# EDGAR Filing Document

**Accession Number:** 0001761325
**File Stem:** 0000950170-23-002145
**Filing Date:** 2023-2
**Character Count:** 112457
**Document Hash:** 7dadf4c7c0b6e1038f669bcaf55ff2d1
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000950170-23-002145.hdr.sgml**: 20230208

**ACCESSION NUMBER**: 0000950170-23-002145

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 49

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230208

**DATE AS OF CHANGE**: 20230208

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Grayscale Stellar Lumens Trust (XLM)
- **CENTRAL INDEX KEY:** 0001761325
- **STANDARD INDUSTRIAL CLASSIFICATION:** [6221]
- **IRS NUMBER:** 836545098
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 0930

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-56434
- **FILM NUMBER:** 23599223

**BUSINESS ADDRESS:**
- **STREET 1:** 290 HARBOR DRIVE
- **STREET 2:** 4TH FLOOR
- **CITY:** STAMFORD
- **STATE:** CT
- **ZIP:** 06902
- **BUSINESS PHONE:** 212 668 5920

**MAIL ADDRESS:**
- **STREET 1:** 290 HARBOR DRIVE
- **STREET 2:** 4TH FLOOR
- **CITY:** STAMFORD
- **STATE:** CT
- **ZIP:** 06902

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Stellar Lumens Investment Trust
- **DATE OF NAME CHANGE:** 20181211

?xml version="1.0" encoding="ASCII"? 10-Q

i

**UNITED STATES** 

**SECURITIES AND EXCHANGE COMMISSION** 

**Washington, D.C. 20549** 

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**FORM** 10-Q

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☒ **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the quarterly period ended** **December 31,** 2022

**or**

☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the transition period from to** 

**Commission File Number** 000-56434

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**Grayscale**<sup>®</sup> **Stellar Lumens Trust (XLM)**

**SPONSORED BY GRAYSCALE INVESTMENTS, LLC** 

(Exact Name of Registrant as Specified in Its Charter)

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| | |
|:---|:---|
| Delaware | 83-6545098 |
| **(State or Other Jurisdiction of**<br>**Incorporation or Organization)** | **(I.R.S. Employer**<br>**Identification No.)** |

---

c/o Grayscale Investments, LLC

**290 Harbor Drive, 4**<sup>th</sup> **Floor**

Stamford**,** Connecticut 06902

**(Address of Principal Executive Offices) (Zip Code)**

**(**212**)** 668-1427

**(Registrant's telephone number, including area code)** 

**Securities registered pursuant to Section 12(g) of the Act:**

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;**Title of each class** | &nbsp;&nbsp;&nbsp;**Trading Symbol(s)** | &nbsp;&nbsp;&nbsp;**Name of each exchange on which registered** |
| &nbsp;&nbsp;&nbsp;Grayscale Stellar Lumens Trust (XLM) Shares | &nbsp;&nbsp;GXLM | &nbsp;&nbsp;&nbsp;**N/A** |

---

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☐ |
|  |  | Emerging growth company | ☒ |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of Shares of the registrant outstanding as of February 2, 2023: 824,600

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**Grayscale**<sup>®</sup> **STELLAR LUMENS Trust (XLM)** 

**Table of Contents** 

---

| | | |
|:---|:---|:---|
|  |  | **Page** |
|  | [<u>Forward-Looking Statements</u>](#statement_regarding_forwardlooking_state) | &nbsp;&nbsp;3 |
|  | [<u>Industry and Market Data</u>](#industry_market_data) | &nbsp;&nbsp;3 |
| [<u>PART I – FINANCIAL INFORMATION</u>](#part_i_financial_information) | [<u>PART I – FINANCIAL INFORMATION</u>](#part_i_financial_information) |  |
| [<u>Item 1.</u>](#item_1_financial_statements_unaudited) | [<u>Financial Statements (Unaudited)</u>](#item_1_financial_statements_unaudited) | &nbsp;&nbsp;4 |
|  | [<u>Statements of Assets and Liabilities at December 31, 2022 and September 30, 2022</u>](#statements_assets_liabilities) | &nbsp;&nbsp;4 |
|  | [<u>Schedules of Investment at December 31, 2022 and September 30, 2022</u>](#schedules_investment) | &nbsp;&nbsp;5 |
|  | [<u>Statements of Operations for the Three Months Ended December 31, 2022 and 2021</u>](#statements_operations) | &nbsp;&nbsp;6 |
|  | [<u>Statements of Changes in Net Assets for the Three Months Ended December 31, 2022 and 2021</u>](#statement_changes_in_net_assets) | &nbsp;&nbsp;7 |
|  | [<u>Notes to the Unaudited Financial Statements</u>](#notes_to_unaudited_financial_statements) | &nbsp;&nbsp;8 |
| [<u>Item 2.</u>](#item_2_managements_discussion_analysis_f) | [<u>Management's Discussion and Analysis of Financial Condition and Results of Operations</u>](#item_2_managements_discussion_analysis_f) | &nbsp;&nbsp;15 |
| [<u>Item 3.</u>](#item_3_quantitative_qualitative_disclosu) | [<u>Quantitative and Qualitative Disclosures about Market Risk</u>](#item_3_quantitative_qualitative_disclosu) | &nbsp;&nbsp;21 |
| [<u>Item 4.</u>](#item_4_controls_procedures) | [<u>Controls and Procedures</u>](#item_4_controls_procedures) | &nbsp;&nbsp;21 |
| [<u>PART II – OTHER INFORMATION</u>](#part_ii_or_information) | [<u>PART II – OTHER INFORMATION</u>](#part_ii_or_information) |  |
| [<u>Item 1.</u>](#item_1_legal_proceedings) | [<u>Legal Proceedings</u>](#item_1_legal_proceedings) | &nbsp;&nbsp;22 |
| [<u>Item 1A.</u>](#item_1a_risk_factors) | [<u>Risk Factors</u>](#item_1a_risk_factors) | &nbsp;&nbsp;22 |
| [<u>Item 2.</u>](#item_2_unregistered_sales_equity_securit) | [<u>Unregistered Sales of Equity Securities and Use of Proceeds</u>](#item_2_unregistered_sales_equity_securit) | &nbsp;&nbsp;23 |
| [<u>Item 3.</u>](#item_3_defaults_upon_senior_securities) | [<u>Defaults Upon Senior Securities</u>](#item_3_defaults_upon_senior_securities) | &nbsp;&nbsp;24 |
| [<u>Item 4.</u>](#item_4_mine_safety_disclosures) | [<u>Mine Safety Disclosures</u>](#item_4_mine_safety_disclosures) | &nbsp;&nbsp;24 |
| [<u>Item 5.</u>](#item_5_or_information) | [<u>Other Information</u>](#item_5_or_information) | &nbsp;&nbsp;24 |
| [<u>Item 6.</u>](#item_6_exhibits) | [<u>Exhibits</u>](#item_6_exhibits) | &nbsp;&nbsp;25 |
| [<u>GLOSSARY OF DEFINED TERMS</u>](#glossary_defined_terms) | [<u>GLOSSARY OF DEFINED TERMS</u>](#glossary_defined_terms) | &nbsp;&nbsp;26 |
| [<u>SIGNATURES</u>](#signatures) | [<u>SIGNATURES</u>](#signatures) | &nbsp;&nbsp;30 |

---

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**Forward-Looking Statements** 

This Quarterly Report on Form 10-Q contains "forward-looking statements" with respect to the financial conditions, results of operations, plans, objectives, future performance and business of Grayscale Stellar Lumens Trust (XLM) (the "Trust"). Statements preceded by, followed by or that include words such as "may," "might," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of these terms and other similar expressions are intended to identify some of the forward-looking statements. All statements (other than statements of historical fact) included in this Quarterly Report that address activities, events or developments that will or may occur in the future, including such matters as changes in market prices and conditions, the Trust's operations, the plans of Grayscale Investments, LLC (the "Sponsor") and references to the Trust's future success and other similar matters are forward-looking statements. These statements are only predictions. Actual events or results may differ materially from such statements. These statements are based upon certain assumptions and analyses the Sponsor made based on its perception of historical trends, current conditions and expected future developments, as well as other factors appropriate in the circumstances. Whether or not actual results and developments will conform to the Sponsor's expectations and predictions, however, is subject to a number of risks and uncertainties, including, but not limited to, those described in "Part I, Item 1A. Risk Factors" of our Annual Report on Form 10-K and in "Part II, Item 1A. Risk Factors" herein. Forward-looking statements are made based on the Sponsor's beliefs, estimates and opinions on the date the statements are made and neither the Trust nor the Sponsor is under a duty or undertakes an obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, other than as required by applicable laws. Investors are therefore cautioned against relying on forward-looking statements.

Unless otherwise stated or the context otherwise requires, the terms "we," "our" and "us" in this Quarterly Report refer to the Sponsor acting on behalf of the Trust.

A glossary of industry and other defined terms is included in this Quarterly Report, beginning on page 26.

This Quarterly Report supplements and where applicable amends the Memorandum, as defined in the Trust's Amended and Restated Declaration of Trust and Trust Agreement, for general purposes.

**Industry and Market Data** 

Although we are responsible for all disclosure contained in this Quarterly Report on Form 10-Q, in some cases we have relied on certain market and industry data obtained from third-party sources that we believe to be reliable. Market estimates are calculated by using independent industry publications in conjunction with our assumptions regarding the Stellar industry and market. While we are not aware of any misstatements regarding any market, industry or similar data presented herein, such data involves risks and uncertainties and is subject to change based on various factors, including those discussed under the headings "Forward-Looking Statements" and "Part I, Item 1A. Risk Factors" in the Annual Report on Form 10-K for the year ended September 30, 2022, filed with the Securities and Exchange Commission (the "SEC") on November 21, 2022 (the "Annual Report").

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**PART I – FINANCIAL INFORMATION:**

**Item 1. <u>Financial St</u><u>atements (Unaudited)</u>**

**GRAYSCALE STELLAR LUMENS TRUST (XLM)**

**STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)**

**(Amounts in thousands, except Share and per Share amounts)**

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| | | |
|:---|:---|:---|
|  | **December 31, 2022** | **September 30, 2022** |
| **Assets:** |  |  |
| &nbsp;&nbsp;Investment in XLM, at fair value (cost $18,828 and $18,947 as of December 31, 2022 and September 30, 2022, respectively) | $5311 | $8653 |
| &nbsp;&nbsp;&nbsp;**Total assets** | $5311 | $8653 |
| **Liabilities:** |  |  |
| &nbsp;&nbsp;Sponsor's Fee payable, related party | $- | $- |
| &nbsp;&nbsp;&nbsp;**Total liabilities** | - | - |
| &nbsp;&nbsp;&nbsp;**Net assets** | $5311 | $8653 |
| **Net Assets consists of:** |  |  |
| &nbsp;&nbsp;Paid-in-capital | $19760 | $19760 |
| &nbsp;&nbsp;Accumulated net investment loss | (932) | (886) |
| &nbsp;&nbsp;Accumulated net realized gain on investment in XLM | - | 73 |
| &nbsp;&nbsp;Accumulated net change in unrealized depreciation on investment in XLM | (13517) | (10294) |
|  | $5311 | $8653 |
| Shares issued and outstanding, no par value (unlimited Shares authorized) | 824600 | 824600 |
| Net asset value per Share | $6.44 | $10.49 |

---

See accompanying notes to the unaudited financial statements.

