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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custodian or, to the extent identifiable, other responsible third parties (for example, a thief or terrorist), any of which may not have the financial resources (including liability insurance coverage) to satisfy a valid claim of the Trust. Similarly, as noted below, the Trust’s Custodian has limited liability to the Trust, which could adversely affect the Trust’s ability to seek recovery from them, even when the TRX Custodian’s actions or failure to act are the cause of the Trust’s loss. may not be possible, either because of a lack of available policies or because of prohibitive cost, for the Trust to obtain insurance that would cover losses of the Trust’s TRX. If an uninsured loss occurs or a loss exceeds policy limits, the Trust could lose all of its assets. The Trust’s risk management processes and policies may prove to not be adequate to prevent any loss of the Trust’s TRX.

Custody of digital
assets presents inherent and unique risks relating to access loss, theft and means of recourse in such scenarios. The Sponsor is continuing
to monitor and evaluate the Trust’s risk management processes and policies and believes that the current risk management processes
and procedures are reasonably designed and effective. The Trust does not normally interact with any digital asset trading platforms, and
the Trust’s TRX is held in a cold storage wallet with the TRX Custodian, a duly chartered New
York limited liability trust company, pursuant to an express custodial relationship. The Sponsor believes that the security procedures
that the Sponsor and the TRX Custodian utilize, such as hardware redundancy, segregation and offline data storage (i.e., the maintenance
of data on computers and/or storage media that is not directly connected to or accessible from the internet and/or networked with other
computers, also known as “cold storage”) protocols are reasonably designed to safeguard the Trust’s TRX
from theft, loss, destruction or other issues relating to hackers and technological attack. Despite the number of security procedures
that the Sponsor and Custodian employ, it is impossible to guarantee the prevention of any loss due to a security breach, software defect,
act of God, pandemic or riot that may be borne by the Trust. Notwithstanding the above, the Sponsor and the TRX Custodian are responsible
for their own gross negligence, willful misconduct or bad faith. In the event that the Trust’s risk management processes and policies
prove to not be adequate to prevent any loss of the Trust’s TRX and such loss is not covered
by insurance or is otherwise recoverable, the value of the Shares will decrease as a result and investors would experience a decrease
in the value of their investment.

The TRX
Custodian could become insolvent or become subject to a receivership or bankruptcy proceeding, which may result in a loss of or delay
in access to Trust assets.

If the TRX Custodian
becomes insolvent or subject to a receivership or bankruptcy proceeding, the Trust’s operations may be adversely affected, and there
is a risk that the insolvency, receivership or bankruptcy of the TRX Custodian may result in the loss of all or a substantial portion
of the Trust’s assets or in a significant delay in the Trust having access to those assets.

The
Trust’s assets will be held in one or more accounts maintained for the Trust by the TRX Custodian. Given that the contractual
protections and legal rights of customers with respect to digital assets held on their behalf by third parties are relatively
untested in a bankruptcy or receivership proceeding of an entity such as the TRX Custodian, in the event of an insolvency,
receivership or bankruptcy proceeding with respect to the TRX Custodian, there is a risk that the Trust’s assets may be
considered the property of the bankruptcy estate of the TRX Custodian, and that customers of the TRX Custodian – including the
Trust – may be at risk of being treated as general unsecured creditors of the TRX Custodian and subject to the risk of total
loss or markdowns on value of such assets. Moreover, even if the Trust’s assets ultimately are not treated as part of the TRX
Custodian’s bankruptcy estate, the automatic stay could apply until the bankruptcy court made such a determination, and the
limited precedent and fact-dependent nature of the determination could delay or preclude the return of such assets to the Trust.
Further, the bankruptcy court may permit the TRX Custodian to retain possession or custody of its customers’ assets until any
claims the estate may have against the customers (including the Trust) are resolved.

actual or perceived business failure or interruption, default, failure to perform security breach or other problems affecting the TRX
Custodian could harm the Trust’s operations, result in partial or total loss of the Trust’s assets, damage the Trust’s
reputation and negatively affect the market perception of the effectiveness of the Trust, all of which could in turn reduce demand for
the Shares, resulting in a reduction in the price of the Shares.

The
Trust may change the custodial arrangements described in this Prospectus at any time without notice to Shareholders.

Loss
of a critical banking relationship for, or the failure of a bank used by, the Trust could adversely impact the Trust’s ability to
create or redeem Baskets, or could cause losses to the Trust.

The
Cash Custodian is necessary to facilitate the creation and redemption of Baskets (in exchange for cash subscriptions by Authorized Participants,
or in exchange for redemptions of Shares by Authorized Participants), and other cash movements, including in connection with the purchase
of TRX by the Sponsor to effectuate subscriptions for cash and the selling of TRX to effect redemptions for cash and, to the extent applicable,
other Trust expenses, and in extraordinary circumstances, to effect the liquidation of the Trust’s TRX. The Trust relies on the
Cash Custodian to hold any cash related to the purchase or sale of TRX. To the extent that the Trust or Sponsor face difficulty establishing
or maintaining banking relationships, the loss of the Trust’s banking partners, including the Cash Custodian, or the imposition
of operational restrictions by these banking partners and the inability of the Trust to utilize other financial institutions may result
in a disruption of creation and redemption activity of the Trust, or cause other operational disruptions or adverse effects for the Trust.
In the future, it is possible that the Trust could be unable to establish accounts at new banking partners, or that the banks with which
the Trust is able to establish relationships may not be as large or well-capitalized or subject to the same degree of prudential supervision
as the existing providers.

The
Trust could also suffer losses in the event that a bank in which the Trust holds customer cash, including the Cash Custodian, fails, becomes
insolvent, enters receivership, is taken over by regulators, enters financial distress, or otherwise suffers adverse effects to its financial
condition or operational status. Recently, some banks have experienced financial distress. If the Cash Custodian were to experience financial
distress or its financial condition is otherwise affected, the Cash Custodian’s ability to provide services to the Trust could be
affected. Moreover, the future failure of the Cash Custodian or other bank at which the Trust maintains cash could result in losses to
the Trust, to the extent the balances are not covered by deposit insurance. As a result, the Trust could suffer losses.

The
Trust is subject to risks due to its concentration of investments in a single asset class.

Unlike
other funds that may invest in diversified assets, the Trust’s investment strategy is concentrated in a single asset within a single
asset class. This concentration maximizes the degree of the Trust’s exposure to a variety of market risks associated with TRX and
digital assets. By concentrating its investment strategy solely in TRX, any losses suffered as a result of a decrease in the price of
TRX can be expected to reduce the value of an interest in the Trust and will not be offset by other gains if the Trust were to invest
in underlying assets that were diversified.

The
lack of active trading markets for the Shares may result in losses on Shareholders’ investments at the time of disposition of Shares.

Although
Shares of the Trust are expected to be publicly listed and traded on an exchange, there can be no guarantee that an active trading
market for the Shares will develop or be maintained. If Shareholders need to sell their Shares at a time when no active market for
them exists, the price Shareholders receive for their Shares, assuming that Shareholders are able to sell them, may be lower than
the price that Shareholders would receive if an active market did exist and, accordingly, a Shareholder may suffer losses.

Several
factors may affect the Trust’s ability to achieve its investment objective on a consistent basis.