Ark 21Shares Bitcoin ETF 10-K

Item 9A. Controls and Procedures Disclosure Controls and Procedures The duly authorized officers of the Sponsor performing functions equivalent to those a principal executive officer and principal financial officer of the Trust would perform if the Trust had any officers, have evaluated the effectiveness of the Trust’s disclosure controls and procedures, and have concluded that the disclosure controls and procedures of the Trust were effective as of the end of the period covered by this report to provide reasonable assurance that information required to be disclosed in the reports that the Trust files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to the duly authorized officers of the Sponsor performing functions equivalent to those a principal executive officer and principal financial officer of the Trust would perform if the Trust had any officers, as appropriate to allow timely decisions regarding required disclosure. 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. Management’s Report on Internal Control over Financial Reporting The Sponsor’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined under Exchange Act Rules 13a-15(f) and 15d-15(f). The Trust’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Trust’s assets, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that the Trust’s receipts and expenditures are being made only in accordance with appropriate authorizations; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Trust’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become ineffective because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. The Principal Executive Officer and Principal Financial and Accounting Officer of the Sponsor assessed the effectiveness of the Trust’s internal control over financial reporting as of December 31, 2024. In making this assessment, they used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Their assessment included an evaluation of the design of the Trust’s internal control over financial reporting and testing of the operational effectiveness of its internal control over financial reporting. Based on their assessment and those criteria, the Principal Executive Officer and Principal Financial and Accounting Officer of the Sponsor concluded that the Trust maintained effective internal control over financial reporting as of December 31, 2024. Because we are an “emerging growth company” under the JOBS Act, our independent registered public accounting firm is not required to attest to the effectiveness of our internal control over financial reporting for so long as we are an emerging growth company. Item 9B. Other Information No officers or directors of the Sponsor have adopted , modified , or terminated trading plans under either a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act) during the quarter ended December 31, 2024. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 56 PART III Item 10. Directors, Executive Officers, and Corporate Governance The Trust does not have any directors, officers, or employees. The following persons, in their respective capacities as directors or executive officers of the Sponsor, a Delaware limited liability company, perform certain functions with respect to the Trust that, if the Trust had directors or executive officers, would typically be performed by them. Russell Barlow is CEO of the Sponsor, Duncan Moir is President of the Sponsor, Edel Bashir is Chief Operating Officer of the Sponsor and Andres Velencia is the Executive Vice President of Investment Management for the Sponsor. Mr. Russell Barlow , 51, has been the Chief Executive Officer of the Sponsor since March 2025, contributing more than 25 years of expertise in regulated asset management. Previously, Russell was the Global Head of Multi Asset and Alternative Investment Solutions and Global Head of Alternative Investment Solutions at abrdn plc, a global investment company (“abrdn”). Over the course of his career, he has designed, launched and managed a wide range of investment products. Additionally, Russell has held a position as a Non-Executive Director at Archax, the UK’s first FCA-regulated digital asset exchange. Mr. Duncan Moir , 39, has been the President of the Sponsor since March 2025, with deep expertise in crypto and blockchain strategy. Previously, Duncan was a Senior Investment Manager at abrdn. He is an independent board member of Hedera Hashgraph LLC and an advisor to Web3 companies. A University of Strathclyde graduate with a BA (Hons) in Economics, he is also a CFA and CAIA charterholder. Ms. Edel Bashir , 45, has been the Chief Operating Officer of the Sponsor since March 2025, with over 20 years of experience in asset management. Previously, Edel was the COO of Multi Asset and Alternative Investment Solutions, COO of Alternatives and