Wendell M. Faria, Esq.

Partner

wendell.faria@dentons.com

D   +1 202 496 7408

Dentons US LLP

1900 K St NW

Washington, DC 20006

United States

dentons.com

We have expanded our discussion of our non-principal strategies on the Cover Page section of the Prospectus in response to the Staff’s comment. We have eliminated our discussion of non-principal strategies which we do not have a current intention to use, such as investing in SPVs. We note that we do not have a strategy to invest in private secondary marketplaces, as the Staff has indicated. Rather, we use these marketplaces as one channel (a platform) to engage in transactions in restricted securities with other qualified investors. Each of these marketplaces will be registered and regulated as an alternative trading system under Regulation ATS. We have added disclosure to clarify the nature and use of these marketplaces in the Prospectus Summary section of the Form N-2.

With respect to the foregoing, please note that the Company has a non-principal investment strategy to invest in Private Funds. For this purpose, the Company distinguishes Private Funds from SPVs. In accordance with its commonly understood meaning, we use the term “SPV” to refer to an entity that was formed for the specific purpose of investing in a particular portfolio company but which relies on (1) the exclusion from the definition of “investment company” contained in Sections 3(c)(1) or Section 3(c)(7), and (2) the non-public offering exemption contained in Rule 506 of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”) in connection with the offer and sale of interests to investors. An SPV is not engaged in the business of investing, reinvesting, owning, holding or trading securities issued by two or more portfolio companies.

By contrast, we use the term “Private Fund” to refer to an investment fund that is engaged in the business of investing, reinvesting, owning, holding or trading securities issued by two or more portfolio companies and which relies on (1) the exclusion from the definition of “investment company” contained in Section 3(c)(1) or Section 3(c)(7) of the Investment Company, and (2) the non-public offering exemption contained in Rule 506 of Regulation D under the Securities Act in connection with the offer and sale of its securities to investors. In this regard, we use the term “Private Fund” to describe a fund that, although having attributes of an SPV, is in essence and operates as a private investment vehicle.

As the following risk factors, which are disclosed in the Prospectus, make the offering speculative and/or one of high risk, please consider adding them to the Cover Page:

·      “Our stock price may be volatile and could decline significantly and rapidly.”

·      “We will have no limitation on the portion of our portfolio that may be invested in illiquid securities, and we anticipate that all or a substantial portion of our portfolio may be invested in such illiquid securities at all times. . . [and we may invest without] limitation in investments in which no secondary market is readily available or which are otherwise illiquid.”

·      “We intend to invest primarily in rapidly growing private companies, which involve significant risks.”

·      “An active, liquid, and orderly market for our common stock may not develop or be sustained. You may be unable to sell your shares of common stock at or above the price at which you purchased them.” Also, revise “at or above the price” to “at, above, or below the price.”

See Item 1.1.j of Form N-2.

We have disclosed in the sub-section entitled “Investment Process” in the Prospectus Summary the criteria we use to select companies for inclusion in the C1 Thirty group. We also discuss in pages 52-54 the process we use in selecting C1 Thirty companies.

The Company does not invest in private digital asset services and technology companies that do not meet its investment criteria for inclusion in the C1 Thirty group.

We have clarified on pages 6 and 31 that while digital assets such as Bitcoin or Ether have been called “cryptocurrencies,” they are not widely accepted as a means of payment.

We have also revised the Prospectus to use the term digital asset when referring to Bitcoin, Ether, or similar assets. We’ve also made clear in the forepart of the Prospectus on page 6 that the term “digital asset” and “crypto asset” are both used to refer to Bitcoin, Ether, or similar assets.

Additionally, we have revised the Prospectus on pages 6 and 31 to indicate that the offer and sale of digital assets and/or the digital assets themselves may be required to be registered under Securities Act, and that a registration question involving digital assets or investments in interests in digital assets should not arise in the Company’s circumstances because it has disclosed that it will not invest directly in digital assets.

We confirm to the Staff that the Company will not invest directly in crypto assets such as Bitcoin, Ether, and similar assets.