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**GRAYSCALE STELLAR LUMENS TRUST (XLM)** 

**SCHEDULES OF INVESTMENT (UNAUDITED)**

**(Amounts in thousands, except quantity of XLM and percentages)**

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| | | | | |
|:---|:---|:---|:---|:---|
| **December 31, 2022** |  |  |  |  |
|  | **Quantity of XLM** | **Cost** | **Fair Value** | **% of Net<br>Assets** |
| Investment in XLM | 74479879.8332186 | $18828 | $5311 | 100% |
| &nbsp;&nbsp;&nbsp;Net assets |  | $18828 | $5311 | 100% |
| **September 30, 2022** |  |  |  |  |
|  | **Quantity of XLM** | **Cost** | **Fair Value** | **% of Net<br>Assets** |
| Investment in XLM | 74950703.0854167 | $18947 | $8653 | 100% |
| &nbsp;&nbsp;&nbsp;Net assets |  | $18947 | $8653 | 100% |

---

See accompanying notes to the unaudited financial statements.

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**GRAYSCALE STELLAR LUMENS TRUST (XLM)** 

**STATEMENTS OF OPERATIONS (UNAUDITED)**

**(Amounts in thousands)**

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| | | |
|:---|:---|:---|
|  | **Three Months Ended December 31,** | **Three Months Ended December 31,** |
|  | **2022** | **2021** |
| **Investment income:** |  |  |
| &nbsp;&nbsp;Investment income | $- | $- |
| **Expenses:** |  |  |
| &nbsp;&nbsp;Sponsor's Fee, related party | 46 | 161 |
| **Net investment loss** | (46) | (161) |
| **Net realized and unrealized loss from:** |  |  |
| &nbsp;&nbsp;Net realized (loss) gain on investment in XLM | (73) | 38 |
| &nbsp;&nbsp;Net change in unrealized depreciation on investment in XLM | (3223) | (1383) |
| **Net realized and unrealized loss on investment** | (3296) | (1345) |
| **Net decrease in net assets resulting from operations** | $(3342) | $(1506) |

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See accompanying notes to the unaudited financial statements.

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**GRAYSCALE STELLAR LUMENS TRUST (XLM)** 

**STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)**

**(Amounts in thousands, except change in Shares outstanding)**

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| | | |
|:---|:---|:---|
|  | **Three Months Ended December 31,** | **Three Months Ended December 31,** |
|  | **2022** | **2021** |
| **Decrease in net assets from operations:** |  |  |
| &nbsp;&nbsp;Net investment loss | $(46) | $(161) |
| &nbsp;&nbsp;Net realized (loss) gain on investment in XLM | (73) | 38 |
| &nbsp;&nbsp;Net change in unrealized depreciation on investment in XLM | (3223) | (1383) |
| &nbsp;&nbsp;&nbsp;Net decrease in net assets resulting from operations | (3342) | (1506) |
| **Decrease in net assets from capital share transactions:** |  |  |
| &nbsp;&nbsp;Shares issued | - | - |
| &nbsp;&nbsp;&nbsp;Net increase in net assets resulting from capital share transactions | - | - |
| &nbsp;&nbsp;&nbsp;Total decrease in net assets from operations and capital share transactions | (3342) | (1506) |
| **Net assets:** |  |  |
| &nbsp;&nbsp;&nbsp;Beginning of period | 8653 | 21342 |
| &nbsp;&nbsp;&nbsp;End of period | $5311 | $19836 |
| **Change in Shares outstanding:** |  |  |
| Shares outstanding at beginning of period | 824600 | 824600 |
| &nbsp;&nbsp;Shares issued | - | - |
| &nbsp;&nbsp;&nbsp;Net increase in Shares | - | - |
| &nbsp;&nbsp;Shares outstanding at end of period | 824600 | 824600 |

---

See accompanying notes to the unaudited financial statements.

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**GRAYSCALE STELLAR LUMENS TRUST (XLM)** 

**NOTES TO THE UNAUDITED FINANCIAL STATEMENTS** 

**1. Organization**

Grayscale Stellar Lumens Trust (XLM) (the "Trust") is a Delaware Statutory Trust that was formed on October 26, 2018 and commenced operations on December 6, 2018. In general, the Trust holds Lumens ("XLM") and, from time to time, issues common units of fractional undivided beneficial interest ("Shares") (in minimum baskets of 100 Shares, referred to as "Baskets") in exchange for XLM. The redemption of Shares is not currently contemplated and the Trust does not currently operate a redemption program. Subject to receipt of regulatory approval and approval by the Sponsor in its sole discretion, the Trust may in the future operate a redemption program. The Trust currently has no intention of seeking regulatory approval to operate an ongoing redemption program. The Trust's investment objective is for the value of the Shares (based on XLM per Share) to reflect the value of XLM held by the Trust, less the Trust's expenses and other liabilities. The Trust may also receive Incidental Rights and/or IR Virtual Currency as a result of the Trust's investment in XLM, in accordance with the terms of the Trust Agreement.

Incidental Rights are rights to claim, or otherwise establish dominion and control over, any virtual currency or other asset or right, which rights are incident to the Trust's ownership of XLM and arise without any action of the Trust, or of the Sponsor or Trustee on behalf of the Trust; IR Virtual Currency is any virtual currency tokens, or other asset or right, received by the Trust through the exercise (subject to the applicable provisions of the Trust Agreement) of any Incidental Right.

Grayscale Investments, LLC ("Grayscale" or the "Sponsor") acts as the Sponsor of the Trust and is a wholly owned subsidiary of Digital Currency Group, Inc. ("DCG"). The Sponsor is responsible for the day-to-day administration of the Trust pursuant to the provisions of the Trust Agreement. Grayscale is responsible for preparing and providing annual and quarterly reports on behalf of the Trust to investors and is also responsible for selecting and monitoring the Trust's service providers. As partial consideration for the Sponsor's services, the Trust pays Grayscale a Sponsor's Fee as discussed in Note 6. The Sponsor also acts as the sponsor and manager of other investment products including Grayscale Basic Attention Token Trust (BAT) (OTCQB: GBAT), Grayscale Bitcoin Trust (BTC) (OTCQX: GBTC), Grayscale Bitcoin Cash Trust (BCH) (OTCQX: BCHG), Grayscale Chainlink Trust (LINK) (OTCQB: GLNK), Grayscale Decentraland Trust (MANA) (OTCQX: MANA), Grayscale Ethereum Trust (ETH) (OTCQX: ETHE), Grayscale Ethereum Classic Trust (ETC) (OTCQX: ETCG), Grayscale Filecoin Trust (FIL) (OTCQB: FILG), Grayscale Horizen Trust (ZEN) (OTCQX: HZEN), Grayscale Litecoin Trust (LTC) (OTCQX: LTCN), Grayscale Livepeer Trust (LPT) (OTCQB: GLIV), Grayscale Solana Trust (SOL), Grayscale Zcash Trust (ZEC) (OTCQX: ZCSH), Grayscale Decentralized Finance (DeFi) Fund LLC (OTCQB: DEFG), Grayscale Digital Large Cap Fund LLC (OTCQX: GDLC), and Grayscale Smart Contract Platform Ex Ethereum (ETH) Fund LLC, each of which is an affiliate of the Trust. The following investment products sponsored or managed by the Sponsor are also SEC reporting companies with their shares registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"): Grayscale Bitcoin Trust (BTC), Grayscale Bitcoin Cash Trust (BCH), Grayscale Ethereum Trust (ETH), Grayscale Ethereum Classic Trust (ETC), Grayscale Horizen Trust (ZEN), Grayscale Litecoin Trust (LTC), Grayscale Zcash Trust (ZEC), and Grayscale Digital Large Cap Fund LLC. Grayscale Advisors, LLC, a Registered Investment Advisor and an affiliate of the Sponsor, is the advisor to the Grayscale Future of Finance (NYSE: GFOF) product.

Authorized Participants of the Trust are the only entities who may place orders to create or, if permitted, redeem Baskets. Genesis Global Trading, Inc. ("Genesis" or, in such capacity, an "Authorized Participant"), a registered broker-dealer and wholly owned subsidiary of DCG, was the only Authorized Participant prior to October 3, 2022 and was party to a participant agreement with the Sponsor and the Trust. Effective October 3, 2022, Grayscale Securities, LLC ("Grayscale Securities" or, in such capacity, an "Authorized Participant"), a registered broker-dealer and wholly owned subsidiary of the Sponsor, is the only Authorized Participant and is party to a participant agreement with the Sponsor and the Trust. As a result, since October 3, 2022, Genesis has no longer acted as an Authorized Participant of the Trust, but serves as a Liquidity Provider to Grayscale Securities. Additional Authorized Participants may be added at any time, subject to the discretion of the Sponsor. The Authorized Participant(s) may engage additional Liquidity Providers at any time.

The custodian of the Trust is Coinbase Custody Trust Company, LLC (the "Custodian"), a third-party service provider. The Custodian is responsible for safeguarding the XLM, Incidental Rights, and IR Virtual Currency held by the Trust, and holding the private key(s) that provide access to the Trust's digital wallets and vaults.

The transfer agent for the Trust (the "Transfer Agent") is Continental Stock Transfer & Trust Company. The responsibilities of the Transfer Agent are to maintain creations, redemptions, transfers, and distributions of the Trust's Shares which are primarily held in book-entry form.

On October 18, 2021, the Trust received notice that its Shares were qualified for public trading on the OTCQX U.S. Marketplace of the OTC Markets Group, Inc. ("OTCQX"). The Trust's trading symbol on OTCQX is "GXLM" and the CUSIP number for its Shares is 38963R105.

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**2. Summary of Significant Accounting Policies**

In the opinion of management of the Sponsor of the Trust, all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position as of December 31, 2022 and September 30, 2022 and results of operations for the three months ended December 31, 2022 and 2021 have been made. The results of operations for the periods presented are not necessarily indicative of the results of operations expected for the full year. These unaudited financial statements should be read in conjunction with the audited financial statements for the year ended September 30, 2022 included in the Trust's Annual Report on Form 10-K.

The following is a summary of significant accounting policies followed by the Trust:

The financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). The Trust qualifies as an investment company for accounting purposes pursuant to the accounting and reporting guidance under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 946, Financial Services – Investment Companies. The Trust uses fair value as its method of accounting for XLM in accordance with its classification as an investment company for accounting purposes. The Trust is not a registered investment company under the Investment Company Act of 1940. GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates and these differences could be material.

The Trust conducts its transactions in XLM, including receiving XLM for the creation of Shares and delivering XLM for the redemption of Shares and for the payment of the Sponsor's Fee. At this time, the Trust is not accepting redemption requests from shareholders. Since its inception, the Trust has not held cash or cash equivalents.

