Company: TOXR
Filing Date: 2025-12-08
Form Type: S-1/A
Source: 0001213900-25-118924
Chunk: 55

Company: 21Shares XRP ETF
Filing Date: 2025-12-08
Form: S-1/A
Chunk 55
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 the Prime Broker is not liable under the Prime Broker Agreement unless in the event of its gross negligence, fraud, material violation of applicable law or willful misconduct. The Prime Broker is not liable for delays, suspension of operations, failure in performance, or interruption of service to the extent it is directly due to a cause or condition beyond the reasonable control of the Prime Broker. These and the other limitations on the Prime Broker’s liability may allow it to avoid liability for potential losses or may be insufficient to cover the value of such potential losses, even if the Prime Broker directly caused such losses. Both the Trust and the Prime Broker and its affiliates (including the XRP Custodians) are required to indemnify each other under certain circumstances.

Moreover, in the event of
an insolvency or bankruptcy of the Prime Broker (in the case of the Trading Balance) or the XRP Custodians (in the case of the Cold Vault
Balance) in the future, given that the contractual protections and legal rights of customers with respect to digital assets held on their
behalf by third parties are relatively untested in a bankruptcy of entities such as the XRP Custodians or the Prime Broker in the virtual
currency industry, there is a risk that customers’ assets — including the Trust’s assets — may
be considered the property of the bankruptcy estate of the Prime Broker (in the case of the Trading Balance) or the XRP Custodians (in
the case of the Cold Vault Balance), and customers — including the Trust — may be at risk of being treated
as general unsecured creditors of such entities and subject to the risk of total loss or markdowns on value of such assets.

The Coinbase Custodial Services
Agreement contains an agreement by the parties thereto to treat the XRP credited to the Trust’s Cold Vault Balance with Coinbase
as financial assets under Article 8 of the New York Uniform Commercial Code (“Article 8”), in addition to
stating that the Coinbase Custodian will serve as fiduciary and custodian on the Trust’s behalf. The Coinbase Custodian’s
parent, Coinbase Global, has stated in public securities filings that in light of the inclusion in its custody agreements of provisions
relating to Article 8 it believes that a court would not treat custodied digital assets as part of its general estate in the event
the Coinbase Custodian were to experience insolvency.

Due to the novelty of digital asset custodial arrangements courts have not yet considered this type of treatment for custodied digital assets and