, employees, principals or affiliates may take positions for their proprietary accounts that are different from those taken by one or more client accounts, or invest in different parts of an issuer’s capital structure, which could disadvantage the investments held by other accounts in that issuer. In addition, purchases or sales of the same investment may be made for two or more accounts on the same date. In effecting transactions, it may not be possible, or consistent with the investment objectives of accounts, to purchase or sell investments at the same time or at the same prices.

Business Opportunities and Related Activities. The General Partner, the Manager or any of their respective members, officers, directors, employees, principals or affiliates may provide more services (such as distribution or recordkeeping) for some types of accounts than for others. In such cases, a Portfolio Manager may benefit, either directly or indirectly, by devoting disproportionate attention to the management of accounts that provide greater overall returns to the General Partner, the Manager or any of their respective members, officers, directors, employees, principals and affiliates. The General Partner, the Manager or any of their respective members, officers, directors, employees, principals and affiliates, engage in a broad spectrum of other activities. Additionally, it is likely that affiliates of the Manager will obtain information from their other business activities that could materially benefit the Partnership if shared with the Manager and utilized in the operations of the Partnership; the affiliates will have no duty to (and are not expected to) share such information with, or use such information in connection with the operation of, the Manager or the Partnership, including as described below. If such information is material non-public information, it could inhibit the investment activity of the Partnership, as described under “Material Nonpublic Information” below.

Variation in, and Other Arrangements Relating to, Compensation. The Manager and/or Portfolio Managers may receive different financial or other benefits from the accounts that it, he or she manages, such as higher management fees or performance-based compensation, which may cause it, him or her to favor certain accounts over others. In addition, the Manager may be influenced by a desire to maintain or raise assets under management or to enhance its, his or her performance record, which could also result in preferential treatment of certain accounts.

Transactions with Affiliates. The Partnership Agreement allows the Partnership to participate in transactions in which the General Partner, the Manager, any of their respective affiliates, members, officers, directors, employees and principals or any Fund Investor is directly or indirectly interested, as described in further detail herein, including under “Selection of Service Providers,” “Affiliates Holding Bitcoin as Custodians or Security Service Providers” and “Possible Future Activities” below. In connection with such transactions, the Partnership, on the one hand, and the General Partner, the Manager, their respective affiliates, members, officers, directors, employees and principals or Limited Partners, on the other hand, may have conflicting

52 interests. The General Partner, the Manager and their respective members, officers, directors, employees, principals or affiliates may also face conflicts of interest in connection with purchase or sale transactions (involving an investment by the Partnership) with an affiliate of the Partnership (including any other fund managed by the General Partner or the Manager), including with respect to the consideration offered by, and the obligations of, the General Partner, the Manager and such other affiliate.

The Manager may adopt policies and procedures designed to address applicable conflicts.

Selection of Service Providers. The Manager may be able to select or influence the selection of the service providers that are used to execute investment transactions for the clients that they supervise. These services may be more beneficial to certain funds than to others.

Affiliates Holding Bitcoin as Custodians or Security Service Providers. In the future, the Manager may select its affiliate as custodian or security vendor. The Manager may be more willing to engage in business transactions with affiliates than other custodians, and affiliates may provide inferior security standards.

Execution with Counterparties and Agents. The Manager faces conflicts relating to its selection of counterparties and agents for execution of transactions by the Partnership. When engaging the services of counterparties and agents, the Manager will take into consideration a variety of factors, including, to the extent applicable, the counterparty’s or agent’s quality of execution, including its ability to follow and accurately execute specific transfer instructions, access liquidity and execute the trade within the Manager’s desired timing, the counterparty’s or agent’s and their respective personnel’s overall experience, reputation and trustworthiness, the counterparty’s or agent’s willingness to commit capital, the commission rate and overall cost of trade, the quality of the counterparty’s or agent’s relationship with the Manager, including its responsiveness to requests, reliability, understanding of the Manager’s strategy and interests, ability to provide market intelligence and the nature and quality of investment ideas it generates, the counterparty’s or agent’s ability to execute trades in difficult markets, the financial strength and stability of the counterparty or agent and the receipt of brokerage or research products and services which are of benefit to the Partnership or the Manager, as well as other factors that the Manager deems appropriate to consider under the circumstances. Counterparties and agents provide other services that are beneficial to the Manager and its affiliates, but that are not necessarily beneficial to the Partnership, including, without limitation, capital introductions, other marketing assistance, client and personnel referrals and research-related services. The Manager may also receive consulting assistance services from the counterparties and agents, including consulting assistance with facilities, technology, service providers, operations, finance, compliance and human resources. These other services and items may influence the Manager’s selection of counterparties or agents.

Possible Future Activities. The Manager and its affiliates may expand the range of services that it provides over time. The Manager and its affiliates will not be restricted in the scope of its business or in the performance of any such services (whether now offered or undertaken in the future) even if such activities could give rise to conflicts of interest, and whether or not such conflicts are described herein. The Manager has, and will continue to develop, relationships with a significant number of companies, financial sponsors, pooled investment vehicles and their senior managers, including relationships with clients who may hold or may have held investments similar to those intended to be made by the Partnership. These clients may themselves represent appropriate investment opportunities for the Partnership or may compete with the Partnership for investment opportunities.

Conflicts Arising from Expense Allocations. From time to time, the General Partner and/or the Manager will be required to decide whether costs and expenses are to be borne by the Partnership, on the one hand, or the General Partner and the Manager, on the other hand, and/or whether certain costs and expenses should be allocated between or among the Partnership, on the one hand, and Other Funds, on the other hand. Certain costs and expenses may be related only to one entity and borne only by such entity or, as is more often the case, costs and expenses may be allocated among the Partnership and other entities. The Manager may face a conflict of interest when making such allocations due to its affiliates’ varying equity interests in the various entities. The Manager implements expense allocation review and approval policies and procedures in order to supervise the allocation of expenses in accordance with the disclosure pertaining to expenses set forth herein and will make such judgments in its fair and reasonable discretion while taking into account factors it

53 considers relevant and appropriate, notwithstanding its interest in the outcome, and may make corrective allocations should it determine that such corrections are necessary or advisable.

Tax Audits. Under the rules applicable to U.S. federal audits of partnership tax returns for taxable years beginning after December 31, 2017, the General Partner will be required to designate a “partnership representative” for the Partnership (which may be itself) and, if the partnership representative of the Partnership is an entity, to appoint an individual to act on behalf of the partnership representative. The partnership representative (and, if applicable, such individual) will have the authority to make all decisions with respect to any tax audit of, or other tax-related administrative or judicial proceeding with respect to the Partnership. Actions taken, and decisions made, by the partnership representative of the Partnership will be binding on the Partnership and the Partners.

It is possible that (i) the person acting as partnership representative of the Partnership, (ii) the individual, if any, appointed to act on behalf of the partnership representative or (iii) one or more of their respective affiliates will have an economic interest in the Partnership and therefore will have an interest in the outcome of any tax audit of, or other tax-related proceeding with respect to, the Partnership. A particular action or decision in the context of a tax audit (for example, how a particular item of income, gain, loss or deduction should be allocated) may favorably affect the partnership representative, such individual or one or more of their respective affiliates, while adversely affecting all or certain Limited Partners.

Material Nonpublic Information. The General Partner, the Manager and their respective members, officers, directors, employees, principals or affiliates occasionally come into possession of material nonpublic information (including in connection with managing other clients’ accounts). The possession of such information may limit the ability of the Partnership to buy or sell an asset or otherwise to participate in an investment opportunity.

Principal and Cross Transactions. The Partnership may enter into transactions and other arrangements with Other Funds that may be viewed as related party or principal transactions (i.e., transactions between the Partnership and an affiliate of the Manager acting for its own account) or cross transactions (i.e., transactions where an affiliate of the Manager acts as agent on behalf of the Partnership and the other party to the transaction between the Partnership and funds or accounts advised by the Manager or an affiliate).

The Manager may, on behalf of the Partnership, for liquidity, portfolio rebalancing or other reasons, enter into agreements with Other Funds (i.e., “cross transactions”). The terms of any such cross transactions will be commercially reasonable and will not be materially less favorable to the Partnership than those available in the market. None of the General Partner, the Manager or their respective affiliates will receive special fees or other compensation in connection with cross transactions. Expenses incurred in such transactions will be allocated equitably in the sole discretion of the Manager between the Partnership and the other party to the cross transaction. Similarly, if a transaction is cancelled, any costs incurred will be allocated equitably in the sole discretion of the Manager between the Partnership and the other party to the cross transaction.

The Partnership will only consider engaging in a principal or a cross transaction with an affiliate of the Manager to the extent permitted by applicable law, including, if required or appropriate, the making of appropriate disclosure to and receipt of consent from the Partnership. Nonetheless, as the Manager will not be acting as an investment adviser with respect to the Partnership, it will not be subject to the Advisers Act consent requirements for principal and agency-cross transactions.

