Canary Litecoin ETF 10-Q for FY2025 Q3
Canary Litecoin ETF (LTCC)
About this 10-Q
Canary Litecoin ETF filed this 10-Q on December 9, 2025, covering the quarter ended September 30, 2025 (FY2025 Q3).
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | ||||||
c/o Canary Capital Group LLC |
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(Address of principal executive offices) |
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| (Registrant’s
telephone number, including area code): | |||||||
Securities registered pursuant to Section 12(b) of the Act:
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| Title of each class | Trading Symbols(s) | Name
of each exchange on which registered | |||||
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Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
| |||||||
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data
File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of
this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
| |||||||
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| |||||||
| Large accelerated filer | ☐ | Accelerated filer | ☐ | ||||
| ☒ | Smaller reporting company | ||||||
| Emerging growth company | |||||||
If
an emerging growth company, indicate by check mark if the registrant has elected not
to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. | |||||||
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). Yes ☐ No | |||||||
The registrant had outstanding Shares as of December 8, 2025. | |||||||
TABLE OF CONTENTS
| Page | |||
| PART I. | FINANCIAL INFORMATION | 1 | |
| Item 1. | Financial Statements | 1 | |
| Statements of Assets and Liabilities as of September 30, 2025 (unaudited) | 1 | ||
| Statement of Changes in Net Assets through September 30, 2025 (unaudited) | 2 | ||
| Notes to Financial Statements (unaudited) | 3 | ||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 7 | |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 9 | |
| Item 4. | Controls and Procedures | 9 | |
| PART II. | OTHER INFORMATION | 10 | |
| Item 1. | Legal Proceedings | 10 | |
| Item 1A. | Risk Factors | 10 | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 10 | |
| Item 3. | Defaults Upon Senior Securities | 10 | |
| Item 4. | Mine Safety Disclosures | 10 | |
| Item 5. | Other Information | 10 | |
| Item 6. | Exhibits | 10 |
i
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements.
Canary Litecoin ETF
Statement
of Assets and Liabilities
(Unaudited)
September 30, 2025
| ASSETS | ||||
| Investment in Litecoin, at fair value (cost $ | $ | |||
| Cash | $ | |||
| Total assets | $ | |||
| LIABILITIES | ||||
| Sponsor Fee payable | $ | |||
| Total liabilities | $ | |||
| Commitments and Contingent Liabilities (Note 6) | ||||
| NET ASSETS | $ | |||
| Shares issued and outstanding as of September 30, 2025 (par value $ per share; number of shares authorized) | ||||
| Net asset value per share | $ | |||
See accompanying Notes to Financial Statements | ||||
1
Canary Litecoin ETF
Statement
of Changes in Net Assets
(Unaudited)
| For the period August 27, 2025 Through September 30, 2025 | ||||
| Increase (decrease) in net assets resulting from operations | ||||
| Net investment loss | ||||
| Net realized gain (loss) on investment in Litecoin transferred to pay Sponsor Fee | ||||
| Net change in unrealized appreciation (depreciation) | ||||
| Net increase (decrease) in net assets resulting from operations | ||||
| Increase (decrease) in net assets resulting from capital share transactions | ||||
| Creations for Shares issued | $ | |||
| Redemptions for Shares redeemed | ||||
| Net increase (decrease) in net assets resulting from capital share transactions | $ | |||
| Total increase(decrease) in net assets from operations and capital share transactions | $ | |||
| Net assets | ||||
| Beginning of period | ||||
| End of period | $ | |||
| Shares issued and redeemed | ||||
| Shares issued | ||||
| Shares redeemed | ||||
| Net increase (decrease) in Shares issued and outstanding | ||||
| Shares outstanding at end of period | ||||
*No comparative financial statements have been provided as the Trust’s operations commenced on October 27, 2025
See accompanying Notes to Financial Statements
2
Canary Litecoin ETF
NOTES TO FINANCIAL STATEMENTS
September 30, 2025
| 1. | Organization |
The Canary Litecoin ETF (the “Trust”) is a Delaware statutory trust, formed on September 24, 2024, pursuant to the Delaware Statutory Trust Act. The Trust continuously issues common shares representing fractional undivided beneficial interest in and ownership of the Trust that may be purchased and sold on the Nasdaq Stock Market, LLC (the “Exchange”) under the symbol “LTCC.” The Trust operates pursuant to a Trust Agreement, as amended and/or restated from time to time (the “Trust Agreement”). CSC Delaware Trust Company, a Delaware trust company, is the trustee of the Trust (the “Trustee”). The Trust is managed and controlled by Canary Capital Group LLC (the “Sponsor”).
The Trust is an exchange-traded fund that issues shares of beneficial interest (the “Shares”) that are listed and trade on the Exchange. The Trust’s investment objective is to seek to provide exposure to the price of Litecoin (“LTC”) held by the Trust, less the expenses of the Trust’s operations and other liabilities. The Trust is a passive investment vehicle that does not seek to generate returns beyond tracking the price of LTC. In seeking to achieve its investment objective, the Trust will hold LTC and establish its net asset value (“NAV”) on each business day by reference to the CoinDesk Litecoin CCIXber 60m New York Rate (the “Pricing Benchmark”). The Pricing Benchmark is calculated by CoinDesk Indices (the “Benchmark Provider”) based on a 60-minute time-weighted average price of the LTC-USD CCIXber Reference Rate (the “Underlying Index”), which is an aggregation of executed trade flow of major LTC trading platforms (“Constituent Platforms”). The Benchmark Provider publishes the Pricing Benchmark. The Trust is sponsored by the Sponsor.
As
of September 30, 2025, the Trust has had no operations other than those actions relating to organizational and registration matters.
On September 22, 2025, Charlie Lee (the “Seed Capital Investor”) purchased Shares at a per-Share price of $
(the “Seed Shares”). Total proceeds to the Trust from the sale of the Seed Shares was $
| 2. | Significant Accounting Policies |
Basis of Presentation
The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of these financial statements. The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and are stated in U.S. Dollars. The Trust’s financial statements were prepared using the accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services — Investment Companies. The Trust qualifies as an investment company solely for accounting purposes and not for any other purpose. The Trust is not registered, and is not required to be registered, as an investment company under the Investment Company Act of 1940, as amended. The Trust follows the significant accounting policies described below.
Use of Estimates
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.
Cash
Generally,
the Trust does not intend to hold any cash. Cash includes non-interest bearing non-restricted cash with one institution. Cash
in a bank deposit account, at times, may exceed U.S. federally insured limits. The Trust has not experienced any losses in such
accounts and does not believe it is exposed to any significant credit risk on such bank deposits. As of September 30, 2025, the
Trust held $
Investment Transactions and Investment Income
The Trust intends to purchase LTC upon the creation of Shares and sell LTC upon the redemption of Shares. Transactions are recorded on a trade-date basis. Realized gains (losses) and changes in unrealized gains (losses) on open positions are determined on a specific identification basis and recognized in the statement of operations in the period in which the sale occurred or the changes in unrealized occurred.
3
Federal Income Taxes
The
Sponsor and the Trustee will treat the Trust as a grantor trust for U.S. federal income tax purposes. As a result, the Trust itself
would not be subject to U.S. federal income tax. Instead, the Trust’s income, expenses and amounts realized should flow
through to the Shareholders, and the Trustee will report to Shareholders and the Internal Revenue Service (“IRS”)
on that basis. If the IRS were to assert successfully that the Trust is not classified as a grantor trust, the Trust would likely
be classified as a partnership for U.S. federal income tax purposes, which may affect the timing and other tax consequences to
the Shareholders. Under such circumstances, the Trust might be classified as a publicly traded partnership that would be taxable
as a corporation for U.S. federal income tax purposes, in which case the Trust would be taxed in the same manner as a corporation
on its taxable income and distributions to shareholders out of the earnings and profits of the Trust would be taxed to shareholders
as ordinary dividend income. However, due to the uncertain treatment of digital assets for U.S. federal income tax purposes, there
can be no assurance in this regard.
Digital Asset Trading Platform Valuation
The value of LTC is determined by the value that various market participants place on LTC through their transactions. The most common means of determining the value of LTC is by surveying one or more digital asset trading platforms where LTC is traded publicly and transparently (e.g., Binance, Bitfinex, Coinbase Pro and Crypto.com).
The Trust identifies and determines the principal market (or in the absence of a principal market, the most advantageous market) for GAAP financial statement purposes consistent with the application of fair value measurement framework in FASB ASC 820. Under ASC 820, a principal market is the market with the greatest volume and activity level for the asset or liability. The Trust’s valuation procedures provide for the designation of the Sponsor to determine the valuation sources and policies to prepare the Trust’s financial statements in accordance with GAAP.
The Trust utilizes various inputs to determine the fair value of its investments on a recurring basis. GAAP establishes a hierarchy that prioritizes inputs to valuations methods. The three levels of inputs are:
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 – Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
Level 3 – Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing the Trust’s own assumptions about the assumptions a market participant would use in valuing the asset or liability and would be based on the best information available.
Calculation of NAV
The Administrator, defined below, determines the NAV of the Trust on each day that the Exchange is open for regular trading, as promptly as practicable after 4:00 p.m. EST. The NAV of the Trust is the aggregate value of the Trust’s assets less its accrued but unpaid liabilities (which include accrued expenses). In determining the Trust’s NAV, the Administrator values LTC held by the Trust based on the price set by the Index as of 4:00 p.m. EST. The Administrator also determines the NAV per Share. For purposes of the Trust’s financial statements, the Trust utilizes a pricing source that is consistent with GAAP, as of the financial statement measurement date, which may result in valuations that differ from the Trust’s daily NAV calculations. The Sponsor determines in its sole discretion the valuation sources and policies used to prepare the Trust’s financial statements in accordance with GAAP.
The Trust’s NAV per Share is calculated by taking the current fair value of its total assets, subtracting any liabilities, and dividing that total by the number of Shares.
Segment Reporting
The Trust operates through a single operating and reporting segment with a primary objective of providing exposure to the price of LTC held by the Trust, less the expenses of the Trust’s operations and other liabilities. The Trust’s chief operating decision maker (“CODM”) is the Sponsor. The CODM monitors the operating results of the Trust and the Trust’s long-term strategic asset allocation is predetermined in accordance with the terms of its prospectus, based on the defined investment strategy against which the CODM assesses the Trust’s performance. In addition to other metrics, the CODM uses net increase (decrease) in net assets resulting from operations as a key metric to assess the Trust’s performance.
| 3. | Trust Expenses and Other Agreements |
| (a) | Sponsor |
The
Trust pays the Sponsor an annual unified fee of
4
As partial consideration for its receipt of the Sponsor Fee, the Sponsor is obligated under the Trust Agreement to assume and pay all fees and other expenses incurred by the Trust in the ordinary course of its affairs, excluding taxes, but including: (i) the fees of the Trust’s third-party service providers, including, but not limited to, the Marketing Agent, the Administrator, the Custodians, the Transfer Agent, the Cash Custodian, the Index Provider, and the Trustee, (ii) the fees and expenses related to the listing, quotation or trading of the Shares on the Exchange (including customary legal, marketing and audit fees and expenses), (iii) legal fees and expenses incurred in the ordinary course, (iv) audit fees, (v) regulatory fees, including, if applicable, any fees relating to the registration of the Trust and Shares, including any ongoing filings related to the offering of Shares, under the 1933 Act or the 1934 Act, (vi) printing and mailing costs, (vii) costs of maintaining the Trust’s website and (viii) applicable license fees (each, a “Sponsor-paid Expense” and collectively, the “Sponsor-paid Expenses”), provided that any expense that qualifies as an Extraordinary Expense (as defined below) will not be deemed to be a Sponsor-paid Expense. There is no cap on the amount of Sponsor-paid Expenses. The Sponsor has also assumed all fees and expenses related to the organization and offering of the Trust and the Shares.
The Trust may incur certain extraordinary, nonrecurring expenses that are not Sponsor-paid Expenses, including, but not limited to, brokerage and transaction costs associated with the sale or transfer of LTC, taxes and governmental charges, expenses and costs of any extraordinary services performed by the Sponsor (or any other service provider) on behalf of the Trust to protect the Trust, the Trust’s assets, or the interests of Shareholders, any indemnification of the Custodians or other agents, service providers or counterparties of the Trust, and extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters (collectively, “Extraordinary Expenses”). To the extent on-chain transaction fees are incurred in connection with transfers or sales of LTC to pay Extraordinary Expenses, the Trust will bear such fees, but to the extent there are any on-chain transaction fees incurred in connection with the transfers of LTC to pay the Sponsor Fee or any Sponsor-paid Expenses, the Sponsor, and not the Trust, shall bear such fees.
To the extent it does not have cash readily available, the Sponsor will cause the transfer or sale of LTC in such quantity as may be necessary to permit the payment of Trust expenses and liabilities not assumed by the Sponsor or for payment of cash redemption proceeds to financial firms that are authorized to purchase or redeem Shares with the Trust (known as “Authorized Participants”). The Trust will seek to transfer or sell LTC at such times and in the smallest amounts required to permit such payments as they become due. With respect to transfers or sales necessary to pay Trust expenses and liabilities that are denominated other than in LTC, the amount of LTC transferred or sold may vary from time to time depending on the actual sales price of LTC relative to the Trust’s expenses and liabilities (e.g., if the price of LTC falls, the amount of LTC needed to be transferred or sold to pay an expense or liability denominated in U.S. dollars will increase). To the extent the Trust must buy or sell LTC, the Trust may do so through a third-party digital asset broker or dealer. The Sponsor will select third party brokers or dealers that it believes have implemented adequate AML, KYC and other legal compliance policies and procedures.
Under the terms of each Authorized Participant Agreement, the Authorized Participants are responsible for any brokerage or transaction costs associated with the sale or transfer of LTC incurred in connection with the fulfillment of a creation or redemption order.
| (b) | Administrator, Custodians and Transfer Agent |
U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (the “Administrator” and “Transfer Agent”) serves as administrator, transfer agent and accounting agent of the Trust pursuant to a Fund Servicing Agreement. Coinbase Custody Trust Company, LLC (the “Coinbase Custodian”) and BitGo Trust Company, Inc. (the “BitGo Custodian” and together with Coinbase Custodian, the “Custodians”) serve as the Trust’s Custodians. Under the Coinbase Custodial Services Agreement and the BitGo Custodial Services Agreement, the Custodians are responsible for safekeeping all the Trust’s LTC allocated to each of the Custodians. The Custodians were selected by the Sponsor. The Sponsor is responsible for opening accounts with the Custodians that hold the Trust’s LTC (the “LTC Accounts”), as well as facilitating the transfer or sale of LTC required for the operation of the Trust. U.S. Bank, N.A., an affiliate of the Administrator and Transfer Agent serves as the cash custodian for the Trust (the “Cash Custodian”). The Cash Custodian is responsible for safekeeping all cash and other non-LTC assets of the Trust.
5
| (c) | Marketing Agent |
Paralel Distributors LLC is the marketing agent of the Trust (the “Marketing Agent”) and is responsible for reviewing and approving the marketing materials, including the Trust’s website, prepared by the Sponsor for compliance with applicable SEC and Financial Industry Regulatory Authority, Inc. (“FINRA”) advertising laws, rules, and regulations pursuant to a marketing agreement with the Trust. The Marketing Agent is a broker-dealer registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and a member of FINRA. With the assistance of the Marketing Agent, the Sponsor developed a marketing plan for the Trust, prepared marketing materials regarding the Shares of the Trust, and exercises the marketing plan of the Trust on an ongoing basis.
| (d) | Principal Financial Officer |
Employees of PINE Advisors LLC (“PINE”) serve as officers of the Trust. In consideration for these services, the Sponsor pays PINE an annual fee. The Sponsor also reimburses PINE for certain out-of-pocket expenses.
| 4. | Capital Share Transactions |
The Trust is an exchange-traded product. The Trust issues Shares on a continuous basis and, when the Trust creates or redeems its Shares, it does so in blocks of Shares (a “Basket”) based on the quantity of LTC attributable to each Share of the Trust (net of accrued but unpaid expenses and liabilities). For a subscription of Shares, the subscription shall be in the amount of cash needed to purchase the amount of LTC represented by the Basket being created, as calculated by the Administrator. For a redemption of Shares, the Sponsor shall arrange for the LTC represented by the Basket to be sold and the cash proceeds distributed. Financial firms that are authorized to purchase or redeem Shares of the Trust (“Authorized Participants”) deliver, or facilitate the delivery of, cash to the Trust’s account with the Cash Custodian in exchange for Shares when they purchase Shares, and the Trust delivers cash to such Authorized Participants when they redeem Shares with the Trust. Further, Authorized Participants do not directly or indirectly purchase, hold, deliver, or receive LTC as part of the creation or redemption process or otherwise direct the Trust or a third party with respect to purchasing, holding, delivering, or receiving LTC as part of the creation or redemption process. Shares initially comprising the same Basket but offered by the Authorized Participants to the public at different times may have different offering prices, which depend on various factors, including the supply and demand for Shares, the value of the Trust’s assets, and market conditions at the time of a transaction. Shareholders who buy or sell Shares during the day from their broker may do so at a premium or discount relative to the NAV of the Shares of the Trust.
