SEC Filing Document

Company: Canary Staked TRX ETF
Ticker: 
CIK: 2064768
Filing Type: S-1
Document Type: S-1
Date Filed: 2025-04-18
Accession Number: 0001999371-25-004423
Exchange: 
SIC Code: 6221
SIC Description: Commodity Contracts Brokers & Dealers
URL: https://www.sec.gov/Archives/edgar/data/2064768/000199937125004423/canary-s1_041825.htm

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in the Trust. Conversely, if the rewards for validators (i.e., Super Representatives) or the value of transaction fees are insufficient to incentivize participation, validators may reduce activity or cease validating transactions altogether. Ultimately, if the cost of maintaining Super Representative infrastructure exceeds the value of rewards and user-delegated voting support, validators may operate at a loss, transition to other networks or cease operations entirely. Each of these outcomes could impair transaction throughput and network stability, which could adversely affect the performance of the Tron Network and reduce the value of TRX held by the Trust. Unlike some proof-of-stake networks, the Tron Network does not burn user transaction fees. Instead, users expend Bandwidth and Energy resources—acquired by freezing TRX—or pay TRX directly when these resources are insufficient. If Bandwidth and Energy consumption becomes prohibitively expensive during peak activity, it could reduce user demand for on-chain activity, impacting validator income over time.

significant drop in validator participation could reduce the collective throughput of the Tron Network, resulting in slower transaction
confirmation, higher congestion and increased vulnerability to disruption or malicious activity. If block production slows or becomes
less reliable, user confidence in the network could be undermined. Any reduction in validator engagement or loss of network responsiveness
could adversely affect the value of the Trust’s TRX holdings or the Sponsor’s ability to operate effectively.

Certain
promoters of TRX have a history of regulatory enforcement actions against them, and future similar actions may have a detrimental effect
on the value of TRX.

Justin
Sun, the founder of the Tron Blockchain, faced enforcement action by the SEC in 2023 for alleged violations related to the sale of unregistered
securities and other regulatory issues. The SEC accused him of misleading investors regarding the nature of certain cryptocurrency offerings.
The enforcement action led to heightened scrutiny of not just Sun but also the Tron platform and TRX. Following the news of the SEC’s
allegations and the actions taken, the value of TRX experienced significant volatility. The enforcement actions by the SEC were ultimately
dismissed.

the extent the SEC or another governmental agency brings further enforcement actions against Justin Sun or other Tron platform insiders
or promoters, TRX’s reputation and user engagement may be affected, influencing its long-term viability and sentiment among investors.
Any such events may result in a temporary or permanent decrease in the value of TRX.

[Risks
associated with the Sponsor staking a portion of the Trust’s assets.

The
Trust intends to establish a program to stake a portion of the Trust’s assets through one or more Staking Providers. The Staking
Provider will provide hardware, software and services necessary to enable the Trust to establish nodes and stake the Trust’s TRX
on the Tron Network. As a result of any staking activity in which the Trust may engage, the Trust expects to receive certain staking rewards
of TRX, which may be treated for federal income tax purposes as income to the Trust. The Staking Provider exercises no discretion as to
the amount the Trust’s TRX to be staked or timing of the staking activities (other than as is incidental in establishing or deactivating
validator nodes). The TRX Custodian will maintain exclusive possession and control of the private keys associated with any staked TRX
at all times. The amount of TRX the Trust may receive as reward for its staking activity can vary significantly over time.

Staking
activity comes with a risk of loss of TRX. None of the Trust’s assets, including any staked assets, are subject to the protections
enjoyed by depositors with Federal Deposit Insurance Corporation (“FDIC”) or SIPC member institutions. The staked assets may
also be subject to “slashing” penalties. Slashings occur when a validator attests to two different histories of the chain
and penalties occur when a validator is offline for a prolonged period of time. In combination, they deter malicious validators from attacking
blockchains and ensure consistent participation of validators to maintain network stability. While the Sponsor does not expect the activities
of the Staking Provider to result in slashing penalties, there can be no guarantee that slashing penalties will not occur. Furthermore,
the Staking Provider’s liability to the Trust is limited, and the Staking Provider may lack the assets or insurance in order to
support the recovery of any losses incurred. Accordingly, there can be no guarantee that the Trust would recover any of its staked assets,
or the value thereof, if it is subject to slashing or penalties.

