Company: TOXR
Filing Date: 2025-08-22
Form Type: S-1/A
Source: 0001213900-25-079981
Chunk: 102

Company: 21Shares XRP ETF
Filing Date: 2025-08-22
Form: S-1/A
Chunk 102
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registered 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 of 1933 . 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 possible regulatory agencies or courts could disagree with this determination.

If XRP is determined to
be offered or sold as a security by a federal court or transactions in XRP are determined to be securities transactions by a federal
court, the Trust could be considered an unregistered “investment company” under the 1940 Act, which could necessitate the
Trust’s liquidation. In this case, the Trust and the Sponsor may be deemed to have participated in an illegal offering of investment
company securities and there is no guarantee that the Sponsor will