As requested, we have revised the disclosures referenced in the Staff’s comment and made revisions in the Registration Statement to clarify the Company’s use of “we,” “us,” or “our” when referring to itself.

With regard to the Staff’s comment about “established history of investing”, we have explained in other sections of the Registration Statement that the members of the Adviser’s Investment Committee have experience in investing in securities in which the Company plans to invest for their own account or for the account of others in which they have an ownership interest. Although the Adviser is a new entity, its advisory services in managing the Company will be delivered principally by the three members of its Investment Committee.

We have added disclosure on page 3 to address what the Adviser means by (1) “strong operating fundamentals” and (2) “scaled valuation growth before an IPO or strategic exit”. The Adviser’s use of strong operating fundamentals includes well accepted metrics in financial analysis such as return on equity, debt to equity ratio, nature of cash flow (whether positive or not and the extent if positive). Its use of “scaled valuation growth before an IPO or strategic exit” is an analytic tool used to measure the potential for a sizable capital gain if any of these events occur. This disclosure uses these terms in their commonly understood meanings in financial analysis.

In support of these uses, we have disclosed, particularly in the “Management” section of the Registration Statement (and Prospectus), that the three members of the Adviser’s Investment Committee all have extensive background and experience in conducting (or having their staff members conduct) the financial analysis of companies, particularly of digital asset services and technology (or venture capital) companies, in which they have invested, either for their own account or for the account of others in which they have held a significant ownership position or a senior management or executive position. We have included in the “Management” section of the Prospectus a comprehensive discussion of the business experience and academic background of each of these Investment Committee members.

In these circumstances, we believe that we have adequately revised the disclosure to describe the meaning of “strong operating fundamentals” and “scaled valuation growth . . .”, as the Staff has requested. We have used these terms in their commonly understood meanings in financial analysis and not arbitrarily. In our view, a reasonable investor who is considering an investment in the Company would have the information needed to reasonably understand these terms in the context in which they are used and would derive very little incremental benefit from being informed of the sources of these definitions. For these reasons, we respectfully decline the Staff’s request to disclose these sources.

We have revised our disclosure on pages 4 and 21 of the Prospectus Summary to explain the nature of the Company’s transactions on private secondary marketplaces. As indicated, this is the principal channel that the Company may use to acquire (and sell) securities issued by C1 Thirty companies. Each private transaction will be effected on a private secondary marketplace or private investment platform that is registered with the SEC as a broker-dealer and registered as an alternative trading system under the requirements of Regulation ATS or as a registered investment adviser under the Investment Advisers Act. In addition, the Company may also participate as an accredited investor directly in non-public offerings conducted by C1 Thirty companies in reliance on the exemption afforded by Section 4(a)(2) of and/or Rule 506 of Regulation D under the Securities Act, or in one-off transactions with accredited investors in reliance on the 4(a)(1 1/2) interpretive exemption.

We have made corresponding changes to other parts of the Registration Statement, as the Staff has requested.

We have revised the disclosure to indicate that the Company expects to source its investments principally through transactions facilitated on a private secondary marketplace or private investment platform that is registered as a broker-dealer and as an ATS or investment adviser. Additionally, the Company expects to obtain investments by participating as an accredited investor in non-public offerings conducted by a C1 Thirty company in reliance on the non-public offering exemption, and supplement these sources in one-off transactions with accredited investors conducted in reliance on the 4(a)(1 ½) exemption. A one-off transaction may also include a purchase from an employee who qualified as an accredited investor under Rule 501(a)(11) of Reg. D (by virtue of being a knowledgeable employee) at time of investing in a C1 Thirty company.

We added information on page 5 to disclose the difficulty an investor may have in obtaining the information needed to make an informed investment decision in a portfolio company, as the Staff requested.

The Company plans to purchase and sell equity and equity-linked securities of private digital asset services and technology companies that meet its investment criteria (“C1 Thirty companies”) on private secondary marketplaces or private investment platforms. Each such marketplace will be registered as a broker-dealer under the Securities Exchange Act and registered as an ATS in reliance on Regulation ATS under the Exchange Act or as a registered investment adviser under the Investment Advisers Act.

