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 36 of 59
Word Count: 1482
Character Count: 9166

Document Content:

would be produced through the use of another methodology. TRX valued using techniques other than those employed by the Pricing Benchmark, including TRX investments that are “fair valued,” may differ from the value established by the Pricing Benchmark. The Trust Agreement includes provisions that limit Shareholders’ voting rights and restrict Shareholders’ right to bring a derivative action. Under the Trust Agreement, Shareholders generally have no voting rights and the Trust will not have regular Shareholder meetings. Shareholders take no part in the management or control of the Trust. Accordingly, Shareholders do not have the right to authorize actions, appoint service providers or take other actions as may be taken by shareholders of other trusts or companies where shares carry such rights. The Sponsor may take actions in the operation of the Trust that may be adverse to the interests of Shareholders and may adversely affect the value of the Shares.

Moreover,
pursuant to the terms of the Trust Agreement, Shareholders’ statutory right under Delaware law to bring a derivative action (i.e.,
to initiate a lawsuit in the name of the Trust in order to assert a claim belonging to the Trust against a fiduciary of the Trust or against
a third-party when the Trust’s management has refused to do so) is restricted. Under Delaware law, a shareholder may bring a derivative
action if the shareholder is a shareholder at the time the action is brought and either (i) was a shareholder at the time of the
transaction at issue or (ii) acquired the status of shareholder by operation of law or the Trust’s governing instrument from
a person who was a shareholder at the time of the transaction at issue. Additionally, Section 3816(e) of the Delaware Statutory Trust
Act specifically provides that a “beneficial owner’s right to bring a derivative action may be subject to such additional
standards and restrictions, if any, as are set forth in the governing instrument of the statutory trust, including, without limitation,
the requirement that beneficial owners owning a specified beneficial interest in the statutory trust join in the bringing of the derivative
action.” In addition to the requirements of applicable law and in accordance with Section 3816(e), the Trust Agreement provides
that no Shareholder will have the right, power or authority to bring or maintain a derivative action, suit or other proceeding on behalf
of the Trust unless two or more Shareholders who (i) are not “Affiliates” (as defined in the Trust Agreement) of one
another and (ii) collectively hold at least 10.0% of the outstanding Shares join in the bringing or maintaining of such action, suit
or other proceeding. This provision applies to any derivative actions brought in the name of the Trust other than claims under the federal
securities laws and the rules and regulations thereunder.

Due
to this additional requirement, a Shareholder attempting to bring or maintain a derivative action in the name of the Trust will be required
to locate other Shareholders with which it is not affiliated and that have sufficient Shares to meet the 10.0% threshold based on the
number of Shares outstanding on the date the claim is brought and thereafter throughout the duration of the action, suit or proceeding.
This may be difficult and may result in increased costs to a Shareholder attempting to seek redress in the name of the Trust in court.
Moreover, if Shareholders bringing a derivative action, suit or proceeding pursuant to this provision of the Trust Agreement do not hold
10.0% of the outstanding Shares on the date such an action, suit or proceeding is brought, or such Shareholders are unable to maintain
Share ownership meeting the 10.0% threshold throughout the duration of the action, suit or proceeding, such Shareholders’ derivative
action may be subject to dismissal. As a result, the Trust Agreement limits the likelihood that a Shareholder will be able to successfully
assert a derivative action in the name of the Trust, even if such Shareholder believes that he or she has a valid derivative action, suit
or other proceeding to bring on behalf of the Trust.

THE TRUST AND TRX
PRICES

Overview of the Trust

The Trust’s
investment objective is to seek to provide exposure to the value of TRX held by the Trust, less the expenses of the Trust’s operations.
In seeking to achieve its investment objective, the Trust will hold TRX and will value its net assets and the Shares daily based on the
Pricing Benchmark. TRX will be the only digital asset held by the Trust.

The Sponsor believes
that the Trust will provide a cost-efficient way for investors to implement strategic and tactical asset allocation strategies that use
TRX by investing in the Shares rather than purchasing, holding and trading TRX directly. The latter alternative would require an investor
to acquire TRX by selecting a digital asset trading platform and opening an account or arranging a private transaction, and initiating
a fiat transaction to initiate or settle such acquisition. An investor would then also be required to custody such TRX by selecting a
retail or institutional custodial platform or establishing a personal computer or hardware security module-based system capable of transacting
directly on the blockchain, and incurring the risk associated with cybersecurity and maintaining a private key that is irrecoverable if
lost, among other difficulties.

The Pricing Benchmark

The net assets of
the Trust and its Shares are valued on a daily basis with reference to the Pricing Benchmark, a financial data website integrating spot
market prices from various digital asset trading platforms, that is designed to reflect the performance of TRX in U.S. dollars. The Pricing
Benchmark was created to facilitate financial products based on TRX. It serves as a once-a-day benchmark rate of the U.S. dollar price
of TRX (USD/TRX), calculated as of 4:00 p.m. ET.

The Pricing Benchmark
aggregates the trade flow of several major TRX trading venues, during an observation window between 3:00 p.m. and 4:00 p.m. ET into the
U.S. dollar price of one TRX at 4:00 p.m. ET. The Sponsor may substitute an alternative reference rate as the Benchmark if it determines,
in good faith, that such reference rate accurately reflects the market price of TRX.

The Trust uses the
Pricing Benchmark to calculate its NAV, which is the aggregate U.S. dollar value of TRX in the Trust, based on the Pricing Benchmark,
less its liabilities and expenses. “NAV per Share” is calculated by dividing NAV by the number of Shares currently outstanding.
NAV and NAV per Share are not measures calculated in accordance with GAAP.

NAV is not intended
to be a substitute for the Trust’s Principal Market NAV calculated in accordance with GAAP, and NAV per Share is not intended to
be a substitute for the Trust’s Principal Market NAV per Share calculated in accordance with GAAP.

The Sponsor, in
its sole discretion, may cause the Trust to price its portfolio based upon an index, benchmark or standard other than the Pricing Benchmark
at any time, with prior notice to the Shareholders, if investment conditions change or the Sponsor believes that another index, benchmark
or standard better aligns with the Trust’s investment objective and strategy. The Sponsor may make this decision for a number of
reasons, including, but not limited to, a determination that the Pricing Benchmark price of TRX differs materially from the global market
price of TRX and/or that third parties are able to purchase and sell TRX on public or private markets not included among the Constituent
Platforms, and such transactions may take place at prices materially higher or lower than the Pricing Benchmark price. The Sponsor, however,
is under no obligation whatsoever to make such changes in any circumstance. In the event that the Sponsor intends to establish the Trust’s
NAV by reference to an index, benchmark or standard other than the Pricing Benchmark, it will provide Shareholders with notice in a prospectus
supplement and/or through a current report on Form 8-K or in the Trust’s annual or quarterly reports.

[Pricing
Benchmark Methodology

The Pricing Benchmark
is calculated based on the “Relevant Transactions” (as defined below) of all of its constituent TRX trading venues (the “Constituent
Platforms”) as follows:

●	All Relevant Transactions are added to a joint list, recording the time of execution,
trade price and size for each transaction.

●	The list is partitioned by timestamp into twelve (12) equally sized time intervals
of five (5) minutes in length.

●	For each partition separately, the volume-weighted median trade price is calculated
from the trade prices and sizes of all Relevant Transactions, i.e., across all Constituent Platforms. A volume-weighted median differs
from a standard median in that a weighting factor, in this case trade size, is factored into the calculation.

●	The Pricing Benchmark is then determined by the equally weighted average of the
volume medians of all partitions.

20__, the Constituent Platforms included in the Pricing Benchmark are ____, ____ and ____.