**Principal Market and Fair Value Determination**

To determine which market is the Trust's principal market (or in the absence of a principal market, the most advantageous market) for purposes of calculating the Trust's net asset value ("NAV"), the Trust follows ASC 820-10, which outlines the application of fair value accounting. ASC 820-10 determines fair value to be the price that would be received for XLM in a current sale, which assumes an orderly transaction between market participants on the measurement date. ASC 820-10 requires the Trust to assume that XLM is sold in its principal market to market participants or, in the absence of a principal market, the most advantageous market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact.

The Trust only receives XLM in connection with a creation order from the Authorized Participant (or its Liquidity Provider) and does not itself transact on any Digital Asset Markets. Therefore, the Trust looks to market-based volume and level of activity for Digital Asset Markets. The Trust, through its Authorized Participant(s), or a Liquidity Provider on behalf of the Authorized Participant(s), may transact in a Brokered Market, a Dealer Market, Principal-to-Principal Markets and Exchange Markets, each as defined in the FASB ASC Master Glossary (collectively, "Digital Asset Markets").

In determining which of the eligible Digital Asset Markets is the Trust's principal market, the Trust reviews these criteria in the following order:

First, the Trust reviews a list of Digital Asset Markets that follow anti-money laundering ("AML") and know-your-customer ("KYC") procedures, and non-Digital Asset Exchange Markets that the Trust reasonably believes are operating in compliance with applicable law, including federal and state licensing requirements, based upon information and assurances provided to it by each market.

Second, the Trust sorts these Digital Asset Markets from high to low by market-based volume and level of activity of XLM traded on each Digital Asset Market in the trailing twelve months.

Third, the Trust then reviews pricing fluctuations and the degree of variances in price on Digital Asset Markets to identify any material notable variances that may impact the volume or price information of a particular Digital Asset Market.

Fourth, the Trust then selects a Digital Asset Market as its principal market based on the highest market-based volume, level of activity and price stability in comparison to the other Digital Asset Markets on the list. Based on information reasonably available to the Trust, Exchange Markets have the greatest volume and level of activity for the asset. The Trust therefore looks to accessible Exchange Markets as opposed to the Brokered Market, Dealer Market and Principal-to-Principal Markets to determine its principal market. As a result of the aforementioned analysis, an Exchange Market has been selected as the Trust's principal market.

The Trust determines its principal market (or in the absence of a principal market the most advantageous market) annually and conducts a quarterly analysis to determine (i) if there have been recent changes to each Digital Asset Market's trading volume and level of activity in the trailing twelve months, (ii) if any Digital Asset Markets have developed that the Trust has access to, or (iii) if recent changes to

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each Digital Asset Market's price stability have occurred that would materially impact the selection of the principal market and necessitate a change in the Trust's determination of its principal market.

The cost basis of XLM received in connection with a creation order is recorded by the Trust at the fair value of XLM at 4:00 p.m., New York time, on the creation date for financial reporting purposes. The cost basis recorded by the Trust may differ from proceeds collected by the Authorized Participant from the sale of the corresponding Shares to investors.

**Investment Transactions and Revenue Recognition**

The Trust considers investment transactions to be the receipt of XLM for Share creations and the delivery of XLM for Share redemptions or for payment of expenses in XLM. At this time, the Trust is not accepting redemption requests from shareholders. The Trust records its investment transactions on a trade date basis and changes in fair value are reflected as net change in unrealized appreciation or depreciation on investments. Realized gains and losses are calculated using the specific identification method. Realized gains and losses are recognized in connection with transactions including settling obligations for the Sponsor's Fee in XLM.

**Fair Value Measurement**

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the 'exit price') in an orderly transaction between market participants at the measurement date.

GAAP utilizes a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Trust. Unobservable inputs reflect the Trust's assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

The fair value hierarchy is categorized into three levels based on the inputs as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Trust has the ability to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, these valuations do not entail a significant degree of judgment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Level 2 – Valuations based on quoted prices in markets that are not active or for which significant inputs are observable, either directly or indirectly.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The availability of valuation techniques and observable inputs can vary by investment. To the extent that valuations are based on sources that are less observable or unobservable in the market, the determination of fair value requires more judgment. Fair value estimates do not necessarily represent the amounts that may be ultimately realized by the Trust.

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| | | | | |
|:---|:---|:---|:---|:---|
|  |  | **Fair Value Measurement Using** | **Fair Value Measurement Using** | **Fair Value Measurement Using** |
| (Amounts in thousands) | **Amount at<br>Fair Value** | **Level 1** | **Level 2** | **Level 3** |
| **December 31, 2022** |  |  |  |  |
| &nbsp;&nbsp;**Assets** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Investment in XLM | $5311 | $5311 | $- | $- |
| **September 30, 2022** |  |  |  |  |
| &nbsp;&nbsp;**Assets** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Investment in XLM | $8653 | $8653 | $- | $- |

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**3. Fair Value of XLM**

XLM is held by the Custodian on behalf of the Trust and is carried at fair value. As of December 31, 2022 and September 30, 2022, the Trust held 74,479,879.8332186 and 74,950,703.0854167 XLM, respectively.

The Trust determined the fair value per XLM to be $0.07 and $0.12 on December 31, 2022 and September 30, 2022, respectively, using the price provided at 4:00 p.m., New York time, by the Digital Asset Exchange Market considered to be the Trust's principal market (Coinbase Pro).

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The following represents the changes in quantity of XLM and the respective fair value:

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| | | |
|:---|:---|:---|
| (Amounts in thousands, except XLM amounts) | **Quantity** | **Fair Value** |
| **Balance at September 30, 2021** | 76848154.9650449 | $21342 |
| &nbsp;&nbsp;XLM contributed | - | - |
| &nbsp;&nbsp;XLM distributed for Sponsor's Fee, related party | (1897451.8796282) | (387) |
| &nbsp;&nbsp;Net change in unrealized depreciation on investment in XLM | - | (12209) |
| &nbsp;&nbsp;Net realized loss on investment in XLM | - | (93) |
| **Balance at September 30, 2022** | 74950703.0854167 | $8653 |
| &nbsp;&nbsp;XLM contributed | - | - |
| &nbsp;&nbsp;XLM distributed for Sponsor's Fee, related party | (470823.2521981) | (46) |
| &nbsp;&nbsp;Net change in unrealized depreciation on investment in XLM | - | (3223) |
| &nbsp;&nbsp;Net realized loss on investment in XLM | - | (73) |
| **Balance at December 31, 2022** | 74479879.8332186 | $5311 |

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**4. Creations and Redemptions of Shares**

At December 31, 2022 and September 30, 2022, there were an unlimited number of Shares authorized by the Trust. The Trust creates (and, should the Trust commence a redemption program, redeems) Shares from time to time, but only in one or more Baskets. The creation and redemption of Baskets on behalf of investors are made by the Authorized Participant in exchange for the delivery of XLM to the Trust or the distribution of XLM by the Trust. The number of XLM required for each creation Basket or redemption Basket is determined by dividing (x) the number of XLM owned by the Trust at 4:00 p.m., New York time, on such trade date of a creation or redemption order, after deducting the number of XLM representing the U.S. dollar value of accrued but unpaid fees and expenses of the Trust, by (y) the number of Shares outstanding at such time and multiplying the quotient obtained by 100. Each Share represented approximately 90.3224 and 90.8934 of one XLM at December 31, 2022 and September 30, 2022, respectively. The decrease in the number of XLM represented by each Share is primarily a result of the periodic withdrawal of XLM to pay the Sponsor's Fee.

The cost basis of investments in XLM recorded by the Trust is the fair value of XLM, as determined by the Trust, at 4:00 p.m., New York time, on the date of transfer to the Trust by the Authorized Participant based on the creation Baskets. The cost basis recorded by the Trust may differ from proceeds collected by the Authorized Participant from the sale of each Share to investors. The Authorized Participant may realize significant profits buying, selling, creating, and, if permitted, redeeming Shares as a result of changes in the value of Shares or XLM.

At this time, the Trust is not operating a redemption program and is not accepting redemption requests. Subject to receipt of regulatory approval and approval by the Sponsor in its sole discretion, the Trust may in the future operate a redemption program. The Trust currently has no intention of seeking regulatory approval to operate an ongoing redemption program.

**5. Income Taxes**

The Sponsor takes the position that the Trust is properly treated as a grantor trust for U.S. federal income tax purposes. Assuming that the Trust is a grantor trust, the Trust will not be subject to U.S. federal income tax. Rather, if the Trust is a grantor trust, each beneficial owner of Shares will be treated as directly owning its pro rata Share of the Trust's assets and a pro rata portion of the Trust's income, gain, losses and deductions will "flow through" to each beneficial owner of Shares.

If the Trust were not properly classified as a grantor trust, the Trust might be classified as a partnership for U.S. federal income tax purposes. However, due to the uncertain treatment of digital assets, including forks, airdrops and similar occurrences for U.S. federal income tax purposes, there can be no assurance in this regard. If the Trust were classified as a partnership for U.S. federal income tax purposes, the tax consequences of owning Shares generally would not be materially different from the tax consequences described herein, although there might be certain differences, including with respect to timing. In addition, tax information reports provided to beneficial owners of Shares would be made in a different form. If the Trust were not classified as either a grantor trust or a partnership for U.S. federal income tax purposes, it would be classified as a corporation for such purposes. In that event, the Trust would be subject to entity-level U.S. federal income tax (currently at the rate of 21%) on its net taxable income and certain distributions made by the Trust to shareholders would be treated as taxable dividends to the extent of the Trust's current and accumulated earnings and profits.

In accordance with GAAP, the Trust has defined the threshold for recognizing the benefits of tax return positions in the financial statements as "more-likely-than-not" to be sustained by the applicable taxing authority and requires measurement of a tax position meeting the "more-likely-than-not" threshold, based on the largest benefit that is more than 50% likely to be realized. Tax positions not deemed to meet the "more-likely-than-not" threshold are recorded as a tax benefit or expense in the current period. As of and during the periods ended December 31, 2022 and September 30, 2022, the Trust did not have a liability for any unrecognized tax amounts. However,

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the Sponsor's conclusions concerning its determination of "more-likely-than-not" tax positions may be subject to review and adjustment at a later date based on factors including, but not limited to, further implementation guidance, and on-going analyses of and changes to tax laws, regulations and interpretations thereof.

The Sponsor of the Trust has evaluated whether or not there are uncertain tax positions that require financial statement recognition and has determined that no reserves for uncertain tax positions related to federal, state and local income taxes existed as of December 31, 2022 and September 30, 2022.

**6. Related Parties**

The Trust considers the following entities, their directors, and certain employees to be related parties of the Trust: DCG, Genesis, Grayscale, Grayscale Securities and CoinDesk Indices, Inc. As of both December 31, 2022 and September 30, 2022, 118,192 Shares of the Trust were held by related parties of the Trust.

The Sponsor's parent, an affiliate of the Trust, holds a minority interest in Coinbase, Inc., the parent company of the Custodian, that represents less than 1.0% of Coinbase, Inc.'s ownership.

