Company: HBAR
Filing Date: 2025-09-09
Form Type: S-1
Source: 0000950170-25-113803
Chunk: 38

Company: Grayscale Hedera Trust ETF
Filing Date: 2025-09-09
Form: S-1
Chunk 38
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 power of the Ethereum Classic Network. The attack resulted in reorganizations of the Ethereum Classic Blockchain that allowed the attacker or attackers to reverse previously recorded transactions in excess of over $5.0 million and $1.0 million.

In addition, in May 2019, the Bitcoin Cash Network, a proof-of-work network, experienced a 51% attack when two large mining pools reversed a series of transactions in order to stop an unknown miner from taking advantage of a flaw in a recent Bitcoin Cash protocol upgrade. Although this particular attack was arguably benevolent, the fact that such coordinated activity was able to occur may negatively impact perceptions of the Bitcoin Cash network. Although the two attacks described above took place on proof-of work based networks, it is possible that a similar attack may occur on the Hedera Network, which could negatively impact the value of HBAR and the value of the Shares.

Although there are no known reports of malicious control of the Hedera Network, if groups of coordinating or connected HBAR holders that together have a sufficient amount of outstanding HBAR were to stake that HBAR and run validators, they could exert authority over the validation of HBAR transactions. This risk is heightened if such amount of the validating power on the network falls within the jurisdiction of a single governmental authority. If network participants, including the core developers and the administrators of validating pools, do not act to ensure greater decentralization of HBAR, the feasibility of a malicious actor obtaining control of the validating power on the Hedera Network will increase, which may adversely affect the value of the Shares.

A malicious actor may also obtain control over the Hedera Network through its influence over core developers by gaining direct control over a core developer or an otherwise influential programmer. To the extent that the HBAR ecosystem does not grow, the possibility that a malicious actor may be able to maliciously influence the Hedera Network in this manner will remain heightened.

If the transaction fees for recording transactions on the Hedera Network are not sufficiently high to incentivize validators, or if certain jurisdictions continue to limit or otherwise regulate validating activities, validators may cease expanding validating power or demand high transaction fees, which could negatively impact the value of HBAR and the value of the Shares.

If the digital asset awards for validating blocks or the transaction fees for recording transactions on the Hedera Network are not sufficiently high to incentivize validators, or if certain jurisdictions continue to limit or otherwise regulate validating activities, validators may cease expending validating power to validate blocks and confirmations of transactions on the Hedera Hashgraph could be slowed. For