Under Regulation ATS, an ATS platform is required to provide trade data involving bid and ask information for the purchase and sale of securities traded on its platform. Apart from this information, however, there appears to be very little or no material information that a company whose shares are trading on this platform is required to provide and that might aid in price discovery. Consequently, the prices of securities purchased and sold on these platforms are heavily negotiated by the transacting parties and may lead to wide bid-ask spreads.

The Company will not invest in SPVs and, therefore, will not invest in Private Funds through SPVs.

The Company will not invest in Private Funds beyond the 15% limit. The 15% limit will not include investments in SPVs because the Company will not invest in SPVs.

For an explanation about the Company’s use of the terms “Private Funds” and “SPVs”, please see our response to Comment No. 10.

The Company will not provide investors with 60 days’ notice before making an investment in Private Funds. Because the Company will not make investments in Private Funds that exceed the 15% maximum limit, it will not provide 60 days’ notice under these circumstances. We have revised the Registration Statement to remove the reference to such 60-day notice period.

We have revised the disclosure to better articulate the risk noted in the subject risk factor. The Adviser and its affiliates do not anticipate that they would be named as defendants in civil proceedings. The Company is merely describing the risk that the Adviser and its affiliates could be named as defendant in civil proceedings, and articulating the risks to investors as a result.

We confirm supplementally that the Company does not need to revise the disclosure pursuant to Item 12 of Form N-2, as the Staff has requested.

We made the requested changes to eliminate acquired fund fees and expenses as a separate line item and include the amount of these fees under “Other Expenses” given the amount.

We also clarified our disclosure circa page 3 of the Registration Statement to indicate that the ETFs in which the Company will invest in pursuit of the non-principal investment strategy the Staff described in its comment will be registered as investment companies under the Investment Company Act and publicly offered (with its securities traded on a national securities exchange). Consequently, these ETFs are not private companies that are relying on the exclusion from the definition of investment company contained in Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act.

Given the relationship between this discussion and the discussion provided in the risk factor on page 29, please also consider integrating the two discussions to demonstrate that notwithstanding speculative trading in native crypto assets, their value is ultimately based on the underlying health and performance of the blockchain and its protocol. With regard to the risks and challenges associated with public, permissionless blockchain technology, including the Bitcoin blockchain and Ethereum blockchain, please ensure that the disclosure addresses or clarifies the following:

·      that a blockchain may be vulnerable to attacks to the extent that, in terms of a proof-of-work blockchain, a “miner” or group of “miners” possesses more than 50% of the blockchain’s “hashing” power or that, in terms of a proof-of-stake blockchain, there is concentration in the ownership and/or staking of the blockchain’s native crypto asset;

·      that proposed changes to a blockchain’s protocol may not be adopted by a sufficient number of users and validators or users and miners, respectively, which may result in competing blockchains with different native crypto assets and sets of participants (also known as a “fork”) (in this regard, consider providing brief examples of forks, e.g., the forks resulting in the Ethereum Classic blockchain and the Bitcoin Cash blockchain);

·      that a blockchain’s protocol, including the code of any smart contracts running on the blockchain, may contain flaws that can be exploited by attackers (in this regard, consider briefly discussing the exploit of The DAO’s smart contract in June 2016, how it was addressed, and its consequences for the Ethereum blockchain, including the resulting hard fork);

·      that these blockchains have historically faced scalability challenges (as an example, explain the common impediments and/or disadvantages to adopting the Bitcoin blockchain as a payment network, including the slowness of transaction processing and finality, variability of transaction fees, and volatility of bitcoin’s price); and

·      that the native crypto assets of these blockchains are bearer assets that can be irrevocably lost or stolen to the extent that the “private keys” securing the assets are lost or stolen.

We note that the Company intends to achieve its investment objective by investing across a diverse selection of “new digital asset technology subsectors,” particularly what you believe to be “30 of the top digital asset services and technology companies.” In this regard, we also note that you refer to “companies involved in DeFi, stablecoins, and other innovations” as examples of the companies in which the Company will invest. Please provide a more detailed, comprehensive description of digital asset services and technology providers as well as the subsectors that you will use to categorize these companies. Please further enhance and contextualize this disclosure by providing an explanation of blockchain and digital asset technology, including the following with regard to public, permissionless blockchains: 

·      their general design and purpose;

·      how they are developed, maintained, and governed;

·      how they are accessed and used;

·      the relationship between them and their native crypto assets (as well as the relationship between applications running on these blockchains and native crypto assets of such applications);

·      and the specific use cases and applications that they support or are designed to support (e.g., “decentralized payments,” “decentralized finance,” and “stablecoins”).