In accordance with the Trust Agreement governing the Trust, the Trust pays a fee to the Sponsor, calculated as 2.5% of the aggregate value of the Trust's assets, less its liabilities (which include any accrued but unpaid expenses up to, but excluding, the date of calculation), as calculated and published by the Sponsor or its delegates in the manner set forth in the Trust Agreement (the "Sponsor's Fee"). The Sponsor's Fee accrues daily in U.S. dollars and is payable in XLM, monthly in arrears. The amount of XLM payable in respect of each daily U.S. dollar accrual will be determined by reference to the same U.S. dollar value of XLM used to determine such accrual. For purposes of these financial statements, the U.S. dollar value of XLM is determined by reference to the Digital Asset Exchange Market that the Trust considers its principal market as of 4:00 p.m., New York time, on each valuation date. The Trust held no Incidental Rights or IR Virtual Currency as of December 31, 2022 and September 30, 2022. No Incidental Rights or IR Virtual Currencies have been distributed in payment of the Sponsor's Fee during the three months ended December 31, 2022 and 2021.

As partial consideration for receipt of the Sponsor's Fee, the Sponsor is obligated under the Trust Agreement to assume and pay all fees and other expenses incurred by the Trust in the ordinary course of its affairs, excluding taxes, but including marketing fees; administrator fees, if any; custodian fees; transfer agent fees; trustee fees; the fees and expenses related to the listing, quotation or trading of the Shares on any secondary market (including customary legal, marketing and audit fees and expenses) in an amount up to $600,000 in any given fiscal year; ordinary course legal fees and expenses; audit fees; regulatory fees, including, if applicable, any fees relating to the registration of the Shares under the Securities Act or the Exchange Act; printing and mailing costs; the costs of maintaining the Trust's website and applicable license fees (the "Sponsor-paid Expenses"), provided that any expense that qualifies as an Additional Trust Expense will be deemed to be an Additional Trust Expense and not a Sponsor-paid Expense.

The Trust may incur certain extraordinary, non-recurring expenses that are not Sponsor-paid Expenses, including, but not limited to, taxes and governmental charges, expenses and costs of any extraordinary services performed by the Sponsor (or any other service provider) on behalf of the Trust to protect the Trust or the interests of shareholders (including in connection with any Incidental Rights and any IR Virtual Currency), any indemnification of the Custodian or other agents, service providers or counterparties of the Trust, the fees and expenses related to the listing, quotation or trading of the Shares on any secondary market (including legal, marketing and audit fees and expenses) to the extent exceeding $600,000 in any given fiscal year and extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters (collectively "Additional Trust Expenses"). In such circumstances, the Sponsor or its delegate (i) will instruct the Custodian to withdraw from the Digital Asset Account XLM, Incidental Rights and/or IR Virtual Currency in such quantity as may be necessary to permit payment of such Additional Trust Expenses and (ii) may either (x) cause the Trust (or its delegate) to convert such XLM, Incidental Rights and/or IR Virtual Currency into U.S. dollars or other fiat currencies at the Actual Exchange Rate or (y) when the Sponsor incurs such expenses on behalf of the Trust, cause the Trust (or its delegate) to deliver such XLM, Incidental Rights and/or IR Virtual Currency in kind to the Sponsor in satisfaction of such Additional Trust Expenses.

For the three months ended December 31, 2022 and 2021, the Trust incurred Sponsor's Fees of $45,551 and $159,553, respectively. As of December 31, 2022 and September 30, 2022, there were no accrued and unpaid Sponsor's Fees. In addition, the Sponsor may pay Additional Trust Expenses on behalf of the Trust, which are reimbursable by the Trust to the Sponsor. For the three months ended December 31, 2022 and 2021, the Sponsor did not pay any Additional Trust Expenses on behalf of the Trust.

On March 2, 2022, the Board of the Sponsor (the "Board") approved the purchase by DCG, the parent company of the Sponsor, of up to an aggregate total of $200 million worth of Shares of the Trust and shares of any of the following five investment products the Sponsor also acts as the sponsor and manager of, including Grayscale Bitcoin Trust (BTC) (OTCQX: GBTC), Grayscale Bitcoin Cash Trust (BCH) (OTCQX: BCHG), Grayscale Digital Large Cap Fund LLC (OTCQX: GDLC), Grayscale Ethereum Trust (ETH) (OTCQX:

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ETHE), and Grayscale Ethereum Classic Trust (ETC) (OTCQX: ETCG). Subsequently, DCG authorized such purchase. The Share purchase authorization does not obligate DCG to acquire any specific number of Shares in any period, and may be expanded, extended, modified, or discontinued at any time. From March 2, 2022 through December 31, 2022, DCG did not purchase any Shares of the Trust under this authorization.

**7. Risks and Uncertainties**

The Trust is subject to various risks including market risk, liquidity risk, and other risks related to its concentration in a single asset, XLM. Investing in XLM is currently highly speculative and volatile.

The net asset value of the Trust relates primarily to the value of XLM held by the Trust, and fluctuations in the price of XLM could materially and adversely affect an investment in the Shares of the Trust. The price of XLM has a limited history. During such history, XLM prices have been volatile and subject to influence by many factors, including the levels of liquidity. If Digital Asset Markets continue to experience significant price fluctuations, the Trust may experience losses. Several factors may affect the price of XLM, including, but not limited to, global XLM supply and demand, theft of XLM from global exchanges or vaults, competition from other forms of digital currency or payment services, global or regional political, economic or financial conditions, and other unforeseen events and situations.

The XLM held by the Trust are commingled and the Trust's shareholders have no specific rights to any specific XLM. In the event of the insolvency of the Trust, its assets may be inadequate to satisfy a claim by its shareholders.

There is currently no clearing house for XLM, nor is there a central or major depository for the custody of XLM. There is a risk that some or all of the Trust's XLM could be lost or stolen. There can be no assurance that the Custodian will maintain adequate insurance or that such coverage will cover losses with respect to the Trust's XLM. Further, transactions in XLM are irrevocable. Stolen or incorrectly transferred XLM may be irretrievable. As a result, any incorrectly executed XLM transactions could adversely affect an investment in the Shares.

The Securities and Exchange Commission (the "SEC") has stated that certain digital assets may be considered "securities" under the federal securities laws. The test for determining whether a particular digital asset is a "security" is 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 did not consider Bitcoin or Ethereum to be securities, and does not currently consider Bitcoin to be a security. The SEC staff has also provided informal assurances to a handful of promoters that their digital assets are not 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.

If XLM is determined to be a "security" under federal or state securities laws by the SEC or any other agency, or in a proceeding in a court of law or otherwise, it may have material adverse consequences for XLM. For example, it may become more difficult for XLM to be traded, cleared and custodied as compared to other digital assets that are not considered to be securities, which could, in turn, negatively affect the liquidity and general acceptance of XLM and cause users to migrate to other digital assets. As such, any determination that XLM is a security under federal or state securities laws may adversely affect the value of XLM and, as a result, an investment in the Shares.

To the extent that XLM is determined to be a security, the Trust and the Sponsor may also be subject to additional regulatory requirements, including those under the Investment Company Act of 1940, and the Sponsor may be required to register as an investment adviser under the Investment Advisers Act of 1940. If the Sponsor determines not to comply with such additional regulatory and registration requirements, the Sponsor will terminate the Trust. Any such termination could result in the liquidation of the Trust's XLM at a time that is disadvantageous to shareholders.

To the extent a private key required to access an XLM address is lost, destroyed or otherwise compromised and no backup of the private keys are accessible, the Trust may be unable to access the XLM controlled by the private key and the private key will not be capable of being restored by the Stellar Network. The processes by which XLM transactions are settled are dependent on the peer-to-peer network, and as such, the Trust is subject to operational risk. A risk also exists with respect to previously unknown technical vulnerabilities, which may adversely affect the value of XLM.

The Trust relies on third party service providers to perform certain functions essential to its operations. Any disruptions to the Trust's service providers' business operations, resulting from business failures, financial instability, security failures, government mandated regulation or operational problems could have an adverse impact on the Trust's ability to access critical services and be disruptive to the operations of the Trust.

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**8. Financial Highlights Per Share Performance**

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| | | |
|:---|:---|:---|
|  | **Three Months Ended December 31,** | **Three Months Ended December 31,** |
|  | **2022** | **2021** |
| **Per Share Data:** |  |  |
| Net asset value, beginning of period | $10.49 | $25.88 |
| Net decrease in net assets from investment operations: |  |  |
| &nbsp;&nbsp;Net investment loss | (0.06) | (0.19) |
| &nbsp;&nbsp;Net realized and unrealized loss | (3.99) | (1.63) |
| &nbsp;&nbsp;&nbsp;Net decrease in net assets resulting from operations | (4.05) | (1.82) |
| Net asset value, end of period | $6.44 | $24.06 |
| Total return | -38.61% | -7.03% |
| Ratios to average net assets: |  |  |
| Net investment loss | -2.50% | -2.50% |
| Expenses | -2.50% | -2.50% |

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Ratios of net investment loss and expenses to average net assets have been annualized.

An individual shareholder's return, ratios, and per Share performance may vary from those presented above based on the timing of Share transactions. The amount shown for a Share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the number of Shares issued in Creations occurring at an operational value derived from an operating metric as defined in the Trust Agreement.

Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period and assuming redemption on the last day of the period.

**9. Indemnifications**

In the normal course of business, the Trust enters into certain contracts that provide a variety of indemnities, including contracts with the Sponsor and affiliates of the Sponsor, DCG and its officers, directors, employees, subsidiaries and affiliates, and the Custodian as well as others relating to services provided to the Trust. The Trust's maximum exposure under these and its other indemnities is unknown. However, no liabilities have arisen under these indemnities in the past and, while there can be no assurances in this regard, there is no expectation that any will occur in the future. Therefore, the Sponsor does not consider it necessary to record a liability in this regard.

**10. Subsequent Events**

As of the close of business on February 2, 2023, the fair value of XLM determined in accordance with the Trust's accounting policy was $0.09 per XLM.

There are no known events that have occurred that require disclosure other than that which has already been disclosed in these notes to the financial statements.

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**Item 2. <u>Management's Discussion and Analysis of</u> <u>Financial Condition and Results of Operations</u>**

The following discussion and analysis of our financial condition and results of operations should be read together with, and is qualified in its entirety by reference to, our unaudited financial statements and related notes included elsewhere in this Quarterly Report, which have been prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP"). The following discussion may contain forward-looking statements based on assumptions we believe to be reasonable. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those set forth under "Part II, Item 1A. Risk Factors" in this Quarterly Report or in "Part I, Item 1A. Risk Factors" and "Forward-Looking Statements" or other sections of our Annual Report on Form 10-K for the year ended September 30, 2022.

**Trust Overview**

The Trust is a passive entity that is managed and administered by the Sponsor and does not have any officers, directors or employees. The Trust holds XLM and, from time to time on a periodic basis, issues Creation Baskets in exchange for deposits of XLM. As a passive investment vehicle, the Trust's investment objective is for the value of the Shares (based on XLM per Share) to reflect the value of XLM held by the Trust, determined by reference to the Index Price, less the Trust's expenses and other liabilities. To date, the Trust has not met its investment objective and the Shares quoted on OTCQX have not reflected the value of XLM held by the Trust, less the Trust's expenses and other liabilities, but instead have traded at both premiums and discounts to such value, which at times have been substantial. The Trust is not managed like a business corporation or an active investment vehicle.