Continued Services of Manager. Limited Partners cannot be assured that the Manager will be willing or able to continue to serve as Manager to the Partnership for any length of time. If the Manager discontinues its activities on behalf of the Partnership and a substitute Manager is not appointed, the Partnership will terminate and liquidate the bitcoin held by the Partnership. Appointment of a substitute Manager will not guarantee the Partnership’s continued operation, successful or otherwise. Because a substitute Manager may have no experience managing a bitcoin financial vehicle, a substitute Manager may not have the experience, knowledge or expertise required to ensure that the Partnership will operate successfully or to continue to operate at all. Therefore, the appointment of a substitute Manager may not necessarily be beneficial to the Partnership or an investment in the Interests and the Partnership may terminate.

54 Other Trading Activities. Personnel of the Manager may invest in bitcoin in their personal trading accounts or foundations for which they may serve as a trustee. Such persons may also invest in other pooled investment vehicles that have strategies similar to that of the Partnership and/or interests in the general partner entities for such vehicles. The trading activity of such persons may differ from or be inconsistent with activities undertaken for the account of the Partnership in such instruments. For example, personnel of the Manager may purchase a bitcoin for their personal accounts at a time when the Partnership is selling bitcoin. Alternatively, personnel of the Manager may take a short position in a digital asset-related instrument on behalf of their own accounts while the Partnership maintains a long position in the same instrument. There can be no assurance that actions taken with respect to the personal accounts of Manager personnel will not adversely affect the Partnership and, indirectly, the Limited Partners. To the extent the personnel of the Manager engage in such trading activities, the Manager’s personal trading policy, which prevents conflicts via a restricted list, may serve to mitigate some such conflicts. It is often difficult to anticipate or predict all circumstances under which the interests of the Partnership and the Limited Partners, on the one hand, and personnel of the Manager, on the other hand, may come into conflict.

Investments by Manager or Related Entities, including Affiliates. The Manager or a related entity or person has made investments in bitcoin and/or businesses in the digital asset industry for its or their own accounts prior to the commencement of investment operations by the Partnership, and may continue to make new investments after investment operations are commenced. Such investments have been and may continue to be made without regard to the interest of the Partnership or its limited partners. The Manager may be more willing to cause the Partnership to engage in transactions with such businesses, and the terms on which such businesses transact with the Partnership may differ from those offered by businesses in which the Manager has not invested. Affiliates of the Manager may obtain exposure to digital assets through investment in the Interests.

Additionally, the General Partner, the Manager and their respective members, officers, principals, directors, employees, partners, agents, representatives, managed investment funds, employee-related investment vehicles and affiliates and the family members and estate-planning vehicles of such persons and various funds and accounts composed of such persons (collectively, “Affiliates”) may invest in the Partnership. Investments by Affiliates may present conflicts of interest between the Manager, on the one hand, and the Partnership and the Limited Partners on the other hand, including with respect to an Affiliate’s exercise of rights as a Limited Partner. An Affiliate’s status as such may be a determining factor in the outcome of any such conflicts. Investment Advisors. Limited Partners may be adversely affected by the lack of independent advisers representing investors in the Partnership. The Manager has consulted with counsel, accountants and other advisers regarding the formation and operation of the Partnership. No counsel has been appointed to represent an investor in connection with the offering of the Interests. Accordingly, an investor should consult his, her or its own legal, tax and financial advisers regarding the desirability of an investment in the Interests.

Media and SALT Conference. Mr. Scaramucci, Founder of the Manager, and other personnel of the Manager, regularly appear as knowledgeable market participants on various television programs. Those appearances could create potential or perceived conflicts of interest to the extent the merits of investing in Partnership holdings as an investment class are discussed. Other potential conflicts are also possible. SALT Venture Group, LLC (“SALT”), a company affiliated with the Manager, from time to time hosts a large investment conference in the U.S. and abroad. The conference has grown to include participation by over 1,800 thought leaders, public policy officials, business professionals, investors and money managers from around the world. The Partnership expects to have a relationship with SALT on a go-forward basis. This relationship with SALT raises potential for actual or perceived conflicts of interest, including through investor, service provider or counterparty participation in SALT conferences as paying guests, speakers or event sponsors. Legal Representation. Davis Polk & Wardwell LLP (“Davis Polk”) represents the General Partner, the Manager and certain of their respective affiliates from time to time in a variety of matters. Davis Polk does not represent any of the Limited Partners in connection with the organization and operation of the Partnership or otherwise. No independent U.S. counsel has been retained to represent the Limited Partners or the Partnership. Davis Polk’s representation of the General Partner and the Manager is limited to specific matters as to which it has been consulted by the General Partner and the Manager, respectively. There may exist other matters that could have a bearing on the Partnership as to which Davis Polk has not been consulted.

55 No independent legal counsel has been retained to represent the Limited Partners, except as otherwise disclosed in this Offering Memorandum. Davis Polk does not undertake to monitor compliance by the Manager or the General Partner and its or their affiliates with the investment program, valuation procedures and other guidelines set forth herein, nor does Davis Polk monitor ongoing compliance with applicable laws. In connection with the preparation of this Offering Memorandum, Davis Polk’s responsibility is limited to matters of U.S. law, and it does not accept responsibility in relation to any other matters referred to or disclosed in this Offering Memorandum. There are times when the interests of Limited Partners may differ from those of the Partnership. Davis Polk does not represent the Limited Partners’ interests in resolving these issues. In reviewing this Offering Memorandum, Davis Polk have relied upon information furnished to it by the General Partner and have not investigated or verified the accuracy and completeness of information set forth herein concerning the Partnership.

Placement Agent. The Partnership has engaged, or will engage, one or more related or third-party placement agents (each, a “Placement Agent”) for the Interests being offered. In such capacity, a Placement Agent is acting for the Manager and is not acting as an investment advisor to potential investors in connection with the offering of such Interests. Potential investors must independently evaluate the offering and make their own investment decisions. The Partnership will pay any Placement Agent a placement fee in respect of Placement Class Limited Partners that have been introduced to the Partnership by such Placement Agent. In respect of each Placement Class Limited Partner, the Partnership will pay the respective Placement Agent the applicable Placement Fee, which is a monthly fee (a) equal to (i) the rate set forth in the Subscription Agreement for such Placement Class Limited Partner multiplied by (ii) the balance of such Placement Class Limited Partner’s Capital Account at the beginning of the month and (b) otherwise calculated in the same manner as the Management Fee. For the avoidance of doubt, the Placement Fee will not offset or otherwise reduce the Management Fee , and the Fees in respect of a Placement Class Limited Partner for a given period will be calculated without reduction for the effect of either Fee. Potential investors should also note that at various times, a Placement Agent may act as placement agent for other fund sponsors and funds, which may offer interests that are similar to the Interests. Those unaffiliated fund sponsors may pay placement fees on terms different from the fees that the Placement Agent will receive from the Manager in connection with this offering, and this difference in fees may influence a Placement Agent’s decision to introduce potential investors to the Partnership.

56 V. ADMINISTRATOR

Administrator

The Manager, in its discretion, may enter into an administration agreement pursuant to which an Administrator may perform administrative, registrar, transfer agency and other services for the Partnership, subject to the overall direction of the Manager. The Partnership expects that it would pay the Administrator such customary fees for its services as the Partnership and the Administrator negotiate from time to time.

MG Stover & Co. (the “Administrator”) has been retained by the Partnership to provide certain administrative services for the Partnership. The Manager on behalf of the Partnership has entered into an Administration Services Agreement (the “Administration Agreement”) with the Administrator to the Partnership. The Administrator’s principal place of business is located at 1331 17th Street, Suite 720, Denver, Colorado 80202.

Pursuant to the Administration Agreement, the Administrator is responsible, under the ultimate supervision of the Manager, for matters pertaining to the administration of the Partnership, namely: (a) maintaining the accounting books and records of the Partnership; (b) calculating the Net Asset Value of the Partnership and preparing monthly financial statements; (c) maintaining the partnership and financial books and records of the Partnership; (d) providing record-keeping services in connection with the issuance, transfer, and redemption of the Interests; and (e) performing other administrative and clerical services necessary in connection with the administration of the Partnership. Pursuant to the Administration Agreement, the Administrator’s compensation includes (i) a one-time “set up” fee, (ii) an ongoing monthly fee calculated as a percentage of the Partnership’s net asset value (subject to monthly minimums) for administration of the Partnership, (iii) a fixed monthly fee for the provision of accounting services to the Partnership and (iv) ad hoc fees for various optional services, including tax reporting and preparation of financial statements. Such compensation is subject to change from time to time, as agreed between the Partnership and the Administrator.

The Administrator is a service provider to the Partnership and does not have any responsibility or authority to make investment decisions, nor render investment advice, with respect to the assets of the Partnership. The Administrator has no responsibility for monitoring compliance by the Manager with any investment policies or restrictions to which they are subject. The Administrator accepts no responsibility or liability for any losses suffered by the Partnership or its partners as a result of any breach of such policies or restrictions by the Manager.

57 VI. CERTAIN TAX AND REGULATORY CONSIDERATIONS

A. CERTAIN TAX CONSIDERATIONS

The following discussion of U.S. federal income tax considerations is not intended as a substitute for careful tax planning. It does not address all of the relevant tax principles that will apply to the Partnership and its Limited Partners. In particular, it does not discuss the tax principles of countries other than the United States or any state or local tax principles. Prospective investors in the Partnership are urged to consult their professional advisors regarding the possible tax consequences of an investment in the Partnership in light of their own situations.

