Although there are no known reports of malicious control of the Sui Network, if groups of coordinating or connected SUI holders that together have more than 50% of outstanding SUI, were to stake that SUI and run validators, they could exert authority over the validation of SUI transactions. This risk is heightened if a substantial amount of the validating power on the network falls within the jurisdiction of a single governmental authority. If network participants, including the core developers and the administrators of validating pools, do not act to ensure greater decentralization of Sui Network validators, the feasibility of a malicious actor obtaining control of the validating power on the Sui Network will increase, which may adversely affect the value of SUI and the value of the Shares. A malicious actor may also obtain control over the Sui Network through its influence over core developers by gaining direct control over a core developer or an otherwise influential programmer. The less that the Sui ecosystem grows, the greater the possibility that a malicious actor may be able to maliciously influence the Sui Network in this manner. Moreover, it is possible that a group of SUI holders that together control more than a substantial amount of outstanding SUI are in fact part of the initial or current core developer group, or are otherwise influential members of the Sui community. To the extent that the initial or current core developer groups also control higher than a threshold of outstanding SUI necessary for an attack, as some believe, the risk of this particular group of users causing the Sui Network to adopt updates to the core protocol that this particular group wants to be implemented will be even greater, and should this materialize, it may adversely affect the value of the Shares. If validators exit the Sui Network, it could increase the likelihood of a malicious actor obtaining control. Validators exiting the network could make the Sui Network more vulnerable to a malicious actor obtaining control of a large percentage of staked SUI, which might enable them to manipulate the Blockchain by censoring or manipulating specific transactions, as discussed previously. If the Blockchain suffers such an attack, the price of SUI could be negatively affected, and a loss of confidence in the Sui Network could result. Any reduction in confidence in the transaction confirmation process or staking power of the Sui Network may adversely affect an investment in the Trust. A temporary or permanent “fork” or a “clone” could adversely affect the value of the Shares. The Sui Network operates using open-source protocols, meaning that any user can download the software, modify it and then propose that the users and validators of SUI adopt the modification. When a modification is introduced and a substantial majority of users and validators consent to the modification, the change is implemented and the network remains uninterrupted. However, if less than a substantial majority of users and validators consent to the proposed modification, and the modification is not compatible with the software prior to its modification, the consequence would be what is known as a “hard fork” of the Sui Network, with one group running the pre-modified software and the other running the modified software. The effect of such a fork would be the existence of two versions of Sui running in parallel, yet lacking interchangeability. For example, in September 2022, the Ethereum network transitioned to a proof-of-stake model, in an upgrade referred to as the “Merge.” Following the Merge, a hard fork of the Ethereum network occurred, as certain Ethereum miners and network participants planned to maintain the proof-of-work consensus mechanism that was removed as part of the Merge. This version of the network was rebranded as “Ethereum Proof-of-Work.” Forks may also occur as a digital asset network community’s response to a significant security breach. For example, in July 2016, Ethereum “forked” into Ethereum and a new digital asset, Ethereum Classic, as a result of the Ethereum network community’s response to a significant security breach. In June 2016, an anonymous hacker exploited a smart contract running on the Ethereum network to syphon approximately $60 million of Ether held by The DAO, a distributed autonomous organization, into a segregated account. In response to the exploit, most participants in the Ethereum community elected to adopt a “fork” that effectively reversed the exploit. However, a minority of users continued to develop the original blockchain, referred to as “Ethereum Classic” with the digital asset on that blockchain now referred to as ETC. ETC now trades on several Digital Asset Trading Platforms. A fork may also occur as a result of an unintentional or unanticipated software flaw in the various versions of otherwise compatible software that users run. Such a fork could lead to users and validators abandoning the digital asset with the flawed software. It is possible, however, that a substantial number of users and validators could adopt an incompatible version of the digital asset while resisting community-led efforts to merge the two chains. This could result in a permanent fork, as in the case of Ethereum and Ethereum Classic. Furthermore, a hard fork can lead to new security concerns. For example, when the Ethereum and Ethereum Classic networks split in July 2016, replay attacks, in which transactions from one network were rebroadcast to nefarious effect on the other network, plagued Ethereum trading platforms through at least October 2016. An Ethereum trading platform announced in July 2016 that it had lost 40,000 Ethereum Classic, worth about $100,000 at that time, as a result of replay attacks. Similar replay attack concerns occurred in connection with the Bitcoin Cash and Bitcoin Satoshi’s Vision networks split in November 2018. Another possible result of a hard fork is an inherent decrease in the level of security due to significant amounts of validating power remaining on one network or migrating instead to the new forked network. After a hard fork, it may become easier for an individual validator or validating pool’s validating power to exceed 50% of the validating power of a digital asset network that retained or attracted less validating power, thereby making digital asset networks that rely on proof-of-stake more susceptible to attack. Digital asset networks and related protocols may also be cloned. Unlike a fork of a digital asset network, which modifies an existing blockchain, and results in two competing digital asset networks, each with the same genesis block, a “clone” is a copy of a
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