It is possible that, in the future, the Sponsor will implement restatements, amendments, or supplements to the Trust Agreement that could adversely affect the intended tax treatment of the Trust as a grantor trust for U.S. federal income tax purposes, including on the receipt of an opinion of counsel to the effect that doing so should not cause the Trust to fail to qualify as a grantor trust for those purposes. There can be no assurance that the IRS or any court will agree with any such position, or that the Trust will not cease to qualify as a grantor trust as a result of any such restatement, amendment, or supplement. A single shareholder may acquire control over a majority of the Shares representing ownership in the Trust, which could limit the ability of other shareholders to exercise voting influence or otherwise adversely impact the value of the Shares. The Sponsor and the Potential Investor are currently in discussions regarding a potential investment in the Trust, pursuant to which the Potential Investor would acquire Shares of the Trust through an Authorized Participant, or its AP Designee, following the effectiveness of the registration statement of which this prospectus forms a part, and pursuant to such registration statement, in exchange for approximately 200,000 ZEC tokens, which are expected to constitute a substantial portion of the Shares representing ownership in the Trust. See “Prospectus Summary— Recent Developments—Potential Contribution Arrangement.” The Potential Investor is a wholly owned, indirect subsidiary of DCG, the indirect parent company of the Sponsor. If such investment is consummated, DCG may, directly and indirectly through the Potential Investor and other affiliates, own a majority of the Shares representing ownership in the Trust and would have control over the limited voting rights granted to the shareholders and would have the ability to control the outcome of virtually all matters presented to our shareholders for their approval. Such shareholder’s interests may conflict with the interests of the Trust’s other shareholders. As long as a single shareholder continues to own a significant or majority percentage of our Shares, this concentrated ownership or influence could impede the development of an active trading market in our Shares or adversely affect an investment in the Shares. Additionally, sales of substantial amounts of Shares by such shareholder, or the perception that these sales may occur, could cause the price of the Shares to experience significant volatility and/or decline, including at a resulting discount to the Trust’s NAV per Share, which would adversely impact the value of the Shares. In addition, DCG is reported to be a significant holder of ZEC and has been vocal in the past about its support for the Zcash Network. In particular, Fortitude Mining, LLC (“Fortitude”), currently a subsidiary of DCG and affiliate of the Sponsor and the Trust, currently mines ZEC and operates mining infrastructure on the Zcash Network. Fortitude is a vertically-integrated digital asset mining platform focused on Zcash. While Fortitude has announced a proposed business combination with HeartSciences Inc., it is expected that upon the consummation of such business combination, DCG will maintain control of the combined company. In addition, Foundry Digital LLC (“Foundry”), a subsidiary of DCG and affiliate of the Sponsor and the Trust, currently operates a ZEC mining pool that accounts for approximately 15.4% of the Zcash Network’s hash rate for the month ended July 2026. DCG could prioritize its own interests in these and other investments over those of the Trust, in ways that may adversely impact the value of the Shares. See also “Certain Relationships and Related Party Transactions—Digital Currency Group” herein and “Item 1A. Risk Factors—Risk Factors Related to Potential Conflicts of Interest—Potential conflicts of interest may arise among the Sponsor or its affiliates and the Trust. The Sponsor and its affiliates have no fiduciary duties to the Trust and its shareholders other than as provided in the Trust Agreement, which may permit them to favor their own interests to the detriment of the Trust and its shareholders” in the Trust's Annual Report on Form 10-K for more information on DCG. The Potential Investor may sell, redeem or otherwise dispose of a substantial portion or all of its Shares. Any such sales or redemptions, or the perception that they may occur, could cause the price of the Shares to fall or make it more difficult for you to sell your Shares at a time and price that you deem appropriate. In addition, large sales or redemptions could cause increased volatility in the price of the Shares or cause the Trust’s arbitrage mechanism to not function as intended, which could cause the Shares to trade at a discount to NAV per Share. See “—Arbitrage transactions intended to keep the price of the Shares closely linked to the price of ZEC may be problematic if the process for the purchase and redemption of Baskets encounters difficulties, which may adversely affect an investment in the Shares.”
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