Certain United States Federal Income Tax Considerations

This summary outlines certain significant U.S. federal income tax principles that are likely to apply to the Partnership and the Limited Partners, given the anticipated nature of the Partnership’s activities. Except where specifically addressing considerations applicable to Tax-Exempt Investors or Non-U.S. Investors, each as defined below, this discussion assumes that the Limited Partner is a U.S. Investor, as defined below, that holds its Interest as a capital asset.

This summary does not purport to address all of the U.S. federal income tax consequences that may be applicable to any particular Limited Partner. In some cases, the activities of a Limited Partner other than its investment in the Partnership may affect the tax consequences to such Limited Partner of an investment in the Partnership. For example, this discussion does not describe tax consequences applicable to Limited Partners subject to special rules, such as regulated investment companies, real estate investment trusts, insurance companies, foreign governments or entities treated as partnerships for U.S. federal income tax purposes. This discussion also does not address the application of the alternative minimum tax or the Medicare contribution tax under Section 1411 of the Code.

The discussion of U.S. federal income tax matters contained herein is based on existing law as contained in the Code, Treasury regulations, administrative rulings and court decisions as of the date of this Offering Memorandum. No assurance can be given that future legislation, administrative rulings or court decisions will not materially and adversely affect the consequences set forth in this summary, possibly on a retroactive basis. Each prospective investor is urged to consult its tax advisor concerning the potential tax consequences of an investment in the Partnership.

For purposes of this summary:

 A “U.S. Investor” is a beneficial owner of an Interest that is a U.S. Person and that is not generally exempt from U.S. federal income tax.

 A “Non-U.S. Investor” is a beneficial owner of an Interest that is not a U.S. Person, is not an entity treated as a partnership for U.S. federal income tax purposes, is not treated as a foreign government for purposes of Section 892 of the Code and is not a tax-exempt organization for U.S. federal income tax purposes. The discussion below addressing Non-U.S. Investors does not, however, address the U.S. federal income tax consequences of an investment in an Interest by any Non-U.S. Investor: (i) whose investment in an Interest is “effectively connected” with the conduct by such Non-U.S. Investor of a trade or business in the United States; (ii) who is a former U.S. citizen or former resident of the United States or that is an entity that has expatriated from the United States; (iii) who is an individual and is present in the United States for 183 days or more in any taxable year; or (iv) that otherwise, because of its particular circumstances, is generally subject to U.S. federal income tax on a net income basis.

 A “Tax-Exempt Investor” is a beneficial owner of an Interest that is a U.S. Person generally exempt from U.S. federal income taxation under Section 501(a) or Section 664(c) of the Code. The discussion below addressing Tax-Exempt Investors does not, however, address the U.S. federal income tax consequences of an investment in the Partnership by any Tax-Exempt Investor that is

58 subject to special rules relating to the computation of “unrelated business taxable income,” such as the rules under Section 512(a)(3) of the Code.

Solely for purposes of the foregoing definitions, a “U.S. Person” is: (i) an individual who is a citizen or resident of the United States; (ii) a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, that is created or organized in or under the laws of the United States, any state therein or the District of Columbia, other than an “S corporation;” or (iii) an estate or trust the income of which is subject to U.S. federal income tax regardless of the source thereof.

If a beneficial owner of an Interest is an entity that is treated as a partnership for U.S. federal income tax purposes, the U.S. federal income tax treatment of a partner in that partnership will generally depend upon the status of the partner and the activities of the partnership. A prospective investor that is treated as a partnership for U.S. federal income tax purposes should consult its tax advisor concerning the tax consequences of an investment in the Partnership.

Partnership Tax Status of the Partnership

The General Partner believes that the Partnership will be treated as a partnership, and not as a corporation, for U.S. federal income tax purposes. In particular, the General Partner believes that, because of the significant restrictions relating to withdrawals from the Partnership’s capital accounts, and to transfers of Interests, the Partnership will not constitute a “publicly traded partnership” taxable as a corporation for U.S. federal income tax purposes.

If the Partnership were treated as a corporation for U.S. federal income tax purposes, it would be subject to U.S. federal income tax (currently, at the rate of 21%) on all of its net income, and non-liquidating distributions by the Partnership would generally be taxable as dividends to the extent of the Partnership’s current and accumulated earnings and profits. In addition, the Partnership would be subject to applicable state and local corporate income taxes. The following discussion is based on the assumption that the Partnership will be treated as a partnership for U.S. federal income tax purposes.

Assuming that the Partnership is treated as a partnership for U.S. federal income tax purposes, the Partnership will not be subject to U.S. federal income tax, except as described in “—Additional U.S. Federal Tax Consequences – Audits” below. Rather, each Partner will be required to report on its U.S. federal income tax return, and thus to take into account in determining its own U.S. federal income tax liability, its share of the Partnership’s income, gains, losses, deductions and credits for the taxable year ending with or within the Partner’s taxable year.

A Partner’s U.S. federal income tax liability for a taxable year will be determined with reference to its share of the Partnership’s income, gains, losses, deductions and credits, regardless of whether the Partner receives any distributions from the Partnership in that taxable year. The Partnership will generally not make distributions to the Limited Partners other than in connection with withdrawal requests. As a consequence, a non-withdrawing Limited Partner will generally be required to use cash from other sources in order to pay tax in respect of its share of the Partnership’s taxable income.

Allocation of the Partnership’s Profits and Losses

For U.S. federal income tax purposes, income, gains, losses, deductions and credits of the Partnership will be allocated to the Partners in a manner generally consistent with the overall economic arrangement among the Partners. The Partnership may make special allocations to a Limited Partner that makes a withdrawal from the Partnership so as to reduce the amount, if any, by which the balance of such Limited Partner’s capital account, immediately prior to such withdrawal, exceeds, or is less than, the tax basis of such Interest. It is possible that the Internal Revenue Service (the “IRS”) will seek to reallocate certain items in a manner different from the manner in which such items were originally allocated by the Partnership. Any such reallocation could have adverse consequences to certain Limited Partners. See “—Additional U.S. Federal Tax Consequences – Audits.”

In-Kind Contributions to the Partnership

59 A Limited Partner that acquires an Interest in exchange for a contribution of bitcoin to the Partnership will generally not recognize gain or loss as a consequence of the contribution, provided that (i) the Partnership holds no assets other than bitcoin at the time of the contribution or, if it does, the Partnership is not treated as an “investment company” for purposes of the provisions of the Code relating to in-kind contributions to partnerships and (ii) the contribution is not treated as part of a “disguised sale,” as described below. However, if the Partnership is treated as an “investment company” and the Partnership owns any asset other than bitcoin at the time of the contribution (for example, as a consequence of a hard fork of bitcoin), a Limited Partner will generally recognize gain on the contribution of appreciated bitcoin, but will not recognize loss on the contribution of depreciated bitcoin, to the Partnership. A partnership will constitute an “investment company” for this purpose if more than 80% of the value of its assets (other than cash and nonconvertible debt obligations) consists of certain types of investment assets. Given the uncertainties with respect to the treatment of digital currencies, it is not clear whether bitcoin would be treated as an asset of this type, and therefore it is not clear whether the Partnership will be treated as an “investment company.” Even if the Partnership is an “investment company,” a Limited Partner who acquires an Interest in exchange for a contribution of bitcoin to the Partnership will not recognize gain on the contribution if the contribution does not result in a diversification of the Limited Partner’s investment. If the Partnership holds no assets other than bitcoin at the time a Limited Partner contributes bitcoin to the Partnership, the contribution will generally not result in a diversification of the Limited Partner’s investment.

Even if the Partnership is not treated as an “investment company” or the relevant contribution does not result in diversification of the contributing Limited Partner’s investment, a Limited Partner would recognize gain or loss (if any) in respect of a contribution of bitcoin to the Partnership if the contribution were treated as a “disguised sale” of the contributed bitcoin to the Partnership. Under applicable Treasury regulations, a contribution of bitcoin will be presumed to be a disguised sale if the Limited Partner receives a distribution (including a distribution of withdrawal proceeds) within two years of the contribution unless the facts and circumstances clearly establish that the contribution and distribution do not constitute a sale. Moreover, if a Limited Partner that contributes bitcoin to the Partnership receives a distribution (including a distribution of withdrawal proceeds) within two years of the contribution and does not treat the contribution and distribution as a disguised sale of the contributed bitcoin, the Limited Partner must file a disclosure statement on IRS Form 8275 with its U.S. federal income tax return.