Additionally,
the TRX Blockchain implements “activation” and “exit” buffer periods moderating when stakers can unstake and withdraw
their stake. This prevents malicious actors from performing an attack and withdrawing before funds are slashed and preserves network stability.

“Activation”
is the funding of a validator to be included in the active set, being forward selected for attestations and block proposals. “Exit”
is the request to exit from the active set and no longer be selected for attestations or block proposals. As part of these “voting”
and “withdrawing” processes of TRX staking, any staked TRX will be inaccessible for a period of time. The duration of activating
and exiting periods are dependent on a range of factors, including network conditions. However, depending on demand, unstaking can take
between hours, weeks or months to complete. This can result in certain liquidity risk to the Trust, which the Sponsor will seek to manage
through a range of risk management methods.]

[TRX
staking may result in adverse tax consequences for the Trust.

The
staking of the Trust’s TRX is expected to result in the Trust’s receipt of staking proceeds in the form of additional TRX.
Any such rewards are expected to be treated as ordinary income for tax purposes. To the extent that staking proceeds are regarded as ordinary
income, the Trust is expected to experience a taxable event. Thus, the Trust’s participation in TRX staking could result in increasing
the tax liability of the Trust. Any such tax liability could adversely affect an investment in the Shares.]

[The
Staking Provider may not optimally execute the Trust’s TRX staking program.

The
Trust relies on the resources of the Staking Provider to facilitate the Trust’s staking program. The Staking Provider will provide
the hardware, software and services necessary for the TRX Custodian to deposit TRX into a validator node. The hardware and software utilized
by the Staking Provider may prove to be inadequate to maximize the Trust’s staking revenue. The Trust is dependent on the hardware,
software and services of the Staking Provider to effectively execute the Trust’s staking program.]

Risk Factors Related to Digital
Assets

The
Value Of The Shares Relates Directly To The Value Of TRX, The Value Of Which May Be Highly Volatile And Subject To Fluctuations Due To
A Number Of Factors.

The value of the
Shares relates directly to the value of the TRX held by the Trust and fluctuations in the price of TRX could adversely affect the value
of the Shares. The market price of TRX may be highly volatile, and subject to a number of factors, including:

•	an increase in the global TRX supply or a decrease in global TRX demand;

•	market conditions of, and overall sentiment towards, the digital assets and blockchain technology industry;

•	trading activity on digital asset trading platforms, which, in many cases, are
largely unregulated or may be subject to manipulation;

•	the adoption of TRX as a medium of exchange, store-of-value or other consumptive
asset and the maintenance and development of the open-source software protocol of the Tron Network, and their ability to meet user demands;

•	manipulative trading activity on digital asset exchanges, which, in many cases, are largely unregulated;

•	the needs of decentralized applications, smart contracts, their users, and users
of the Tron Network generally for TRX to pay Bandwidth or Energy resources to execute transactions;

•	forks in the Tron Network, particularly where changes to the Tron Network
source code are either not well-received by key constituencies within the TRX community or are not successfully executed or implemented and fail to achieve
the functionality such changes were intended to bring about;

•	governmental or regulatory actions by, or investigations or litigation in, countries
around the world targeting well-known decentralized applications or smart contracts that are built on the Tron Network, or other developments
or problems, and associated publicity, involving or affecting such decentralized applications or smart contracts;

•	increased competition from other forms of digital assets or payment services, including
digital currencies constituting legal tender that may be issued in the future by central banks, or digital assets meant to serve as a
medium of exchange by major private companies or other institutions;

•	increased competition from other blockchain networks combining smart contracts,
programmable scripting languages, and an associated runtime environment, with blockchain-based recordkeeping, particularly where such
other blockchain networks are able to offer users access to a larger consumer user base, greater efficiency, reliability, or processing
speed, or more economical transaction processing fees than the Tron Network;