The Trust creates and redeems Shares in exchange for cash or LTC.
Shareholders who decide to buy or sell Shares of the Trust place their trade orders through their brokers and incur customary brokerage commissions and charges.
Only Authorized Participants may place orders to create and redeem baskets through the Transfer Agent. The Transfer Agent coordinates with the Trust's custodians to facilitate settlement of the Shares.
| 5. | Related Parties |
The Sponsor is considered to be a related party to the Trust. The Trust’s operations are supported by its Sponsor.
| 6. | Commitments and Contingent Liabilities |
In the normal course of business, the Trust may enter into contracts that contain a variety of general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust which have not yet occurred and cannot be predicted with any certainty. However, the Sponsor believes the risk of loss under these arrangements to be remote. There were no commitments or contingencies required to be disclosed as of the date of the financial statements.
| 7. | Subsequent Events |
On
October 27, 2025, the Trust’s registration statement became effective in accordance with the provisions of section 8(a) of the
Securities Act of 1933 and the Trust purchased $
6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of the Trust’s financial condition and results of operations should be read together with, and is qualified in its entirety by reference to, the Trust’s unaudited financial statements and related notes included elsewhere in this Quarterly Report, which have been prepared in accordance with GAAP.
This Quarterly Report on Form 10-Q (the “Quarterly Report”) includes “forward-looking statements” with respect to the financial conditions, results of operations, plans, objectives, future performance and business of Canary Litecoin ETF (the “Trust”). In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or the negative of these terms or other comparable terminology. All statements (other than statements of historical fact) included in this Quarterly Report that address activities, events, or developments that will or may occur in the future, including such matters as movements in the digital asset markets, the Trust’s operations, the plans of Canary Capital Group LLC (the “Sponsor”), and references to the Trust’s future success and other similar matters, are forward-looking statements. These statements are only predictions. Actual events or results may differ materially. These statements are based upon certain assumptions and analyses the Sponsor has made based on its perception of historical trends, current conditions, and expected future developments, as well as other factors appropriate in the circumstances.
Factors which could have a material adverse effect on the Trust’s business, financial condition or results of operations and future prospects or which could cause actual results to differ materially from the Trust's expectations include, but are not limited to:
| ● | the special considerations discussed in this Quarterly Report; |
| ● | general economic, market and business conditions; |
| ● | technology developments regarding the use of Litecoin and other digital assets, including the systems used by the Sponsor and the Trust’s custodian in their provision of services to the Trust; |
| ● | changes in laws or regulations, including those concerning taxes, made by governmental authorities or regulatory bodies; |
| ● | other world economic and political developments, including, without limitation, global pandemics and the societal and government responses thereto; and |
| ● | any additional factors discussed in this Quarterly Report, as well as those described from time to time in the Trust’s future reports filed with the SEC. |
All the forward-looking statements made in this Quarterly Report are qualified by these cautionary statements, and there can be no assurance that the actual results or developments the Sponsor anticipates will be realized or, even if substantially realized, that they will result in the expected consequences to, or have the expected effects on, the Trust’s operations or the value of the Shares.
Should one or more of these factors or other uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those described in forward-looking statements. Forward-looking statements are made based on the Sponsor’s beliefs, estimates and opinions on the date the statements are made, and neither the Trust nor the Sponsor is under a duty to update any of the forward-looking statements to conform such statements to actual results or to reflect a change in the Sponsor’s expectations or predictions, other than as required by applicable laws. Investors are therefore cautioned against relying on forward-looking statements.
Overview of the Trust
The Trust is an exchange-traded fund that issues Shares that are listed and trade on the Exchange. The Trust’s investment objective is to seek to provide exposure to the price of LTC held by the Trust, less the expenses of the Trust’s operations and other liabilities. The Trust is a passive investment vehicle that does not seek to generate returns beyond tracking the price of LTC. In seeking to achieve its investment objective, the Trust will hold LTC and establish its NAV on each business day by reference to the Pricing Benchmark. The Pricing Benchmark is calculated by the Benchmark Provider based on a 60-minute time-weighted average price of the Underlying Index, which is an aggregation of executed trade flow of Constituent Platforms. The Benchmark Provider publishes the Pricing Benchmark. The Trust is sponsored by the Sponsor.
The Shareholders of the Trust take no part in the management or control, and have no voice in, the Trust’s operations or business. Except to elect a successor Sponsor upon the resignation of the Sponsor or as otherwise required by laws of the state of Delaware, Shareholders will have no voting rights under the Trust Agreement.
7
Liquidity and Capital Resources
Post commencement of investment operations, the Trust will typically not hold a cash balance except in connection with the creation and redemption of “Baskets” (i.e., blocks of 10,000 Shares) or to pay expenses not assumed by the Sponsor. The Trust pays the Sponsor an annual unified fee of 0.95% of the Trust’s LTC Holdings (the “Sponsor Fee”). The Trust’s “LTC Holdings” is the quantity of the Trust’s LTC plus any cash or other assets held by the Trust represented in LTC as calculated using the Pricing Benchmark price, less its liabilities (which include estimated accrued but unpaid fees and expenses) represented in LTC as calculated using the Pricing Benchmark price.
The Trust may also incur certain extraordinary, nonrecurring expenses that are not assumed by the Sponsor, including, but not limited to, brokerage and transaction costs associated with the sale or transfer of LTC, taxes and governmental charges, expenses and costs of any extraordinary services performed by the Sponsor (or any other service provider) on behalf of the Trust to protect the Trust, the Trust’s assets, or the interests of Shareholders, any indemnification of the Custodians or other agents, service providers or counterparties of the Trust, and extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters (collectively, “Extraordinary Expenses”). To the extent on-chain transaction fees are incurred in connection with transfers or sales of LTC to pay Extraordinary Expenses, the Trust will bear such fees.
To the extent it does not have cash readily available, the Sponsor shall cause the transfer or sale of LTC in such quantity as may be necessary to permit the payment of Trust expenses and liabilities not assumed by the Sponsor or for payment of redemption proceeds to Authorized Participants. The Trust will not bear any costs associated with the transfer or sale of LTC to pay the Sponsor Fee. To the extent the Trust incurs any Extraordinary Expenses, the Trust will bear the costs of any transfers or sales of LTC to pay such expenses. The Trust will seek to transfer LTC at such times and in the smallest amounts required to permit such payments as they become due. With respect to transfers or sales necessary to pay Trust expenses and liabilities that are denominated other than in LTC, the amount of LTC transferred or sold may vary from time to time depending on the actual sales price of LTC relative to the Trust’s expenses and liabilities (e.g., if the price of LTC falls, the amount of LTC needed to be transferred or sold to pay an expense denominated in U.S. dollars will increase). To the extent the Trust must buy or sell LTC, the Trust may do so through a third-party digital asset broker or dealer. When the Trust buys or sells LTC, the Sponsor seeks quotes from its LTC trading counterparties. Such transactions are typically conducted over the counter rather than over a trading platform or similar order matching service. The Sponsor will select third party brokers or dealers that it believes have implemented adequate anti-money laundering, know-your-customer and other legal compliance policies and procedures.
Results of Operations
From September 24, 2024 (i.e., the date of formation) through September 30, 2025, the Trust was in an organizational period and had not commenced investment operations. On September 22, 2025, the Seed Capital Investor purchased 40,000 Seed Shares. Total proceeds to the Trust from the sale of the Seed Shares was $1,000,000 which was held in cash as presented on the Trust’s statement of assets and liabilities. As of the date of the financial statements, these 40,000 Seed Shares represented all of the outstanding Shares. On October 27, 2025, the Trust purchased $1,000,000 of LTC with the proceeds of the Seed Shares in connection with the commencement of investment operations.
Off-Balance Sheet Arrangements
As of September 30, 2025, the Trust has not used, nor does it expect to use in the future, special purpose entities to facilitate off-balance sheet financing arrangements and has no loan guarantee arrangements or off-balance sheet arrangements of any kind other than agreements entered into in the normal course of business, which may include indemnification provisions related to certain risks service providers undertake in performing services which are in the best interests of the Trust. While the Trust’s exposure under such indemnification provisions cannot be estimated, these general business indemnifications are not expected to have a material impact on the Trust’s financial position.
Critical Accounting Policies
Principal Market and Fair Value Determination
The Trust’s periodic financial statements are prepared in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 820, “Fair Value Measurements and Disclosures” (“ASC Topic 820”) and utilize an exchange-traded price from the Trust’s principal market for LTC on the Trust’s financial statement measurement date. The Sponsor will determine in its sole discretion the valuation sources and policies used to prepare the Trust’s financial statements in accordance with GAAP. The Trust intends to engage a third-party vendor to obtain a price from a principal market for LTC, which will be determined and designated by such third-party vendor daily based on its consideration of several exchange characteristics, including oversight, and the volume and frequency of trades. Under GAAP, such a price is expected to be deemed a Level 1 input in accordance with the ASC Topic 820 because it is expected to be a quoted price in active markets for identical assets or liabilities.
8
Investment Company Considerations
The Trust follows accounting and reporting guidance in accordance with the FASB ASC Topic 946, Financial Services – Investment Companies. The Trust uses fair value as its method of accounting for LTC. The Trust qualifies as an investment company solely for accounting purposes and not for any other purpose. The Trust is not registered, and is not required to be registered, as an investment company under the Investment Company Act of 1940, as amended. GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates and these differences could be material.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable to “Smaller Reporting Companies,” as defined in Rule 12b-2 of the Exchange Act.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
The Trust maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to the Principal Executive Officer and Principal Financial and Accounting Officer of the Sponsor performing functions equivalent to those a principal executive officer and principal financial and accounting officer of the Trust would perform if the Trust had any officers, as appropriate to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of the Principal Executive Officer and the Principal Financial and Accounting Officer of the Sponsor, the Sponsor evaluated the effectiveness of the design and operation of the Trust’s disclosure controls and procedures, as defined under Exchange Act Rule 13a-15(e). Based on this evaluation, the Principal Executive Officer and the Principal Financial and Accounting Officer of the Sponsor concluded that, as of September 30, 2025, the Trust’s disclosure controls and procedures were effective in ensuring material information relating to the Trust is recorded, processed, summarized and reported by management of the Sponsor on a timely basis and to ensure the quality and timeliness of the Trust’s public disclosures with the SEC.
There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures.
Changes in Internal Control over Financial Reporting
There were no changes in the Trust’s internal controls over financial reporting that occurred during the Trust’s most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, these internal controls over financial reporting.
9
PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
Not applicable to Smaller Reporting Companies.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
| a) | On September 22, 2025, Seed Capital Investor purchased 40,000 Seed Shares in a transaction exempt from registration under Section 4(a)(2) of the Securities Act of 1933 (the “Securities Act”). Total proceeds to the Trust from the sale of the Seed Shares was $1,000,000. The Seed Capital Investor acted as a statutory underwriter in connection with the Seed Shares. On October 27, 2025, the Trust purchased $1,000,000 of LTC with the proceeds of the Seed Shares. |
| b) | Not applicable. |
| c) | None. |
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
| a) | All information required to be reported in a report on Form 8-K during the period covered by this Form 10-Q has been reported. |
| b) | Not applicable. |
| c) |
Item 6. Exhibits.
Listed below are the exhibits, which are filed as part of this quarterly report on Form 10-Q (according to the number assigned to them in Item 601 of Regulation S-K of the 1933 Act):
10
| * | Filed herewith |
| ** | Previously filed |
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Canary Capital Group LLC | |||
| as Sponsor of Canary Litecoin ETF | |||
| By: | /s/ Steven McClurg | ||
| Name: | Steven McClurg | ||
| Title: | Chief Executive Officer (Principal Executive Officer)* | ||
| By: | /s/ Starr Frohlich | ||
| Name: | Starr Frohlich | ||
| Title: | Principal Financial and Accounting Officer | ||
Date: December 9, 2025
* The Registrant is a trust and this person is signing in their capacity as an officer of Canary Capital Group LLC, the Sponsor of the Registrant.
12
Exhibit 3.1
FIRST AMENDED AND RESTATED
TRUST AGREEMENT
OF
CANARY LITECOIN ETF
Dated as of October 6, 2025
By and Among
CANARY CAPITAL GROUP LLC
CSC DELAWARE TRUST COMPANY
and
THE SHAREHOLDERS
FROM TIME TO TIME HEREUNDER
TABLE OF CONTENTS
| ARTICLE I | DEFINITIONS; THE TRUST | 1 |
| SECTION 1.1 | Definitions | 1 |
| SECTION 1.2 | Name | 7 |
| SECTION 1.3 | Delaware Trustee; Offices | 7 |
| SECTION 1.4 | Declaration of Trust | 8 |
| SECTION 1.5 | Purposes and Powers | 8 |
| SECTION 1.6 | Tax Treatment | 9 |
| SECTION 1.7 | Legal Title | 9 |
| ARTICLE II | THE TRUSTEE | 9 |
| SECTION 2.1 | Term; Resignation; Removal | 9 |
| SECTION 2.2 | Powers | 10 |
| SECTION 2.3 | Compensation and Expenses of the Trustee | 10 |
| SECTION 2.4 | Indemnification | 11 |
| SECTION 2.5 | Successor Trustee | 11 |
| SECTION 2.6 | Liability of Trustee | 12 |
| SECTION 2.7 | Reliance; Advice of Counsel | 14 |
| SECTION 2.8 | Payments to the Trustee | 15 |
| ARTICLE III | SHARES; CREATIONS AND ISSUANCE OF CREATION BASKETS | 15 |
| SECTION 3.1 | General | 15 |
| SECTION 3.2 | Offer of Shares; Procedures for Creation and Issuance of Creation Units to Authorized Participants | 16 |
| SECTION 3.3 | Book-Entry System | 17 |
| SECTION 3.4 | Assets of the Trust | 17 |
| SECTION 3.5 | Liabilities of the Trust | 17 |
| SECTION 3.6 | Distributions | 18 |
| SECTION 3.7 | Voting Rights | 18 |
| SECTION 3.8 | Equality | 18 |
| ARTICLE IV | TRANSFERS OF SHARES | 18 |
| SECTION 4.1 | General Prohibition | 18 |
| SECTION 4.2 | [Reserved] | 19 |
| SECTION 4.3 | Transfer of Shares Generally | 19 |
| ARTICLE V | REDEMPTIONS | 19 |
| SECTION 5.1 | Redemption of Creation Units | 19 |
| ARTICLE VI | THE SPONSOR | 20 |
| SECTION 6.1 | Management of the Trust | 20 |
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| SECTION 6.2 | Authority of Sponsor | 20 |
| SECTION 6.3 | Obligations of the Sponsor | 22 |
| SECTION 6.4 | General Prohibitions | 24 |
| SECTION 6.5 | Liability of Covered Persons | 24 |
| SECTION 6.6 | Fiduciary Duty | 25 |
| SECTION 6.7 | Indemnification of the Sponsor | 26 |
| SECTION 6.8 | Expenses and Limitations Thereon | 27 |
| SECTION 6.9 | Voluntary Withdrawal of the Sponsor | 29 |
| SECTION 6.10 | Litigation | 29 |
| SECTION 6.11 | Bankruptcy; Merger of the Sponsor | 29 |
| ARTICLE VII | THE SHAREHOLDERS | 30 |
| SECTION 7.1 | No Management or Control; Limited Liability; Exercise of Rights through an Authorized Participant | 30 |
| SECTION 7.2 | Rights and Duties | 30 |
| SECTION 7.3 | Limitation of Liability | 31 |
| SECTION 7.4 | Derivative Actions | 31 |
| SECTION 7.5 | Appointment of Agents | 32 |
| SECTION 7.6 | Business of Shareholders | 32 |
| SECTION 7.7 | Authorization of Prospectus | 32 |
| ARTICLE VIII | BOOKS OF ACCOUNT AND REPORTS | 33 |
| SECTION 8.1 | Books of Account | 33 |
| SECTION 8.2 | Annual Updates, Quarterly Updates and Account Statements | 33 |
| SECTION 8.3 | Tax Information | 33 |
| SECTION 8.4 | Calculation of Litecoin Holdings | 34 |
| SECTION 8.5 | Maintenance of Records | 34 |
| ARTICLE IX | FISCAL YEAR | 34 |
| SECTION 9.1 | Fiscal Year | 34 |
| ARTICLE X | AMENDMENT OF TRUST AGREEMENT; MEETINGS | 34 |
| SECTION 10.1 | Amendments to the Trust Agreement | 34 |
| SECTION 10.2 | Meetings of the Trust | 35 |
| SECTION 10.3 | Action Without a Meeting | 36 |
| ARTICLE XI | TERM | 36 |
| SECTION 11.1 | Term | 36 |
| ARTICLE XII | TERMINATION | 36 |
| SECTION 12.1 | Events Requiring Dissolution of the Trust | 36 |
| SECTION 12.2 | Distributions on Dissolution | 38 |
| SECTION 12.3 | Termination; Certificate of Cancellation | 38 |
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| ARTICLE XIII | MISCELLANEOUS | 39 |
| SECTION 13.1 | Governing Law | 39 |
| SECTION 13.2 | Provisions In Conflict With Law or Regulations | 39 |
| SECTION 13.3 | Merger and Consolidation | 40 |
| SECTION 13.4 | Construction | 40 |
| SECTION 13.5 | Notices | 40 |
| SECTION 13.6 | Counterparts; Electronic Signatures | 41 |
| SECTION 13.7 | Binding Nature of Trust Agreement | 41 |
| SECTION 13.8 | No Legal Title to Trust Estate | 42 |
| SECTION 13.9 | Creditors | 42 |
| SECTION 13.10 | Integration | 42 |
| SECTION 13.11 | Goodwill; Use of Name | 42 |
| SECTION 13.12 | Patriot Act Compliance | 42 |
| SECTION 13.13 | Corporate Transparency Act | 42 |
EXHIBIT A — Form of Certificate of Trust of Canary Litecoin ETF
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CANARY LITECOIN ETF
FIRST AMENDED AND RESTATED TRUST AGREEMENT
This FIRST AMENDED AND RESTATED TRUST AGREEMENT of CANARY LITECOIN ETF is made and entered into as of October 6, 2025 (“Trust Agreement”), by and among Canary Capital Group LLC, a Delaware limited liability company (“Sponsor”), CSC Delaware Trust Company, a Delaware corporation, as trustee (“Trustee”), and the Shareholders from time to time hereunder.