**Critical Accounting Policies and Estimates**

**Investment Transactions and Revenue Recognition**

The Trust considers investment transactions to be the receipt of XLM for Share creations and the delivery of XLM for Share redemptions or for payment of expenses in XLM. At this time, the Trust is not accepting redemption requests from shareholders. The Trust records its investment transactions on a trade date basis and changes in fair value are reflected as net change in unrealized appreciation or depreciation on investments. Realized gains and losses are calculated using the specific identification method. Realized gains and losses are recognized in connection with transactions including settling obligations for the Sponsor's Fee in XLM.

**Principal Market and Fair Value Determination**

To determine which market is the Trust's principal market (or in the absence of a principal market, the most advantageous market) for purposes of calculating the Trust's net asset value ("NAV"), the Trust follows Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 820-10, which outlines the application of fair value accounting. ASC 820-10 determines fair value to be the price that would be received for XLM in a current sale, which assumes an orderly transaction between market participants on the measurement date. ASC 820-10 requires the Trust to assume that XLM is sold in its principal market to market participants or, in the absence of a principal market, the most advantageous market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact.

Effective October 3, 2022, the Sponsor entered into a Participant Agreement with Grayscale Securities, a wholly owned subsidiary of the Sponsor and an affiliate and related party of the Trust, pursuant to which Grayscale Securities has agreed to act as an Authorized Participant of the Trust. The Participant Agreement provides the procedures for the creation of Shares of the Trust through the Authorized Participant, which are substantially similar to the procedures for the creation of Shares set forth in the Trust's prior participant agreement with Genesis, except that the Authorized Participant may engage a Liquidity Provider to source XLM on behalf of the Authorized Participant in connection with the creation of Shares. Since October 3, 2022, Grayscale Securities is the only acting Authorized Participant of the Trust. Grayscale Securities has engaged Genesis as a Liquidity Provider. Additional Authorized Participants may be added at any time, subject to the discretion of the Sponsor.

The Trust only receives XLM in connection with a creation order from the Authorized Participant (or its Liquidity Provider) and does not itself transact on any Digital Asset Markets. Therefore, the Trust looks to market-based volume and level of activity for Digital Asset Markets. The Trust, through its Authorized Participant(s), or a Liquidity Provider on behalf of the Authorized Participant(s), may transact in a Brokered Market, a Dealer Market, Principal-to-Principal Markets and Exchange Markets, each as defined in the FASB ASC Master Glossary. In determining which of the eligible Digital Asset Markets is the Trust's principal market, the Trust reviews these criteria in the following order:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•First, the Trust reviews a list of Digital Asset Markets that follow anti-money laundering ("AML") and know-your-customer ("KYC") procedures, and non-Digital Asset Exchange Markets that the Trust reasonably believes are operating in compliance with applicable law, including federal and state licensing requirements, based upon information and assurances provided to it by each market.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Second, the Trust sorts these Digital Asset Markets from high to low by market-based volume and activity of XLM traded on each Digital Asset Market in the trailing twelve months.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Third, the Trust then reviews pricing fluctuations and the degree of variances in price on Digital Asset Markets to identify any material notable variances that may impact the volume or price information of a particular Digital Asset Market.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Fourth, the Trust then selects a Digital Asset Market as its principal market based on the highest market volume, activity and price stability in comparison to the other Digital Asset Markets on the list. Based on information reasonably available to the Trust, Exchange Markets have the greatest volume and level of activity for the asset. The Trust therefore looks to accessible Exchange Markets as opposed to the Brokered Market, Dealer Market and Principal-to-Principal Markets to determine its principal market. As a result of the aforementioned analysis, an Exchange Market has been selected as the Trust's principal market.

The Trust determines its principal market (or in the absence of a principal market the most advantageous market) annually and conducts a quarterly analysis to determine (i) if there have been recent changes to each Digital Asset Market's trading volume and level of activity in the trailing twelve months, (ii) if any Digital Asset Markets have developed that the Trust has access to, or (iii) if recent changes to each Digital Asset Market's price stability have occurred that would materially impact the selection of the principal market and necessitate a change in the Trust's determination of its principal market.

The cost basis of XLM received in connection with a creation order is recorded by the Trust at the fair value of XLM at 4:00 p.m., New York time, on the creation date for financial reporting purposes. The cost basis recorded by the Trust may differ from proceeds collected by the Authorized Participant from the sale of the corresponding Shares to investors.

**Investment Company Considerations**

The Trust is an investment company for GAAP purposes and follows accounting and reporting guidance in accordance with the FASB ASC Topic 946, Financial Services – Investment Companies. The Trust uses fair value as its method of accounting for XLM in accordance with its classification as an investment company for accounting purposes. The Trust is not a registered investment company under the Investment Company Act of 1940. GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates and these differences could be material.

**Review of Financial Results (unaudited)**

**Financial Highlights for the Three Months Ended December 31, 2022 and 2021**

**(All amounts in the following table and the subsequent paragraphs, except Share, per Share, XLM and price of XLM amounts, are in thousands)** 

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| | | |
|:---|:---|:---|
|  | **Three Months Ended December 31,** | **Three Months Ended December 31,** |
|  | **2022** | **2021** |
| Net realized and unrealized loss on investment in XLM | $(3296) | $(1345) |
| Net decrease in net assets resulting from operations | $(3342) | $(1506) |
| Net assets | $5311 | $19836 |

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Net realized and unrealized loss on investment in XLM for the three months ended December 31, 2022 was ($3,296) which includes a realized loss of ($73) on the transfer of XLM to pay the Sponsor's Fee and net change in unrealized depreciation on investment in XLM of ($3,223). Net realized and unrealized loss on investment in XLM for the period was driven by XLM price depreciation from $0.12 per XLM as of September 30, 2022 to $0.07 per XLM as of December 31, 2022. Net decrease in net assets resulting from operations was ($3,342) for the three months ended December 31, 2022, which consisted of the net realized and unrealized loss on investment in XLM, plus the Sponsor's Fee of $46. Net assets decreased to $5,311 at December 31, 2022, a 39% decrease for the three-month period. The decrease in net assets resulted from the aforementioned XLM price depreciation and the withdrawal of approximately 470,823 XLM to pay the foregoing Sponsor's Fee.

Net realized and unrealized loss on investment in XLM for the three months ended December 31, 2021 was ($1,345) which includes a realized gain of $38 on the transfer of XLM to pay the Sponsor's Fee and net change in unrealized depreciation on investment in XLM of ($1,383). Net realized and unrealized loss on investment in XLM for the period was driven by XLM price depreciation from $0.28 per XLM as of September 30, 2021 to $0.26 per XLM as of December 31, 2021. Net decrease in net assets resulting from operations was ($1,506) for the three months ended December 31, 2021, which consisted of the net realized and unrealized loss on investment in XLM, plus the Sponsor's Fee of $161. Net assets decreased to $19,837 at December 31, 2021, a 7% decrease for the three-month period.

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The decrease in net assets resulted from the aforementioned XLM price depreciation and the withdrawal of approximately 482,743 XLM to pay the foregoing Sponsor's Fee.

**Cash Resources and Liquidity** 

The Trust has not had a cash balance at any time since inception. When selling XLM, Incidental Rights and/or IR Virtual Currency in the Digital Asset Market to pay Additional Trust Expenses on behalf of the Trust, the Sponsor endeavors to sell the exact number of XLM, Incidental Rights and/or IR Virtual Currency needed to pay expenses in order to minimize the Trust's holdings of assets other than XLM. As a consequence, the Sponsor expects that the Trust will not record any cash flow from its operations and that its cash balance will be zero at the end of each reporting period. Furthermore, the Trust is not a party to any off-balance sheet arrangements.

In exchange for the Sponsor's Fee, the Sponsor has agreed to assume most of the expenses incurred by the Trust. As a result, the only ordinary expense of the Trust during the periods covered by this Quarterly Report was the Sponsor's Fee. The Trust is not aware of any trends, demands, conditions or events that are reasonably likely to result in material changes to its liquidity needs.

**Selected Operating Data** 

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| | | |
|:---|:---|:---|
|  | **Three Months Ended December 31,** | **Three Months Ended December 31,** |
|  | **2022** | **2021** |
|  | **(All XLM balances are rounded to the nearest whole XLM)** | **(All XLM balances are rounded to the nearest whole XLM)** |
| **XLM:** |  |  |
| Opening balance | 74950703 | 76848155 |
| &nbsp;&nbsp;Creations | - | - |
| &nbsp;&nbsp;Sponsor's Fee, related party | (470823) | (482743) |
| &nbsp;&nbsp;&nbsp;Closing balance | 74479880 | 76365412 |
| &nbsp;&nbsp;Accrued but unpaid Sponsor's Fee, related party | - | - |
| &nbsp;&nbsp;&nbsp;Net closing balance | 74479880 | 76365412 |
| **Number of Shares:** |  |  |
| &nbsp;&nbsp;Opening balance | 824600 | 824600 |
| &nbsp;&nbsp;Creations | - | - |
| &nbsp;&nbsp;&nbsp;Closing balance | 824600 | 824600 |

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| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2022** | **2021** |
| Price of XLM on principal market(1) | $0.07 | $0.26 |
| NAV per Share(2) | $6.44 | $24.06 |
| Index Price | $0.07 | $0.26 |
| Digital Asset Holdings per Share(3) | $6.44 | $24.04 |

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(1)The Trust performed an assessment of the principal market at December 31, 2022 and 2021, and identified the principal market as Coinbase Pro.

(2)As of December 31, 2022 and 2021 the NAV per Share was calculated using the fair value of XLM based on the price provided by Coinbase Pro, the Digital Asset Exchange that the Trust currently considers its principal market, as of 4:00 p.m., New York time, on the valuation date.

(3)The Trust's Digital Asset Holdings per Share is derived from the Index Price as represented by the Index as of 4:00 p.m., New York time, on the valuation date. The Trust's Digital Asset Holdings per Share is calculated using a non-GAAP methodology where the price is derived from multiple Digital Asset Exchanges. See "Item 1. Business—Overview of the XLM Industry and Market—XLM Value—The Index and the Index Price" in the Trust's Annual Report on Form 10-K for a description of the Index and the Index Price. The Digital Asset Exchanges included in the Index as of December 31, 2022 were Coinbase Pro, Binance.US and Bitstamp. The Digital Asset Exchanges included in the Index as of December 31, 2021 were Coinbase Pro, Binance.US, Bitstamp, and Kraken. Effective January 28, 2023, the Index Provider removed Binance.US from the Index due to the exchange failing the minimum liquidity requirement, and added Kraken as a Constituent Exchange due to the exchange meeting the minimum liquidity requirement as part of its scheduled quarterly review. See "Item 1. Business—Valuation of XLM and Determination of Digital Asset Holdings" in the Trust's Annual Report on Form 10-K for a description of the Trust's Digital Asset Holdings per Share.

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For accounting purposes, the Trust reflects creations and the XLM receivable with respect to such creations on the date of receipt of a notification of a creation but does not issue Shares until the requisite number of XLM is received. At this time, the Trust is not accepting redemption requests from shareholders. Subject to receipt of regulatory approval from the SEC and approval by the Sponsor in its sole discretion, the Trust may in the future operate a redemption program. The Trust currently has no intention of seeking regulatory approval to operate an ongoing redemption program.

