Company: GSUI
Filing Date: 2025-12-05
Form Type: S-1
Source: 0001193125-25-309828
Chunk: 220

Company: Grayscale Sui Trust (SUI)
Filing Date: 2025-12-05
Form: S-1
Chunk 220
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 regular consensus, after a safety violation, the Sui Network will halt. The validators will analyze the data prior to the halt to determine who was responsible and propose that the stake of the malicious actors responsible for the safety violation should be slashed after restart, typically 100% of their stake. Future protocol upgrades may include the implementation of automated slashing mechanisms, where penalties would be triggered and enforced directly by the network code without requiring social coordination. As of July 2025, there have been no slashing events on the Sui Network. In light of the mechanical and standardized nature of validation activities, the Sponsor does not anticipate that the Staking Provider, which is expected to be an institution of recognized and trusted standing in the digital asset marketplace, with whom the Sponsor has had extensive prior interaction, would commit any slash-worthy offenses in the conduct of the Provider-Facilitated Staking activities. The Sponsor would have the right to direct the Custodian to cease staking the Trust’s SUI with the Staking Provider at any time, subject to the extent the Trust’s SUI cannot immediately be un-staked due to technical considerations, and the Sponsor expects that notice of any slashing event would be timely and permit the Sponsor to halt the staking of the Trust’s SUI, thereby mitigating the risk of permanent loss of the Trust’s SUI without replacement.

Security and Controls

The Trust’s Custodian has multiple layers of security protocols designed to protect the Trust’s assets from unauthorized access or transfer, which remain in place when the Trust’s SUI is staked.

The Trust’s SUI is staked directly from the Trust’s wallets and is not transferred to any other wallet to be staked. The Sui protocol (a) mandates that the executor of the staking transaction (i.e., the Sponsor on behalf of the Trust) can execute the withdraw function at any time through the Trust’s wallets administered by the Custodian and (b) limits the activities of the Staking Provider to executing only those activities specified by the protocol, such as staking, un-staking and performing validation activities. Accordingly, the Staking Provider does not have any control over the Trust’s staked SUI other than to stake or un-stake SUI at the direction of the Sponsor. In particular, the Staking Provider is not authorized to leverage or rehypothecate the Trust’s SUI tokens.The Staking Provider is also not able to change the designated wallet addresses on the Sui Network to which stakedSUIis to be withdrawn or