RECITALS
WHEREAS, with the filing of a Certificate of Trust on September 24, 2024, and entry into that certain original trust agreement with the Trustee (the “Original Trust Agreement”), the Sponsor established a statutory trust, to be known as the “Canary Litecoin ETF” pursuant to the Delaware Trust Statute;
WHEREAS, the Sponsor and the Trustee desire to amend and restate the Original Trust Agreement;
WHEREAS, the Sponsor desires to establish the terms on which Litecoin (as herein defined) may be deposited in the trust and provide for the creation of Shares in Creation Units (as herein defined) representing fractional undivided interests in the net assets of the trust and the execution and delivery of Certificates (as herein defined) evidencing the shares; and
WHEREAS, the Sponsor desires to provide for other terms and conditions upon which the trust shall be established and administered, as hereinafter provided.
NOW, THEREFORE, in consideration of the premises and of the mutual agreements herein contained, the Sponsor and the Trustee hereby amend and restate the Original Trust Agreement and agree as follows:
ARTICLE I
DEFINITIONS; THE TRUST
SECTION 1.1 Definitions.
As used in this Trust Agreement, the following terms shall have the following meanings unless the context otherwise requires:
“Administrator” means any Person from time to time engaged by the Sponsor to assist in the administration of the Shares.
“Administrator Fee” means the fee payable to the Administrator for services it provides to the Trust, which the Sponsor shall pay the Administrator as a Sponsor-paid Expense.
“Affiliate” means (i) any Person directly or indirectly owning, controlling or holding with power to vote 10% or more of the outstanding voting securities of such Person, (ii) any Person 10% or more of whose outstanding voting securities are directly or indirectly owned, controlled or held with power to vote by such Person, (iii) any Person, directly or indirectly, controlling, controlled by or under common control of such Person, (iv) any employee, officer, director, member, manager or partner of such Person, or (v) if such Person is an employee, officer, director, member, manager or partner, any Person for which such Person acts in any such capacity.
“Annual Report” means (i) the Trust’s most recent annual report, if any, prepared and publicly disseminated pursuant to the standards of any Secondary Market on which the Shares are then listed, quoted or traded or (ii) if the Shares are then registered under the Exchange Act, the Trust’s most recent annual report prepared and filed in accordance with the rules and regulations of the SEC.
“Authorized Participant” means a Person that (i) is a registered broker-dealer or other securities market participant, such as a bank or other financial institution, that is not required to register as a broker-dealer to engage in securities transactions, (ii) is a DTC participant, and (iii) has entered into an Authorized Participant Agreement with the Sponsor and the Trust.
“Authorized Participant Agreement” means an agreement among the Distributor, the Transfer Agent and an Authorized Participant, as it may be amended or supplemented from time to time in accordance with its terms.
“Authorized Participant Designee” means an entity designated by an Authorized Participant to facilitate creations or redemptions of Shares on behalf of an Authorized Participant.
“Beneficial Owners” means owners of beneficial interests in Shares.
“Business Day” means any day other than a Saturday, Sunday or other day on which banks are permitted or required to close for business in New York, New York.
“Cash Creation Order” has the meaning assigned thereto in Section 3.2(a)(i).
“Cash Redemption Order” has the meaning assigned thereto in Section 5.1(a)(i).
“Certificate of Trust” means the Certificate of Trust of the Trust, including all amendments thereto, in the form attached hereto as Exhibit A, filed with the Secretary of State of the State of Delaware pursuant to Section 3810 of the Delaware Trust Statute.
“CFTC” means the Commodity Futures Trading Commission.
“Code” means the Internal Revenue Code of 1986, as amended.
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“Corporate Trust Office” means the principal office at which at any particular time the corporate trust business of the Trustee is administered, which office at the date hereof is located at 251 Little Falls Drive, Wilmington, DE 19808.
“Covered Person” means the Sponsor and its Affiliates and their respective members, managers, directors, officers, employees, agents and controlling persons.
“Creation Unit” means a basket of 10,000 Shares.
“Creation Amount” means, in the case of a Creation Order in Litecoin, the Creation Litecoin Amount, or, in the case of a Creation Order for cash, the Creation Cash Amount.
“Creation Litecoin Amount” means, on any Trade Date, the number of Litecoin required as of such Trade Date for each Creation Unit, as determined by dividing (x) the number of Litecoin owned by the Trust at 4:00 p.m., New York time, on such Trade Date, after deducting the number of Litecoin representing accrued but unpaid fees and expenses of the Trust (in the case of any such fee and expense other than the Sponsor Fee, converted using the Index at such time, and carried to the eighth decimal place), by (y) the number of Shares outstanding at such time (with the quotient so obtained calculated to one one-hundred-millionth of one Litecoin (i.e., carried to the eighth decimal place)) and multiplying such quotient by 10,000.
“Creation Cash Amount” means, on any Trade Date, the amount of cash as of such Trade Date for each Creation Unit, as determined by dividing (x) the cash value of Litecoin owned by the Trust at 4:00 p.m., New York time, on such Trade Date, converted using the Index at such time, after deducting representing accrued but unpaid fees and expenses of the Trust (in the case of any such fee and expense denominated in Litecoin, converted using the Index at such time), by (y) the number of Shares outstanding at such time (with the quotient so obtained calculated to one one-hundred-millionth of one Litecoin (i.e., carried to the eighth decimal place)) and multiplying such quotient by 10,000.
“Creation Order” has the meaning assigned thereto in Section 3.2(a)(i).
“Creation Settlement Date” means, with respect to any Creation Order, the Business Day on which such Creation Order settles, as specified in the Authorized Participant Agreement.
“CTA” has the meaning given in Section 13.13 herein.
“Custodian” means Coinbase Custody Trust Company, LLC, BitGo Trust Company Inc., or any other Person or Persons from time to time engaged to provide custodian, security or related services to the Trust pursuant to authority delegated by the Sponsor.
“Custodian Fee” means the fee payable to the Custodian for the services it provides to the Trust, which the Sponsor shall pay to the Custodian as a Sponsor-paid Expense.
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“Delaware Trust Statute” means the Delaware Statutory Trust Act, Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. § 3801 et seq., as the same may be amended from time-to-time.
“Depository” means The Depository Trust Company, or such other depository of Shares as may be selected by the Sponsor as specified herein.
“Digital Assets” means digital representations of value or rights represented by cryptocurrency, cryptographic tokens or other forms of virtual currency or assets.
“Distributor” means any Person from time to time engaged to provide marketing and/or distribution services or related services to the Trust pursuant to authority delegated by the Sponsor.
“Distributor Fee” means the fee payable to the Distributor for services it provides to the Trust, which the Sponsor shall pay the Distributor as a Sponsor-paid Expense.
“Event of Withdrawal” has the meaning set forth in Section 12.1(a)(iii) hereof.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Expenses” has the meaning set forth in Section 2.4.
“Extraordinary Expenses” has the meaning set forth in Section 6.8(b).
“FinCEN” means the Financial Crimes Enforcement Network, a bureau of the U.S. Department of Treasury.
“Fiscal Year” has the meaning set forth in Article IX hereof.
“GAAP” means U.S. generally accepted accounting principles.
“Incidental Rights” means any rights to claim or otherwise take possession of IR Assets that may result from a “hard fork” of the Litecoin Network, airdrop of Digital Assets or other future means of creating or disseminating Digital Assets, in each case as applicable to the Trust’s Litecoin.
“Indemnified Persons” has the meaning assigned to such term in Section 2.4.
“Index” means the BitGo Trust Company Inc., or such other benchmark or index as the Sponsor may designate from time to time.
“IR Agent” means any party appointed by agreement to serve as an agent of the Shareholders for the distribution of Incidental Rights or IR Assets.
“IR Assets” means any Digital Assets that are entitled to be acquired by the Trust through the exercise (subject to Section 1.5(b) and Section 6.4(f)) of any Incidental Right.
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“IRS” means the U.S. Internal Revenue Service or any successor thereto.
“Liquidating Trustee” has the meaning assigned thereto in Section 12.2.
“Litecoin” means Litecoin, a type of virtual currency based on an open source cryptographic protocol existing on the Litecoin Network as determined by the Sponsor in accordance with Section 6.2, and the assets underlying the Trust’s Shares.
“Litecoin Account” means the Trust’s digital asset custody account with the Custodian.
“Litecoin Creation Order” has the meaning assigned thereto in Section 3.2(a)(i).
“Litecoin Holdings” means, at any time, the aggregate number of Litecoin representing the Trust’s assets, less its liabilities (which include estimated accrued but unpaid fees and expenses), calculated in accordance with Section 8.4.
“Litecoin Network” means the online, end-user-to-end-user network hosting a public transaction ledger, known as a blockchain, and the source code comprising the basis for the cryptographic and algorithmic protocols governing the Litecoin Network.
“Litecoin Redemption Order” has the meaning assigned thereto in Section 5.1(a)(i).
“Original Trust Agreement” has the meaning set forth in the recitals.
“Percentage Interest” means, with respect to any Shareholder at any time, a fraction, the numerator of which is the number of Shares held by such Shareholder and the denominator of which is the total number of Shares outstanding, in each case as of 4:00 p.m., New York time, on the date of determination.
“Person” means any natural person, partnership, limited liability company, statutory trust, corporation, association or other legal entity.
“Prospectus” means the most recent of any prospectus of the Trust that has been filed with the SEC as a part of the Registration Statement.
“Quarterly Report” means (i) the Trust’s most recent quarterly report, if any, prepared and publicly disseminated pursuant to the standards of any Secondary Market on which the Shares are then listed, quoted or traded or (ii) if the Shares are then registered under the Exchange Act, the Trust’s most recent quarterly report on Form 10-Q prepared and filed in accordance with the rules and regulations of the SEC.
“Redemption Order” has the meaning assigned thereto in Section 5.1(a).
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“Registration Statement” means the most recent registration statement of the Trust, if any, as filed with and declared effective by the SEC, as the same may at any time and from time to time be amended or supplemented. At inception, the Trust shall not file a Registration Statement.
“SEC” means the Securities and Exchange Commission.
“Secondary Market” means any marketplace or other alternative trading system, as determined by the Sponsor, on which the Shares may then be listed, quoted or traded, including but not limited to, The Nasdaq Stock Market LLC or any national securities exchange.
“Securities Act” means the Securities Act of 1933, as amended.
“Shareholder” means any Person that owns Shares.
“Shares” means the common units of fractional undivided beneficial interest in the profits, losses, distributions, capital and assets of, and ownership of, the Trust.
“Sponsor” means Canary Capital Group LLC, or any substitute therefor as provided herein, or any successor thereto by merger or operation of law.
“Sponsor Agreement” means that certain Sponsor Agreement by and between the Sponsor and the Trust, dated October 6, 2025, as may be amended from time to time.
“Sponsor Fee” has the meaning set forth in Section 6.8(a)(i).
“Sponsor-paid Expenses” have the meaning set forth in Section 6.8(a)(v).
“Total Creation Amount” means, with respect to any Creation Order, the applicable Creation Amount multiplied by the number of Creation Units, as specified in such Creation Order.
“Total Redemption Amount” means, with respect to any Redemption Order, the applicable Creation Amount multiplied by the number of Creation Units being redeemed, as specified in such Redemption Order.
“Trade Date” means, for any Creation Order or Redemption Order, the Business Day on which the Total Creation Amount with respect to such Creation Order or Redemption Order is determined in accordance with the Authorized Participant Agreement.
“Transfer Agent” means any Person from time to time engaged to provide such services or related services to the Trust pursuant to authority delegated by the Sponsor.
“Transfer Agent Fee” means the fee payable to the Transfer Agent for services it provides to the Trust, which the Sponsor shall pay the Transfer Agent as a Sponsor-paid Expense.
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“Treasury Regulations” means regulations, including proposed or temporary regulations, promulgated under the Code. References herein to specific provisions of proposed or temporary regulations shall include analogous provisions of final Treasury Regulations or other successor Treasury Regulations.
“Trust” means Canary Litecoin ETF, a Delaware statutory trust formed pursuant to the Certificate of Trust, the affairs of which are governed by this Trust Agreement.
“Trust Agreement” means this Amended and Restated Trust Agreement, as it may at any time or from time-to-time be amended.
“Trustee” means CSC Delaware Trust Company, its successors and assigns, or any substitute therefor as provided herein, acting not in its individual capacity but solely as trustee of the Trust.
“Trust Estate” means (i) all the Litecoin and cash in the Trust’s accounts, including the Litecoin Account, (ii) all Incidental Rights held by the Trust, (iii) all IR Assets in the Trust’s accounts, (iv) all proceeds from the sale of Litecoin, Incidental Rights and IR Assets pending use of such cash for payment of Extraordinary Expenses or distribution to the Shareholders, and (v) any rights of the Trust pursuant to any agreements, other than this Trust Agreement, to which the Trust is a party.
“Trust Expense” has the meaning set forth in Section 2.3.
“U.S. Dollar” means United States dollars.
SECTION 1.2 Name.
(a) The name of the Trust is “Canary Litecoin ETF” in which name the Trustee and the Sponsor shall cause the Trust to carry out its purposes as set forth in Section 1.5, make and execute contracts and other instruments in the name and on behalf of the Trust and sue and be sued in the name and on behalf of the Trust.
SECTION 1.3 Delaware Trustee; Offices.
(a) The sole Trustee of the Trust is CSC Delaware Trust Company, which is located at the Corporate Trust Office or at such other address in the State of Delaware as the Trustee may designate in writing to the Shareholders. The Trustee shall receive service of process on the Trust in the State of Delaware at the foregoing address. In the event CSC Delaware Trust Company resigns or is removed as the Trustee, the trustee of the Trust in the State of Delaware shall be the successor Trustee, subject to Section 2.1.
(b) The principal office of the Trust, and such additional offices as the Sponsor may establish, shall be located at such place or places inside or outside the State of Delaware as the Sponsor may designate from time to time in writing to the Trustee and the Shareholders. Initially, the principal office of the Trust shall be at 8 Cadillac Drive, Suite 300, Brentwood, TN 37027.
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SECTION 1.4 Declaration of Trust.
The Trust Estate shall be held in trust for the Shareholders. It is the intention of the parties hereto that the Trust shall be a statutory trust, under the Delaware Trust Statute and that this Trust Agreement shall constitute the governing instrument of the Trust. It is not the intention of the parties hereto to create a general partnership, limited partnership, limited liability company, joint stock association, corporation, bailment or any form of legal relationship other than a Delaware statutory trust that is treated as a grantor trust for U.S. federal income tax purposes and for purposes of applicable state and local tax laws. Nothing in this Trust Agreement shall be construed to make the Shareholders partners or members of a joint stock association. Effective as of the date hereof, the Trustee and the Sponsor shall have all of the rights, powers and duties set forth herein and in the Delaware Trust Statute with respect to accomplishing the purposes of the Trust. The Trustee has filed the Certificate of Trust required by Section 3810 of the Delaware Trust Statute in connection with the formation of the Trust under the Delaware Trust Statute.
SECTION 1.5 Purposes and Powers.