If a Limited Partner is not required to recognize gain upon a contribution of bitcoin to the Partnership, both the contributing Limited Partner’s initial tax basis in its Interest and the Partnership’s tax basis in the contributed bitcoin will generally be equal to the tax basis of the contributed bitcoin in the hands of the Limited Partner on the date of contribution. If a Limited Partner is required to recognize gain upon a contribution of bitcoin to the Partnership, both the contributing Limited Partner’s initial tax basis in its Interest and the Partnership’s tax basis in the contributed bitcoin will generally be equal to the tax basis of the contributed bitcoin in the hands of the Limited Partner on the date of contribution increased by the amount of gain recognized. Any bitcoin contributed to the Partnership by a Limited Partner may, immediately after contribution, have a fair market value in excess of its tax basis (built-in gain), assuming that the Limited Partner is not required to recognize gain on the contribution, or a tax basis in excess of its fair market value (built-in loss). To the extent of any built-in gain (or built-in loss), gain (or loss) recognized by the Partnership on the disposition of any such contributed bitcoin will be specially allocated to the Limited Partner that contributed such bitcoin. In addition, the contributing Limited Partner may be required to recognize built-in gain (or built-in loss) on the contributed bitcoin if the Partnership makes certain in-kind distributions within the seven-year period following the contribution. Specifically, a Limited Partner may recognize built-in gain (or in the case of a distribution to another Partner, built-in loss) in respect of the contributed bitcoin if, during this seven-year period, the Partnership (i) distributes the contributed bitcoin to any Partner(s) other than the contributing Limited Partner or (ii) distributes property, other than the contributed bitcoin or U.S. dollars, to the contributing Limited Partner.

Nature of the Partnership’s Income and Losses

The tax treatment of the Limited Partners’ shares of the Partnership’s income, gains, losses, deductions and credits (including the character as ordinary income, short-term capital gain or long-term capital gain) will generally be determined at the Partnership level.

60 Due to the new and evolving nature of digital currencies and the absence of comprehensive guidance with respect to digital currencies, many significant aspects of the U.S. federal income tax treatment of digital currencies are uncertain. The General Partner does not intend to request a ruling from the IRS on these issues. Rather, the General Partner will cause the Partnership to take positions that it believes to be reasonable. There can be no assurance, however, that the IRS will agree with the positions the Partnership takes, and it is possible that the IRS will successfully challenge the Partnership’s positions.

In 2014, the IRS released a notice (the “Notice”) discussing certain aspects of the treatment of “convertible virtual currency” (that is, digital currency that has an equivalent value in fiat currency or that acts as a substitute for fiat currency) for U.S. federal income tax purposes. In the Notice, the IRS stated that, for U.S. federal income tax purposes, such digital currency (i) is “property,” (ii) is not “currency” for purposes of the rules of the Code relating to foreign currency gain or loss and (iii) may be held as a capital asset. In 2019, the IRS released a revenue ruling and a set of “Frequently Asked Questions” (the “Ruling & FAQs”) that provide some additional guidance, including guidance to the effect that, under certain circumstances, hard forks of digital currencies are taxable events giving rise to ordinary income and guidance with respect to the determination of the tax basis of digital currency. However, the Notice and the Ruling & FAQs do not address other significant aspects of the U.S. federal income tax treatment of digital currencies. Moreover, although the Ruling & FAQs address the treatment of hard forks, there continues to be uncertainty with respect to the timing and amount of the income inclusions. While the Ruling & FAQs do not address most situations in which air drops occur, it is clear from the reasoning of the Ruling & FAQs that the IRS would treat an air drop, under certain circumstances, as a taxable event giving rise to ordinary income.

The remainder of this discussion assumes that bitcoin, and any other digital currency that the Partnership may hold as a result of a fork, air drop or similar occurrence, is properly treated for U.S. federal income tax purposes as property that may be held as a capital asset and that is not currency for purposes of the rules with respect to foreign currency gain and loss.

Gain or loss recognized by the Partnership from the sale or other disposition of bitcoin, or of other digital currencies acquired by the Partnership as a result of a fork, air drop or similar event, will constitute capital gain or loss. In addition, as discussed above, the Partnership may recognize ordinary income as a consequence of a fork, air drop or similar occurrence affecting bitcoin that it holds. Bitcoin lending transactions may be treated as taxable dispositions of bitcoin for U.S. federal income tax purposes. Fees payable to the Partnership in connection with bitcoin lending transactions will constitute ordinary income.

In general, capital gain or loss recognized by the Partnership on the disposition of any digital currency will be long-term if the Partnership’s holding period for the digital currency is more than one year as of the date of the sale or other disposition and will be short-term if the Partnership’s holding period for the digital currency is one year or less as of the date of the sale or other disposition. Net capital gain (that is, the excess of net long-term capital gain over net short-term capital loss) recognized by Limited Partners who are individuals is subject to U.S. federal income tax at a maximum rate of 20%. Short-term capital gain is subject to U.S. federal income tax at the rates applicable to ordinary income. The deductibility of capital losses is subject to significant limitations. The excess of capital losses over capital gains may be offset against the ordinary income of a non-corporate Limited Partner, subject to a $3,000 annual deduction limitation. Such excess may not be carried back, but may be carried forward indefinitely until fully used. Capital losses of a

61 corporate Limited Partner may be offset only against capital gains, but unused capital losses may generally be carried back three years (subject to certain limitations) and carried forward five years.

Limitations on the Deductibility of Losses and Expenses

In addition to the limitations on the deductibility of capital losses discussed above, various other limitations may apply to restrict the Limited Partners’ ability to deduct their shares of losses realized, and expenses incurred, by the Partnership. The principal limitations are discussed below, but it is possible that certain other limitations would apply.

It is anticipated that the Partnership’s expenses (including the Management Fee, but excluding interest expenses and expenses that are required to be capitalized, such as the Placement Fee) will constitute investment expenses, which are treated as “miscellaneous itemized deductions.” For any taxable year beginning before January 1, 2026, these investment expenses will not be deductible by a non-corporate Limited Partner. For taxable years beginning on or after January 1, 2026, these expenses (i) will be deductible by a non-corporate Limited Partner for regular U.S. federal income tax purposes only to the extent that the non-corporate Limited Partner’s share of such expenses, when combined with other “miscellaneous itemized deductions,” exceeds 2% of the non-corporate Limited Partner’s adjusted gross income for the particular year, (ii) will not be deductible by a non-corporate Limited Partner for U.S. federal alternative minimum tax purposes and (iii) will be subject to certain other limitations on deductibility.

Section 163(d) of the Code limits a non-corporate taxpayer’s deduction for “investment interest” to the amount of the taxpayer’s “net investment income,” as such terms are defined in Section 163(d). For purposes of Section 163(d), “net investment income” does not include long-term capital gains unless the taxpayer elects to be subject to tax on such income at ordinary income rates. Depending on the amount of a non- corporate Limited Partner’s overall “net investment income” for any taxable year, Section 163(d) could apply to limit the deductibility of the non-corporate Limited Partner’s share of interest expenses, if any, incurred by the Partnership, as well as the deductibility of interest paid by a non-corporate Limited Partner on indebtedness incurred to finance such Limited Partner’s investment in the Partnership. “Investment interest” that a Limited Partner cannot deduct in any taxable year as a consequence of the application of Section 163(d) may be deducted in subsequent taxable years, subject to the application of Section 163(d) in those years.

The General Partner expects that the “passive activity loss” rules and “excess business loss” rules will not apply to limit the deductibility of a Limited Partner’s share of the Partnership’s losses and deductions. Assuming that is the case, a Limited Partner (other than a widely held corporation) will generally not be able to offset its “passive activity losses” from other sources against its share of Partnership income and gain, and its ability to offset its “business losses” from other sources against its share of the Partnership’s income and gain will be limited.

A Limited Partner’s share of expenses that are attributable to the offering and sale of Interests in the Partnership cannot be deducted or amortized, but instead must be capitalized. Any such amounts will be included in the adjusted tax basis of the Limited Partner’s Interest. A Limited Partner’s share of expenses incurred to organize the Partnership must also be capitalized, but will be amortized on a straight-line basis over a 15-year period unless the Partnership elects not to amortize such expenses.

Withdrawal by Limited Partners

For U.S. federal income tax purposes, a Limited Partner will be treated as holding a single interest in the Partnership with a single tax basis even though the Limited Partner may have acquired different portions of its Interest at different times. In general, a Limited Partner’s tax basis in its Interest will be equal to (i) the aggregate amount of capital contributions made by the Limited Partner, (ii) increased by the Limited Partner’s share of the Partnership’s income and gain and by any increase in the Limited Partner’s share of the Partnership’s liabilities and (iii) decreased (but not below zero) by the amount of any distribution the Limited Partner has received from the Partnership, by the Limited Partner’s share of the Partnership’s losses and deductions and by any reduction in the Limited Partner’s share of the Partnership’s liabilities, in each case, as determined for U.S. federal income tax purposes.

62 In general, when a Limited Partner makes a withdrawal from the Partnership, the Limited Partner will recognize gain to the extent that the cash distributed upon withdrawal exceeds the Limited Partner’s adjusted tax basis in its Interest. If a Limited Partner receives only cash, rather than an in-kind distribution of assets, on a complete withdrawal from the Partnership, it generally will recognize a loss to the extent that its adjusted tax basis in its Interest exceeds such cash. If, however, a Limited Partner makes a partial withdrawal from the Partnership, or if a Limited Partner that makes a complete withdrawal from the Partnership receives any distribution of property other than cash, the Limited Partner will not recognize a loss, if any, at the time of such withdrawal.

