SEC Filing Document

Company: VanEck BNB ETF
Ticker: 
CIK: 2066824
Filing Type: S-1
Document Type: S-1
Date Filed: 2025-05-05
Accession Number: 0002066824-25-000002
Exchange: 
SIC Code: 6221
SIC Description: Commodity Contracts Brokers & Dealers
URL: https://www.sec.gov/Archives/edgar/data/2066824/000206682425000002/vaneckbnbetfs-1.htm

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the quantity of digital assets involved in the Loss, or return to the Trust a quantity of the same fiat currency that is equal to the quantity of fiat currency involved in the Loss (if the Loss involved the Fiat Account). However, the Trust does not control the BNB Custodian and cannot guarantee that the BNB Custodian will perform its obligations to the Trust under the Custody Agreement, in a timely manner or at all. The Custody Agreement provides that (i) the BNB Custodian does not own or control the underlying software protocols of networks which govern the operation of digital assets (including the Ethereum Blockchain), (ii) the BNB Custodian makes no guarantees regarding their security, functionality, or availability, and (iii) in no event shall the BNB Custodian be liable for or in connection with any acts, decisions, or omissions made by developers or promoters of digital assets, including BNB.

Similarly, under the Clearing Agreement, the BNB Custodian’s liability in connection with the Clearing Services is limited as follows, among others: the BNB Custodian does not have any responsibility for any sale or purchase of BNB for cash to a Liquidity Provider through the Clearing Services (such a transaction, a “Clearing Transaction”), other than as specifically identified in the Clearing Agreement. The BNB Custodian may rely upon, without liability on its part, any clearing request submitted through Gemini’s platform. Absent gross negligence,

willful misconduct or fraud, the BNB Custodian shall not be liable for any loss resulting from a clearing request or the use of Clearing Services. Validation and confirmation procedures used by [ ] are designed only to verify the source of clearing requests and that each party has met its respective obligations in respect of a clearing request and not to detect errors in the content of a clearing request or to prevent duplicate clearing requests. The Trust is responsible for losses resulting from clearing requests provided by it and for any errors made by or on behalf of the Trust, any errors resulting, directly or indirectly, from fraud or the duplication of any clearing request by or on behalf of the Trust, or any losses resulting from the malfunctioning of any devices used by the Trust or loss or compromise of credentials used by the Trust to deliver clearing requests. The BNB Custodian may reject, refuse to settle or otherwise not complete any request to settle a BNB transaction through the Clearing Services for any reason necessary to comply with applicable laws and regulations or in connection with its fraud or other compliance controls and systems, and the BNB Custodian shall have no liability whatsoever to the Trust, any transaction counterparty or any other party in connection with or arising out of the BNB Custodian rejecting, refusing or otherwise not completing the settlement of a transaction through the Clearing Services. The BNB Custodian will not settle transactions through the Clearing Services: (i) if either party to a Clearing Transaction has not fully funded its accounts held with the BNB Custodian and used in connection with the Clearing Services (in the Trust’s case, the Clearing Account and Fiat Account), as applicable, with the required fiat currency amount or BNB amount, as applicable, prior to the agreed expiration time; (ii) if either party to a Clearing Transaction has not confirmed its acceptance of the clearing request to the BNB Custodian prior to the agreed expiration time; (iii) if either party to a transaction is not a [ ] customer; or (iv) for any other reason as determined by the BNB Custodian in its sole discretion to comply with applicable laws and regulation or in connection with the BNB Custodian’s fraud or other compliance controls and systems. Although the BNB Custodian has represented to the Sponsor that Clearing Transactions ordinarily settle automatically within minutes once the BNB and cash have been funded by both the Trust and the Liquidity Provider in their respective accounts at the BNB Custodian used in connection with the Clearing Services (in the Trust’s case, the Clearing Account and Fiat Account), the BNB Custodian is not required by the Clearing Agreement to settle the Clearing Transaction that quickly. These and the other limitations on the BNB Custodian’s liability may allow it to avoid liability for potential losses, even if the BNB Custodian directly caused such losses.

Moreover, in the event of an insolvency or bankruptcy of the BNB 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 of an entity such as the BNB Custodian in the virtual currency industry, there is a risk that customers’ assets – including the Trust’s assets – may be considered the property of the bankruptcy estate of the BNB Custodian and customers – including the Trust – may be at risk of being treated as general unsecured creditors of such entities and subject to the risk of total loss or markdowns on value of such assets.

The Custody Agreement contains an agreement by the parties to treat the BNB credited to the Trust’s Vault Balance as financial assets under Article 8 of the New York Uniform Commercial Code (“Article 8”), in addition to stating that the BNB Custodian will serve as fiduciary and custodian on the Trust’s behalf. It is possible that a court would not treat custodied digital assets as part of the BNB Custodian’s general estate in the event the BNB 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. In the case of the Clearing Account, because it is an omnibus account in which the assets of multiple customers – including the Trust’s assets – are held together, it is likely the Trust would be treated as a general unsecured creditor in respect of the Clearing Account held with the BNB Custodian in the event of the BNB Custodian’s insolvency. The Clearing Agreement does not contain an Article 8 opt-in. If the BNB Custodian became subject to insolvency proceedings and a court were to rule that the custodied BNB were part of the BNB Custodian’s general estate and not the property of the Trust, then the Trust would be treated as a general unsecured creditor in the BNB Custodian’s insolvency proceedings and the Trust could be subject to the loss of all or a significant portion of its assets. Moreover, in the event of the bankruptcy of the BNB Custodian, an automatic stay could go into effect and protracted litigation could be required in order to recover the assets held with the BNB Custodian, all of which could significantly and negatively impact the Trust’s operations and the value of the Shares.

Under the Trust Agreement, the Trustee and the Sponsor will not be liable for any liability or expense incurred, including, without limitation, as a result of any loss of BNB by the BNB Custodian, absent gross negligence or bad faith on the part of the Trustee or the Sponsor or breach by the Sponsor of the Trust Agreement, as the case may be. As a result, the recourse of the Trust or the Shareholders to the Trustee or the Sponsor, including in the event of a loss of BNB by the BNB Custodian, is limited.

The Shareholders’ recourse against the Sponsor, the Trustee, and the Trust’s other service providers for the services they provide to the Trust, including, without limitation, those relating to the holding of BNB or the provision of instructions relating to the movement of BNB, is limited. For the avoidance of doubt, neither the Sponsor, the Trustee, nor any of their affiliates, nor any other party has guaranteed the assets or liabilities, or otherwise assumed the liabilities, of the Trust, or the obligations or liabilities of any service provider to the Trust, including, without limitation, the BNB Custodian. Consequently, a loss may be suffered with respect to the Trust’s BNB that is not covered by the BNB Custodian’s insurance and for which no person is liable in damages. As a result, the recourse of the Trust or the Shareholders, under applicable law, is limited.

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.