a Senior Investment Manager at abrdn. Her expertise includes operation strategy, portfolio management, and hedge fund research. A graduate of University College Cork, Ireland with a BSc in Finance, she has held senior roles across Bermuda, Dublin and Boston. Mr. Andres Valencia , 37, is the Executive Vice President of Investment Management at the Sponsor and a member of the Executive Committee. Before Andres joined the Sponsor in June 2021, he was a VP of Operations at JPMorgan as part of the Beta Strategies Group and helped launch and build the company’s ETF business. Andres has over ten years of experience managing ETFs. Andres started his career in Asset Servicing at Bank of New York Mellon covering commodity and currency ETFs. The Trust does not have a code of ethics as it does not have any directors, officers, or employees. The Sponsor has a code of ethics (the “Code of Ethics”) that applies to its executive officers, including its Principal Executive Officer and Principal Financial Officer, who perform certain functions with respect to the Trust that, if the Trust had executive officers would typically be performed by them. The Sponsor’s Policies are in place and require that the Sponsor eliminate, mitigate, or otherwise disclose conflicts of interest. Additionally, the Sponsor has adopted policies and procedures requiring that certain applicable personnel pre-clear personal trading activity in which bitcoin is the referenced asset. The Sponsor has also implemented an Information Barrier Policy restricting certain applicable personnel from obtaining sensitive information. The Sponsor believes that these controls are reasonably designed to mitigate the risk of conflicts of interest and other impermissible activity. The Code of Ethics is available on request, free of charge, by writing the Sponsor at etf@21shares.com or calling the Sponsor at (646) 370-6016. Insider Trading Policy The Trust does not have an insider trading policy as it does not have any directors, officers, or employees. The Sponsor has adopted an insider trading policy applicable to the Sponsor’s directors, officers and employees, which is included as an exhibit to this annual report on Form 10-K. Item 11. Executive Compensation The Trust does not have directors or executive officers. The only ordinary expense paid by the Trust is the Sponsor’s fee. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Security Ownership of Certain Beneficial Owners There are no persons known by the Trust to own directly or indirectly beneficially more than 5% of the outstanding Shares of the Trust as of March 26, 2025. Security Ownership of Management The Trust does not have directors or executive officers. 57 Change in Control Neither the Sponsor nor the Trustee knows of any arrangements which may subsequently result in a change in control of the Trust. Securities Authorized for Issuance under Equity Compensation Plans The Trust has no securities authorized for issuance under equity compensation plans. Item 13. Certain Relationships and Related Transactions See Item 11. Item 14. Principal Accounting Fees and Services Fees for services performed by Cohen & Company, Ltd., as paid by the Sponsor from the Sponsor fee, for the periods ended December 31, 2024 and 2023, were: 2024 2023 Audit fees $ 91,000 $ 9,500 Audit-related fees $ $ - Tax fees $ - $ - All other fees $ - $ - Total $ 91,000 $ 9,500 In the table above, in accordance with the SEC’s definitions and rules, Audit Fees are fees paid to Cohen & Company, Ltd. for professional services for the audit of the Trust’s financial statements included in the Form 10-K and review of financial statements included in the Forms 10-Q, and for services that are normally provided by the accountants in connection with regulatory filings or engagements. Audit Related Fees are fees for assurance and related services that are reasonably related to the performance of the audit or review of the Trust’s financial statements. Approval of Independent Registered Public Accounting Firm Services and Fees The Sponsor approved all of the services provided by Cohen & Company, Ltd. described above. The Sponsor pre-approved all audit services of the independent registered public accounting firm, including all engagement fees and terms. 