(a) The purposes of the Trust shall be to accept Litecoin or cash for subscriptions of Shares in accordance with Article III hereof, to hold Litecoin, cash, Incidental Rights and IR Assets, to distribute Litecoin (or cash from the sale of Litecoin) upon redemptions of Shares in accordance with Article V hereof and to distribute Litecoin, Incidental Rights and IR Assets (or cash from the sale thereof) upon the liquidation of the Trust, and to enter into any lawful transaction and engage in any lawful activities in furtherance of or incidental to the foregoing. For the avoidance of doubt, such activities include any lawful action necessary or desirable in connection with the Trust’s ownership of Incidental Rights, including the acquisition of IR Assets, except if such action would be prohibited by Section 1.5(b) or any other provision of this Trust Agreement. The Trust shall not engage in any business activity and shall not intentionally acquire any assets other than Litecoin or cash or own any assets other than Litecoin, Incidental Rights and (if permissible under Section 1.5(b) and Section 6.4(f)) IR Assets, or take any of the actions set forth in Section 6.4. The Trust shall have all of the powers specified in Section 3.1 hereof as powers which may be exercised by a Sponsor on behalf of the Trust under this Trust Agreement.
(b) The Trust shall not take any action that could cause the Trust to be treated other than as a grantor trust for U.S. federal income tax purposes. Without limiting the generality of the foregoing, nothing in this Trust Agreement (including, for the avoidance of doubt, Section 1.5(a)) shall be construed to give the Trustee or the Sponsor the power to vary the investment of the Shareholders within the meaning of Section 301.7701-4(c) or similar provisions of the Treasury Regulations, nor shall the Trustee or the Sponsor take any action that would vary the investment of the Shareholders. The Trust shall not seek to acquire Incidental Rights or IR Assets. However, if the Trust does acquire such assets by virtue of holding Litecoin, the Trust shall sell such Incidental Rights or IR Assets, distribute such Incidental Rights or IR Assets, or pay expenses with such Incidental Rights or IR Assets as soon as practical after acquiring such Incidental Rights or IR Assets.
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(c) To the extent not held or reserved pending fulfillment of a Redemption Order or to pay the expenses of the Trust, the Sponsor shall cause all cash proceeds received by the Trust in connection with purchase of Creation Units to be converted to Litecoin as soon as reasonably practicable.
SECTION 1.6 Tax Treatment.
Each of the parties hereto, by entering into this Trust Agreement, (i) expresses its intention that the Shares will qualify under applicable tax law as interests in a grantor trust which holds the Trust Estate, (ii) agrees that it will file its own U.S. federal, state and local income, franchise and other tax returns in a manner that is consistent with clause (i) of this Section 1.6 and with the classification of the Trust as a grantor trust, and (iii) agrees to use reasonable efforts to notify the Sponsor promptly upon a receipt of any notice from any taxing authority having jurisdiction over such holders of Shares with respect to the treatment of the Shares as anything other than interests in a grantor trust.
SECTION 1.7 Legal Title.
Legal title to all of the Trust Estate shall be vested in the Trust as a separate legal entity; provided, however, that if applicable law in any jurisdiction requires legal title to any portion of the Trust Estate to be vested otherwise, the Sponsor may cause legal title to such portion of the Trust Estate to be held by or in the name of the Sponsor or any other Person (other than a Shareholder or the Trustee) as nominee.
ARTICLE II
THE TRUSTEE
SECTION 2.1 Term; Resignation; Removal.
(a) CSC Delaware Trust Company has been appointed and hereby agrees to serve as the Trustee of the Trust. The Trust shall have only one Trustee unless otherwise determined by the Sponsor. The Trustee shall serve until such time as the Trust is terminated or if the Sponsor removes the Trustee or the Trustee resigns. The Trustee is appointed to serve as the trustee of the Trust in the State of Delaware and shall at all times satisfy the requirements of Section 3807(a) of the Delaware Trust Statute and be authorized to exercise corporate trust powers under the laws of Delaware, having a combined capital, surplus and undivided profits of at least $50,000,000 and subject to supervision or examination by federal or state authorities. If the Trustee publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Article II the combined capital, surplus and undivided profits of the Trustee shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible to serve as trustee of the Trust in accordance with the provisions of this Section 2.1, the Trustee shall resign promptly in the manner and with the effect specified in this Article II. The Trustee may have normal banking and trust relationships with the Sponsor and their respective Affiliates; provided that none of (i) the Sponsor, (ii) any Person involved in the organization or operation of the Sponsor or the Trust or (iii) any Affiliate of any of them may be the Trustee hereunder. The Trust shall have at least one trustee with a principal place of business in Delaware. It is understood and agreed by the parties hereto that the Trustee shall have none of the duties or liabilities of the Sponsor and shall have no obligation to supervise or monitor the Sponsor or otherwise manage the Trust.
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(b) The Trustee is permitted to resign upon at least one hundred eighty (180) days’ notice to the Sponsor upon which date such resignation shall be effective.
(c) If at any time the Trustee shall cease to be eligible to serve as trustee of the Trust in accordance with the provisions of this Trust Agreement, or if at any time the Trustee shall become incapable of acting, or shall be adjudged bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then the Sponsor may remove the Trustee and appoint a successor trustee by written instrument, in duplicate, which instrument shall be delivered to the Trustee so removed and the successor trustee. The Sponsor may at any time, upon sixty (60) days’ prior notice to the Trustee, remove the Trustee and appoint a successor trustee by written instrument or instruments, in triplicate, signed by the Sponsor or its attorney-in-fact duly authorized, one complete set of which instruments shall be delivered to the Trustee so removed and one complete set to the successor so appointed.
SECTION 2.2 Powers.
Except to the extent expressly set forth in Section 1.3 and this Article II, the duty and authority to manage the affairs of the Trust is vested in the Sponsor, which duty and authority the Sponsor may further delegate as provided herein, all pursuant to Section 3806(b)(7) of the Delaware Trust Statute. The duties of the Trustee shall be limited to (i) accepting legal process served on the Trust in the State of Delaware, and (ii) the execution of any certificates required to be filed with the Secretary of State of the State of Delaware which the Trustee is required to execute under Section 3811 of the Delaware Trust Statute. The Trustee shall provide prompt notice to the Sponsor of its performance of any of the foregoing. The Sponsor shall reasonably keep the Trustee informed of any actions taken by the Sponsor with respect to the Trust that would reasonably be expected to affect the rights, obligations or liabilities of the Trustee hereunder or under the Delaware Trust Statute.
SECTION 2.3 Compensation and Expenses of the Trustee.
The Trustee shall be entitled to receive from the Sponsor, as a Sponsor-paid Expense, reasonable compensation for its services hereunder as set forth in a separate fee agreement and shall be entitled to be reimbursed by the Sponsor on behalf of the Trust for reasonable out-of-pocket expenses incurred by it in the performance of its duties hereunder, including without limitation, the reasonable compensation, out-of-pocket expenses and disbursements of counsel, any experts and such other agents as the Trustee may employ in connection with the exercise and performance of its rights and duties hereunder (together, the “Trust Expenses”). To the extent that the Sponsor fails to pay the Trust Expenses, the Trust will be responsible for such Trust Expenses.
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SECTION 2.4 Indemnification.
(a) The Trust hereby agrees to be primary obligor and shall indemnify, defend and hold harmless the Trustee (including in its individual capacity) and any of the officers, directors, employees and agents of the Trustee (the “Indemnified Persons”) from and against any and all losses, damages, liabilities, claims, actions, suits, costs, expenses, disbursements (including the reasonable fees and expenses of counsel and fees and expenses incurred in connection with enforcement of its indemnification rights hereunder), taxes and penalties of any kind and nature whatsoever (collectively, “Expenses”), to the extent that such Expenses arise out of or are imposed upon or asserted at any time against such Indemnified Persons with respect to the performance of this Trust Agreement, the creation, operation or termination of the Trust or the transactions contemplated hereby; provided, however, that the Trust shall not be required to indemnify any Indemnified Person for any Expenses which are a result of the willful misconduct, bad faith or gross negligence of an Indemnified Person. If the Trust shall have insufficient assets or improperly refuses to pay an Indemnified Person within sixty (60) days of a request for payment owed hereunder, the Sponsor shall, as secondary obligor, compensate or reimburse the Trustee or indemnify, defend and hold harmless an Indemnified Person as if it were the primary obligor hereunder; provided, however, that the Sponsor shall not be required to indemnify any Indemnified Person for any Expenses which are a result of the willful misconduct, bad faith or gross negligence of an Indemnified Person. To the fullest extent permitted by law and by the requirement for treatment of the Trust as a grantor trust for tax purposes, Expenses to be incurred by an Indemnified Person shall, from time to time, be advanced by, or on behalf of, the Sponsor prior to the final disposition of any matter upon receipt by the Sponsor of an undertaking by, or on behalf of, such Indemnified Person to repay such amount if it shall be determined that the Indemnified Person is not entitled to be indemnified under this Trust Agreement.
(b) As security for any amounts owing to the Trustee hereunder, the Trustee shall have a lien against the Trust property, which lien shall be prior to the rights of the Sponsor or any other Shareholder. The obligations of the Sponsor and the Trust to indemnify the Indemnified Persons under this Section 2.4 shall survive the termination of this Trust Agreement.
SECTION 2.5 Successor Trustee.
Upon the resignation or removal of the Trustee, the Sponsor shall appoint a successor Trustee by delivering a written instrument to the outgoing Trustee. Any successor Trustee must satisfy the requirements of Section 3807 of the Delaware Trust Statute. The successor Trustee shall become fully vested with all of the rights, powers, duties and obligations of the outgoing Trustee under this Trust Agreement, with like effect as if originally named as Trustee, and the outgoing Trustee shall be discharged of its duties and obligations under this Trust Agreement. Any business entity into which the Trustee may be merged or converted or with which it may be consolidated, or any entity resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any entity succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, to the fullest extent permitted by law without the execution or filing of any paper or any further act on the part of any of the parties hereto. Any successor Trustee shall file any necessary amendments to the Certificate of Trust with the Secretary of State.
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SECTION 2.6 Liability of Trustee.
Except as otherwise provided in this Article II, in accepting the trust created hereby, CSC Delaware Trust Company acts solely as Trustee hereunder and not in its individual capacity, and all Persons having any claim against CSC Delaware Trust Company by reason of the transactions contemplated by this Trust Agreement and any other agreement to which the Trust is a party shall look only to the Trust Estate for payment or satisfaction thereof. The Trustee shall not be liable or accountable hereunder to the Trust or to any other Person or under any other agreement to which the Trust is a party, except for the Trustee’s own fraud, gross negligence, bad faith or willful misconduct. In particular, but not by way of limitation:
(a) The Trustee shall have no liability or responsibility for the validity or sufficiency of this Trust Agreement or for the form, character, genuineness, sufficiency, enforceability, collectability, location, existence, value or validity of the Trust Estate;
(b) The Trustee has not prepared or verified, and shall not be responsible or liable for, any information, disclosure or other statement in the Prospectus or in any other document issued or delivered in connection with the sale or transfer of the Shares;
(c) The Trustee shall not be liable for any actions taken or omitted to be taken by it in accordance with the instructions of the Sponsor or the Liquidating Trustee;
(d) The Trustee shall not have any liability for the acts or omissions of the Sponsor, the Transfer Agent, the Custodian or their respective delegates;
(e) The Trustee shall have no duty or obligation to monitor or supervise the performance of any obligations of the Sponsor, the Custodian or their respective delegates or any Authorized Participant or any other Person;
(f) No provision of this Trust Agreement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its rights or powers hereunder;
(g) Under no circumstances shall the Trustee be liable for any obligations, representations, warranties, covenants or indebtedness of the Trust arising under this Trust Agreement or any other agreements to which the Trust is a party;
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(h) The Trustee shall be authorized but not obligated to take the actions of the Trust under this Trust Agreement and the related documents and shall be under no obligation to exercise any of the rights or powers vested in it by this Trust Agreement, or to institute, conduct or defend any litigation under this Trust Agreement or any other agreements to which the Trust is a party, at the request, order or direction of the Sponsor unless the Sponsor has offered to CSC Delaware Trust Company (or any successor Trustee) (in its capacity as Trustee and individually) security or indemnity satisfactory to it against the costs, expenses and liabilities that may be incurred by CSC Delaware Trust Company (or such successor Trustee) (including, without limitation, the reasonable fees and expenses of its counsel) therein or thereby;
(i) Notwithstanding anything contained herein to the contrary, the Trustee shall not be required to take any action in any jurisdiction other than in the State of Delaware if the taking of such action will (i) require the consent or approval or authorization or order of, or the giving of notice to, or the registration with or taking of any action in respect of, any state or other governmental authority or agency of any jurisdiction other than the State of Delaware, (ii) result in any fee, tax or other governmental charge becoming payable by the Trustee under the laws of any jurisdiction or any political subdivision thereof other than the State of Delaware or (iii) subject the Trustee to personal jurisdiction, other than in the State of Delaware, for causes of action arising from personal acts unrelated to the consummation of the actions of the Trustee contemplated by this Trust Agreement;
(j) To the extent that, at law or in equity, the Trustee has duties (including fiduciary duties) and liabilities relating thereto to the Trust, the Shareholders, the Beneficial Owners, or any other Person, the Trustee, acting under this Trust Agreement, shall not be liable to the Trust, the Shareholders, the Beneficial Owners or any other Person for its good faith reliance on the provisions of this Trust Agreement, and the provisions of this Trust Agreement, to the extent that they restrict or eliminate the duties and liabilities of the Trustee otherwise existing at law or in equity are agreed by the parties hereto to replace such other duties and liabilities of the Trustee;
(k) The Trustee shall not be liable for special, punitive, exemplary, consequential or similar damages for a breach of the Trust Agreement under any circumstances, including, without limitation, lost profits;
(l) If the Trustee is unsure of the application of any provision of this Trust Agreement or any related agreement, then the Trustee may promptly deliver a notice to the Sponsor requesting written instructions as to the course of action desired by the Sponsor, and if the Trustee does not receive such instructions within ten Business Days after it has delivered such notice, or such shorter period of time set forth in such notice, it may, but shall be under no duty to, take or refrain from taking such action not inconsistent with this Trust Agreement;
(m) The Trustee shall not be required to take any action if the Trustee shall reasonably determine, or shall have been advised by counsel, that such action is likely to result in personal liability, or is contrary to the terms hereof or of any document contemplated hereby to which the Trustee is a party or otherwise contrary to law;
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(n) The Trustee shall have no duty or obligation to manage, control, use, sell, dispose of or otherwise deal with the Trust Estate, to prepare or file any document or report (including any securities or tax filings or reports, any financing or continuation statement, qualification to do business, licensing, commission filing or other filing for the Trust), or to otherwise perfect or maintain the perfection of any security interest or lien, or otherwise to take or refrain from taking any action under or in connection with this Trust Agreement except as expressly required by the terms of this Trust Agreement, and the right of the Trustee to perform any discretionary act enumerated in this Trust Agreement or in any related document shall not be construed as a duty, and no implied duties (including fiduciary duties) or obligations shall be read into this Trust Agreement or any related agreement against the Trustee;
(o) The Trustee shall not be liable for any action taken, or error of judgment made, in good faith by any officer or employee of the Trustee;
(p) In no event shall the Trustee be liable for forces beyond its control including strikes, work stoppages, acts of war or terrorism, insurrection, revolution, nuclear or natural catastrophes, epidemics or pandemics, or acts of God and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; and
(q) The Trustee may earn compensation in the form of short-term interest (“float”) on items like uncashed distribution checks (from the date issued until the date cashed), funds that the Trustee is directed not to invest and deposits awaiting investment direction or received too late to be invested overnight in previously directed investments.
SECTION 2.7 Reliance; Advice of Counsel.
(a) In the absence of bad faith, the Trustee may conclusively rely upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Trust Agreement in determining the truth of the statements and the correctness of the opinions contained therein, and shall incur no liability to anyone in acting or not acting on any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties and need not investigate any fact or matter pertaining to, or contained in, any such document; provided, however, that the Trustee shall have examined any certificates and opinions so as to reasonably determine compliance of such certificates and opinions with the requirements of this Trust Agreement. The Trustee may accept a certified copy of a resolution of the board of directors or other governing body of any corporate party as conclusive evidence that such resolution has been duly adopted by such body and that such resolution is in full force and effect. As to any fact or matter the method of the determination of which is not specifically prescribed in this Trust Agreement, the Trustee may for all purposes hereof rely on a certificate, signed by the president, any vice president, the treasurer or any other authorized officers of the relevant party, as to such fact or matter, and such certificate shall constitute full protection to the Trustee for any action taken or omitted to be taken by it in good faith in reliance thereon.