There is no guidance as to whether digital currency would be treated as cash for purposes of determining the amount of gain, if any, recognized by a Limited Partner on a withdrawal. Unless the Partnership is treated as an “investment partnership” and the Limited Partner is treated as an “eligible partner,” as each such term is defined for this purpose, a distribution of “marketable securities” to a Limited Partner will generally be treated as a distribution of cash. Given the uncertainties with respect to the treatment of digital currencies, it is not possible to predict whether the Partnership will be treated as an “investment partnership,” or whether any Limited Partner that acquires an Interest in exchange for bitcoin will be treated as an “eligible partner,” for this purpose. Moreover, while it is possible that bitcoin would constitute a “marketable security” for this purpose because it is readily exchangeable into fiat currency, there is no guidance on this question.

In general, any gain or loss recognized by a Limited Partner on the receipt of a distribution from the Partnership will constitute capital gain or loss. For purposes of determining whether any such capital gain or loss is long-term or short-term, the Limited Partner will be treated, pursuant to a formula set forth in applicable Treasury regulations, as having (i) a long-term holding period for the portion of its Interest that is attributable to capital contributions it made more than one year prior to the date of the withdrawal and (ii) a short-term holding period for the portion of its Interest that is attributable to capital contributions it made during the one-year period ending on the date of the withdrawal, and the withdrawal will be treated as made in respect of these two portions of the Limited Partner’s Interest on a pro rata basis.

As discussed in “—Allocation of the Partnership’s Profits and Losses,” however, in connection with a withdrawal by a Limited Partner from the Partnership, the Partnership may specially allocate taxable income, gain or loss to the withdrawing Limited Partner so as to reduce the amount, if any, by which the balance of such Limited Partner’s capital account, immediately prior to such withdrawal, exceeds, or is less than, the tax basis of such Limited Partner’s Interest. This special allocation will increase or decrease, as the case may be, the tax basis of the withdrawing Limited Partner’s Interest, thereby possibly eliminating any gain or loss on the withdrawal itself. The special allocation may thus result in the withdrawing Limited Partner’s recognizing short-term capital gain (or loss) or ordinary income (or loss) instead of long-term capital gain (or loss) in connection with the withdrawal. Moreover, in connection with a withdrawal from the Partnership, a Limited Partner could recognize ordinary income or loss attributable to the Limited Partner’s share of certain assets of the Partnership described in Section 751 of the Code if the Partnership held any such assets. It is generally not expected that the Partnership will hold any such assets.

Non-U.S. Investors in the Partnership

The General Partner believes, and this disclosure is based on the assumption, that a Non-U.S. Investor will not be treated as engaged in the conduct of a trade or business in the United States, and will not recognize income that is treated as “effectively connected” with the conduct of a trade or business in the United States (any such income, “ECI”), as a consequence of an investment in the Partnership. Although the nature of assets the Partnership may hold in the future as a consequence of forks, air drops and similar occurrences is uncertain, it is unlikely that any such asset would give rise to ECI. There can, however, be no complete assurance in this regard.

A Non-U.S. Investor will not be subject to U.S. federal income or withholding tax with respect to its share of any gain recognized by the Partnership on the sale or other disposition of bitcoin or any similar digital currencies that the Partnership may acquire as a result of a fork, air drop or similar occurrence. In general, a Non-U.S. Investor will also not be subject to U.S. federal income or withholding tax with respect to any distribution received from the Partnership, whether in U.S. dollars or in digital currency.

63 Provided that it does not constitute ECI, U.S.-source “fixed or determinable annual or periodical” (“FDAP”) income received, or treated as received, by a Non-U.S. Investor will generally be subject to U.S. withholding tax at the rate of 30% (subject to possible reduction or elimination pursuant to an applicable tax treaty and to statutory exemptions such as the portfolio interest exemption). Although there is no guidance on point, ordinary income recognized by the Partnership as a result of a fork, air drop or similar occurrence would presumably constitute FDAP income. It is unclear, however, whether a Non-U.S. Investor’s share of any such FDAP income would be properly treated as U.S.-source or foreign-source FDAP income. In the absence of guidance, it is likely that the Partnership will withhold 30% from each Non-U.S. Investor’s share of any ordinary income attributable to a fork, air drop or similar occurrence. In addition, a Non-U.S. Investor’s share of any fees payable to the Partnership in connection with bitcoin lending transactions will be subject to this 30% withholding tax if they are from sources within the United States.

A Non-U.S. Investor that is a resident of a country that maintains an income tax treaty with the United States may be eligible to claim the benefits of that treaty to reduce or eliminate the 30% U.S. withholding tax on its share of any income that the Partnership treats as U.S.-source FDAP income, but only if the Non-U.S. Investor’s home country treats the Partnership as “fiscally transparent,” as defined in applicable Treasury regulations. In general, it is expected that the full 30% withholding tax will be imposed on a Non-U.S. Investor’s share of any such income and that a Non-U.S. Investor will be able to obtain the benefit of a reduced rate pursuant to a tax treaty only by filing a refund claim with the IRS. There can be no assurance that the Partnership will provide sufficient information and documentation to a Non-U.S. Investor to permit the Non-U.S. Investor to file for any such refund.

In order to prevent the imposition of U.S. “backup” withholding and (if applicable) to qualify for a reduced rate of withholding tax at source under a treaty, a Non-U.S. Investor must comply with certain certification requirements (generally, by delivering a properly executed IRS Form W-8BEN or W-8BEN-E to the Partnership).

Assuming that the Partnership does not hold any assets the sale of which could give rise to ECI, gain recognized by a Non-U.S. Investor on a sale or other disposition of all or any portion of its Interest will not be subject to U.S. federal income tax. However, any person acquiring an Interest from a Non-U.S. Investor will be required to withhold and remit to the IRS an amount equal to 10% of the amount realized by the Non- U.S. Investor on the disposition of the Interest (or, under certain circumstances, 100% of the amount realized excluding the portion of the Partnership’s liabilities that is attributable to the transferred Interest) unless such transferee receives a certification from the Non-U.S. Investor or the Partnership, in accordance with final Treasury regulations recently issued by Treasury and the IRS, to the effect that the Non-U.S. Investor will not recognize any gain on the disposition or that certain circumstances exist that make it unlikely that a substantial portion of the gain recognized by the Non-U.S. Investor on the disposition will constitute ECI. If the transferee of all or any portion of a Non-U.S. Investor’s Interest withholds such tax, the Non-U.S. Investor will generally be able to obtain a refund of the withholding tax from the IRS, provided that the Non-U.S. Investor complies with the appropriate procedures for claiming a refund.

Under Sections 1471 through 1474 of the Code, applicable Treasury regulations and additional guidance (“FATCA”), the Partnership will generally be required to withhold a 30% tax from any “withholdable payments” it makes, or is treated as making, to any Non-U.S. Investor that is an entity unless such Non-U.S. Investor provides certain certifications and other information to the Partnership sufficient to establish that it qualifies for an exemption from, or an appropriate reduction of, the FATCA tax (including, in the case of certain Non-U.S. Investors, information relating to the Non-U.S. Investor’s U.S. owners, if any). For purposes of FATCA, “withholdable payments” are defined as payments of U.S.-source FDAP income that does not constitute ECI.

Tax-Exempt Investors in the Partnership

In general, Tax-Exempt Investors are subject to U.S. federal income taxation with respect to any unrelated business taxable income (“UBTI”) they derive. When computing UBTI, a Tax-Exempt Investor is required to include its share of the income of any partnership of which it is a partner to the extent that such income would be UBTI if derived directly by the Tax-Exempt Investor. UBTI generally does not include certain specified types of income, including gains from the sale, exchange or other disposition of property other than

64 inventory or property held primarily for sale to customers in the ordinary course of a trade or business. However, UBTI includes “unrelated debt-financed income,” which is generally defined as any income derived from property in respect of which “acquisition indebtedness” is outstanding, even if the income would otherwise be excluded in computing UBTI.

A Tax-Exempt Investor may recognize UBTI as a consequence of an investment in the Partnership. In particular, in the absence of guidance to the contrary, it is possible that a Tax-Exempt Investor’s share of any income arising from a fork, air drop or similar occurrence would be treated as UBTI. A Tax-Exempt Investor’s share of any fees payable to the Partnership in connection with a bitcoin lending transaction may also constitute UBTI. In addition, although the Partnership generally does not expect to finance its investments with borrowed funds, the Partnership may incur debt on a short-term basis in connection with the execution of purchase transactions, and any such borrowing may give rise to “unrelated debt-financed income.” If a Tax-Exempt Investor finances its investment in the Partnership with debt, all or a portion of the Tax-Exempt Investor’s share of the Partnership’s income, and all or a portion of any gain recognized by the Tax-Exempt Investor on a withdrawal from the Partnership or a sale or other disposition of all or any portion of its Interest, may be included in UBTI, even if such income and gain would not otherwise have constituted UBTI.