As of December 31, 2022, the Trust had a net closing balance with a value of $5,310,266, based on the Index Price (non-GAAP methodology). As of December 31, 2022, the Trust had a total market value of $5,310,863, based on the principal market (Coinbase Pro).

As of December 31, 2021, the Trust had a net closing balance with a total value of $19,826,752, based on the Index Price (non-GAAP methodology). As of December 31, 2021, the Trust had a total market value of $19,836,680, based on the principal market (Coinbase Pro).

**Historical Digital Asset Holdings and XLM Prices**

As movements in the price of XLM will directly affect the price of the Shares, investors should understand recent movements in the price of XLM. Investors, however, should also be aware that past movements in the XLM price are not indicators of future movements. Movements may be influenced by various factors, including, but not limited to, government regulation, security breaches experienced by service providers, as well as political and economic uncertainties around the world.

The following chart illustrates the movement in the Trust's Digital Asset Holdings per Share versus the Index Price and the Trust's NAV per Share from December 6, 2018 to December 31, 2022.

![img51709816_0.jpg](img51709816_0.jpg)

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The following table illustrates the movements in the Index Price from the beginning of the Trust's operations on December 6, 2018 to December 31, 2022. Since the beginning of the Trust's operations, the Index Price has ranged from $0.03 to $0.72, with the straight average being $0.17 through December 31, 2022. The Sponsor has not observed a material difference between the Index Price and average prices from the constituent Digital Asset Exchanges individually or as a group.

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | **High** | **High** | **Low** | **Low** |  |  |
| **Period** | **Average** | **Index Price** | **Date** | **Index Price** | **Date** | **End of period** | **Last business day** |
| December 6, 2018 (the inception of the Trust's operations) to December 31, 2018 | $0.11 | $0.13 | 12/24/2018 | $0.09 | 12/15/2018 | $0.11 | $0.11 |
| Twelve months ended December 31, 2019 | $0.09 | $0.14 | 5/19/2019 | $0.04 | 12/17/2019 | $0.04 | $0.04 |
| Twelve months ended December 31, 2020 | $0.08 | $0.20 | 11/30/2020 | $0.03 | 3/16/2020 | $0.13 | $0.13 |
| Twelve months ended December 31, 2021 | $0.36 | $0.72 | 5/11/2021 | $0.13 | 1/2/2021 | $0.26 | $0.26 |
| Twelve months ended December 31, 2022 | $0.14 | $0.29 | 1/2/2022 | $0.07 | 12/29/2022 | $0.07 | $0.07 |
| December 6, 2018 (the inception of the Trust's operations) to December 31, 2022 | $0.17 | $0.72 | 5/11/2021 | $0.03 | 3/16/2020 | $0.07 | $0.07 |

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The following table illustrates the movements in the Digital Asset Market price of XLM, as reported on the Trust's principal market, from the beginning of the Trust's operations on December 6, 2018 to December 31, 2022. Since the beginning of the Trust's operations, the price of XLM has ranged from $0.03 to $0.72, with the straight average being $0.17 through December 31, 2022.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | **High** | **High** | **Low** | **Low** |  |  |
| **Period** | **Average** | **Digital Asset Market Price** | **Date** | **Digital Asset Market Price** | **Date** | **End of period** | **Last business day** |
| December 6, 2018 (the inception of the Trust's operations) to December 31, 2018 | $0.11 | $0.13 | 12/24/2018 | $0.09 | 12/15/2018 | $0.11 | $0.11 |
| Twelve months ended December 31, 2019 | $0.09 | $0.14 | 5/19/2019 | $0.04 | 12/17/2019 | $0.04 | $0.04 |
| Twelve months ended December 31, 2020 | $0.08 | $0.20 | 11/30/2020 | $0.03 | 3/16/2020 | $0.13 | $0.13 |
| Twelve months ended December 31, 2021 | $0.36 | $0.72 | 5/11/2021 | $0.13 | 1/2/2021 | $0.26 | $0.26 |
| Twelve months ended December 31, 2022 | $0.14 | $0.29 | 1/2/2022 | $0.07 | 12/29/2022 | $0.07 | $0.07 |
| December 6, 2018 (the inception of the Trust's operations) to December 31, 2022 | $0.17 | $0.72 | 5/11/2021 | $0.03 | 3/16/2020 | $0.07 | $0.07 |

---

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The following chart sets out the historical closing prices for the Shares as reported by OTCQX and the Trust's Digital Asset Holdings per Share.

**GXLM Premium/(Discount): GXLM Share Price vs. Digital Asset Holdings per Share ($)**![img51709816_1.jpg](img51709816_1.jpg)

The following chart sets out the historical premium and discount for the Shares as reported by OTCQX and the Trust's Digital Asset Holdings per Share.

**GXLM Premium/(Discount): GXLM Share Price vs. Digital Asset Holdings per Share (%)**![img51709816_2.jpg](img51709816_2.jpg)

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**Item 3. <u>Quantitative and Qualitat</u><u>ive Disclosures about Market Risk</u>** 

The Trust Agreement does not authorize the Trustee to borrow for payment of the Trust's ordinary expenses. The Trust does not engage in transactions in foreign currencies which could expose the Trust or holders of Shares to any foreign currency related market risk. The Trust does not invest in derivative financial instruments and has no foreign operations or long-term debt instruments.

**Item 4. <u>Controls</u> <u>and Procedures</u>**

The Trust maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Principal Executive Officer and Principal Financial and Accounting Officer of the Sponsor, and to the audit committee of the Board of Directors of the Sponsor, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of the Principal Executive Officer and the Principal Financial and Accounting Officer of the Sponsor, the Sponsor conducted an evaluation of the Trusts disclosure controls and procedures, as defined under Exchange Act Rule 13a-15(e). Based on this evaluation, the Principal Executive Officer and the Principal Financial and Accounting Officer of the Sponsor concluded that the Trust's disclosure controls and procedures were effective as of the end of the period covered by this report.

**Changes in Internal Control Over Financial Reporting** 

There was no change in the Trust's internal controls over financial reporting that occurred during the Trust's most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, these internal controls.

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**PART II – OTHER INFORMATION:**

**Item 1. <u>Legal</u> <u>Proceedings</u>** 

None.

**Item 1A. <u>Ri</u><u>sk Factors</u>** 

There have been no material changes to the Risk Factors last reported under "Part I, Item 1A. Risk Factors" of the registrant's Annual Report on Form 10-K, except as set forth below.

**Recent developments in the digital asset economy have led to extreme volatility and disruption in digital asset markets, a loss of confidence in participants of the digital asset ecosystem, significant negative publicity surrounding digital assets broadly and market-wide declines in liquidity.**

Beginning in the fourth quarter of 2021 and continuing throughout 2022, digital asset prices began falling precipitously, with the price of XLM falling by nearly 79% from November 30, 2021 to December 31, 2022. This has led to volatility and disruption in the digital asset markets and financial difficulties for several prominent industry participants, including digital asset exchanges, hedge funds and lending platforms. For example, in the first half of 2022, digital asset lenders Celsius Network LLC and Voyager Digital Ltd. and digital asset hedge fund Three Arrows Capital each declared bankruptcy. This resulted in a loss of confidence in participants in the digital asset ecosystem, negative publicity surrounding digital assets more broadly and market-wide declines in digital asset trading prices and liquidity.

Thereafter, in November 2022, FTX, the third largest Digital Asset Exchange by volume at the time, halted customer withdrawals amid rumors of the company's liquidity issues and likely insolvency. Shortly thereafter, FTX's CEO resigned and FTX and several affiliates of FTX filed for bankruptcy. The U.S. Department of Justice subsequently brought criminal charges, including charges of fraud, violations of federal securities laws, money laundering, and campaign finance offenses, against FTX's former CEO and others. FTX is also under investigation by the SEC, the Justice Department, and the Commodity Futures Trading Commission, as well as by various regulatory authorities in the Bahamas, Europe and other jurisdictions. In response to these events, the digital asset markets have experienced extreme price volatility and declines in liquidity, and regulatory and enforcement scrutiny has increased, including from the DOJ, the SEC, the CFTC, the White House and Congress. In addition, several other entities in the digital asset industry filed for bankruptcy following FTX's bankruptcy filing, such as BlockFi Inc. and Genesis Global Holdco, LLC ("Genesis Holdco"), both of which are digital asset lenders. The SEC also brought charges against Genesis Global Capital, LLC, a subsidiary of Genesis Holdco, and Gemini Trust Company, LLC on January 12, 2023 for their alleged unregistered offer and sale of securities to retail investors.

Genesis Holdco, together with certain of its subsidiaries, filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in January 2023. While Genesis Holdco is not a service provider to the Trust, it is an affiliate of Genesis Global Trading, Inc., which acts as a Liquidity Provider to the Authorized Participant of the Trust, is a wholly owned subsidiary of DCG, and is an affiliate of the Trust and the Sponsor. The Liquidity Provider sources digital assets on behalf of the Authorized Participant in connection with the creation of Shares. As such, if Genesis Holdco's bankruptcy, including the potential sale or transfer of the Liquidity Provider's equity and/or assets as part of the bankruptcy negotiations, has a negative impact on the Liquidity Provider's ability to act in such capacity, the Authorized Participant may be required to replace the Liquidity Provider, which could negatively impact the Trust's ability to create new Shares.

These events have led to significant negative publicity around digital asset market participants including DCG, Genesis and DCG's other affiliated entities. This publicity could negatively impact the reputation of the Sponsor and have an adverse effect on the trading price and/or the value of the Shares. Moreover, sales of a significant number of Shares of the Trust as a result of these events could have a negative impact on the trading price of the Shares.

These events are continuing to develop at a rapid pace and it is not possible to predict at this time all of the risks that they may pose to the Sponsor, the Trust, their affiliates and/or the Trust's third party service providers, or on the digital asset industry as a whole. Continued disruption and instability in the digital asset markets as these events develop, including further declines in the trading prices and liquidity of XLM, could have a material adverse effect on the value of the Shares and the Shares could lose all or substantially all of their value.

**The Trust relies on third party service providers to perform certain functions essential to the affairs of the Trust and the replacement of such service providers could pose a challenge to the safekeeping of the Trust's XLM and to the operations of the Trust.**

The Trust relies on the Custodian, the Authorized Participant and other third party service providers to perform certain functions essential to managing the affairs of the Trust. In addition, the Authorized Participant relies on the Liquidity Provider to source XLM in connection

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with the creation of Shares. Any disruptions to such service providers' business operations, resulting from business failures, financial instability, security failures, government mandated regulation or operational problems could have an adverse impact on the Trust's ability to access critical services and be disruptive to the operations of the Trust and require the Sponsor to replace such service provider. Moreover, the Sponsor could decide to replace a service provider to the Trust, or the Authorized Participant may decide to replace the Liquidity Provider for other reasons.

If the Sponsor decides, or is required, to replace Coinbase Custody Trust Company, LLC as the custodian of the Trust's XLM, transferring maintenance responsibilities of the Digital Asset Account to another party will likely be complex and could subject the Trust's XLM to the risk of loss during the transfer, which could have a negative impact on the performance of the Shares or result in loss of the Trust's assets.