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(b) In the exercise or administration of the Trust hereunder and in the performance of its duties and obligations under this Trust Agreement, the Trustee, at the expense of the Trust (i) may act directly or through its agents, attorneys, custodians or nominees pursuant to agreements entered into with any of them, and the Trustee shall not be liable for the conduct or misconduct of such agents, attorneys, custodians or nominees if such agents, attorneys, custodians or nominees shall have been selected by the Trustee with reasonable care and (ii) may consult with counsel, accountants and other skilled professionals to be selected with reasonable care by it. The Trustee shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the opinion or advice of any such counsel, accountant or other such Persons.
SECTION 2.8 Payments to the Trustee.
Any amounts paid to the Trustee pursuant to this Article II shall be deemed not to be a part of the Trust Estate immediately after such payment. Any amounts owing to the Trustee under this Trust Agreement shall constitute a claim against the Trust Estate. Notwithstanding any other provision of this Trust Agreement, all payments to the Trustee, including fees, expenses and any amounts paid in connection with indemnification of the Trustee in accordance with the terms of this Trust Agreement will be payable only in U.S. Dollars.
ARTICLE III
SHARES; CREATIONS AND ISSUANCE OF CREATION BASKETS
SECTION 3.1 General.
The Sponsor shall have the power and authority, without action or approval by the Shareholders, to cause the Trust to issue Shares from time to time as it deems necessary or desirable. The number of Shares authorized shall be unlimited, and the Shares so authorized may be represented in part by fractional Shares, calculated to one one -hundred-millionth of one Litecoin (i.e., carried to the eighth decimal place). From time to time, the Sponsor may cause the Trust to divide or combine the Shares into a greater or lesser number without thereby changing the proportionate beneficial interests in the Trust Estate, or in any way affecting the rights, of the Shareholders, without action or approval by the Shareholders. Except as set forth in Section 3.2(b), the Trust shall issue Shares solely in exchange for contributions of Litecoin and/or an amount of cash equivalent to the number of Litecoin (or for no consideration if pursuant to a Share distribution or split-up); provided, however, the Sponsor may, in its sole discretion, determine to require such transactions to exclusively in Litecoin or exclusively in cash. All Shares when so issued shall be fully paid and non-assessable. Subject to the limitations upon, and requirements for, the issuance of Creation Units stated herein and in the Authorized Participant Agreement, the number of Creation Units that may be issued by the Trust is unlimited. Every Shareholder and Beneficial Owner, by virtue of having purchased or otherwise acquired a Share, shall be deemed to have expressly consented and agreed to be bound by the terms of this Trust Agreement.
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SECTION 3.2 Offer of Shares; Procedures for Creation and Issuance of Creation Units to Authorized Participants.
(a) General. The following procedures, as supplemented by the more detailed procedures specified in each Authorized Participant Agreement, including all exhibits, annexes, attachments and procedures, as applicable, to each Authorized Participant Agreement, which may be amended from time to time in accordance with the provisions of the relevant Authorized Participant Agreement (provided that any such amendment shall not constitute an amendment of this Trust Agreement), shall govern the Trust with respect to the creation and issuance of Creation Units to Authorized Participants, subject to Section 3.2(b).
(i) On any Business Day, an Authorized Participant may place an order for one or more Creation Units (each, a “Creation Order”) in the manner provided in the Authorized Participant Agreement. The Sponsor may require, in its sole discretion, that a Creation Order be denominated in Litecoin (a “Litecoin Creation Order”) or cash (a “Cash Creation Order”).
(ii) The Sponsor or its delegate shall process Creation Orders only from Authorized Participants with respect to which an Authorized Participant Agreement is in full force and effect and only in accordance with the Authorized Participant Agreement. The Sponsor or its delegate shall maintain and make available at the Trust’s principal offices during normal business hours a current list of the Authorized Participants with respect to which an Authorized Participant Agreement is in full force and effect.
(iii) The Trust shall create and issue Creation Units only in exchange for deposit in the account designated by the Sponsor on the applicable Creation Settlement Date of the applicable Total Creation Amount by the relevant Authorized Participant or Authorized Participant Designee, as applicable.
(iv) The Sponsor or its delegate has final determination of all questions as to the calculation of the Total Creation Amount at any time.
(v) The expense and risk of delivery, ownership and safekeeping of Litecoin, until such Litecoin has been received and not rejected by the Trust, shall be borne solely by the Authorized Participant or a Authorized Participant Designee, as applicable.
(vi) Upon the receipt of the Total Creation Amount in the account designated by the Sponsor, the Sponsor or its delegate shall, or shall direct the Transfer Agent to, credit to the account designated by the Authorized Participant the number of Creation Units ordered by the Authorized Participant.
(vii) The Trust or its delegate may accept delivery of Litecoin or cash by such other means as the Sponsor, from time to time, may determine to be acceptable for the Trust.
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(b) Rejection or Suspension. The Sponsor or its delegate shall reject a Creation Order if the Creation Order is not in proper form as described in the relevant Authorized Participant Agreement or if the fulfillment of the Creation Order, in the opinion of its counsel, might be unlawful. The issuance of Creation Units may be suspended by the Sponsor generally, or refused with respect to a particular Creation Order, during any period when the transfer books of the Transfer Agent are closed or if circumstances outside the control of the Sponsor or its delegate make it for all practicable purposes not feasible to process Creation Orders or for any other reason at any time or from time to time. None of the Sponsor, its delegates or the Custodian shall be liable for the suspension or rejection of any Creation Order.
(c) Conflict. In the event of any conflict between the procedures described in this Section 3.2 and the Authorized Participant Agreement, the Authorized Participant Agreement shall control.
(d) Successor Custodian. If a successor to the Custodian shall be employed, the Trust and the Sponsor shall establish procedures acceptable to such successor with respect to the matters addressed in this Section 3.2.
SECTION 3.3 Book-Entry System.
(a) Shares shall be held in book-entry form by the Sponsor, its delegate, or the Transfer Agent. The Sponsor or its delegate shall, or shall direct the Transfer Agent, to (i) credit or debit the number of Creation Units to the account of the applicable Shareholder and (ii) issue or cancel Creation Units, as applicable, at the direction of the Sponsor or its delegate.
(b) The Sponsor or its delegate may cause the Trust to issue Shares in certificated form in its sole discretion.
SECTION 3.4 Assets of the Trust.
The Trust Estate shall irrevocably belong to the Trust for all purposes, subject only to the rights of creditors of the Trust and shall be so recorded upon the books of account of the Trust.
SECTION 3.5 Liabilities of the Trust.
The Trust Estate shall be charged with the liabilities of the Trust and with all expenses, costs, charges and reserves attributable to the Trust. The Sponsor shall have full discretion, to the extent not inconsistent with applicable law, to determine which items shall be treated as income and which items as capital, and each such determination and allocation shall be conclusive and binding upon the Shareholders and Beneficial Owners.
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SECTION 3.6 Distributions.
(a) The Trust may make distributions on Shares either in cash or in kind, including in such form as is necessary and permissible for the Trust to facilitate the distribution of Incidental Rights and/or IR Assets.
(b) Distributions on Shares, if any, may be made with such frequency as the Sponsor may determine, which may be daily or otherwise, to the Shareholders, from the Trust Estate, after providing for actual and accrued liabilities. All distributions on Shares shall be made pro rata to the Shareholders in proportion to their respective Percentage Interests at the date and time of record established for such distribution.
(c) If the Trust sells Litecoin, Incidental Rights and/or IR Assets in order to pay Extraordinary Expenses, then any cash remaining from these sales after the payment of any Extraordinary Expenses shall promptly be distributed to the Shareholders.
SECTION 3.7 Voting Rights.
Notwithstanding any other provision hereof, on each matter submitted to a vote of the Shareholders, each Shareholder shall be entitled to a proportionate vote based upon its Percentage Interest at such time.
SECTION 3.8 Equality.
All Shares shall represent an equal proportionate beneficial interest in the Trust Estate subject to the liabilities of the Trust, and each Share’s interest in the Trust Estate shall be equal to each other Share.
ARTICLE IV
TRANSFERS OF SHARES
SECTION 4.1 General Prohibition.
A Shareholder may not sell, assign, transfer or otherwise dispose of, or pledge, hypothecate or in any manner encumber any or all of its Shares or any part of its right, title and interest in the Trust Estate except as permitted in this Article IV and any act in violation of this Article IV shall not be binding upon or recognized by the Trust (regardless of whether the Sponsor shall have knowledge thereof), unless approved in writing by the Sponsor.
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SECTION 4.2 [Reserved].
SECTION 4.3 Transfer of Shares Generally.
Shares shall be transferable on the books of account for the Trust only by the record holder thereof or by his or her duly authorized agent upon delivery to the Sponsor or the Transfer Agent or similar agent of a duly executed instrument of transfer, and such evidence of the genuineness of each such execution and authorization and of such other matters as may be required by the Sponsor. Upon such delivery, and subject to any further requirements specified by the Sponsor, the transfer shall be recorded on the books of account for the Trust. Until a transfer is so recorded, the Shareholder of record of Shares shall be deemed to be the Shareholder with respect to such Shares for all purposes hereunder and neither the Sponsor nor the Trust, nor the Transfer Agent or any similar agent or registrar or any officer, employee or agent of the Trust, shall be affected by any notice of a proposed transfer.
ARTICLE V
REDEMPTIONS
SECTION 5.1 Redemption of Creation Units.
(a) General. The following procedures, as supplemented by the Authorized Participant Agreement, which may be amended from time to time in accordance with the provisions of the Authorized Participant Agreement (provided that any such amendment shall not constitute an amendment of this Trust Agreement), shall govern the Trust with respect to the redemption of Creation Units, subject to Section 5.1(b).
(i) On any Business Day, an Authorized Participant may place an order to redeem Creation Units (each, a “Redemption Order”) in the manner provided in the Authorized Participant Agreement. The Sponsor may require, in its sole discretion, that Redemption Orders may be denominated in Litecoin (a “Litecoin Redemption Order”) or cash (a “Cash Redemption Order”).
(ii) The Sponsor or its delegates shall process Redemption Orders only from Authorized Participants with respect to which an Authorized Participant Agreement is in full force and effect.
(iii) The Sponsor or its delegate has final determination of all questions as to the determination of the Total Redemption Amount at any time.
(iv) With respect to a Litecoin Redemption Order, the Total Redemption Amount shall be delivered only to the account or wallet designated by the applicable Authorized Participant.
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(v) With respect to a Cash Creation Order, the Sponsor shall instruct the applicable Custodian to withdraw from the Litecoin Account Litecoin in such quantity as may be necessary to permit payment of the Total Redemption Amount and may cause the Trust (or its delegate) to convert such Litecoin into U.S. Dollars.
(vi) The Total Redemption Amount shall be subject to the deduction of any applicable tax or other governmental charges that may be due.
(b) Rejection or Suspension. The Sponsor or its delegate shall reject a Redemption Order if the Redemption Order is not in proper form as described in the relevant Authorized Participant Agreement or if the fulfillment of the Redemption Order, in the opinion of its counsel, might be unlawful. The redemption of Creation Units may be suspended by the Sponsor generally, or refused with respect to a particular Redemption Order, during any period when the transfer books of the Transfer Agent are closed or if circumstances outside the control of the Sponsor or its delegate make it for all practicable purposes not feasible to process Redemption Orders or for any other reason at any time or from time to time. None of the Sponsor, its delegates or the Custodian shall be liable for the suspension or rejection of any Redemption Order.
(c) Conflict. In the event of any conflict between the procedures described in this Section 5.1 and the Authorized Participant Agreement, the Authorized Participant Agreement shall control.
ARTICLE VI
THE SPONSOR
SECTION 6.1 Management of the Trust.
Pursuant to Section 3806(b)(7) of the Delaware Trust Statute, the Trust shall be managed by the Sponsor in accordance with this Trust Agreement. The Sponsor may delegate, as provided herein, the duty and authority to manage the affairs of the Trust. Any determination as to what is in the interests of the Trust made by the Sponsor in good faith shall be conclusive. In construing the provisions of this Trust Agreement, the presumption shall be in favor of a grant of power to the Sponsor, but subject, for the avoidance of doubt, to the restrictions, prohibitions and limitations expressly set forth in Section 1.5, Section 6.4(f) and otherwise in this Trust Agreement. The enumeration of any specific power in this Trust Agreement shall not be construed as limiting the aforesaid power.
SECTION 6.2 Authority of Sponsor.
In addition to, and not in limitation of, any rights and powers conferred by law or other provisions of this Trust Agreement, and except as limited, restricted or prohibited by the express provisions of this Trust Agreement or the Delaware Trust Statute, the Sponsor shall have, and may exercise on behalf of the Trust, all powers and rights necessary, proper, convenient or advisable to effectuate and carry out the purposes of the Trust, which powers and rights shall include, without limitation, the following:
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(a) To direct the Trustee pursuant to this Trust Agreement and to enter into, execute, accept, deliver and maintain, and to cause the Trust to perform its obligations under, contracts, agreements and any or all other documents and instruments incidental to the Trust’s purposes, and to do and perform all such acts as may be in furtherance of the Trust’s purposes, or necessary or appropriate for the offer and sale of the Shares, including, but not limited to, causing the Trust to enter into (i) contracts or agreements with the Sponsor or an Affiliate, provided that any such contract or agreement does not conflict with the provisions of Section 1.5(b) of this Trust Agreement, Section 6.4 of this Trust Agreement or clause (ii) of this Section 6.2(a) and (ii) contracts with third parties for various services, it being understood that any document or instrument executed or accepted by the Sponsor in the Sponsor’s name shall be deemed executed and accepted on behalf of the Trust by the Sponsor;
(b) To establish, maintain, deposit into, and sign checks and/or otherwise draw upon, accounts on behalf of the Trust with appropriate banking and savings institutions;
(c) To deposit, withdraw, pay, retain and distribute the Trust Estate or any portion thereof in any manner consistent with the provisions of this Trust Agreement;
(d) To supervise the preparation of the Prospectus and supplements and amendments thereto;
(e) To make or authorize the making of distributions to the Shareholders and expenses of the Trust out of the Trust Estate;
(f) To cause the Trust to appoint an agent to act on behalf of the Shareholders pursuant to Section 7.5;
(g) To prepare, or cause to be prepared, and file, or cause to be filed, an application to register any Shares under the Securities Act and/or the Exchange Act and to take any other action and execute and deliver any certificates or documents that may be necessary to effectuate such registration;
(h) To prepare, or cause to be prepared, and file, or cause to be filed, an application to enable the Shares to be listed, quoted or traded on any Secondary Market and to take any other action and execute and deliver any certificates or documents that may be necessary to effectuate such listing, quotation or trading;
(i) To appoint one or more Custodians, banks or other security vendors, including itself or an Affiliate, to provide for custodian security services, or to determine not to appoint any Custodian, bank or other security vendors, and to otherwise take any action with respect to the Custodians, banks or other security vendors to safeguard the Trust Estate;
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(j) In the sole and absolute discretion of the Sponsor, to admit an Affiliate or Affiliates of the Sponsor as additional Sponsors;
(k) To delegate those of its duties hereunder as it shall determine from time to time to one or more Distributors, and add any additional service providers, if needed and as applicable;
(l) To perform such other services as the Sponsor believes that the Trust may from time to time require;
(m) Interact with the Depository as required; and
(n) In general, but subject to Section 1.5 and Section 6.4 of this Trust Agreement, to do everything necessary, suitable or proper for the accomplishment of any purpose or the furtherance of any power herein set forth, either alone or in association with others, and to do every other act or thing incidental or appurtenant to, or growing out of or connected with, the aforesaid purposes or powers.
SECTION 6.3 Obligations of the Sponsor.