The Company intends to invest in any digital asset services and technology company that it believes is included in this industry or group of industries and that fits its investment criteria. We consider any company that is engaged in the business of providing services with respect to digital assets (e.g., DeFi or decentralized finance platforms, or stablecoins) or the business of developing technology that involves the use of digital assets (e.g., the use of new financial technology systems involving digital payment systems or, more broadly, blockchain and digital assets to develop new financial services and products) as a company that is within the digital asset services and technology industry or group of industries and, therefore, eligible for investment by the Company.

We have added the requested disclosure to provide more detail on the types of companies in which the Company may invest in accordance with its principal investment strategy. See circa page 52.

Our section under “Investment Targeting and Screening” circa page 53 provides a discussion of the criteria we use in determining the C1 Thirty companies. We have revised this disclosure to clarify the Company’s application of these factors.

We have replaced “market capitalization” with “valuation”, as the Staff has requested.

We have removed the reference to “unicorn” in light of the Staff’s comment.

Under the Company’s investment process, as described in this section, the Company will not invest in a company merely because it is determined to satisfy the general growth and health factors. As described, substantially more due diligence is performed before the Company determines that a prospect is suitable for inclusion in its C1 Thirty group of companies and, therefore, warrants an investment.

The criteria used for selecting a C1 Thirty company is discussed in the Summary Prospectus under the sub-section entitled “Investment Process”. See circa pages 6-7.

C1 Group, LLC (formerly, C1 Holdings, LLC), the Company’s sponsor (the “Sponsor”), paid the expenses for organizing the Company, including particularly the legal costs, and the initial capital required by Section 14(a) of the Investment Company Act for the conduct of the Company’s initial public offering. The Sponsor has also paid a portion of the offering costs in connection with the Company’s initial public offering, including accounting, legal and auditing fees of the Company, organizational and offering costs, expenses related to the Company’s dividend reinvestment plan, as well as fees paid to the Administrator, the transfer agent, the custodian and the independent directors. The Company will reimburse the Sponsor for these organizational and offering costs, promptly upon the closing.

We have revised the pricing table required by Item 1.1.g of the Registration Statement to disclose in footnote (3) thereto the Company’s reimbursement of these costs.

The Company’s Articles of Incorporation and Bylaws were filed as exhibits to the initial Registration Statement. The form of the Company’s Articles of Amendment and Restatement is being filed with this Amendment.

We have added the penultimate paragraph to the subsection entitled “Payment of Our Expenses” on page 62 to disclose the amount of expenses incurred in connection with the offering, which includes organizational expenses, registration fees, FINRA filing fees, exchange listing fees, printing expenses, legal fees and expenses, and accounting fees and expenses, and that the Sponsor, which we have defined in the Prospectus as C1 Group LLC, will pay a portion of these expenses pre-offering and will be reimbursed from the proceeds of the offering promptly upon the closing. We supplementally inform the Staff that prior to the effectiveness of the Registration Statement, the Board, including the independent directors, will duly consider the reimbursement of such organizational and offering expenses. We supplementally inform the Staff that we expect that the members of the Board, consistent with their fiduciary duties under the Investment Company Act and state law, will consider the fairness of reimbursing the Sponsor for such organizational and offering expenses in light of the business and investment objectives of the Company and will approve, including a majority of the Board’s independent directors, the Company’s disbursement of funds for this purpose. Following the Board’s approval, we will add disclosure in this section of the Prospectus to indicate whether such approval was unanimous.

We have added disclosure on page 62 and in the pricing table required by Item 1.1.g of Form N-2 to explain that common shareholders indirectly bear these costs by deducting them from the gross offering proceeds.