Moreover, the legal rights of customers with respect to digital assets held on their behalf by a third-party custodian, such as the Custodian, in insolvency proceedings are currently uncertain. The Custody Agreement contains an agreement by the parties to treat the digital assets credited to the Trust's Digital Asset Account as financial assets under Article 8 of the Uniform Commercial Code ("Article 8"), in addition to stating that the Custodian will serve as fiduciary and custodian on the Trust's behalf. The Custodian's parent, Coinbase Global Inc., has stated in its most recent public securities filings that in light of the inclusion in its custody agreements of provisions relating to Article 8 it believes that a court would not treat custodied digital assets as part of its general estate in the event the Custodian were to experience insolvency. However, due to the novelty of digital asset custodial arrangements courts have not yet considered this type of treatment for custodied digital assets and it is not possible to predict with certainty how they would rule in such a scenario. If the Custodian became subject to insolvency proceedings and a court were to rule that the custodied digital assets were part of the Custodian's general estate and not the property of the Trust, then the Trust would be treated as a general unsecured creditor in the Custodian's insolvency proceedings and the Trust would be subject to the loss of all or a significant portion of its assets.

To the extent that Sponsor is not able to find a suitable party willing to serve as the custodian, the Sponsor may be required to terminate the Trust and liquidate the Trust's XLM. In addition, to the extent that the Sponsor finds a suitable party and must enter into a modified Custodian Agreement that is less favorable for the Trust or Sponsor and/or transfer the Trust's assets in a relatively short time period, the safekeeping of the Trust's XLM may be adversely affected, which may in turn adversely affect value of the Shares. Likewise, if the Sponsor and/or the Authorized Participant is required to replace any other service provider, they may not be able to find a party willing to serve in such capacity in a timely manner or at all. If the Sponsor decides, or is required, to replace the Authorized Participant and/or if the Authorized Participant decides, or is required, to replace the Liquidity Provider, this could negatively impact the Trust's ability to create new Shares, which would impact the Shares' liquidity and could have a negative impact on the value of the Shares.

**Item 2. <u>Unregistered Sales of Equit</u><u>y Securities and Use of Proceeds</u>** 

Purchases of equity securities by the issuer and affiliated purchasers —The table below sets forth information regarding open market purchases of Shares of Grayscale Stellar Lumens Trust (XLM) (OTCQX: GXLM) by DCG, the parent company of the Sponsor, on a monthly basis during the three months ended December 31, 2022:

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| | | | | |
|:---|:---|:---|:---|:---|
| **Period** | **(a) Total Number of Shares of XLM Purchased** | **(b) Average Price Paid per Share of XLM** | **(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)** | **(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs** |
|  |  |  |  | **(in millions)** |
| October 1, 2022 - October 31, 2022 |  | $- |  | $200.0 |
| November 1, 2022 - November 30, 2022 |  | - |  | 200.0 |
| December 1, 2022 - December 31, 2022 |  | - |  | 200.0 |
| &nbsp;&nbsp;Total |  | $- |  | $200.0 |

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(1)On March 2, 2022, the Board of the Sponsor approved the purchase by DCG, the parent company of the Sponsor, of up to an aggregate total of $200 million worth of Shares of the Trust and shares of any of the following five investment products the Sponsor also acts as the sponsor and manager of, including Grayscale Bitcoin Trust (BTC) (OTCQX: GBTC), Grayscale Bitcoin Cash Trust (BCH) (OTCQX: BCHG), Grayscale Digital Large Cap Fund LLC (OTCQX: GDLC), Grayscale Ethereum Trust (ETH) (OTCQX: ETHE), and Grayscale Ethereum Classic Trust (ETC) (OTCQX: ETCG). Subsequently, DCG authorized such purchase. The Share purchase authorization does not obligate DCG to acquire any specific number of Shares in any period, and may be expanded,

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extended, modified, or discontinued at any time. From March 2, 2022 through February 2, 2023, DCG did not purchase any Shares of the Trust under this authorization.

**Item 3. <u>Defaults Upo</u><u>n Senior Securities</u>**

None.

**Item 4. <u>Mine Safe</u><u>ty Disclosures</u>** 

Not applicable.

**Item 5. <u>Other</u> <u>Information</u>** 

None.

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**Item 6. <u>E</u><u>xhibits</u>** 

---

| | |
|:---|:---|
| **Exhibit**<br>**Number**<br>| &nbsp;&nbsp;**Exhibit Description**<br>|
| &nbsp;&nbsp;4.1 | [<u>Participant Agreement, dated October 3, 2022, between Grayscale Investments, LLC and Grayscale Securities, LLC</u>](https://www.sec.gov/Archives/edgar/data/1761325/000095017022019177/gxlm-ex4_1.htm)[<u>(incorporated by reference to Exhibit 4.1 of the periodic report on Form 8-K filed by the Registrant on October 3, 2022).</u>](https://www.sec.gov/Archives/edgar/data/1761325/000095017022019177/gxlm-ex4_1.htm) |
| &nbsp;&nbsp;10.1 | [<u>Distribution and Marketing Agreement, dated October 3, 2022, between Grayscale Investments, LLC and Grayscale</u>](https://www.sec.gov/Archives/edgar/data/1761325/000095017022019177/gxlm-ex10_1.htm)[<u>Securities, LLC (incorporated by reference to Exhibit 10.1 of the periodic report on Form 8-K filed by the Registrant o</u>](https://www.sec.gov/Archives/edgar/data/1761325/000095017022019177/gxlm-ex10_1.htm)[<u>n October 3, 2022).</u>](https://www.sec.gov/Archives/edgar/data/1761325/000095017022019177/gxlm-ex10_1.htm) |
| &nbsp;&nbsp;31.1 | [<u>Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended, with respect to the Trust's Quarterly Report on Form 10-Q for the quarter ended December 31, 2022.</u>](gxlm-ex31_1.htm) |
| &nbsp;&nbsp;31.2 | [<u>Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended, with respect to the Trust's Quarterly Report on Form 10-Q for the quarter ended December 31, 2022.</u>](gxlm-ex31_2.htm) |
| &nbsp;&nbsp;32.1 | [<u>Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, with respect to the Trust's Quarterly Report on Form 10-Q for the quarter ended December 31, 2022.</u>](gxlm-ex32_1.htm) |
| &nbsp;&nbsp;32.2 | [<u>Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, with respect to the Trust's Quarterly Report on Form 10-Q for the quarter ended December 31, 2022.</u>](gxlm-ex32_2.htm) |
| &nbsp;&nbsp;101.INS\* | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| &nbsp;&nbsp;101.SCH\* | Inline XBRL Taxonomy Extension Schema Document  |
| &nbsp;&nbsp;101.CAL\* | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| &nbsp;&nbsp;101.LAB\* | Inline XBRL Taxonomy Extension Label Linkbase Document |
| &nbsp;&nbsp;101.PRE\* | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| &nbsp;&nbsp;101.DEF\* | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| &nbsp;&nbsp;104 | Cover Page Interactive Data File—The cover page interactive data file does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. |

---

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\* Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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**Glossary of Defined Terms**

"**Actual Exchange Rate**"—With respect to any particular asset, at any time, the price per single unit of such asset (determined net of any associated fees) at which the Trust is able to sell such asset for U.S. dollars (or other applicable fiat currency) at such time to enable the Trust to timely pay any Additional Trust Expenses, through use of the Sponsor's commercially reasonable efforts to obtain the highest such price.

"**Additional Trust Expenses**"—Together, any expenses incurred by the Trust in addition to the Sponsor's Fee that are not Sponsor-paid Expenses, including, but not limited to, (i) taxes and governmental charges, (ii) expenses and costs of any extraordinary services performed by the Sponsor (or any other service provider) on behalf of the Trust to protect the Trust or the interests of shareholders (including in connection with any Incidental Rights and any IR Virtual Currency), (iii) any indemnification of the Custodian or other agents, service providers or counterparties of the Trust, (iv) the fees and expenses related to the listing, quotation or trading of the Shares on any Secondary Market (including legal, marketing and audit fees and expenses) to the extent exceeding $600,000 in any given fiscal year and (v) extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters.

"**Administrator Fee**"—The fee payable to any administrator of the Trust for services it provides to the Trust, which the Sponsor will pay such administrator as a Sponsor-paid Expense.

"**Agent**"—A Person appointed by the Trust to act on behalf of the shareholders in connection with any distribution of Incidental Rights and/or IR Virtual Currency.

"**Authorized Participant**"—Certain eligible financial institutions that have entered into an agreement with the Trust and the Sponsor concerning the creation of Shares. Each Authorized Participant (i) is a registered broker-dealer, (ii) has entered into a Participant Agreement with the Sponsor and (iii) owns a digital wallet address that is known to the Custodian as belonging to the Authorized Participant or such Authorized Participant's Liquidity Provider.

"**Basket**"—A block of 100 Shares.

"**Basket Amount**"—On any trade date, the number of XLM required as of such trade date for each Creation Basket, as determined by dividing (x) the number of XLM owned by the Trust at 4:00 p.m., New York time, on such trade date, after deducting the number of XLM representing the U.S. dollar value of accrued but unpaid fees and expenses of the Trust (converted using the Index Price at such time, and carried to the eighth decimal place), by (y) the number of Shares outstanding at such time (with the quotient so obtained calculated to one one-hundred-millionth of one XLM (i.e., carried to the eighth decimal place)), and multiplying such quotient by 100.

"**Blockchain**" or "**Stellar Ledger**"—The public transaction ledger of the Stellar Network on which transactions in XLM are recorded.

"**Creation Basket**"—Basket of Shares issued by the Trust in exchange for deposits of the Basket Amount required for each such Creation Basket.

"**Custodial Services**"—The Custodian's services that (i) allow XLM to be deposited from a public blockchain address to the Trust's Digital Asset Account and (ii) allow the Trust and the Sponsor to withdraw XLM from the Trust's Digital Asset Account to a public blockchain address the Trust or the Sponsor controls pursuant to instructions the Trust or the Sponsor provides to the Custodian.

"**Custodian**"—Coinbase Custody Trust Company, LLC.

"**Custodian Agreement**"—The Amended and Restated Custodial Services Agreement, dated as of June 29, 2022, by and between the Trust and the Sponsor and Custodian that governs the Trust's and the Sponsor's use of the Custodial Services provided by the Custodian as a fiduciary with respect to the Trust's assets.

"**Custodian Fee**"—Fee payable to the Custodian for services it provides to the Trust, which the Sponsor shall pay to the Custodian as a Sponsor-paid Expense.

"**DCG**"—Digital Currency Group, Inc.

"**Digital Asset Account**"—A segregated custody account controlled and secured by the Custodian to store private keys, which allow for the transfer of ownership or control of the Trust's XLM on the Trust's behalf.

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"**Digital Asset Exchange**"—An electronic marketplace where exchange participants may trade, buy and sell XLM based on bid-ask trading. The largest Digital Asset Exchanges are online and typically trade on a 24-hour basis, publishing transaction price and volume data.

"**Digital Asset Exchange Market**"—The global exchange market for the trading of XLM, which consists of transactions on electronic Digital Asset Exchanges.

