Company: TOXR
Filing Date: 2025-08-22
Form Type: S-1/A
Source: 0001213900-25-079981
Chunk: 56

Company: 21Shares XRP ETF
Filing Date: 2025-08-22
Form: S-1/A
Chunk 56
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 loss or markdowns on value of such assets.

The Custodial Services
Agreement contains an agreement by the parties to treat the XRP credited to the Trust’s Cold Vault Balance as financial assets
under Article 8 of the New York Uniform Commercial Code (“Article 8”), in addition to stating that the XRP
Custodian will serve as fiduciary and custodian on the Trust’s behalf. The XRP Custodian’s parent, Coinbase Global, has stated
in its most recent 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 XRP Custodian were to
experience insolvency. However, due to the novelty of digital asset custodial arrangements courts have not yet considered this type of
treatment for custodied digital assets and it is not possible to predict with certainty how they would rule in such a scenario. If the
XRP Custodian became subject to insolvency proceedings and a court were to rule that the custodied XRP were part of the XRP Custodian’s
general estate and not the property of the Trust, then the Trust would be treated as a general unsecured creditor in the XRP Custodian’s
insolvency proceedings and the Trust could be subject to the loss of all or a significant portion of its assets. Moreover, in the event
of the bankruptcy of the XRP Custodian, an automatic stay could go into effect and protracted litigation could be required in order to
recover the assets held with the XRP Custodian, all of which could significantly and negatively impact the Trust’s operations and
the value of the Shares.

With respect to the Prime Broker
Agreement, there is a risk that the Trading Balance, in which the Trust’s XRP and cash is held in omnibus accounts by the Prime
Broker, could be considered part of the Prime Broker’s bankruptcy estate in the event of the Prime Broker’s bankruptcy. The
Prime Broker Agreement contains an Article 8 opt-in clause with respect to the Trust’s assets held in the Trading Balance.

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The amount of XRP that may
be held in the Trading Balance will be limited to the amount necessary to process a given creation or redemption transaction, as applicable,
or to pay for Trust Expenses not assumed by the Sponsor in consideration for the Sponsor Fee.

The Prime Broker is not required
to hold any of the