Under recently enacted legislation, a Tax-Exempt Investor may not use a net loss from one trade or business (other than a net operating loss arising in a taxable year beginning before January 1, 2018) to offset net UBTI from another trade or business. Under recently finalized Treasury regulations, certain investment activities of a tax-exempt organization, namely “qualifying partnership interests,” “qualifying S corporation interests” and interests in “debt-financed property or properties,” are treated as one trade or business for this purpose. Accordingly, a tax-exempt organization (i) may aggregate the various trades or businesses conducted by a single partnership, provided that the tax-exempt organization’s interest in the partnership is a “qualifying partnership interest,” and (ii) may aggregate the trades or businesses of all partnerships in which it holds “qualifying partnership interests.” Moreover, unrelated debt-financed income derived from a “qualifying partnership interest” may be aggregated with any other UBTI derived from the investment activities of the tax-exempt organization described above, including UBTI derived from such “qualifying partnership interest.” A tax-exempt organization will be treated as holding a “qualifying partnership interest” in a partnership if (i) the tax-exempt organization holds directly or indirectly no more than 2% of the profits or capital interest in the partnership for the tax-exempt organization’s taxable year with which or in which the partnership’s taxable year ends (the “de minimis test”) or (ii) the tax-exempt organization and certain related persons hold directly no more than 20% of the capital interest in the partnership for the tax-exempt organization’s taxable year with which or in which the partnership’s taxable year ends and do not “significantly participate” (within the meaning of the final Treasury regulations) in the management of the partnership (the “participation test”). A partnership interest that is designated as a “qualifying partnership interest” generally will remain as a “qualifying partnership interest” until the interest no longer meets the de minimis test or the participation test, although in certain circumstances such a partnership interest may remain as a "qualifying partnership interest" for the immediately following taxable year. A prospective Tax-Exempt Investor that intends to finance its investment in the Partnership with debt should consult its tax advisor regarding the potential application of these proposed regulations to an investment by the Tax-Exempt Investor in the Partnership.

A charitable remainder trust is not subject to U.S. federal income tax with respect to UBTI, but instead is subject to a U.S. federal excise tax equal to the entire amount of any UBTI it derives. A prospective investor that is a charitable remainder trust should consult its tax advisor regarding an investment in the Partnership.

Prospective Tax-Exempt Investors that are private foundations, or that are “applicable educational institutions” as defined in Section 4968 of the Code, should consult their tax advisors about the possible excise tax consequences to them of an investment in the Partnership.

A Tax-Exempt Investor may be subject to the information reporting requirements described in “—Reporting Requirements,” as well as to other information reporting requirements, as a consequence of an investment in the Partnership. Any prospective Tax-Exempt Investor is urged to consult its tax advisor concerning the reporting obligations it may have as a result of an investment in the Partnership.

65 Additional U.S. Federal Tax Consequences

Adjustments to Basis of Partnership Assets. A partnership may make an election to adjust the tax basis of its assets in the event of a transfer of an interest in the partnership, the death of a partner or certain distributions by the partnership. Because of the accounting complexities that can result from having such an election in effect, and because the election, once made, cannot be revoked without the consent of the IRS, the General Partner does not intend to cause the Partnership to make this election. In certain circumstances, however, the Partnership may be required to reduce the tax basis of its assets as a result of a transfer of an interest in, or certain distributions by, the Partnership. Limited Partners making withdrawals from the Partnership, or transferring Interests in the Partnership, will in certain circumstances be required to provide information to enable the Partnership to comply with this requirement. Any Limited Partner that engages in a transaction, or experiences another event, that gives rise to basis adjustments may be required to bear the administrative and other costs incurred by the Partnership in connection with the basis adjustments. These costs can be significant.

Information Returns and Schedules. The Partnership will file an information return on IRS Form 1065 for each of its taxable years and will provide each Limited Partner with an IRS Schedule K-1 as promptly as reasonably practicable after the end of each Partnership taxable year. It is possible, however, that the Schedules K-1 for a taxable year will not be delivered to the Limited Partners until after April 15 of the following year. It is therefore possible that, in any taxable year, the Limited Partners will need to apply for extensions of time to file their tax returns. A Limited Partner that takes a reporting position on its U.S. federal income tax return that is different from any position reflected in the Partnership’s information return must notify the IRS and the General Partner of such inconsistency. Pursuant to the Partnership Agreement, each Limited Partner will agree not to treat any item on any of such Limited Partner’s income tax returns, including any tax return filed after such Limited Partner has withdrawn from the Partnership, in a manner that is inconsistent with the treatment of such item on the Partnership’s information tax returns without the General Partner’s prior written consent.

Partnership Representative. A partnership that files a U.S. federal income tax return is required to designate a “partnership representative” with a substantial presence in the United States to act on its behalf in tax- related proceedings. If the partnership representative is an entity, the partnership must appoint an individual with a substantial presence in the United States to act on behalf of the partnership representative. The General Partner will select a person (which may be itself) to serve as the Partnership’s partnership representative and, if the partnership representative is an entity, an individual who will act on behalf of the partnership representative. The partnership representative, and the individual acting on behalf of the partnership representative, will have the authority to make all decisions with respect to any tax audit of the Partnership or other tax-related administrative or judicial proceeding, and such decisions will be binding on the Partnership and the Limited Partners.

Audits. Audits of the tax treatment of the Partnership’s income, gains, losses, deductions and credits generally will be conducted at the Partnership level in a single proceeding, which the partnership representative of the Partnership will control, rather than by individual audits of the Limited Partners. If the IRS audits a tax return of the Partnership, however, an audit of the Limited Partners’ own returns may result. The legal and accounting costs incurred by the Partnership in connection with any audit of a tax return of the Partnership will be borne by the Partnership, but Limited Partners will bear the cost of audits of their own returns.

Under the rules applicable to U.S. federal audits of partnership tax returns for taxable years beginning after December 31, 2017, partners are not required to receive notice of any audit of a partnership tax return and are not entitled to participate in any such audit, and any adjustment made in a partnership audit will be binding on all of the partners. Any tax arising from an audit of a partnership tax return, as well as any resulting interest and penalties, will generally be payable by the partnership in the year in which the determination becomes final unless the partnership elects to send statements (“Adjustment Statements”) to its partners for the audited year informing them of their shares of the adjustments made on audit. If a partnership sends Adjustment Statements, the partners will generally be required to pay any tax, interest (at a rate that is two percentage points higher than the interest rate generally applicable for tax underpayments) and penalties arising from such adjustments as if the adjustments were made in the audited year and any other affected

66 year, as applicable, but will not be required to amend their tax returns for any prior year. In general, if a partnership pays the tax resulting from an audit adjustment, the amount will be determined by applying the highest rate of tax in effect for the audited year to the net adjustment amount. The net adjustment amount may be reduced, with the approval of the IRS, (i) to account for certain types of income and for the status of certain types of partners, such as corporations and tax-exempt partners, and (ii) by the portion of such net adjustment amount that is taken into account by direct or indirect partners filing amended returns for the reviewed year (and any intervening year for which their tax attributes are adjusted) or participating in a “pull- in” procedure pursuant to which a partner may pay the tax in the same amount, and adjust its tax attributes, as if it had filed all applicable amended returns.

Although it is possible that the Partnership will elect to send Adjustment Statements in the event of an adjustment arising out of an audit, there can be no assurance in this regard. If the Partnership pays any tax, interest and/or penalties resulting from an audit of a tax return of the Partnership, each Limited Partner and former Limited Partner to which such payment is attributable will be required to bear the economic burden of, and to indemnify the Partnership for, the portion of the payment that is attributable to such Limited Partner or former Limited Partner. It is possible that the amount of tax, interest and/or penalties borne by a Limited Partner or former Limited Partner will exceed the amount of tax, interest and/or penalties that would have been payable by the relevant Limited Partner or former Limited Partner if the Partnership had elected to send Adjustment Statements to the Partners. Prospective Limited Partners should note that a Limited Partner’s obligation to indemnify the Partnership for any such tax, interest and/or penalties will survive the Limited Partner’s withdrawal from the Partnership and the dissolution of the Partnership.

If a Limited Partner or former Limited Partner fails to indemnify the Partnership for the payment of any tax, interest and/or penalties by the Partnership that is attributable to such Limited Partner or former Limited Partner, a portion of the economic burden of any such payment will be borne by each then-current Limited Partner. Thus, there can be no assurance that the economic burden of any payment will not be borne by Limited Partners that would not have owed additional tax, interest and/or penalties, or would have owed additional tax, interest and/or penalties in a lesser amount than their shares of such payment, if the Partnership had elected to send Adjustment Statements to the Partners.

The partnership audit rules described above are new and partnerships do not yet have any significant experience with them. It is possible that state and local taxing jurisdictions will enact similar provisions.

Reporting Requirements. A direct or indirect participant in any “reportable transaction” must disclose its participation to the IRS on IRS Form 8886. Furthermore, a “material advisor” to a reportable transaction is required to maintain a list of each person with respect to whom the advisor acted as a material advisor, as well as to disclose to the IRS certain other information regarding the transaction. For purposes of the disclosure rules, a partner may, in certain circumstances, be treated as a participant in a reportable transaction in which its partnership participates. Although the General Partner does not expect that the Partnership will participate in any reportable transactions, there can be no assurance in this regard. In addition, a withdrawal from the Partnership or a transfer of an Interest will generally be reportable by the withdrawing or transferor Limited Partner if the Limited Partner recognizes a loss on the withdrawal or transfer that equals or exceeds the applicable threshold amount. Certain states, including New York, have similar disclosure requirements.