In addition to the obligations expressly provided by the Delaware Trust Statute or this Trust Agreement, the Sponsor shall:
(a) Devote such of its time to the affairs of the Trust as it shall, in its discretion exercised in good faith, determine to be necessary to carry out the purposes of the Trust, as set forth in Section 1.5, for the benefit of the Shareholders;
(b) Execute, file, record and/or publish all certificates, statements and other documents and do any and all other things as may be appropriate for the formation, qualification and operation of the Trust and for the conduct of its affairs in all appropriate jurisdictions;
(c) Retain independent public accountants to audit the accounts of the Trust;
(d) Employ attorneys to represent the Sponsor and, as necessary, the Trust;
(e) Select and enter into agreements with the Trustee and any other service provider to the Trust;
(f) Use its best efforts to maintain the status of the Trust as a grantor trust for U.S. federal income tax purposes under Subpart E, Part I of Subchapter J of the Code;
(g) Monitor all fees charged to the Trust, and the services rendered by the service providers to the Trust, to determine whether the fees paid by, and the services rendered to, the Trust are at competitive rates and are the best price and services available under the circumstances, and if necessary, renegotiate the fee structure to obtain such rates and services for the Trust;
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(h) Provide for the safekeeping and use of the Trust Estate, whether or not in the Sponsor’s immediate possession or control;
(i) Not employ or permit others to employ the Trust Estate in any manner except for the benefit of the Trust, including, among other things, the utilization of any portion of the Trust Estate as compensating balances for the exclusive benefit of the Sponsor;
(j) At all times act with integrity and good faith and exercise due diligence in all activities relating to the Trust and in resolving conflicts of interest;
(k) Enter into directly or through its delegates an Authorized Participant Agreement with each Authorized Participant and discharge the duties and responsibilities of the Trust and the Sponsor thereunder;
(l) Receive directly or through its delegates from Authorized Participants and process properly submitted Creation Orders, as described in Section 3.2(a);
(m) Receive directly or through its delegates from Authorized Participants and process properly submitted Redemption Orders (if authorized), as described in Section 5.1(a);
(n) Interact with the Custodian and any other party as required;
(o) If the Shares are listed, quoted or traded on any Secondary Market, cause the Trust to comply with all rules, orders and regulations of such Secondary Market to which the Trust is subject as a result of the listing, quotation or trading of the Shares on such Secondary Market, and take all such other actions that may reasonably be taken and are necessary for the Shares to remain listed, quoted or traded on such Secondary Market until the Trust is terminated or the Shares are no longer listed, quoted or traded on such Secondary Market;
(p) If the Shares are transferred in a transaction registered under the Securities Act or registered under the Exchange Act, cause the Trust to comply with all rules, orders and regulations of the SEC and take all such other actions as may reasonably be taken and are necessary for the Shares to remain registered under the Exchange Act until the Trust is terminated or the Shares are no longer registered under the Exchange Act; and
(q) Take all actions to prepare and, to the extent required by this Trust Agreement or by law, deliver to Shareholders and/or Beneficial Owners, as applicable, press releases or statements, financial or otherwise, that the Sponsor determines are required to be provided to Shareholders by applicable law or governmental regulation or the requirements of any Secondary Market on which the Shares are listed, quoted or traded or, if any Shares are transferred in a transaction registered under the Securities Act or registered under the Exchange Act, the SEC, as applicable.
The foregoing clauses of Section 6.2 and Section 6.3 shall be construed as powers, and the foregoing enumeration of specific powers shall not be held to limit or restrict in any manner the general powers of the Sponsor. Any action by the Sponsor hereunder shall be deemed an action on behalf of the Trust, and not an action in an individual capacity.
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SECTION 6.4 General Prohibitions.
The Trust shall not, and the Sponsor shall not have the power to cause the Trust to:
(a) Receive any property other than Litecoin or cash upon the issuance of Shares;
(b) Hold any property other than (i) Litecoin, Incidental Rights and IR Assets, (ii) cash from the sale of Litecoin, Incidental Rights or IR Assets or received in connection with a Cash Creation Order and (iii) interests in any liquidating trust or other vehicle formed to hold Incidental Rights or IR Assets pending distribution of such interests to the Shareholders;
(c) Hold any cash from the sale of Litecoin, Incidental Rights or IR Assets for more than thirty (30) Business Days prior to using such cash to pay Extraordinary Expenses or satifying Redemption Orders and distributing any remaining cash to the Shareholders;
(d) redeem the Shares other than (i) to satisfy a Redemption Order from an Authorized Participant, (ii) as provided in Section 5.1 or (iii) upon the dissolution of the Trust;
(e) Elect to be treated as an association taxable as a corporation for U.S. federal income tax purposes; or
(f) Notwithstanding any other provision of this Trust Agreement, including Section 6.4(b), take any action that could cause the Trust to be treated other than as a grantor trust for U.S. federal income tax purposes.
SECTION 6.5 Liability of Covered Persons.
A Covered Person shall have no liability to the Trust or to any Shareholder, Beneficial Owner or other Covered Person for any loss suffered by the Trust which arises out of any action or inaction of such Covered Person if such Covered Person, in good faith, determined that such course of conduct was in the best interest of the Trust and such course of conduct did not constitute fraud, gross negligence, bad faith or willful misconduct of such Covered Person. Subject to the foregoing, neither the Sponsor nor any other Covered Person shall be personally liable for the return or repayment of all or any portion of the Litecoin transferred, or the purchase price otherwise paid, by a Shareholder for its Shares, it being expressly agreed that any such return made pursuant to this Trust Agreement shall be made solely from the assets of the Trust without any rights of contribution from the Sponsor or any other Covered Person. A Covered Person shall not be liable for the conduct or misconduct of any delegatee selected by the Sponsor with reasonable care.
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SECTION 6.6 Fiduciary Duty.
(a) To the extent that, at law or in equity, the Sponsor has duties (including fiduciary duties) and liabilities relating thereto to the Trust, the Shareholders, the Beneficial Owners or any other Person, the Sponsor acting under this Trust Agreement shall not be liable to the Trust, the Shareholders, the Beneficial Owners or any other Person for its good faith reliance on the provisions of this Trust Agreement subject to the standard of care set forth in Section 6.5 herein. The provisions of this Trust Agreement, to the extent that they restrict or eliminate the duties and liabilities of the Sponsor otherwise existing at law or in equity are agreed by the parties hereto to replace such other duties and liabilities of the Sponsor. To the fullest extent permitted by law, no Person other than the Sponsor and the Trustee shall have any duties (including fiduciary duties) or liabilities at law or in equity to the Trust, the Shareholders, the Beneficial Owners or any other Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between the Sponsor or any of its Affiliates, on the one hand, and the Trust, any Shareholder, and Beneficial Owner or any other Person, on the other hand; or
(ii) whenever this Trust Agreement or any other agreement contemplated herein provides that the Sponsor shall act in a manner that is, or provides terms that are, fair and reasonable to the Trust, any Shareholder, any Beneficial Owner or any other Person,
the Sponsor shall resolve such conflict of interest, take such action or provide such terms, considering in each case the relative interest of each party (including its own interest) to such conflict, agreement, transaction or situation and the benefits and burdens relating to such interests, any customary or accepted industry practices, and any applicable generally accepted accounting practices or principles. In the absence of bad faith by the Sponsor, the resolution, action or terms so made, taken or provided by the Sponsor shall not constitute a breach of this Trust Agreement or any other agreement contemplated herein or of any duty or obligation of the Sponsor at law or in equity or otherwise.
(c) The Sponsor and any Affiliate of the Sponsor may engage in or possess an interest in profit-seeking or business ventures of any nature or description, independently or with others, whether or not such ventures are competitive with the Trust and the doctrine of corporate opportunity, or any analogous doctrine, shall not apply to the Sponsor. If the Sponsor acquires knowledge of a potential transaction, agreement, arrangement or other matter that may be an opportunity for the Trust, it shall have no duty to communicate or offer such opportunity to the Trust, and the Sponsor shall not be liable to the Trust, the Shareholders or the Beneficial Owners for breach of any fiduciary or other duty by reason of the fact that the Sponsor pursues or acquires for, or directs such opportunity to, another Person or does not communicate such opportunity or information to the Trust. Neither the Trust, any Shareholder nor any Beneficial Owner shall have any rights or obligations by virtue of this Trust Agreement or the trust relationship created hereby in or to such independent ventures or the income or profits or losses derived therefrom, and the pursuit of such ventures, even if competitive with the purposes of the Trust, shall not be deemed wrongful or improper. Except to the extent expressly provided herein, the Sponsor may engage or be interested in any financial or other transaction with the Trust, the Shareholders, the Beneficial Owners or any Affiliate of the Trust, the Shareholders or the Beneficial Owners.
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(d) To the fullest extent permitted by law and notwithstanding any other provision of this Trust Agreement or in any agreement contemplated herein or applicable provisions of law or equity or otherwise, whenever in this Trust Agreement a Person is permitted or required to make a decision (a) in its “sole discretion” or “discretion” or under a grant of similar authority or latitude, the Person shall be entitled to consider only such interests and factors as it desires, including its own interests, and shall have no duty or obligation to give any consideration to any interest of or factors affecting the Trust, the Shareholders, the Beneficial Owners or any other Person, or (b) in its “good faith” or under another express standard, the Person shall act under such express standard and shall not be subject to any other or different standard. The term “good faith” as used in this Trust Agreement shall mean subjective good faith as such term is understood and interpreted under Delaware law.
SECTION 6.7 Indemnification of the Sponsor.
(a) The Sponsor shall be indemnified by the Trust against any losses, judgments, liabilities, expenses and amounts paid in settlement of any claims sustained by it in connection with its activities for the Trust, provided that (i) the Sponsor was acting on behalf of, or performing services for, the Trust and has determined, in good faith, that such course of conduct was in the best interests of the Trust and such liability or loss was not the result of fraud, gross negligence, bad faith, willful misconduct, or a material breach of this Trust Agreement on the part of the Sponsor and (ii) any such indemnification will be recoverable only from the Trust Estate. All rights to indemnification permitted herein and payment of associated expenses shall not be affected by the dissolution or other cessation of existence of the Sponsor, or the withdrawal, adjudication of bankruptcy or insolvency of the Sponsor, or the filing of a voluntary or involuntary petition in bankruptcy under Title 11 of the United States Code by or against the Sponsor.
(b) Notwithstanding the provisions of Section 6.7(a) above, the Sponsor, any Authorized Participant and any other Person acting as a broker-dealer for the Trust shall not be indemnified for any losses, liabilities or expenses arising from or out of an alleged violation of U.S. federal or state securities laws unless (i) there has been a successful adjudication on the merits of each count involving alleged securities law violations as to the particular indemnitee and the court approves the indemnification of such expenses (including, without limitation, litigation costs), (ii) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to the particular indemnitee and the court approves the indemnification of such expenses (including, without limitation, litigation costs) or (iii) a court of competent jurisdiction approves a settlement of the claims against a particular indemnitee and finds that indemnification of the settlement and related costs should be made.
(c) The Trust shall not incur the cost of that portion of any insurance that insures any party against any liability, the indemnification of which is herein prohibited.
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(d) Expenses incurred in defending a threatened or pending civil, administrative or criminal action suit or proceeding against the Sponsor shall be paid by the Trust in advance of the final disposition of such action, suit or proceeding if (i) the legal action relates to the performance of duties or services by the Sponsor on behalf of the Trust; (ii) the legal action is initiated by a third party who is not a Shareholder or the legal action is initiated by a Shareholder and a court of competent jurisdiction specifically approves such advance; and (iii) the Sponsor undertakes to repay the advanced funds with interest to the Trust in cases in which it is not entitled to indemnification under this Section 6.7.
(e) The term “Sponsor” as used only in this Section 6.7 shall include, in addition to the Sponsor, any other Covered Person performing services on behalf of the Trust and acting within the scope of the Sponsor’s authority as set forth in this Trust Agreement.
(f) In the event the Trust is made a party to any claim, dispute, demand or litigation or otherwise incurs any loss, liability, damage, cost or expense as a result of or in connection with any Shareholder’s (or assignee’s) or Beneficial Owner’s (or assignee’s) obligations or liabilities unrelated to Trust affairs, such Shareholder or Beneficial Owner (or assignees cumulatively) shall indemnify, defend, hold harmless, and reimburse the Trust for all such loss, liability, damage, cost and expense incurred, including attorneys’ and accountants’ fees.
SECTION 6.8 Expenses and Limitations Thereon.
(a) Sponsor Fee.
(i) The Trust shall pay to the Sponsor a unified fee (the “Sponsor Fee”) as set forth in the Sponsor Agreement. The Sponsor Fee will accrue daily and be payable monthly in Litecoin or cash. The Sponsor may agree to waive or reduce the Sponsor Fee in its sole discretion without Shareholder consent or approval.
(ii) Except as provided in Section 6.8(a)(iv), to cause the Trust to pay the Sponsor Fee, the Sponsor or its delegate shall instruct the Custodian to withdraw the number of Litecoin or cash equal to the accrued but unpaid Sponsor Fee and transfer such Litecoin or cash to the Sponsor’s account at such times as the Sponsor determines in its absolute discretion.
(iii) After the payment of the Sponsor Fee to the Sponsor, the Sponsor may elect to convert the Litecoin it receives into U.S. Dollars. The Shareholders acknowledge that the rate at which the Sponsor converts such Litecoin to U.S. Dollars may differ from the Index. The Trust shall not be responsible for any fees and expenses incurred by the Sponsor to convert Litecoin received in payment of the Sponsor Fee into U.S. Dollars.
(iv) The Sponsor may, from time to time, temporarily waive all or a portion of the Sponsor Fee in its sole discretion.
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(v) As partial consideration for receipt of the Sponsor Fee, the Sponsor shall assume and pay all fees and other expenses incurred by the Trust in the ordinary course of its affairs, excluding taxes, but including: (i) the Distributor Fee; (ii) the Administrator Fee; (iii) the Custodian Fee; (iv) the Transfer Agent Fee; (v) the Trustee fee; (vi) the fees and expenses related to the listing, quotation or trading of the Shares on any Secondary Market (including customary marketing expenses); (vii) ordinary course legal fees and expenses; (viii) audit fees; (ix) regulatory fees, including, if applicable, any fees relating to the registration of the Shares under the Securities Act or the Exchange Act; (x) printing and mailing costs; (xi) costs of maintaining the Trust’s website and (xii) applicable license fees (each, an “Sponsor-paid Expense” and, together, the “Sponsor-paid Expenses”), provided that any expense that qualifies as an Extraordinary Expense as set forth in Section 6.8(b) shall be deemed to be an Extraordinary Expenses and not a Sponsor-paid Expense.
(b) Extraordinary Expenses.
(i) The Trust shall pay any expenses incurred by the Trust in addition to the Sponsor Fee that are not Sponsor-paid Expenses, including, but not limited to, (i) brokerage and transaction costs associated with the sale or transfer of Litecoin not covered by an Authorized Participant, (ii) taxes and governmental charges; (iii) expenses and costs of any extraordinary services performed by the Sponsor (or any other service provider) on behalf of the Trust to protect the Trust or the interests of Shareholders (including in connection with any Incidental Rights and any IR Assets); (iv) any indemnification of the Custodian, Administrator or other agents, service providers or counterparties of the Trust; (v) extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters and (vi) other extraordinary expenses not included as Sponsor-paid Expenses (collectively, “Extraordinary Expenses”).
(ii) To cause the Trust to pay the Extraordinary Expenses, if any, the Sponsor or its delegates (i) shall instruct the Custodian to withdraw from the Litecoin Account Litecoin in such quantity as may be necessary to permit payment of such Extraordinary Expenses and (ii) may either (x) cause the Trust (or its delegate) to convert such Litecoin into U.S. Dollars or other fiat currencies or (y) cause the Trust (or its delegate) to deliver such Litecoin in kind in satisfaction of such Extraordinary Expenses.
(iii) If the Trust holds any Incidental Rights and/or IR Assets at any time, the Trust may pay any Extraordinary Expenses, in whole or in part, with such Incidental Rights and/or IR Assets by entering into an agreement with the relevant payee and transferring such Incidental Rights and/or IR Assets to that payee at a value to be determined pursuant to such agreement; provided that the Trust shall use Incidental Rights and/or IR Assets to pay Extraordinary Expenses only if such agreement and transfer does not otherwise conflict with the terms of this Trust Agreement. If the Trust pays the Extraordinary Expenses in Incidental Rights and/or IR Assets, in whole or in part, the amount of Litecoin that would otherwise have been used to satisfy such payment shall be correspondingly reduced.
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(c) The Sponsor or any Affiliate of the Sponsor may be reimbursed only for the actual cost to the Sponsor or such Affiliate of any expenses that it advances on behalf of the Trust for payment of which the Trust is responsible. In addition, payment to the Sponsor or such Affiliate for indirect expenses incurred in performing services for the Trust in its capacity as the Sponsor (or an Affiliate of the Sponsor) of the Trust, such as salaries and fringe benefits of officers and directors, rent or depreciation, utilities and other administrative items generally falling within the category of the Sponsor’s “overhead,” is prohibited.
SECTION 6.9 Voluntary Withdrawal of the Sponsor.
The Sponsor may withdraw voluntarily as the Sponsor of the Trust only upon one hundred and twenty (120) days’ prior written notice to all Shareholders and the Trustee. If the withdrawing Sponsor is the last remaining Sponsor, the Shareholders holding Shares equal to at least a majority (over 50%) of the Shares may vote to elect and appoint, effective as of a date on or prior to the withdrawal, a successor Sponsor who shall carry on the affairs of the Trust. If the Sponsor withdraws and a successor Sponsor is named, the withdrawing Sponsor shall pay all expenses as a result of its withdrawal.
SECTION 6.10 Litigation.
The Sponsor is hereby authorized to prosecute, defend, settle or compromise actions or claims at law or in equity as may be necessary or proper to enforce or protect the Trust’s interests. The Sponsor shall satisfy any judgment, decree or decision of any court, board or authority having jurisdiction or any settlement of any suit or claim prior to judgment or final decision thereon, first, out of any insurance proceeds available therefor, next, out of the Trust’s assets and, thereafter, out of the assets (to the extent that it is permitted to do so under the various other provisions of this Trust Agreement) of the Sponsor.