58 PART IV Item 15. Exhibits and Financial Statement Schedules (a)(1) Financial Statements See Index to Financial Statements on page F-1. (a)(2) Financial Statement Schedules No financial statement schedules are filed herewith because (i) such schedules are not required or (ii) the information required has been presented in the aforementioned financial statements. (a)(3) Exhibits The following documents are filed herewith or incorporated herein and made a part of this Annual Report: No. Exhibit Description 3.1 Trust Agreement of ARK 21Shares Bitcoin ETF (1) 3.2 Form of Amended and Restated Trust Agreement (2) 3.3 Certificate of Trust (1) 4.1 Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934 (5) 10.1 Form of Sponsor Agreement (4) 10.2 Form of Authorized Participant Agreement (2) 10.3 Form of Support Services Agreement (1) 10.4 Form of Prime Broker Agreement (2) 10.5 Form of Custodial Services Agreement (included as Exhibit A to Form of Prime Broker Agreement) (1) 10.6 Form of Fund Administration and Accounting Agreement (1) 10.7 Form of Transfer Agency and Services Agreement (1) 10.8 Form of Index Licensing Agreement (1) 10.9 Form of Marketing Agent Agreement (1) 10.10 Form of Cash Custody Agreement (1) 10.11 Subscription Agreement (1) 10.12 Initial Seed Capital Subscription Agreement (4) 10.13 BitGo Custodial Services Agreement (6) 10.14 Anchorage Custodial Services Agreement (6) 19.1 Insider Trading Policies and Procedures (8) 23.1 Consent of Independent Registered Public Accounting Firm (7) 31.1 Certification by Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (8) 31.2 Certification by Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (8) 32.1 Certification by Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (8) 32.2 Certification by Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (8) 97.1 Executive Officer Incentive-Based Compensation Clawback Policy (5) 101.INS Inline XBRL Instance Document.* 101.SCH Inline XBRL Taxonomy Extension Schema Document.* 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.* 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document.* 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document.* 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document.* 104 Cover Page Interactive Data File (Embedded as Inline XBRL document and contained in Exhibit 101).* (1) Incorporated by reference to Pre-Effective Amendment No. 3 filed by the Registrant on December 18, 2023. (2) Incorporated by reference to Pre-Effective Amendment No. 5 filed by the Registrant on December 28, 2023. (3) Incorporated by reference to Pre-Effective Amendment No. 6 filed by the Registrant on January 8, 2024. (4) Incorporated by reference to Pre-Effective Amendment No. 7 filed by the Registrant on January 9, 2024. (5) Incorporated by reference to the Annual Report on Form 10-K filed by the Registrant on March 26, 2024. (6) Incorporated by reference to the Current Report on Form 8-K filed by the Registrant on September 12, 2024. (7) Incorporated by reference to Pre-Effective Amendment No. 8 filed by the Registrant on January 10, 2024. (8) Filed herewith. Item 16. Form 10-K Summary None. 59 GLOSSARY OF DEFINED TERMS “Advisers Act”: The Investment Advisers Act of 1940, as amended. “Article 8”: Article 8 of the New York Uniform Commercial Code. “1940 Act”: Investment Company Act of 1940, as amended. “Additional Trust Expenses”: Certain extraordinary, non-recurring expenses that are not Sponsor-paid Expenses (as defined below), which the Sponsor does not assume, including, but not limited to, 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 or the interests of Shareholders, any indemnification of the Bitcoin Custodians, Administrator or other agents, service providers or counterparties of the Trust, the fees and expenses related to the listing, and extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters. “Administrator”: The Bank of New York Mellon. “Authorized Participant”: One that purchases or redeems Baskets from or to the Trust. “Basket” or “Creation Basket”: A block of 5,000 Shares used by the Trust to issue or redeem Shares. “Bitcoin”: A system for decentralized digital value exchange that is designed to enable units of bitcoin to be transferred across borders without the need for currency conversion. Bitcoin is not legal tender. The supply of bitcoin is not determined by a central government, but rather by an open-source software program that limits both the total amount of bitcoin that will be produced and the rate at which it is released into the network. The responsibility for maintaining the official ledger of who owns what bitcoin and for validating new bitcoin transactions is not entrusted to any single central entity. Instead, it is distributed among the network’s participants. “Bitcoin Counterparty”: Designated third party, who is not an Authorized Participant but who may be an affiliate of an Authorized Participant, or the Prime Broker or Lender, as applicable, with whom the Sponsor has entered into an agreement on behalf of the Trust, that will, acting as a counterparty, deliver, receive or convert to U.S. dollars the bitcoin related to the Authorized Participant’s creation or redemption order. “Bitcoin Custodian”: Each of (i) Coinbase Custody Trust Company, LLC, (ii) Anchorage Digital Bank N.A, and (iii) BitGo New York Trust Company, LLC. “Blockchain (or Bitcoin blockchain)”: The public transaction ledger of the Bitcoin network on which miners or mining pools solve algorithmic equations allowing them to add records of recent transactions (called “blocks”) to the chain of transactions in exchange for an award of bitcoin from the Bitcoin network and the payment of transaction fees, if any, from users whose transactions are recorded in the block being added. “Business Day”: Any day other than a day when the Exchange is closed for regular trading. “CBDCs”: Central bank digital currencies. “Cash Custodian”: The Bank of New York Mellon “CEA”: Commodity Exchange Act of 1936, as amended. “CFTC”: Commodity Futures Trading Commission, an independent agency with the mandate to regulate commodity futures and options in the United States. “Code”: Internal Revenue Code of 1986, as amended. “Coinbase Global”: Coinbase Global, Inc., the parent of Coinbase, Inc. “Cold Vault Balance”: The Trust’s “cold storage” or similarly secure technology. “Connected Trading Venue”: Trading venues (including third-party venues and the Prime Broker’s own execution venue) where the Prime Broker executes orders to buy and sell bitcoin on behalf of clients. 60 “Constituent Exchange”: A trading venue that is eligible as in any of the CME CF Cryptocurrency Pricing Products if it offers a market that facilitates the spot trading of the relevant base digital asset against the corresponding quote asset, including markets where the quote asset is made fungible with the accepted digital assets and makes trade data and order data available through an application programming interface with sufficient reliability, detail and timeliness. “DeFi”: Decentralized finance. “DFPI”: California Department of Financial Protection and Innovation. “DTC”: The Depository Trust Company. DTC will act as the securities depository for the Shares. “DTC Participant”: An entity that has an account with DTC. “DSTA”: Delaware Statutory Trust Act. “Exchange”: Cboe BZX Exchange, Inc. “Exchange Act”: The Securities Exchange Act of 1934, as amended. “FinCEN”: The Financial Crimes Enforcement Network. “FINRA”: Financial Industry Regulatory Authority, formerly the National Association of Securities Dealers. “GAAP”: Accounting principles generally accepted in the United States of America. “Indirect Participants”: Banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly. “Incidental Rights”: Rights to acquire, or otherwise establish dominion and control over, any virtual currency or other asset or right, which rights are incident to the Trust’s ownership of bitcoin and arise without any action of the Trust, or of the Sponsor or Sub-Adviser on behalf of the Trust. “Index”: CF Bitcoin Reference Rate—New York Variant. “Index Provider”: CF Benchmarks Ltd. “IRS”: U.S. Internal Revenue Service. “IR Virtual Currency”: Virtual currency tokens, or other assets or rights, acquired by the Trust through the exercise (subject to the applicable provisions of the Trust Agreement) of any Incidental Right. “KYT”: Know-Your-Transaction. “Lender”: Coinbase Credit, Inc. “Marketing Agent”: Foreside Global Services, LLC. “Mutually Capped Liabilities”: In respect of the Coinbase Custodian’s obligations to indemnify the Trust and its affiliates against third-party claims and losses to the extent arising out of or relating to, among others, the Coinbase Custodian’s gross negligence, violation of its confidentiality, data protection and/or information security obligations, or violation of any law, rule or regulation with respect to the provision of its services, the Coinbase Custodian’s liability shall not exceed the greater of (A) $5 million and (B) the aggregate fees paid by the Trust to the Coinbase Custodian in the 12 months prior to the event giving rise to the Coinbase Custodian’s liability. “NAV”: Net asset value of the Trust. “NAV per Share”: Net asset value of the Trust per Share. “NFA”: National Futures Association. 61 “OFAC”: Office of Foreign Assets Control of the U.S. Treasury Department. “PB Mutually Capped Liabilities”: In respect of the Prime Broker’s obligations to indemnify the Trust and its affiliates against third-party claims and losses to the extent arising out of or relating to, among others, the Prime Broker’s gross negligence, violation of its confidentiality, data protection and/or information security obligations, violation of any law, rule or regulation with respect to the provision of its services, or the full amount of the Trust’s assets lost due to the insolvency of or security event at a Connected Trading Venue, the Prime Broker’s liability shall not exceed the greater of (A) $5 million and (B) the aggregate fees paid by the Trust to the Prime Broker in the 12 months prior to the event giving rise to the Prime Broker’s liability. “Prime Broker”: Coinbase, Inc. “Principal Market NAV”: Net asset value of the