We have revised the discussion on the Company’s Distribution Reinvestment Plan (“DRIP”) to disclose the rights of shareholders upon termination, including that:

Stockholders who elect not to participate in the DRIP will receive all distributions payable in cash directly to the stockholder of record (or, if the shares are held in street or other nominee name, then to such nominee) by the Plan Administrator as distribution disbursing agent.

Participation in the Plan is completely voluntary and may be terminated or resumed at any time without penalty by providing notice in writing to the Plan Administrator, which must be received at least five calendar days prior to the distribution record date; otherwise, such termination or resumption will be effective with respect to any subsequently declared distribution.

This notice may be sent to Plan Administrator and must contain the shareholder’s name, address, daytime phone number, Social Security or tax I.D. number, a reference to C1 Fund Inc., an affirmative statement (as applicable) that the stockholder elects not to participate in the Plan, or that the stockholder is electing to participate in the Plan, and the signature of the shareholder or an individual authorized to sign on the shareholder’s behalf.

No other rights of the stockholder are affected by a stockholder’s election not to not to participate in the DRIP.

We have deleted the clause “as that term is used in the Investment Company Act” in stating fundamental investment restriction number “7”, as requested, and added “group of industries” in accordance with Section 8(b)(1)(E) of the Investment Company Act.

We have revised the Company’s concentration policy for consistency with its principal investment strategy.

In accordance with the requirements of Rule 35(d) under the Investment Company Act, we have disclosed that the Company will treat its policy to invest at least 80% of the value of its total assets in companies operating within the digital asset services and technology industry or group of industries (that have been selected for inclusion in the C1 Thirty group) as non-fundamental, and that the Company will provide shareholders with 60 days’ written notice before changing this policy.

As requested, we have added a statement that the Company’s policy to invest up to 15% of the value of its total assets in Private Funds and ETFs (as well as ETPs) is non-fundamental, and that (in accordance with the requirements of Rule 35(d)) it may change this policy without providing shareholders with 60 days’ written notice.

We understand that Maryland law permits a fund to eliminate or alter the fiduciary duties of trustees, shareholders or other persons, and replace them with the standards set forth in your Articles of Incorporation. Provisions eliminating or altering the fiduciary duties of a fund’s directors, officers, member of any advisory board, investment adviser(s), depositor (“fiduciary covered persons”) are inconsistent with federal securities laws and the Commission’s express views on such persons’ fiduciary duties. Please add a provision to your Articles of Incorporation, or otherwise modify it, to clarify explicitly that notwithstanding anything to the contrary in the Articles of Incorporation, nothing in the Articles of Incorporation modifying, restricting or eliminating the duties or liabilities of the Company’s directors and officers shall apply to, or in any way limit, the duties (including state law fiduciary duties) or liabilities of the directors and officers with respect to matters arising under the federal securities laws. Relatedly, to the extent not already done so, please summarize in the Prospectus’ Limitation on Liability of Directors and Officers; Indemnification and Advance of Expenses section, any provisions in your Articles of Incorporation eliminating or altering the fiduciary duties of director and officers. Immediately following that summary, add the follow statement:

Nothing in the Articles of Incorporation modifying, restricting, or eliminating the duties or liabilities of directors or officers in the Articles of Incorporation shall apply to, or in any way limit, the duties (including state law fiduciary duties of loyalty and care) or liabilities of such persons with respect to matters arising under the federal securities laws.

Page 6 indicates how investments will be purchased including closing conditions and escrow. Please describe the Company’s accounting policy for recognition of a purchase of investment subject to such conditions and when a sale of such investment is recognized. Cite applicable U.S. GAAP in your response.

The third paragraph in the Equity Securities section on page 47 describes SPV valuation and discusses the fees paid to the SPV manager. Please explain how the fees will be accounted for in regards to the fair value. Please describe if the registrant will follow accounting guidance related to the use of NAV as a practical expedient to fair value related to such SPVs and if such SPVs will qualify for such use under ASC 820. The section further describes that the SPV investment generally equals the fair value of those underlying securities. Please supplementally describe how the registrant will value such underlying securities and unit of account related to such SPVs that are not consolidated.