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

Chunk 42 of 59
Word Count: 1355
Character Count: 8444

Document Content:

affiliation or material relationship between such TRX trading counterparties and the Authorized Participants or other service providers of the Trust in executing a transaction in TRX with the Trust. The agreements with the TRX trading counterparties provide that once the Sponsor determines based on its execution procedures which counterparty to execute a trade with and the Sponsor has placed a trade with a specific counterparty, that counterparty is contractually obligated to settle that trade. The TRX trading counterparties will have no obligation to participate in cash orders for creations and redemptions. Each of these third parties are, and any other trading counterparty the Trust places orders with in the future will be, subject to U.S. federal and/or state licensing requirements or similar laws in non-U.S. jurisdictions and maintain practices and policies designed to comply with AML and KYC regulations or similar laws in non-U.S. jurisdictions. CUSTODY OF THE TRUST’S ASSETS

The TRX Custodian
is authorized to safeguard the Trust’s TRX holdings allocated to it by the Sponsor. The TRX Custodian maintains one or more custody
accounts on its books, pursuant to the terms of the TRX Custody Agreement, for the receipt, safekeeping, and maintenance of TRX.

As a regulated
custodian, the TRX Custodian is subject to a detailed statutory and regulatory framework, including holding customer assets in segregated
client accounts on behalf of customers. 100% of Trust assets and private keys safekeeped by the TRX Custodian will be held in cold storage
in segregated accounts and are never commingled with the TRX Custodian or other client assets. The TRX Custodian applies industry standards,
such as CryptoCurrency Security Standard (CCSS) and SOC1 and SOC2, while also working with the most trusted brands in the industry and
offering clients comprehensive insurance solutions.

The TRX Custodian
ecosystem and architecture for private key management include the BitGo Platform, hardware security modules (“HSMs”) and modular
services. The TRX Custodian cold custody solution is built on BitGo’s security to manage keys on behalf of customers. The TRX Custodian
only signs transactions that have been authorized by the Sponsor and follow the policies set by the account administrators.

The primary keys
and backup keys are created offline using an Offline Vault Console (“OVC”) on air gapped laptops during a secure ceremony
to create hardened cryptographic seeds that power the BitGo solution. This is to ensure only machines which have no access to the internet
and are pristine are able to see private key material.

Undisclosed personnel
at the TRX Custodian hold the sharded keys. When they are reconstituted, they are able to sign a transaction which moves funds in the
public blockchain. To mitigate collusion, the individuals who have the sharded keys are different from those who have access to the vaults
where the signings happen.

The private key
is reconstituted in the OVC, but only in internal memory. At no point is it displayed or shown to any user. After signing is done, the
key is no longer available in memory. The OVC is run in a read-only disk, so once the laptop is powered off, there is no non-volatile
storage of any kind to write back to disk. The OVC operates using a RAM disk, where it simulates a real hard disk, but it is completely
ephemeral and is wiped as soon as the machine is power cycled or rebooted, thus wiping the reconstituted private key and preventing it
from being copied or compromised.

The TRX Custodian
is a South Dakota trust company and the private keys are strategically distributed across various geographic locations within the United
States. In order to enhance security measures, the TRX Custodian refrains from disclosing the exact locations of these keys.

At time of wallet
creation, the TRX Custodian creates a unique key pair within its HSM in order to give each client a unique wallet on-chain. These online
keys are wrapped by the BitGo HSM and stored within the TRX Custodian’s data vault for the BitGo Platform keys used to sign transactions.

As all custody
wallets are segregated, the existence of TRX held by the Trust can be verified on-chain by the Sponsor or any other authorized party.

The TRX Custodian
cold wallets are supported by a $250 million insurance policy issued by Lloyd’s of London. The specifics of the policy include Cyber
Insurance, E&O, general specie. Any copying and theft of private keys, insider theft or dishonest acts by the TRX Custodian employees
or executives, and loss of keys directly related to the TRX Custodian’s custody of keys would be covered by this amount at minimum.
This insurance policy is shared among all of the TRX Custodian’s clients and is not specific to the Trust or to customers holding
TRX and may not be available or sufficient to protect the Trust from all possible losses or sources of losses. The Sponsor may purchase
additional insurance coverage through the TRX Custodian’s underwriter, though the Sponsor has not purchased such additional insurance
cover as of the date of this prospectus. The TRX Custodian is not FDIC-insured. The TRX Custodian has established a business continuity
plan that will support its ability to conduct business in the event of a significant business disruption. This plan is reviewed and updated
annually, and can be updated more frequently, if deemed necessary, by the TRX Custodian in its sole discretion. Should the TRX Custodian
be impacted by a significant business disruption, the TRX Custodian aims to minimize business interruption as quickly and efficiently
as possible.

The TRX Custodian’s
fork policy determines that in the event of an upcoming modification to the Tron Network that could result in a digital asset network
fork or airdrop, the TRX Custodian will use best commercial efforts to provide the value of the forked digital asset. In addition to the
TRX Custodian’s fork policy, the TRX Custodian adheres to the fork policy outlined by the CME. The TRX Custodian may not support
airdrops, side chains, or other derivative, enhanced, or forked protocols, tokens, or coins which supplement or interact with an asset
supported by the TRX Custodian and assumes absolutely no responsibility in respect to new protocols. The Trust Agreement provides, and
the Sponsor has communicated to the TRX Custodian, that the Trust disclaims all rights to Incidental Rights and IR Virtual Currencies.

The TRX
Custody Agreement commenced on the effective date, as detailed in the agreement, and will continue for one (1) year, unless earlier
terminated in accordance with the terms of the TRX Custody Agreement. After the initial term, the TRX Custody Agreement will
automatically renew for successive renewal terms, as established on the agreement, unless either party notifies the other of its
intention not to renew with prior notice. The TRX Custodian may terminate the TRX Custody Agreement for any reason upon providing at
least thirty (30) days’ written notice to the Trust and to the Sponsor, or immediately if the TRX Custodian perceives a risk
of legal or regulatory non-compliance associated with the Trust’s custodial account activity, among others. The Sponsor may
terminate the TRX Custody Agreement at any time upon providing at least thirty (30) days’ written notice to the TRX Custodian,
paying outstanding amounts and an early termination fee.

The
Trust generally does not intend to hold cash or cash equivalents except for cash received from Authorized Participants in connection with
a creation transaction or cash held by the Trust pending distribution to Authorized Participants in a redemption transaction or payment
of Trust expenses. The Trust has entered into a custodian agreement (the “Cash Custody Agreement”) with the Cash Custodian
under which the Cash Custodian acts as custodian of the Trust’s cash. The Trust is obligated to convert any cash contributed to
TRX as soon as practicable, except to the extent necessary for a redemption transaction or to pay expenses.

The Trust may change
the custodial arrangements described in this Prospectus at any time without notice to Shareholders. To the
extent a change in custodial arrangements is deemed material by the Sponsor, the Trust will notify Shareholders in a Prospectus supplement
and/or a current report on Form 8-K or in its annual or quarterly reports.]

Forks and Air Drops