Company: HBAR
Filing Date: 2025-09-09
Form Type: S-1
Source: 0000950170-25-113803
Chunk: 44

Company: Grayscale Hedera Trust ETF
Filing Date: 2025-09-09
Form: S-1
Chunk 44
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 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 HBAR and 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. Moreover, it is possible that a group of HBAR holders that together control more than 50% of outstanding HBAR are in fact part of the initial or current core developer group, or are otherwise influential members of the HBAR community. To the extent that the initial or current core developer groups also control more than 50% of outstanding HBAR, as some believe, the risk of and arising from this particular group of users obtaining control of the validating power on the Hedera Network will be even greater, and should this materialize, it may adversely affect the value of the Shares.

If validators exit the Hedera Network, it could increase the likelihood of a malicious actor obtaining control.

Validators exiting the network could make the Hedera Network more vulnerable to a malicious actor obtaining control of a large percentage of staked HBAR, which might enable them to manipulate the Hedera Hashgraph by censoring or manipulating specific transactions, as discussed previously. If the Hedera Hashgraph suffers such an attack, the price of HBAR could be negatively affected, and a loss of confidence in the Hedera Network could result. Any reduction in confidence in the transaction confirmation process or staking power of the Hedera Network may adversely affect an investment in the Trust.

A temporary or permanent “fork” or a “clone” could adversely affect the value of the Shares.

The Hedera Network operates using open-source protocols, meaning that any user can download the software, modify it and then propose that the users and validators of the Hedera Network adopt the modification. When a modification is introduced and a substantial majority of users and validators’ consent to the modification, the change is implemented and the network remains uninterrupted. However, if less than a substantial majority