Company: TOXR
Filing Date: 2025-11-20
Form Type: S-1/A
Source: 0001213900-25-112826
Chunk: 35

Company: 21Shares XRP ETF
Filing Date: 2025-11-20
Form: S-1/A
Chunk 35
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 by Ripple Labs and other early stakeholders could have an adverse effect on the market price of XRP.

The largest XRP wallets are
believed to hold, in aggregate, a significant percentage of the XRP in circulation. Ripple Labs holds a large portion of the XRP supply,
which has led to concerns about centralization. Despite escrow mechanisms that gradually release XRP into the market, Ripple Labs still
retains control over a significant portion of XRP, which can impact market dynamics if large amounts are sold. Likewise large sales or
distributions by other holders of a significant portion of the XRP supply could have an adverse effect on the market price of XRP. Media
reports in August 2025 estimate that XRP co-founder Chris Larsen holds at least 2.5 billion XRP tokens and sales previously attributed
to Mr. Larsen have resulted in heighted volatility in the market price and trading volume of XRP. For instance, sales believed to be
attributable to Mr. Larsen in August 2025 resulted in the market price of XRP dropping 14% intraday. The concentration of XRP in the
hands of Ripple Labs and early stakeholders, such as XRP co-founder Chris Larsen, could affect the market’s confidence in XRP as
a digital asset.

A determination that XRP or any other digital asset is offered or sold as a “security” may adversely affect the price of XRP and the value of the Shares, and result in potentially extraordinary, nonrecurring expenses to, or termination of, the Trust.

Depending on its characteristics,
a digital asset, including XRP, may be considered to be offered and sold as a “security” under U.S. federal securities
laws. The tests for determining whether a particular digital asset is offered and sold as a “security” are complex and difficult
to apply, and the outcome is difficult to predict. Public, though non-binding, statements by senior officials at the SEC have indicated
that the SEC does not currently consider bitcoin to be offered or sold as a security. The SEC staff has also provided informal assurances
via no-action letter to a handful of promoters that their digital assets are not offered and sold as securities.

On the other hand, the SEC
has brought enforcement actions against the issuers and promoters of several other digital assets on the basis that the digital assets
in question are securities. More recently, the SEC has also brought enforcement actions against digital asset trading platforms for allegedly
operating unregistered securities