"**Digital Asset Holdings**"—The aggregate value, expressed in U.S. dollars, of the Trust's assets (other than U.S. dollars or other fiat currency), less its liabilities (which include estimated accrued but unpaid fees and expenses) calculated in the manner set forth under "Item 1. Business—Valuation of XLM and Determination of Digital Asset Holdings" in our Annual Report. See also "Item 1. Business—Investment Objective" in our Annual Report for a description of the Trust's NAV, as calculated in accordance with GAAP.

"**Digital Asset Holdings Fee Basis Amount**"—The amount on which the Sponsor's Fee for the Trust is based, as calculated in the manner set forth under "Item 1. Business—Valuation of XLM and Determination of Digital Asset Holdings" in our Annual Report.

"**Digital Asset Market**"—A "Brokered Market," "Dealer Market," "Principal-to-Principal Market" or "Exchange Market," as each such term is defined in the Financial Accounting Standards Board Accounting Standards Codification Master Glossary.

"**DSTA**"—The Delaware Statutory Trust Act, as amended.

"**DTC**"—The Depository Trust Company. DTC is a limited purpose trust company organized under New York law, a member of the U.S. Federal Reserve System and a clearing agency registered with the SEC. DTC will act as the securities depository for the Shares.

"**Exchange Act**"—The Securities Exchange Act of 1934, as amended.

"**FINRA**"—The Financial Industry Regulatory Authority, Inc., which is the primary regulator in the United States for broker-dealers, including Authorized Participants.

"**GAAP**"—United States generally accepted accounting principles.

"**Genesis**"—Genesis Global Trading, Inc., a wholly owned subsidiary of Digital Currency Group, Inc., which as of the date of this Quarterly Report, is the only Liquidity Provider of the Authorized Participant.

"**Grayscale Securities**"—Grayscale Securities, LLC, a wholly owned subsidiary of the Sponsor, which as of the date of this Quarterly Report, is the only acting Authorized Participant.

"**Incidental Rights**"—Rights to acquire, or otherwise establish dominion and control over, any virtual currency or other asset or right, which rights are incident to the Trust's ownership of XLM and arise without any action of the Trust, or of the Sponsor or Trustee on behalf of the Trust.

"**Index**"—The CoinDesk Lumens Price Index (XLMX).

"**Index License Agreement**"—The license agreement, dated as of February 1, 2022, between the Index Provider and the Sponsor governing the Sponsor's use of the Index for calculation of the Index Price.

"**Index Price**"—The U.S. dollar value of an XLM derived from the Digital Asset Exchanges that are reflected in the Index, calculated at 4:00 p.m., New York time, on each business day. See "Item 1. Business—Overview of the XLM Industry and Market—XLM Value—The Index and the Index Price" in our Annual Report for a description of how the Index Price is calculated. For purposes of the Trust Agreement, the term XLM Index Price shall mean the Index Price as defined herein.

"**Index Provider**"—CoinDesk Indices, Inc., a Delaware corporation that publishes the Index. DCG is the indirect parent company of CoinDesk Indices, Inc. As a result, CoinDesk Indices, Inc. is an affiliate of the Sponsor and the Trust and is considered a related party of the Trust.

"**Investment Advisers Act**"—Investment Advisers Act of 1940, as amended.

"**Investment Company Act**"—Investment Company Act of 1940, as amended.

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"**Investor**"—Any investor that has entered into a subscription agreement with an Authorized Participant, pursuant to which such Authorized Participant will act as agent for the investor.

"**IR Virtual Currency**"—Any virtual currency tokens, or other asset or right, acquired by the Trust through the exercise (subject to the applicable provisions of the Trust Agreement) of any Incidental Right.

"**Liquidity Provider**"—A service provider engaged by an Authorized Participant to source XLM on behalf of the Authorized Participant.

"**Marketing Fee**"—Fee payable to the marketer for services it provides to the Trust, which the Sponsor will pay to the marketer as a Sponsor-paid Expense.

"**NAV**"—The net asset value of the Trust determined on a GAAP basis.

"**OTCQX**"—The OTCQX tier of OTC Markets Group Inc.

"**Participant Agreement**"—An agreement entered into by an Authorized Participant with the Sponsor that provides the procedures for the creation of Baskets and for the delivery of XLM required for Creation Baskets.

"**SEC**"—The U.S. Securities and Exchange Commission.

"**Secondary Market**"—Any marketplace or other alternative trading system, as determined by the Sponsor, on which the Shares may then be listed, quoted or traded, including but not limited to, the OTCQX tier of the OTC Markets Group Inc.

"**Securities Act**"—The Securities Act of 1933, as amended.

"**Shares**"—Common units of fractional undivided beneficial interest in, and ownership of, the Trust.

"**Sponsor**"—Grayscale Investments, LLC.

"**Sponsor-paid Expenses**"—The fees and expenses incurred by the Trust in the ordinary course of its affairs that the Sponsor is obligated to assume and pay, excluding taxes, but including: (i) the Marketing Fee, (ii) the Administrator Fee, (iii) the Custodian Fee and fees for any other security vendor engaged by the Trust, (iv) the Transfer Agent fee, (v) the Trustee fee, (vi) the fees and expenses related to the listing, quotation or trading of the Shares on any Secondary Market (including customary legal, marketing and audit fees and expenses) in an amount up to $600,000 in any given fiscal year, (vii) ordinary course, legal fees and expenses, (viii) audit fees, (ix) regulatory fees, including, if applicable, any fees relating to the registration of the Shares under the Securities Act or the Exchange Act, (x) printing and mailing costs, (xi) costs of maintaining the Trust's website and (xii) applicable license fees, provided that any expense that qualifies as an Additional Trust Expense will be deemed to be an Additional Trust Expense and not a Sponsor-paid Expense.

"**Sponsor's Fee**"—A fee, payable in XLM, which accrues daily in U.S. dollars at an annual rate of 2.5% of the Digital Asset Holdings Fee Basis Amount of the Trust as of 4:00 p.m., New York time, on each day; provided that for a day that is not a business day, the calculation of the Sponsor's Fee will be based on the Digital Asset Holdings Fee Basis Amount from the most recent business day, reduced by the accrued and unpaid Sponsor's Fee for such most recent business day and for each day after such most recent business day and prior to the relevant calculation date.

"**Stellar**" or the "**Stellar Network**"—The online, end-user-to-end-user network hosting a public transaction ledger, known as the Blockchain, and the source code comprising the basis for the cryptographic and algorithmic protocols governing the Stellar Network. See "Item 1. Business—Overview of the XLM Industry and Market" in our Annual Report.

"**Transfer Agent**"—Continental Stock Transfer & Trust Company, a Delaware corporation.

"**Transfer Agent Fee**"—Fee payable to the Transfer Agent for services it provides to the Trust, which the Sponsor will pay to the Transfer Agent as a Sponsor-paid Expense.

"**Trust**"—Grayscale Stellar Lumens Trust (XLM), a Delaware statutory trust, formed on October 26, 2018 under the DSTA and pursuant to the Trust Agreement.

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"**Trust Agreement**"—The Amended and Restated Declaration of Trust and Trust Agreement between the Trustee and the Sponsor establishing and governing the operations of the Trust, as amended by Amendments No. 1 and No. 2 thereto and as the same may be amended from time to time.

"**Trustee**"—Delaware Trust Company (formerly known as CSC Trust Company of Delaware), a Delaware trust company, is the Delaware trustee of the Trust.

"**U.S.**"—United States.

"**U.S. dollar**" or "**$**"—United States dollar or dollars.

"**XLM**" or "**Lumens**"—Stellar Lumens tokens, which are a type of digital asset based on an open-source cryptographic protocol existing on the Stellar Network, comprising units that constitute the assets underlying the Trust's Shares.

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**SIGNATURES** 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned in the capacities\* indicated, thereunto duly authorized.

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| | | |
|:---|:---|:---|
| **Grayscale Investments, LLC**<br>**as Sponsor of Grayscale Stellar Lumens Trust (XLM)** | **Grayscale Investments, LLC**<br>**as Sponsor of Grayscale Stellar Lumens Trust (XLM)** | **Grayscale Investments, LLC**<br>**as Sponsor of Grayscale Stellar Lumens Trust (XLM)** |
| By: | /s/ Michael Sonnenshein | /s/ Michael Sonnenshein |
|  | Name: | Michael Sonnenshein |
|  | Title: | Member of the Board of Directors and Chief Executive Officer (Principal Executive Officer)\* |

---

---

| | | |
|:---|:---|:---|
| By: | /s/ Edward McGee | /s/ Edward McGee |
|  | Name: | Edward McGee |
|  | Title: | Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)\* |

---

Date: February 8, 2023

\* The Registrant is a trust and the persons are signing in their capacities as officers or directors of Grayscale Investments, LLC, the Sponsor of the Registrant.

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## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a)** 

**AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Michael Sonnenshein, certify that:

1. I have reviewed this quarterly report of Grayscale Stellar Lumens Trust (XLM) ("Trust");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 8, 2023

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| |
|:---|
| /s/ Michael Sonnenshein |
| Michael Sonnenshein \*<br>Chief Executive Officer (Principal Executive Officer) |

---

\* The Registrant is a trust and Mr. Sonnenshein is signing in his capacity as Principal Executive Officer of Grayscale Investments, LLC, the Sponsor of the Registrant.

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## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION OF PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER PURSUANT TO RULE 13a-14(a)** 

**AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Edward McGee, certify that:

1. I have reviewed this quarterly report of Grayscale Stellar Lumens Trust (XLM) ("Trust");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 8, 2023

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| |
|:---|
| /s/ Edward McGee |
| Edward McGee \*<br>Chief Financial Officer (Principal Financial and Accounting Officer) |

---

\* The Registrant is a trust and Mr. McGee is signing in his capacity as Principal Financial and Accounting Officer of Grayscale Investments, LLC, the Sponsor of the Registrant.

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## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATION PURSUANT TO**

**18 U.S.C. SECTION 1350**

**AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Quarterly Report of Grayscale Stellar Lumens Trust (XLM) (the "Trust") on Form 10-Q for the period ending December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael Sonnenshein, Principal Executive Officer of Grayscale Investments, LLC, the Sponsor of the Trust, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust.

---

| |
|:---|
| /s/ Michael Sonnenshein |
| Michael Sonnenshein \* |
| Chief Executive Officer (Principal Executive Officer) |
| February 8, 2023 |

---

\* The Registrant is a trust and Mr. Sonnenshein is signing in his capacity as Principal Executive Officer of Grayscale Investments, LLC, the Sponsor of the Trust.

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## Exhibit 32.2

**Exhibit 32.2**

**CERTIFICATION PURSUANT TO**

**18 U.S.C. SECTION 1350**

**AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Quarterly Report of Grayscale Stellar Lumens Trust (XLM) (the "Trust") on Form 10-Q for the period ending December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Edward McGee, Principal Financial and Accounting Officer of Grayscale Investments, LLC, the Sponsor of the Trust, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust.

---

| |
|:---|
| /s/ Edward McGee |
| Edward McGee \* |
| Chief Financial Officer (Principal Financial and Accounting Officer) |
| February 8, 2023 |

---

\* The Registrant is a trust and Mr. McGee is signing in his capacity as Principal Financial and Accounting Officer of Grayscale Investments, LLC, the Sponsor of the Trust.

------