Like the Ethereum Network, the Avalanche Network is one of a number of projects intended to expand blockchain use beyond just a peer-to-peer money system. The price of AVAX on public Digital Asset Trading Platforms has a limited history, and during this history, AVAX prices on the Digital Asset Markets more generally, and on Digital Asset Trading Platforms individually, have been volatile and subject to influence by many factors, including operational interruptions. While the Index is designed to limit exposure to the interruption of individual Digital Asset Trading Platforms, the Index Price, and the price of AVAX generally, remain subject to volatility experienced by Digital Asset Trading Platforms, and such volatility could adversely affect the value of the Shares. For example, from August 20, 2024 (the commencement of the Trust’s operations) through December 31, 2025, the Index Price ranged from $11.36 to $54.44, with the straight average being $25.05. See “Business—Overview of the Avalanche Industry and Market—Historical AVAX Prices.” Several U.S. regulators, including the Financial Crimes Enforcement Network of the U.S. Department of the Treasury (“FinCEN”), the SEC, the Commodity Futures Trading Commission (“CFTC”), the U.S. Internal Revenue Service (“IRS”), and state regulators, including the New York Department of Financial Services (“NYDFS”), have made official pronouncements or issued guidance or rules regarding the treatment of certain classes of digital assets collectively, which may include AVAX. Similarly, the treatment of AVAX and other digital assets is often uncertain or contradictory in other countries. The regulatory uncertainty surrounding the treatment of AVAX creates risks for the Trust and its Shares. See “Risk Factors—Risk Factors Related to the Regulation of Digital Assets, the Trust and the Shares.” Summary Risk Factors Before you invest in the Shares, you should carefully consider all the information in this prospectus, including matters set forth under the heading “Risk Factors.” Some of the more significant challenges and risks relating to an investment in the Shares include those associated with the following: • Extreme volatility of trading prices that many digital assets, including AVAX, have experienced in recent periods and may continue to experience, could have a material adverse effect on the value of the Shares and the Shares could lose all or substantially all of their value; • The medium-to-long term value of the Shares is subject to a number of factors relating to the capabilities and development of blockchain technologies and to the fundamental investment characteristics of digital assets; • The value of the Shares is dependent on the acceptance of digital assets, such as AVAX, which represent a new and rapidly evolving industry; • Digital assets may have concentrated ownership and large sales or distributions by holders of such digital assets could have an adverse effect on the market price of such digital assets; • Recent developments in the digital asset economy have led to extreme volatility and disruption in digital asset markets, a loss of confidence in participants of the digital asset ecosystem, significant negative publicity surrounding digital assets broadly and market-wide declines in liquidity; • The largely unregulated nature and lack of transparency surrounding the operations of Digital Asset Trading Platforms may adversely affect the value of digital assets and, consequently, the value of the Shares; • The value of the Shares relates directly to the value of AVAX held by the Trust, the value of which may be highly volatile and subject to fluctuations; • The Shares may trade at a price that is at, above or below the Trust’s NAV per Share as a result of the non- concurrent trading hours between NASDAQ and the Digital Asset Trading Platform Market; • Shareholders may suffer a loss on their investment if the Shares trade above or below the Trust’s NAV per Share;
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