A U.S. Investor may be subject to various other U.S. federal information reporting requirements as a result of an investment in the Partnership. Failure to comply with any reporting requirements could give rise to substantial penalties. Tax-Exempt Investors may also be subject to certain information reporting requirements. Prospective investors are urged to consult their tax advisors to determine the reporting requirements to which they may be subject as a consequence of an investment in the Partnership.

State and Local Tax Considerations

In addition to the U.S. federal income tax consequences described above, prospective U.S. Investors should consider the potential state and local tax consequences of an investment in the Partnership. State and local tax laws may differ from U.S. federal income tax laws with respect to the treatment of specific items of income, gain, loss, deduction and credit.

67 The taxing authorities of certain states, including New York, (i) have announced that they will follow the Notice with respect to the treatment of digital currencies for state income tax purposes and/or (ii) have issued guidance exempting the purchase and/or sale of digital currencies for fiat currency from state sales tax. It is unclear what further guidance on the treatment of digital currency for state tax purposes may be issued in the future. Any future guidance on the treatment of digital currencies for state or local tax purposes could result in adverse tax consequences for investors in the Partnership and could have an adverse effect on the value of bitcoin.

Non-U.S. Tax Considerations

This Offering Memorandum does not attempt to discuss any taxes imposed by jurisdictions other than the United States. The treatment of digital currencies for tax purposes by non-U.S. jurisdictions may differ from the treatment of digital currencies for U.S. federal, state or local tax purposes. It is possible, for example, that a non-U.S. jurisdiction would impose sales tax or value-added tax on purchases and sales of digital currencies for fiat currency. If a foreign jurisdiction with a significant share of the market of bitcoin users imposes onerous tax burdens on digital currency users, or imposes sales or value-added tax on purchases and sales of digital currency for fiat currency, such actions could result in decreased demand for bitcoin in such jurisdiction, which could adversely affect the price of bitcoin.

Importance of Obtaining Professional Advice

The foregoing summary is not intended as a substitute for careful tax planning. Accordingly, prospective investors in the Partnership are strongly urged to consult their tax advisors with specific reference to their own situations regarding the possible tax consequences of an investment in the Partnership.

Authorization Regarding Disclosure of Tax Structure

Notwithstanding any other statement in this Offering Memorandum, the General Partner, the Manager and their respective affiliates, advisors, members, partners, officers, directors, employees and principals authorize each investor and each investor’s employees, representatives or other agents, from and after the commencement of any discussions with any such party, to disclose to any and all persons without limitation of any kind the tax treatment and tax structure of the Partnership and any transaction entered into by the Partnership and all materials of any kind (including opinions or other tax analyses) relating to such tax treatment or tax structure that are provided to the such investor, except for any information identifying the General Partner, the Manager or their respective affiliates, members, partners, officers, directors, employees and principals, the investors, the Partnership, any Feeder Fund, any investor in any Feeder Fund or (except to the extent relevant to such tax structure or tax treatment) any nonpublic commercial or financial information.

68 B. CERTAIN REGULATORY CONSIDERATIONS

Anti-Money Laundering Regulations

As part of the Partnership’s responsibility to comply with regulations aimed at the prevention of money laundering and terrorist financing, the Partnership, the General Partner, the Manager, the Administrator or any of their respective affiliates may require a detailed verification of a prospective investor’s or Limited Partner’s identity, any beneficial owner of the prospective investor or Limited Partner, and the source of any payment.

The Partnership, the General Partner, the Manager and the Administrator reserve the right to request at any time such information and/or documentation as is necessary to verify the identity of a prospective investor or Limited Partner and any underlying beneficial owner of a prospective investor’s or Limited Partner’s interest in the Partnership. The Partnership, the General Partner, the Manager and the Administrator also reserve the right to request such identification evidence in respect of a transferee of an Interest. In the event of delay or failure by the prospective investor, Limited Partner or transferee to produce any information and/or documentation required for verification purposes, or on the basis of such information and/or documentation that is provided, the Partnership, the General Partner, the Manager and/or the Administrator may reject or delay the acceptance of the subscription or (as the case may be) the relevant transfer of an Interest and the Administrator may refuse to process such subscription or transfer, or (in the case of a subscription) may cause the withdrawal of such Limited Partner from the Partnership, and any funds received will be returned to the prospective investor or Limited Partner without interest or deduction to the account from which the monies were originally debited.

The Partnership, the General Partner, the Manager and the Administrator also reserve the right to refuse to make or suspend the payment of withdrawal proceeds of a Limited Partner if the Partnership, the General Partner, the Manager or the Administrator suspects or is advised that the payment of any withdrawal monies to such Limited Partner might result in a breach or violation of any applicable anti-money laundering laws or the laws, regulations and Executive Orders administered by the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”), or other laws or regulations in any relevant jurisdiction (collectively, “AML/OFAC Obligations”).

Each prospective investor or transferee of an Interest will be required to make certain representations to the Partnership, the General Partner, the Manager and/or the Administrator in connection with applicable AML/OFAC Obligations. Further, such prospective investor, Limited Partner or transferee must represent to the Partnership, the General Partner, the Manager and the Administrator that it is not a prohibited foreign shell bank.1

Such prospective investor, Limited Partner or transferee will also be required to represent to the Partnership, the General Partner, the Manager and the Administrator that amounts contributed by it to the Partnership were not directly or indirectly derived from, or for the benefit of, activities that may contravene U.S. Federal, state or international laws and regulations, including, without limitation, any applicable anti-money laundering laws and regulations. Further, the General Partner and the Manager may, in the future, become subject to rules or regulations promulgated by the U.S. Department of Treasury’s Financial Crimes Enforcement Network that may require any prospective investor, Limited Partner or transferee to make additional representations or provide additional information relating to such prospective investor, Limited Partner or transferee. Prospective investors, Limited Partners or transferees who fail to provide any such additional representations or information may be prevented from investing in the Partnership or may be subject to additional remedies, as required by law.

Each prospective investor, Limited Partner or transferee will agree to notify the Partnership, the General Partner, the Manager and the Administrator promptly in writing should it become aware of any change in the

1 A “prohibited foreign shell bank” is a foreign bank that does not have a physical presence in any country, and is not a “regulated affiliate,” i.e., an affiliate of a depository institution, credit union, or foreign bank that (i) maintains a physical presence in the U.S. or a foreign country and (ii) is subject to banking supervision in the country regulating the affiliated depository institution, credit union or foreign bank.

69 information set forth in its representations. Each prospective investor, Limited Partner and transferee is advised that, by law, the Partnership, the General Partner, the Manager and/or the Administrator may be obligated to “freeze the account” of such Limited Partner, either by prohibiting additional investments from the Limited Partner, declining any withdrawal requests from the Limited Partner, suspending the payment of withdrawal proceeds payable to the Limited Partner and/or segregating the assets in the account in compliance with governmental regulations. The Partnership, the General Partner, the Manager and/or the Administrator may also be required to report such action and to disclose the prospective investor’s, Limited Partner’s or transferee’s identity to OFAC or other applicable governmental and regulatory authorities.

In order to comply with regulations aimed at the prevention of money laundering in any applicable jurisdictions, the Partnership may require prospective investors to provide evidence to verify their identity. Accordingly, the General Partner reserves the right to request such information as it considers necessary to verify the identity of a prospective investor. The General Partner may refuse to accept any subscription or transfer application if a prospective investor delays in producing or fails to produce any information required by the General Partner for the purpose of verification and, in that event, any funds received by the General Partner will be returned without interest to the account from which the moneys were originally debited.

Consistent with anti-money laundering requirements that relate to subscriptions in the Partnership, withdrawal payments will generally only be paid to the bank account from which the Capital Contribution was received. Payments to other accounts held in the name of the registered owner of the Interest will only be made upon instruction of the Partnership. Unless otherwise agreed by the General Partner and the Administrator, funds or securities remitted by a third party will not be accepted.

U.S. Securities Act of 1933

The Interests have not been and will not be registered under the Securities Act. The Interests are being offered in reliance on the exemption from registration provided by Section 4(2) of the Securities Act and Regulation D promulgated thereunder. Each prospective investor (whether or not a U.S. citizen, resident or entity) will be required to represent, among other customary private placement representations, that it is an “accredited investor” as defined in Regulation D, and is acquiring the Interests for its own account for investment purposes only and not for resale or distribution. The Interests may not be transferred or resold except as permitted under the Partnership Agreement and unless registered under the Securities Act or pursuant to an exemption from such registration.

U.S. Investment Company Act of 1940

It is anticipated that the Partnership will not be registered under the Investment Company Act and Limited Partners will therefore not be afforded the protections available to investors in registered investment companies.