SECTION 6.11 Bankruptcy; Merger of the Sponsor.
(a) The Sponsor shall not cease to be a Sponsor of the Trust merely upon the occurrence of its making an assignment for the benefit of creditors, filing a voluntary petition in bankruptcy, filing a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation, filing an answer or other pleading admitting or failing to contest material allegations of a petition filed against it in any proceeding of this nature or seeking, consenting to or acquiescing in the appointment of a trustee, receiver or liquidator for itself or of all or any substantial part of its properties.
(b) To the fullest extent permitted by law, and on sixty (60) days’ prior written notice to the Shareholders of their right to vote thereon, if any such transaction is other than with an affiliated entity, nothing in this Trust Agreement shall be deemed to prevent the merger of the Sponsor with another corporation or other entity, the reorganization of the Sponsor into or with any other corporation or other entity, the transfer of all the capital stock of the Sponsor or the assumption of the rights, duties and liabilities of the Sponsor by, in the case of a merger, reorganization or consolidation, the surviving corporation or other entity by operation of law. Without limiting the foregoing, none of the transactions referenced in the preceding sentence shall be deemed to be a voluntary withdrawal for purposes of Section 6.10 or an Event of Withdrawal for purposes of Section 12.1(a)(iii).
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ARTICLE VII
THE SHAREHOLDERS
SECTION 7.1 No Management or Control; Limited Liability; Exercise of Rights through an Authorized Participant.
The Shareholders shall not participate in the management or control of the Trust nor shall they enter into any transaction on behalf of the Trust or have the power to sign for or bind the Trust, said power being vested solely and exclusively in the Sponsor. Except as provided in Section 7.3 hereof, no Shareholder shall be bound by, or be personally liable for, the expenses, liabilities or obligations of the Trust in excess of its Percentage Interest of the Trust Estate. Except as provided in Section 7.3 hereof, each Share owned by a Shareholder shall be fully paid and no assessment shall be made against any Shareholder. No salary shall be paid to any Shareholder in its capacity as a Shareholder, nor shall any Shareholder have a drawing account or earn interest on its Percentage Interest of the Trust Estate. By the purchase and acceptance or other lawful delivery and acceptance of Shares, each owner of such Shares shall be deemed to be a Shareholder and beneficiary of the Trust and vested with beneficial undivided interest in the Trust to the extent of the Shares owned beneficially by such Shareholder, subject to the terms and conditions of this Trust Agreement.
SECTION 7.2 Rights and Duties.
The Shareholders shall have the following rights, powers, privileges, duties and liabilities:
(a) The Shareholders shall have the right to obtain from the Sponsor information on all things affecting the Trust, provided that such information is for a purpose reasonably related to the Shareholder’s interest as a beneficial owner of the Trust.
(b) The Shareholders shall receive the share of the distributions provided for in this Trust Agreement in the manner and at the times provided for in this Trust Agreement.
(c) Except for the Shareholders’ transfer rights set forth in Article IV and the Shareholders’ redemption rights set forth in Article V hereof, Shareholders shall have the right to demand a redemption of their Shares only upon the dissolution and winding up of the Trust and only to the extent of funds available therefor, as provided in Section 12.2. In no event shall a Shareholder be entitled to demand or receive property other than cash upon the dissolution and winding up of the Trust. No Shareholder shall have priority over any other Shareholder as to distributions. The Shareholder shall not have any right to bring an action for partition against the Trust.
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(d) Shareholders holding Shares representing at least a majority (over 50%) of the Shares may vote to appoint a successor Sponsor as provided in Section 6.10 or to continue the Trust as provided in Section 12.1(a)(iv).
Except as set forth above, the Shareholders shall have no voting or other rights with respect to the Trust.
SECTION 7.3 Limitation of Liability.
(a) Except as provided in Section 6.7(f) hereof, and as otherwise provided under Delaware law, the Shareholders shall be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of Delaware and no Shareholder shall be liable for claims against or debts of the Trust in excess of its Percentage Interest of the Trust Estate, except in the case of a Shareholder that is an Authorized Participant, in the event that the liability is founded upon misstatements or omissions contained in such Shareholder’s Authorized Participant Agreement. In addition, and subject to the exceptions set forth in the immediately preceding sentence, the Trust shall not make a claim against a Shareholder with respect to amounts distributed to such Shareholder or amounts received by such Shareholder upon redemption of such Shareholder’s Shares unless, under Delaware law, such Shareholder is liable to repay such amount.
(b) The Trust shall indemnify to the full extent permitted by law and the other provisions of this Trust Agreement, and to the extent of the Trust Estate, each Shareholder against any claims of liability asserted against such Shareholder solely because it is a beneficial owner of one or more Shares as a Shareholder.
(c) Every written note, bond, contract, instrument, certificate or undertaking made or issued by the Sponsor on behalf of the Trust shall give notice to the effect that the same was executed or made by or on behalf of the Trust and that the obligations of such instrument are not binding upon the Shareholders individually but are binding only upon the assets and property of the Trust, and no resort shall be had to the Shareholders’ personal property for satisfaction of any obligation or claim thereunder, and appropriate references may be made to this Trust Agreement and may contain any further recital that the Sponsor deems appropriate, but the omission thereof shall not operate to bind the Shareholders individually or otherwise invalidate any such note, bond, contract, instrument, certificate or undertaking. Nothing contained in this Section 7.3 shall diminish the limitation on the liability of the Trust to the extent set forth in Section 3.5 hereof.
SECTION 7.4 Derivative Actions.
Subject to any other requirements of applicable law including Section 3816 of the Delaware Trust Statute, no Shareholder shall 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 of one another and (ii) collectively hold at least 10% of the outstanding Shares join in the bringing or maintaining of such action, suit or other proceeding. This Section 7.4 shall not apply to any derivative claims brought under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, or the rules and regulations thereunder.
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SECTION 7.5 Appointment of Agents.
(a) By the purchase and acceptance or other lawful delivery, acceptance or holding of the Shares, the Shareholders shall be deemed to agree that the Sponsor may cause the Trust to appoint an agent (an “IR Agent”) to act on their behalf in connection with any distribution of Incidental Rights and/or IR Assets if the Sponsor has determined in good faith that such appointment is reasonably necessary or in the best interests of the Trust and the Shareholders in order to facilitate the distribution of any Incidental Rights and/or IR Assets. For the avoidance of doubt, the Sponsor may cause the Trust to appoint the Sponsor or any of its Affiliates to act in such capacity, subject to Section 6.2(a) of this Trust Agreement. Any Person appointed as IR Agent of the Shareholders pursuant to this Section 7.5(a) shall receive an in-kind distribution of Incidental Rights and/or IR Assets on behalf of the Shareholders of record with respect to such distribution and following receipt of any such distribution, shall determine, in such Person’s sole discretion and without any direction from the Trust or the Sponsor (in its capacity as Sponsor of the Trust), whether and when to sell the distributed Incidental Rights and/or IR Assets on behalf of the record date Shareholders.
(b) Any IR Agent appointed pursuant to Section 7.5(a) shall not receive any compensation in connection with its role as IR Agent. The foregoing notwithstanding, any such IR Agent shall be entitled to receive from any distribution of Incidental Rights and/or IR Assets, Incidental Rights and/or IR Assets with an aggregate fair market value equal to the amount of administrative and other reasonable expenses incurred by such IR Agent in connection with such in-kind distribution of Incidental Rights and/or IR Assets, including expenses incurred by such IR Agent in connection with any post-distribution sale of such Incidental Rights and/or IR Assets.
SECTION 7.6 Business of Shareholders.
Except as otherwise specifically provided herein, any of the Shareholders and any shareholder, officer, director, employee or other Person holding a legal or beneficial interest in an entity that is a Shareholder, may engage in or possess an interest in business ventures of every nature and description, independently or with others, and the pursuit of such ventures, even if competitive with the affairs of the Trust, shall not be deemed wrongful or improper.
SECTION 7.7 Authorization of Prospectus.
Each Shareholder (or any permitted assignee thereof) hereby agrees that the Trust, the Sponsor and the Trustee are authorized to execute, deliver and perform the agreements, acts, transactions and matters contemplated hereby or described in, or contemplated by, the Prospectus on behalf of the Trust without any further act, approval or vote of the Shareholders, notwithstanding any other provision of this Trust Agreement, the Delaware Trust Statute or any applicable law, rule or regulation.
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ARTICLE VIII
BOOKS OF ACCOUNT AND REPORTS
SECTION 8.1 Books of Account.
Proper books of account for the Trust shall be kept and shall be audited annually by an independent certified public accounting firm selected by the Sponsor in its sole discretion, and there shall be entered therein all transactions, matters and things relating to the Trust as are required by the applicable law and regulations and as are usually entered into books of account kept by trusts. The books of account shall be kept at the principal office of the Trust and each Shareholder (or any duly constituted designee of a Shareholder) shall have, at all times during normal business hours, free access to and the right to inspect and copy the same for any purpose reasonably related to the Shareholder’s interest as a beneficial owner of the Trust. Such books of account shall be kept, and the Trust shall report its profits and losses on, the accrual method of accounting for financial accounting purposes on a Fiscal Year basis as described in Article IX.
SECTION 8.2 Annual Updates, Quarterly Updates and Account Statements.
(a) If the Shares are not then listed, quoted or traded on any Secondary Market or registered under the Securities Act or the Exchange Act, the Sponsor shall furnish each Shareholder with an annual report of the Trust within one hundred and eighty (180) calendar days after the Trust’s fiscal year (or as soon as reasonably practicable thereafter) including, but not limited to, annual audited financial statements (including a statement of income and statement of financial condition), prepared in accordance with GAAP and accompanied by a report of the independent registered public accounting firm that audited such statements.
(b) If the Shares are then listed, quoted or traded on a Secondary Market or registered under the Securities Act or the Exchange Act, the Sponsor shall prepare and publish the Trust’s Annual Reports and Quarterly Reports as required by the rules and regulations of such Secondary Market or the SEC, as applicable.
SECTION 8.3 Tax Information.
Appropriate tax information (adequate to enable each Shareholder to complete and file its U.S. federal tax return) shall be delivered to each Shareholder following the end of each Fiscal Year but, to the extent possible, no later than April 1. All such information shall be prepared, and all of the Trust’s tax returns shall be filed, in a manner consistent with the treatment of the Trust as a grantor trust. The Trust’s taxable year shall be the calendar year. The Trust shall comply with all U.S. federal withholding requirements respecting distributions to, or receipts of amounts on behalf of, Shareholders that the Sponsor reasonably believes are applicable under the Code. The consent of Shareholders shall not be required for such withholding.
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SECTION 8.4 Calculation of Litecoin Holdings.
The Sponsor or its delegate shall calculate and publish the Trust’s Litecoin Holdings on each Business Day as of 4:00 p.m., New York time, or as soon as practicable thereafter, as set forth in and in accordance with the Prospectus.
SECTION 8.5 Maintenance of Records.
The Sponsor shall maintain for a period of at least six Fiscal Years (a) all books of account required by Section 8.1 hereof; (b) a list of the names and last known address of, and number of Shares owned by, all Shareholders; (c) a copy of the Certificate of Trust and all certificates of amendment thereto; (d) executed copies of any powers of attorney pursuant to which any certificate has been executed; (e) copies of the Trust’s U.S. federal, state and local income tax returns and reports, if any; (f) copies of any effective written Trust Agreements, Authorized Participant Agreements, including any amendments thereto; and (g) any financial statements of the Trust. The Sponsor may keep and maintain the books and records of the Trust in paper, magnetic, electronic or other format as the Sponsor may determine in its sole discretion, provided that the Sponsor shall use reasonable care to prevent the loss or destruction of such records. If there is a conflict between this Section 8.5 and the rules and regulations of any Secondary Market on which the Shares are listed, quoted or traded or, if applicable, the SEC with respect to the maintenance of records, the records shall be maintained pursuant to the rules and regulations of such Secondary Market or the SEC.
ARTICLE IX
FISCAL YEAR
SECTION 9.1 Fiscal Year.
The fiscal year of the Trust for financial accounting purposes (the “Fiscal Year”) shall begin on the first day of January and end on the last day of December of each year. The Fiscal Year in which the Trust shall terminate shall end on the date of such termination.
ARTICLE X
AMENDMENT OF TRUST AGREEMENT; MEETINGS
SECTION 10.1 Amendments to the Trust Agreement.
(a) Amendment Generally.
(i) Except as otherwise specifically provided in this Section 10.1, the Sponsor, in its sole discretion and without Shareholder consent, may amend or otherwise supplement this Trust Agreement by making an amendment, an agreement supplemental hereto, or an amended and restated declaration of trust and trust agreement. Any such restatement, amendment and/or supplement hereto shall be effective on such date as designated by the Sponsor in its sole discretion; provided that the Sponsor shall not be permitted to make any such amendment, or otherwise supplement this Trust Agreement, if such amendment or supplement would permit the Sponsor, the Trustee or any other Person to vary the investment of the Shareholders (within the meaning of Treasury Regulations Section 301.7701-4(c)) or would otherwise adversely affect the status of the Trust as a grantor trust for U.S. federal income tax purposes.
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(b) Without limitation of the foregoing, the Sponsor may, without the approval of the Shareholders, amend the provisions of this Trust Agreement if the Trust is advised at any time by the Trust’s accountants or legal counsel that the amendments made are necessary to ensure that the Trust’s status as a grantor trust will be respected for U.S. federal income tax purposes.
(c) No amendment affecting the rights or duties of the Trustee shall be binding upon or effective against the Trustee unless consented to by the Trustee in writing. No amendment shall be made to this Trust Agreement without the consent of the Trustee if the Trustee reasonably believes that such amendment adversely affects any of its rights, duties or liabilities. The Trustee shall be under no obligation to execute any amendment to the Trust Agreement or to any agreement to which the Trust is a party until it has received an instruction letter from the Sponsor, in form and substance reasonably satisfactory to the Trustee, (i) directing the Trustee to execute such amendment, (ii) representing and warranting to the Trustee that such execution is authorized and permitted by the terms of the Trust Agreement and (if applicable) such other agreement to which the Trust is a party and does not conflict with or violate any other agreement to which the Trust is a party and (iii) confirming that such execution and acts related thereto are covered by the indemnity provisions of the Trust Agreement in favor of the Trustee and do not adversely affect the Trustee.
(d) Upon amendment of this Trust Agreement, the Certificate of Trust shall also be amended, if required by the Delaware Trust Statute, to reflect such change. At the expense of the Sponsor, the Trustee shall execute and file any amendment to the Certificate of Trust, if so directed by the Sponsor.
(e) To the fullest extent permitted by law, no provision of this Trust Agreement may be amended, waived or otherwise modified orally but only by a written instrument adopted in accordance with this Section 10.1.
SECTION 10.2 Meetings of the Trust.
Meetings of the Shareholders may be called by the Sponsor in its sole discretion. The Sponsor shall furnish written notice to all Shareholders thereof of the meeting and the purpose of the meeting, which shall be held on a date not less than ten (10) nor more than sixty (60) days after the date of mailing of said notice, at a reasonable time and place. Any notice of meeting shall be accompanied by a description of the action to be taken at the meeting. Shareholders may vote in person or by proxy at any such meeting.
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SECTION 10.3 Action Without a Meeting.
Any action required or permitted to be taken by Shareholders by vote may be taken without a meeting by written consent setting forth the actions so taken. Such written consents shall be treated for all purposes as votes at a meeting. If the vote or consent of any Shareholder to any action of the Trust or any Shareholder, as contemplated by this Trust Agreement, is solicited by the Sponsor, the solicitation shall be effected by notice to each Shareholder given in the manner provided in Section 13.5. The vote or consent of each Shareholder so solicited shall be deemed conclusively to have been cast or granted as requested in the notice of solicitation, whether or not the notice of solicitation is actually received by that Shareholder, unless the Shareholder expresses written objection to the vote or consent by notice given in the manner provided in Section 13.5 and actually received by the Trust within twenty (20) days after the notice of solicitation is sent. The Covered Persons dealing with the Trust shall be entitled to act in reliance on any vote or consent that is deemed cast or granted pursuant to this Section 10.3 and shall be fully indemnified by the Trust in so doing. Any action taken or omitted in reliance on any such deemed vote or consent of one or more Shareholders shall not be void or voidable by reason of any communication made by or on behalf of all or any of such Shareholders in any manner other than as expressly provided in Section 13.5.
ARTICLE XI
TERM
SECTION 11.1 Term.
The term for which the Trust is to exist shall be perpetual, unless terminated pursuant to the provisions of Article XII hereof or as otherwise provided by law.
ARTICLE XII
TERMINATION
SECTION 12.1 Events Requiring Dissolution of the Trust.