Trust determined on a GAAP basis. “Principal Market NAV per Share”: Net asset value of the Trust per Share determined on a GAAP basis. “Redemption Order Date”: The date a redemption order is received in satisfactory form by the Marketing Agent. “Register”: The record of all Shareholders and holders of the Shares in certificated form kept by the Administrator. “Relevant Coinbase Entities”: Coinbase Global and Coinbase Inc. “SEC”: The U.S. Securities and Exchange Commission. “Securities Act”: The Securities Act of 1933, as amended. “Seed Capital Investor”: 21Shares US LLC, a Delaware limited liability company. “Seed Creation Baskets”: Shares of the Trust purchased by the Seed Capital Investor. “Shares”: Common shares representing fractional undivided beneficial interests in the Trust. “Shareholders”: Holders of Shares. “Sponsor”: 21Shares US LLC, a Delaware limited liability company. “Sponsor-paid Expenses”: The fees and other expenses incurred by the Trust in the ordinary course of its affairs, which the Sponsor assumes and pays, excluding taxes, but including (i) fees to the Sub-Adviser; (ii) the Marketing Fee, (iii) fees to the Administrator, if any, (iv) fees to the Bitcoin Custodians, (v) fees to the Transfer Agent, (vi) fees to the Trustee, (vii) the fees and expenses related to any future listing, trading or quotation of the Shares on any listing exchange or quotation system (including legal, marketing and audit fees and expenses), (viii) ordinary course legal fees and expenses but not litigation-related expenses, (ix) audit fees, (x) regulatory fees, including if applicable any fees relating to the registration of the Shares under the Securities Act or the Exchange Act, (xi) printing and mailing costs; (xii) costs of maintaining the Sponsor’s website and (xiii) applicable license fees, provided that any expense that qualifies as an Additional Trust Expense will be deemed to be an Additional Trust Expense and not a Sponsor-paid Expense. “Sponsor Indemnified Party”: The Sponsor and each of its shareholders, members, directors, officers, employees, affiliates and subsidiaries. “Sub-Adviser”: ARK Investment Management LLC, a Delaware limited liability company. “Trade Credits”: Bitcoin or cash that are borrowed as trade credits. “Transfer Agent”: The Bank of New York Mellon. “Trust”: ARK 21Shares Bitcoin ETF. “Trust Agreement”: Amended and Restated Trust Agreement of ARK 21Shares Bitcoin ETF. “Trustee”: Delaware Trust Company, a Delaware trust company. “U.S Treasury Department”: U.S. Department of the Treasury. “You”: The owner or holder of Shares. 62 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. ARK 21Shares Bitcoin ETF (Registrant) By: 21Shares US LLC, its Sponsor Signature Title (Capacity) Date /s/ Russell Barlow Chief Executive Officer March 26, 2025 Russell Barlow (Principal Executive Officer) /s/ Duncan Moir President March 26, 2025 Duncan Moir (Principal Financial Officer and Principal Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities* and on the dates indicated. Signature Title (Capacity) Date /s/ Russell Barlow Chief Executive Officer March 26, 2025 Russell Barlow (Principal Executive Officer) /s/ Duncan Moir President March 26, 2025 Duncan Moir (Principal Financial Officer and Principal Accounting Officer) 63 Ark 21shares Bitcoin ETF index to financial statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID 925 ) F-2 Statements of Assets and Liabilities F-3 Schedule of Investment F-4 Statement of Operations F-5 Statements of Changes in Net Assets F-6 Notes to Financial Statements F-7 F- 1 Report of Independent Registered Public Accounting Firm To the Sponsor and Shareholders of ARK 21Shares Bitcoin ETF Opinion on the Financial Statements We have audited the accompanying statements of assets and liabilities of ARK 21Shares Bitcoin ETF (the “Trust”) as of December 31, 2024 and 2023, including the schedule of investment as of December 31, 2024, the related statement of operations for the year ended December 31, 2024 and the statements of changes in net assets for the year ended December 31, 2024, and for the period from December 12, 2023 (initial seed creation date) through December 31, 2023, including the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Trust as of December 31, 2024 and 2023, the results of its operations for the year ended December 31, 2024, and changes in its net assets for the year ended December 31, 2024, and for the period from December 12, 2023 (initial seed creation date) through December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Trust’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of cash and digital assets owned as of December 31, 2024 and 2023, by correspondence with the custodians and bitcoin trading counterparties. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. We have served as the Trust’s auditor since 2023. /S/ COHEN & COMPANY, LTD. COHEN & COMPANY, LTD. Towson, Maryland March 26, 2025 F- 2 ARK 21SHARES BITCOIN ETF STATEMENTS OF ASSETS AND LIABILITIES (Amounts in thousands, except Share and per Share amounts) December 31, 2024 December 31, 2023 Assets Investment in bitcoin, at fair value (cost 3,077,870 , and $ - , respectively) $ 4,352,648 $ – Cash – – 1 Bitcoin sold receivable 11,227 – Total assets 4,363,875 – 1 Liabilities Capital shares payable $ 11,229 $ – Sponsor fee payable 358 – Total liabilities 11,587 – Commitments and contingent liabilities (Note 9) Net assets $ 4,352,288 $ – 1 Net assets consists of: Paid-in-capital $ 2,460,639 $ – 1 Accumulated earnings (loss) 1,891,649 – $ 4,352,288 $ – 1 Shares issued and outstanding, no par value, unlimited amount authorized 46,690,000 2 Net asset value per share $ 93.22 $ 50.00 1 Amount rounds to less than $1,000. See Note 1 to the Notes to financial statements. The accompanying notes are an integral part of the financial statements. F- 3 ARK 21SHARES BITCOIN ETF SCHEDULE OF INVESTMENT (Amounts in thousands, except Quantity of bitcoin and percentages) December 31, 2024 * Quantity of bitcoin Cost Fair Value % of Net Assets Investment in bitcoin 46,607.1028 $ 3,077,870 $ 4,352,648 100.01 % Total investments 46,607.1028 $ 3,077,870 $ 4,352,648 100.01 % Liabilities in excess of other assets ( 360 ) ( 0.01 )% Net assets $ 4,352,288 100.00 % * No comparative schedule has been provided as the Trust did not hold any bitcoin as of December 31, 2023. The accompanying notes are an integral part of the financial statements. F- 4 ARK 21SHARES BITCOIN ETF STATEMENT OF OPERATIONS (Amounts in thousands) For the Year Ended December 31, 2024* Expenses Sponsor fee $ 5,925 Total expenses 5,925 Less waiver and reimbursement ( 93 ) Net expenses 5,832 Net investment loss ( 5,832 ) Realized and change in unrealized gain (loss) Net realized gain on investment in bitcoin sold to pay Sponsor fee 825 Net realized gain on investment in bitcoin sold for redemptions 621,878 Net change in unrealized appreciation (depreciation) on investment in bitcoin 1,274,778 Net realized and change in unrealized gain (loss) 1,897,481 Net increase in net assets resulting from operations $ 1,891,649 * No prior year comparative statement has been provided as this is the first fiscal year of the Trust’s operations. The accompanying notes are an integral part of the financial statements. F- 5 ARK 21SHARES BITCOIN ETF STATEMENTS OF CHANGES IN NET ASSETS (Amounts in thousands, except change in Shares issued and redeemed) For the Year Ended December 31, 2024 For the period December 12, 2023 (initial seed creation date) through December 31, 2023 Net assets, beginning of period $ – 1 $ – ^1 Contributions for Shares issued 5,904,040 – Distributions for Shares redeemed ( 3,443,401 ) – Net investment loss ( 5,832 ) – Net realized gain on investment in bitcoin sold to pay Sponsor fee 825 – Net realized gain on investment in bitcoin sold for redemptions 621,878 – Net change in unrealized appreciation (depreciation) on investment in bitcoin 1,274,778 – Net assets, end of period $ 4,352,288 $ – Shares issued and redeemed Shares issued 95,560,000 2 Shares redeemed ( 48,870,002 ) – Net increase in Shares issued and outstanding 46,689,998 2 ^ The amount represents the initial seed on December 12, 2023. 1 Amount rounds to less than $1,000. See Note 1 to the Notes to Financial Statements. The accompanying notes are an integral part of the financial statements. F- 6 ARK 21Shares Bitcoin ETF Notes to Financial Statements 1. Organization The ARK 21Shares Bitcoin ETF (the “Trust”) is a Delaware statutory trust, formed on June 22, 2021, pursuant to the Delaware Statutory Trust Act (“DSTA”). The Trust operates pursuant to an Amended and Restated Trust Agreement (the “Trust Agreement”). Delaware Trust Company, a Delaware trust company, is the trustee of the Trust (the “Trustee”). The Trust is managed and controlled by 21Shares US LLC (the “Sponsor”). The Sponsor is a limited liability company formed in the state of Delaware on June 16, 2021, and is a wholly owned subsidiary of Jura Pentium Inc., whose ultimate parent company is 21co Holdings Limited (formerly known as Amun Holdings Limited). Coinbase Custody Trust Company, LLC (“Coinbase”), BitGo New York Trust Company, LLC (“BitGo”), and Anchorage Digital Bank N.A. (“Anchorage”, and, together with Coinbase and BitGo, as the context may require, the “Custodian”, “Custodians” and each a “Custodian”) are the custodians for the Trust and hold all of the Trust’s bitcoin on the Trust’s behalf. The transfer agent (the “Transfer Agent”), the administrator for the Trust (the “Administrator”), and the cash custodian (the “Cash Custodian”), is Bank of New York Mellon. The Trust is an exchange-traded fund that issues units of