Company: TOXR
Filing Date: 2025-10-10
Form Type: S-1/A
Source: 0001213900-25-098141
Chunk: 103

Company: 21Shares XRP ETF
Filing Date: 2025-10-10
Form: S-1/A
Chunk 103
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 the Ripple Complaint. Although
the S.D.N.Y. ruled that XRP was not inherently a security, it did find that certain purchases and sales of XRP can be deemed to be unregistered
sales of securities, depending upon the characteristics of the transaction. In future litigation, other courts might disagree with the
assessment that XRP is not offered or sold as a security, or that XRP is offered or sold as a security depending on the characteristics
of the transaction. To the extent that a court were to find that the Trust had engaged in unregistered sales of securities, the Trust
would be subject to penalties, disgorgement and other sanctions, which would significantly negatively impact the Trust and the value
of Shares.

The S.D.N.Y. entered a
final judgment in the case on August 7, 2024, imposing a $125,035,150 civil penalty against Ripple and an injunction prohibiting Ripple
from violating the registration provisions of the Securities Act. Both the SEC and Ripple appealed the ruling. However, on August 7,
2025, the SEC, Ripple and other defendants filed a Joint Stipulation of Dismissal that dismisses the SEC’s appeal and Ripple’s
cross-appeal pending in the Second Circuit, and resolves the Commission’s civil enforcement action against the defendants. Following
the dismissal of the cross-appeals, that final judgment will remain in effect.

In accordance with the
Sponsor’s internal policies and procedures, the Sponsor engaged in a review process to determine whether XRP has been bought or
sold as a security and based off the review it has determined it has not. The Sponsor has reviewed publicly available materials relating
to XRP and the Ripple Labs. Among other things, the Sponsor has reviewed publicly available materials relating to the circumstances around
the creation of XRP, the market and technological needs that the XRP Ledger was intended to address, the XRP Ledger’s role in enabling
blockchain interoperability and cross-blockchain communications, the XRP Ledger’s consensus mechanism, the Ripple Labs’ marketing
and delivery of the product to initial customers. Based on the Sponsor’s review of these materials, the Sponsor believes there
is a reasonable basis to conclude that at this time offers and sales of XRP would not constitute offers and sales of a “security”
as that term is defined under Section 2(a)(1) of the 1933 Act. This determination is a risk-based judgement by the Sponsor that is attendant
with legal risk as it is