(a) The Trust shall dissolve at any time upon the happening of any of the following events:
(i) a U.S. federal or state regulator requires the Trust to shut down or forces the Trust to liquidate its Litecoin or seizes, impounds or otherwise restricts access to the Trust Estate;
(ii) any ongoing event exists that either prevents the Trust from converting or makes impractical the Trust’s reasonable efforts to convert Litecoin to U.S. Dollars;
(iii) a certificate of dissolution or revocation of the Sponsor’s charter is filed (and ninety (90) days have passed after the date of notice to the Sponsor of revocation without a reinstatement of the Sponsor’s charter) or the withdrawal, removal, adjudication or admission of bankruptcy or insolvency of the Sponsor (each of the foregoing events an “Event of Withdrawal”) has occurred unless (i) at the time there is at least one remaining Sponsor or (ii) within ninety (90) days of such Event of Withdrawal Shareholders holding at least a majority (over 50%) of the Shares agree in writing to continue the affairs of the Trust and to select, effective as of the date of such event, one or more successor Sponsors; or
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(iv) Shareholders holding at least 50% of the outstanding Shares, not including affiliated parties of the Sponsor for purposes of calculation of such percentage, notify the Sponsor that they elect to dissolve the Trust, notice of which is sent to the Sponsor not less than ninety (90) business days prior to the effective date of dissolution.
(b) The Sponsor may, in its sole discretion, dissolve the Trust if any of the following events occur:
(i) the SEC determines that the Trust is an investment company required to be registered under the Investment Company Act of 1940;
(ii) the CFTC determines that the Trust is a commodity pool under the Commodity Exchange Act;
(iii) the Trust is determined to be a “money service business” under the regulations promulgated by FinCEN under the authority of the U.S. Bank Secrecy Act and is required to comply with certain FinCEN regulations thereunder;
(iv) the Trust is required to obtain a license or make a registration under any state law regulating money transmitters, money services businesses, providers of prepaid or stored value or similar entities, or virtual currency businesses;
(v) the Trust becomes insolvent or bankrupt;
(vi) the Custodian resigns or is removed without replacement;
(vii) all of the Trust’s assets are sold;
(viii) the Sponsor determines that the size of the Trust Estate in relation to the expenses of the Trust makes it unreasonable or imprudent to continue the affairs of the Trust;
(ix) the Sponsor receives notice from the IRS or from counsel for the Trust or the Sponsor that the Trust fails to qualify for treatment, or will not be treated, as a grantor trust under the Code;
(x) the Trustee notifies the Sponsor of the Trustee’s election to resign and the Sponsor does not appoint a successor trustee within one hundred and eighty (180) days; or
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(xi) the Sponsor determines, in its sole discretion, that it is desirable or advisable for any reason to discontinue the affairs of the Trust.
(c) The death, legal disability, bankruptcy, insolvency, dissolution, or withdrawal of any Shareholder (as long as such Shareholder is not the sole Shareholder of the Trust) shall not result in the termination of the Trust, and such Shareholder, his or her estate, custodian or personal representative shall have no right to a redemption of such Shareholder’s Shares. Each Shareholder (and any assignee thereof) expressly agrees that in the event of his or her death, he or she waives on behalf of himself or herself and his or her estate, and he or she directs the legal representative of his or her estate and any person interested therein to waive the furnishing of any inventory, accounting or appraisal of the Trust Estate and any right to an audit or examination of the books of account for the Trust, except for such rights as are set forth in Article VIII hereof relating to the books of account and reports of the Trust.
SECTION 12.2 Distributions on Dissolution.
Upon the dissolution of the Trust, the Sponsor (or in the event there is no Sponsor, such person (the “Liquidating Trustee”) as the majority in interest of the Shareholders may propose and approve) shall take full charge of the Trust Estate. Any Liquidating Trustee so appointed shall have and may exercise, without further authorization or approval of any of the parties hereto, all of the powers conferred upon the Sponsor under the terms of this Trust Agreement, subject to all of the applicable limitations, contractual and otherwise, upon the exercise of such powers, and provided that the Liquidating Trustee shall not have general liability for the acts, omissions, obligations and expenses of the Trust. Thereafter, in accordance with Section 3808(e) of the Delaware Trust Statute, the affairs of the Trust shall be wound up by the Sponsor or the Liquidating Trustee and all assets owned by the Trust shall be liquidated as promptly as is consistent with obtaining the fair value thereof, and the proceeds therefrom shall be applied and distributed in the following order of priority: (a) to the expenses of liquidation and termination and to creditors, including Shareholders who are creditors, to the extent otherwise permitted by law, in satisfaction of liabilities of the Trust (whether by payment or the making of reasonable provision for payment thereof) other than liabilities for distributions to Shareholders, and (b) to the Shareholders pro rata in accordance with their respective Percentage Interests of the Trust Estate.
SECTION 12.3 Termination; Certificate of Cancellation.
Following the dissolution and distribution of the assets of the Trust, the Trust shall terminate and the Sponsor or the Liquidating Trustee, as the case may be, shall instruct the Trustee in writing to execute and cause such certificate of cancellation of the Certificate of Trust to be filed in accordance with the Delaware Trust Statute at the expense of the Sponsor or the Liquidating Trustee, as the case may be. Notwithstanding anything to the contrary contained in this Trust Agreement, the existence of the Trust as a separate legal entity shall continue until the filing of such certificate of cancellation.
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ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Governing Law.
The validity and construction of this Trust Agreement and all amendments hereto shall be governed by the laws of the State of Delaware, and the rights of all parties hereto and the effect of every provision hereof shall be subject to and construed according to the laws of the State of Delaware without regard to the conflict of laws provisions thereof; provided, however, that causes of action for violations of U.S. federal or state securities laws shall not be governed by this Section 13.1, and provided, further, that the parties hereto intend that the provisions hereof shall control over any contrary or limiting statutory or common law of the State of Delaware (other than the Delaware Trust Statute) and that, to the maximum extent permitted by applicable law, there shall not be applicable to the Trust, the Trustee, the Sponsor, the Shareholders or this Trust Agreement any provision of the laws (statutory or common) of the State of Delaware (other than the Delaware Trust Statute) pertaining to trusts that relate to or regulate in a manner inconsistent with the terms hereof: (a) the filing with any court or governmental body or agency of trustee accounts or schedules of trustee fees and charges, (b) affirmative requirements to post bonds for trustees, officers, agents, or employees of a trust, (c) the necessity for obtaining court or other governmental approval concerning the acquisition, holding or disposition of real or personal property, (d) fees or other sums payable to trustees, officers, agents or employees of a trust, (e) the allocation of receipts and expenditures to income or principal, (f) restrictions or limitations on the permissible nature, amount or concentration of trust investments or requirements relating to the titling, storage or other manner of holding of trust assets, or (g) the establishment of fiduciary or other standards or responsibilities or limitations on the acts or powers of trustees or managers that are inconsistent with the limitations on liability or authorities and powers of the Trustee or the Sponsor set forth or referenced in this Trust Agreement. Section 3540 of Title 12 of the Delaware Code shall not apply to the Trust. The Trust shall be of the type commonly called a “statutory trust,” and without limiting the provisions hereof, but subject to Section 1.5 and Section 1.6, the Trust may exercise all powers that are ordinarily exercised by such a statutory trust under Delaware law. Subject to Section 1.5 and Section 1.6, the Trust specifically reserves the right to exercise any of the powers or privileges afforded to statutory trusts and the absence of a specific reference herein to any such power, privilege or action shall not imply that the Trust may not exercise such power or privilege or take such actions.
SECTION 13.2 Provisions In Conflict With Law or Regulations.
(a) The provisions of this Trust Agreement are severable, and if the Sponsor shall determine, with the advice of counsel, that any one or more of such provisions (the “Conflicting Provisions”) are in conflict with the Code, the Delaware Trust Statute, the Securities Act, if applicable, or other applicable U.S. federal or state laws or the rules and regulations of any Secondary Market, the Conflicting Provisions shall be deemed never to have constituted a part of this Trust Agreement, even without any amendment of this Trust Agreement pursuant to this Trust Agreement; provided, however, that such determination by the Sponsor shall not affect or impair any of the remaining provisions of this Trust Agreement or render invalid or improper any action taken or omitted prior to such determination. No Sponsor or Trustee shall be liable for making or failing to make such a determination.
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(b) If any provision of this Trust Agreement shall be held invalid or unenforceable in any jurisdiction, such holding shall not in any manner affect or render invalid or unenforceable such provision in any other jurisdiction or any other provision of this Trust Agreement in any jurisdiction.
SECTION 13.3 Merger and Consolidation.
Subject to the provisions of Section 1.5 and Section 1.6, the Sponsor may cause (i) the Trust to be merged into or consolidated with, converted to or to sell all or substantially all of its assets to, another trust or entity; (ii) the Shares of the Trust to be converted into beneficial interests in another statutory trust (or series thereof); or (iii) the Shares of the Trust to be exchanged for shares in another trust or company under or pursuant to any U.S. state or federal statute to the extent permitted by law. For the avoidance of doubt, subject to the provisions of Section 1.5, the Sponsor, with written notice to the Shareholders, may approve and effect any of the transactions contemplated under (i), (ii) and (iii) above without any vote or other action of the Shareholders.
SECTION 13.4 Construction.
In this Trust Agreement, unless the context otherwise requires, words used in the singular or in the plural include both the plural and singular and words denoting any gender include all genders. The title and headings of different parts are inserted for convenience and shall not affect the meaning, construction or effect of this Trust Agreement.
SECTION 13.5 Notices.
All notices or communications under this Trust Agreement (other than notices of pledge or encumbrance of Shares, and reports and notices by the Sponsor to the Shareholders) shall be in writing and shall be effective upon personal delivery, or if sent by mail, postage prepaid, or if sent electronically, by email, or by overnight courier, and addressed, in each such case, to the address set forth in the books and records of the Trust or such other address as may be specified in writing, of the party to whom such notice is to be given, upon the deposit of such notice in the United States mail, upon transmission and electronic confirmation thereof or upon deposit with a representative of an overnight courier, as the case may be. Notices of pledge or encumbrance of Shares shall be effective upon timely receipt by the Sponsor in writing. Any reports or notices by the Sponsor to the Shareholders which are given electronically shall be effective upon receipt without requirement of confirmation.
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All notices that are required to be provided to the Trustee shall be sent to:
CSC Delaware Trust Company
Attn: Corporate Trust Administration
251 Little Falls Drive
Wilmington, DE 19808
All notices that the Trustee is required to provide shall be sent to:
if to the Trust, at
Canary Litecoin ETF
8 Cadillac Drive, Suite 300
Brentwood, TN 37027
Attention: Steven McClurg
if to the Sponsor, at
Canary Capital Group LLC
8 Cadillac Drive, Suite 300
Brentwood, TN 37027
Attention: Steven McClurg
SECTION 13.6 Counterparts; Electronic Signatures.
This Trust Agreement may be executed in one or more counterparts (including those by facsimile or other electronic means), all of which shall constitute one and the same instrument binding on all of the parties hereto, notwithstanding that all parties are not signatory to the original or the same counterpart. This Trust Agreement, to the extent signed and delivered by means of a facsimile machine or other electronic transmission, shall be treated in all manner and respects as an original agreement and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.
SECTION 13.7 Binding Nature of Trust Agreement.
The terms and provisions of this Trust Agreement shall be binding upon and inure to the benefit of the heirs, custodians, executors, estates, administrators, personal representatives, successors and permitted assigns of the respective Shareholders. For purposes of determining the rights of any Shareholder or assignee hereunder, the Trust and the Sponsor may rely upon the Trust records as to who are Shareholders and permitted assignees, and all Shareholders and assignees agree that the Trust and the Sponsor, in determining such rights, shall rely on such records and that Shareholders and their assignees shall be bound by such determination.
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SECTION 13.8 No Legal Title to Trust Estate.
Subject to the provisions of Section 1.7 in the case of the Sponsor, the Shareholders shall not have legal title to any part of the Trust Estate.
SECTION 13.9 Creditors.
No creditors of any Shareholders shall have any right to obtain possession of, or otherwise exercise legal or equitable remedies with respect to, the Trust Estate.
SECTION 13.10 Integration.
This Trust Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.
SECTION 13.11 Goodwill; Use of Name.
No value shall be placed on the name or goodwill of the Trust, which shall belong exclusively to Canary Capital Group LLC.
SECTION 13.12 Patriot Act Compliance.
The parties hereto acknowledge that in accordance with requirements established under the USA PATRIOT Act and its implementing regulations (collectively, the “Patriot Act”), the Trustee, in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. Each party hereby agrees that it shall provide the Trustee with such information in its possession as the Trustee may request from time to time in order to comply with any applicable requirements of the Patriot Act.
SECTION 13.13 Corporate Transparency Act.
The Corporate Transparency Act (31 U.S.C. § 5336) and its implementing regulations (collectively, the “CTA”), may require the Trust to file reports with Financial Crimes Enforcement Network. It shall be Sponsor’s duty and not the Trustee’s duty to prepare such filings, cause the Trust to make such filings, and to cause the Trust to comply with its obligations under the CTA, if any.
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IN WITNESS WHEREOF, the undersigned have duly executed this Trust Agreement as of the day and year first above written.
| CSC DELAWARE TRUST COMPANY | ||
| as Trustee | ||
| By: |  | |
| Name: Gregory Daniels | ||
| Title: Vice President | ||
| CANARY CAPITAL GROUP LLC | ||
| as Sponsor | ||
| By: | ||
| Name: Steven McClurg | ||
| Title: Chief Executive Officer | ||
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IN WITNESS WHEREOF, the undersigned have duly executed this Trust Agreement as of the day and year first above written.
| CSC DELAWARE TRUST COMPANY | ||
| as Trustee | ||
| By: | ||
| Name: Gregory Daniels | ||
| Title: Vice President | ||
| CANARY CAPITAL GROUP LLC | ||
| as Sponsor | ||
| By: |  | |
| Name: Steven McClurg | ||
| Title: Chief Executive Officer | ||
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EXHIBIT A
FORM OF CERTIFICATE OF TRUST
CERTIFICATE OF TRUST
OF
CANARY LITECOIN ETF
This Certificate of Trust of Canary Litecoin ETF (the “Trust”) is being duly executed and filed on behalf of the Trust by the undersigned, as trustee, to form a statutory trust under the Delaware Statutory Trust Act (12 Del. C. § 3801 et seq.) (the “Act”).
1. Name. The name of the statutory trust formed hereby is Canary Litecoin ETF.
2. Delaware Trustee. The name and business address of the trustee of the Trust in the State of Delaware are CSC Delaware Trust Company, 251 Little Falls Drive, Wilmington, DE 19808.
3. Effective Date. This Certificate of Trust shall be effective upon filing.
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate of Trust in accordance with Section 3811(a)(1) of the Act.
| CSC DELAWARE TRUST COMPANY, not in its individual capacity but solely as Trustee of the Trust | ||
| By: | ||
| Name: | ||
| Title: | ||
A-1
Exhibit 31.1
Certification of Principal Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Steven McClurg, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Canary Litecoin ETF (the “Registrant”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
| 4. | The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (c) | Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
| 5. | The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
| Date: December 9, 2025 | By: | /s/ Steven McClurg | |
| Name: | Steven McClurg* | ||
| Title: | Chief Executive Officer | ||
| (Principal Executive Officer) |
* The Registrant is a trust and Mr. McClurg is signing in his capacity as an officer of Canary Capital Group LLC, the Sponsor of the Registrant.
Exhibit 31.2
Certification
of Principal Financial and Accounting Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Starr Frohlich, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Canary Litecoin ETF (the “Registrant”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
| 4. | The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (c) | Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
| 5. | The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
| Date: December 9, 2025 | By: | /s/ Starr Frohlich | |
| Name: | Starr Frohlich | ||
| Title: | Principal Financial and Accounting Officer |
Exhibit 32.1
Certification of Principal Executive Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. Section 1350, in connection with this Quarterly Report on Form 10-Q for the period ended September 30, 2025 (the “Report”) of Canary Litecoin ETF (the “Registrant”), as filed with the U.S. Securities and Exchange Commission on the date hereof, I, Steven McClurg, Chief Executive Officer of the Registrant, hereby certify that, to my knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
| Date: December 9, 2025 | By: | /s/ Steven McClurg | |
| Name: | Steven McClurg * | ||
| Title: | Chief Executive Officer | ||
| (Principal Executive Officer) |
* The Registrant is a trust and Mr. McClurg is signing in his capacity as an officer of Canary Capital Group LLC, the Sponsor of the Registrant.
Exhibit 32.2
Certification of Principal Financial and Accounting
Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. Section 1350, in connection with this Quarterly Report on Form 10-Q for the period ended September 30, 2025 (the “Report”) of Canary Litecoin ETF (the “Registrant”), as filed with the U.S. Securities and Exchange Commission on the date hereof, I, Starr Frohlich, Principal Financial and Accounting Officer of the Registrant, hereby certify that, to my knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
| Date: December 9, 2025 | By: | /s/ Starr Frohlich | |
| Name: | Starr Frohlich | ||
| Title: | Principal Financial and Accounting Officer |