Jack replied to this on Twitter. Because the BTC transfers from Strike to the custody company, they have to say it's been hypothecated legally, or something to that effect.

Replies (1)

Then why would they say "without notice to you?" If the only rehypothecation being done was the transfer to the custody company, they could give notice of that to the borrower and then leave that out of the terms. Instead, they leave it open that it could be rehypothecated any number of times without you knowing.