beneficial interest (the “Shares”) representing fractional undivided beneficial interests in its net assets that trade on Cboe BZX Exchange, Inc. (the “Exchange”). The Shares were listed for trading on the Exchange on January 11, 2024, under the ticker symbol “ARKB”. The Trust’s investment objective is to seek to track the performance of bitcoin, as measured by the performance of the CME CF Bitcoin Reference Rate—New York Variant (the “Index”), adjusted for the Trust’s expenses and other liabilities. CF Benchmarks Ltd. is the administrator for the Index (the “Index Provider”). The Index is designed to reflect the performance of bitcoin in U.S. dollars. In seeking to achieve its investment objective, the Trust holds bitcoin at its Custodians and values its Shares daily based on the Index. ARK Investment Management LLC (the “Sub-Adviser”) is the sub-adviser of the Trust and provides assistance in the marketing of the Shares. The Trust’s Shares are neither interests in nor obligations of the Sponsor, the Sub-Adviser, or the Trustee. The Trust is an “emerging growth company” as that term is used in the Securities Act of 1933, as amended (the “Securities Act”), and, as such, the Trust may elect to comply with certain reduced public company reporting requirements. On December 12, 2023, the Sponsor, in its capacity as Seed Capital Investor, subject to conditions, purchased the initial Seed Creation Baskets comprising 2 Shares at a per-Share price of $ 50.00 , as described in “Seed Capital Investor.” Total proceeds to the Trust from the sale of these Initial Seed Shares were $ 100 . Delivery of the Seed Shares were made on December 12, 2023. These Seed Creation Baskets were redeemed for cash on or about January 5, 2024. On January 9, 2024 (the “Seed Capital Purchase Date”), the Seed Capital Investor purchased Seed Creation Baskets comprising 10,000 Shares (the “Initial Seed Creation Baskets”) at a per-share price of $ 46.88 . Total proceeds to the Trust from the sale of the Seed Creation Baskets were $ 468,806.44 . On January 9, 2024, the Trust purchased 10 bitcoins with the proceeds of the Seed Creation Baskets by transacting with a Bitcoin Counterparty to acquire bitcoin on behalf of the Trust in exchange for cash provided by the Sponsor in its capacity as Seed Capital Investor. These Seed Creation Baskets were redeemed for cash on or about January 19, 2024. 2. Significant Accounting Policies Basis of Accounting The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP” or “GAAP”). The Trust qualifies as an investment company solely for accounting purposes and not for any other purpose and follows the accounting and reporting guidance under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services - Investment Companies, but 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 uses fair value as its method of accounting for bitcoin in accordance with its classification as an investment company for accounting purposes. The preparation of the financial statements in conformity with US GAAP requires the Trust to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ materially from such estimates as additional information becomes available or actual amounts may become determinable. Should actual results differ from those previously recognized, the recorded estimates will be revised accordingly with the impact reflected in the operating results of the Trust in the reporting period in which they become known. F- 7 Cash Cash includes non-interest bearing, non-restricted cash maintained with one financial institution that does not exceed U.S. federally insured limits. Investment Valuation US GAAP defines fair value as the price the Trust would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Trust’s policy is to value investments held at fair value. The Trust identifies and determines the bitcoin principal market (or in the absence of a principal market, the most advantageous market) for GAAP purposes consistent with the application of the fair value measurement framework in FASB ASC 820 – Fair Value Measurement. A principal market is the market with the greatest volume and activity level for the asset or liability. The determination of the principal market will be based on the market with the greatest volume and level of activity that can be accessed. The Trust obtains relevant volume and level of activity information and based on initial analysis will select an exchange market as the Trust’s principal market. The net asset value (“NAV”) and NAV per Share will be calculated using the fair value of bitcoin based on the price provided by this exchange market, as of 4:00 p.m. ET on the measurement date for GAAP purposes. The Trust will update its principal market analysis periodically and as needed to the extent that events have occurred, or activities have changed in a manner