Company: TOXR
Filing Date: 2025-11-20
Form Type: S-1/A
Source: 0001213900-25-112826
Chunk: 108

Company: 21Shares XRP ETF
Filing Date: 2025-11-20
Form: S-1/A
Chunk 108
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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 Labs and an injunction prohibiting
Ripple Labs 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 Labs and other defendants filed a Joint Stipulation of Dismissal that dismisses the SEC’s appeal
and Ripple Labs’ 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