U.S. Investment Advisers Act of 1940

While the Manager is registered with the SEC as an investment adviser under the Advisers Act, the Manager is not and will not be acting in such capacity in providing services to the Partnership. As such, neither the Partnership nor an investor in the Partnership will have the protections afforded by the Advisers Act. For example, in managing the Partnership, the Manager will not be subject to the Advisers Act’s requirements with respect to the custody of client assets or transactions with affiliates.

The Manager will also refrain from taking certain actions if it believes such action would subject the activities of the Partnership to the Advisers Act. For example, the Manager will not invest the Partnership’s free cash in money market funds or any other securities.

U.S. Commodity Exchange Act

The Partnership is not a commodity pool and will not be regulated by the CFTC under the Commodity Exchange Act and the rules thereunder. Limited Partners will not receive the regulatory protections afforded to investors in regulated commodity pools. Therefore, this Offering Memorandum will not be required to be,

70 and will not be, filed with the CFTC. The CFTC does not pass upon the merits of participating in a pool or upon the adequacy or accuracy of any offering memorandum. Consequently, the CFTC has not reviewed or approved, and will not review or approve, this offering, this Offering Memorandum or any other offering materials for the Partnership.

Benefit Plan Investor Considerations

All Plan Investors

Before authorizing an investment in the Partnership, the fiduciaries or other authorized representatives of a plan investor should consider (i) the fiduciary standards under applicable law, (ii) whether the investment in the Partnership satisfies the prudence and diversification requirements of applicable law, including whether the investment is prudent in light of limitations on the marketability of Interests in the Partnership and (iii) whether such fiduciaries or representatives have the authority to make the investment under the appropriate plan investment policies and governing instruments and under applicable law. In analyzing the prudence of an investment in the Partnership under applicable law, special attention should be given to any provisions of applicable law that require a determination that the investment is reasonably designed to further the plan’s purpose, an examination of risk and return factors and the consideration of the portfolio’s composition with regard to diversification, liquidity, the current return of the total portfolio relative to anticipated cash flow needs of the plan and the projected return of the total portfolio relative to the plan’s funding objectives. Fiduciaries of an individual retirement account (“IRA”) or Keogh plan should also consider that an IRA may only make investments that are authorized by the Code and applicable governing instruments.

Benefit Plan Investors Subject to ERISA or the Code

ERISA, the Code and the regulations thereunder, provide, in essence, that if “benefit plan investors” as defined in Section 3(42) of ERISA (“Benefit Plan Investors”) beneficially own 25% or more of any class of equity interests in a fund, then the assets and transactions of the fund will be subject to the fiduciary and prohibited transaction provisions of ERISA or the Code. Benefit Plan Investors include ERISA plans, IRAs, Keogh plans and entities of which 25% or more of any class of equity is held by such plans or accounts.

In determining whether the assets of the Partnership will be ERISA “plan assets” (“Plan Assets”), the General Partner will rely on information, representations and covenants provided by investors and prospective investors in their subscription booklets and each investor will be asked in its subscription booklet to acknowledge that the General Partner is entitled to rely on the information, representations and covenants provided by such investor and other investors in their respective subscription booklets.

ERISA Plan Asset Rules

The discussion below describes in more detail certain aspects of the rules of ERISA and the Code as they apply to the Partnership. The fiduciary standards of Sections 401 through 405 of ERISA and the prohibited transaction rules of Section 406 of ERISA and Section 4975 of the Code apply to the management and investment of assets of United States private sector employee benefit plans. The prohibited transaction rules under Section 4975 of the Code also apply to IRAs and Keogh plans. Under applicable regulations set forth in 29 C.F.R. § 2510.3-101 (as defined in Section 3(42) of ERISA), when any such plan or account acquires an equity interest in an investment fund that is not registered under the Investment Company Act, the plan or account’s assets include not only its equity interest in the fund but also an undivided proportional interest in each of the underlying assets of the fund, unless an exception applies under the relevant regulations. One such exception is the so-called “25% exception.” The 25% exception applies as long as Benefit Plan Investors in a fund do not beneficially own 25% or more of any class of equity interests in the fund. In order for the 25% exception to continue to apply, the 25% test must be met initially and immediately after each sale, transfer or withdrawal of any equity interests in the fund. If the Benefit Plan Investors in a fund remain under the 25% threshold (or such percentage as may be prescribed by any change in applicable regulation or law) (the “Plan Threshold”), the manager of the fund will not be subject to ERISA’s fiduciary standards and the transactions by the fund will be free of the prohibited transaction rules of ERISA and the Code. If the Benefit Plan Investors in a fund exceed the Plan Threshold, the Benefit Plan Investors in the fund will be attributed a proportional undivided interest in each asset held by the fund and that portion of the assets will

71 be treated as Plan Assets, and the fund manager may be deemed an ERISA fiduciary with respect to that portion of the assets, and transactions involving that portion of the assets will be subject to the prohibited transaction rules of ERISA and the Code.

Application of the Plan Asset Rules

The General Partner will use its reasonable best efforts to keep the Partnership under the Plan Threshold in order to avoid the result that the Partnership’s assets will be deemed to be Plan Assets subject to the fiduciary and prohibited transaction provisions of ERISA or Section 4975 of the Code. As a result, the underlying assets of the Partnership are not expected to be deemed Plan Assets for purposes of ERISA, and ERISA’s fiduciary duties and prohibited transaction rules should not apply to the General Partner, the Manager or the Partnership.

The General Partner reserves the right to compel a Limited Partner to withdraw all or any portion of its Interests on reasonable terms determined by the Partnership in its sole discretion in order to ensure that the underlying assets of the Partnership will not be treated as Plan Assets.

The General Partner, in its sole discretion, may determine that it is not in the Partnership’s best interest to allow IRAs to purchase Interests, and if such determination is made, will reject all subscriptions for Interests received from or on behalf of IRAs. Acceptance of subscriptions on behalf of Benefit Plan Investors is in no respect a representation by the Partnership, the General Partner or the Manager that this investment meets all relevant requirements with respect to investment by such plans generally or any particular plan, or that this investment is appropriate for plans generally or any particular plan.

Form 5500

Plan administrators of investors that are subject to ERISA may be required to report on Form 5500 Annual Return/Report compensation paid to service providers, including, for this purpose, compensation paid to the General Partner and the Manager. The descriptions contained herein of fees and compensation, including the Management Fee payable to the Manager, are intended to satisfy the disclosure requirements for “eligible indirect compensation” for which the alternative reporting option on Schedule C of Form 5500 may be available.

Potential plan investors should consult with their respective counsel regarding the consequences under ERISA, the Code or other similar statutes of their acquisition and ownership of Interests.

Neither this discussion nor anything in this Offering Memorandum, the Partnership Agreement, any subscription materials, any Side Letter, any marketing materials or other materials provided to a potential investor is intended to be investment advice directed at any potential Benefit Plan Investor.

72 APPENDIX A: SELLING LEGENDS

NOTICE TO FLORIDA INVESTORS:

THE INTERESTS HAVE NOT BEEN REGISTERED UNDER THE FLORIDA SECURITIES ACT.

IF SALES ARE MADE TO FIVE (5) OR MORE INVESTORS IN FLORIDA, ANY FLORIDA INVESTOR MAY, AT HIS OR HER OPTION, VOID ANY PURCHASE HEREUNDER WITHIN A PERIOD OF THREE (3) DAYS AFTER HE OR SHE (A) FIRST TENDERS OR PAYS TO THE PARTNERSHIP, AN AGENT OF THE PARTNERSHIP OR AN ESCROW AGENT THE CONSIDERATION REQUIRED HEREUNDER OR (B) DELIVERS HIS OR HER EXECUTED SUBSCRIPTION AGREEMENT, WHICHEVER OCCURS LATER. TO ACCOMPLISH THIS, IT IS SUFFICIENT FOR A FLORIDA INVESTOR TO SEND A LETTER OR TELEGRAM TO THE PARTNERSHIP WITHIN SUCH THREE (3) DAY PERIOD STATING THAT HE OR SHE IS VOIDING AND RESCINDING THE PURCHASE. IF AN INVESTOR SENDS A LETTER, IT IS PRUDENT TO DO SO BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO INSURE THAT THE LETTER IS RECEIVED AND TO EVIDENCE THE TIME OF MAILING.

A-1

PARTNERSHIP SkyBridge Bitcoin Fund L.P. Care of: SkyBridge Capital II, LLC Attn: Marie Noble, General Counsel 527 Madison Avenue, 4th Floor New York, NY 10022 Phone: 212-485-3100

GENERAL PARTNER SkyBridge Bitcoin GP LLC Attn: Marie Noble 527 Madison Avenue, 4th Floor New York, NY 10022 Phone: 212-485-3100

MANAGER SkyBridge Capital II, LLC Attn: Marie Noble, General Counsel 527 Madison Avenue, 4th Floor New York, NY 10022 Phone: 212-485-3100

ADMINISTRATOR MG Stover & Co. Attn: Investor Relations 1331 17th Street, Suite 720 Denver, CO 80202 United States of America Email: [email protected] Phone: 303-410-4400 Fax: 303-648-4864

COUNSEL TO THE GENERAL PARTNER AND THE MANAGER Davis Polk & Wardwell LLP 450 Lexington Avenue New York, NY 10017 United States of America