that could change the Trust’s determination of the principal market. Various inputs are used in determining the fair value of assets and liabilities. Inputs may be based on independent market data (“observable inputs”) or they may be internally developed (“unobservable inputs”). These inputs are categorized into a disclosure hierarchy consisting of three broad levels for financial reporting purposes. The level of a value determined for an asset or liability within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are as follows: Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not considered to be active, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means; and Level 3: Unobservable inputs, including the Trust’s assumptions used in determining the fair value of investments, where there is little or no market activity for the asset or liability at the measurement date. Amount at Fair Value Measurement Using (Amounts in thousands) Fair Value Level 1 Level 2 Level 3 December 31, 2024 Assets Investment in bitcoin $ 4,352,648 $ 4,352,648 $ – $ – * No comparative schedule has been provided as the Trust did not hold any bitcoin as of December 31, 2023. The cost basis of the investment in bitcoin recorded by the Trust for financial reporting purposes is the fair value of bitcoin at the time of purchase. The cost basis recorded by the Trust may differ from proceeds collected by the authorized participant from the sale of the corresponding Shares to investors. Investment Transactions The Trust considers investment transactions to be the receipt of bitcoin for Share creations and the delivery of bitcoin for Share redemptions or for payment of expenses in bitcoin. The Trust records its investments transactions on a trade date basis and changes in fair value are reflected as net change in unrealized appreciation or depreciation on investments. Realized gains and losses are calculated using the specific identification method. Realized gains and losses are recognized in connection with transactions including settling obligations for the Sponsor’s Fee in bitcoin. F- 8 Calculation of Net Asset Value “NAV” and NAV per Share On each day other than when the Exchange is closed for regular trading (a “Business Day”), as soon as practicable after 4:00 p.m. (Eastern Time), the net asset value of the Trust is obtained by subtracting all accrued fees, expenses and other liabilities of the Trust from the fair value of the bitcoin and other assets held by the Trust using the index price. The Trustee computes the NAV per Share by dividing the NAV of the Trust by the number of Shares outstanding on the date the computation is made. Federal Income Taxes The Sponsor and the Trustee will treat the Trust as a “grantor trust” for U.S. federal income tax purposes. Although not free from doubt due to the lack of directly governing authority, if the Trust operates as expected, the Trust should be classified as a “grantor trust” for U.S. federal income tax purposes and the Trust itself should not be subject to U.S. federal income tax. Each beneficial owner of Shares will be treated as directly owning its pro rata Share of the Trust’s assets and a pro rata portion of the Trust’s income, gain, losses and deductions will “pass through” to each beneficial owner of Shares. If the Trust sells bitcoin (for example, to pay fees or expenses), such a sale is a taxable event to Shareholders. Upon a Shareholder’s sale of its Shares, the Shareholder will be treated as having sold the pro rata share of the bitcoin held in the Trust at the time of the sale and may recognize gain or loss on such sale. The Sponsor has reviewed the tax positions as of December 31, 2024, and has determined that no provision for income tax is required in the Trust’s financial statements. Recently Issued Accounting Pronouncements The Trust adopted FASB Accounting Standards Update 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures (“ASU 2023-07”). The Trust operates in one segment. The segment derives its revenues from Trust investments made in accordance with the defined investment strategy of the Trust, as prescribed in the Trust’s prospectus. The Chief Operating Decision Maker (“CODM”) is the Sponsor. The CODM monitors the operating results of the Trust. The financial information the CODM leverages to assess the segment’s performance and to make decisions for the Trust’s single segment, is consistent with that presented within the Trust’s financial statements. In December 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). ASU 2023-08 is intended to improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income. The amendments also improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale restrictions, and changes during the reporting period. ASU 2023-08 is effective for annual and interim reporting periods beginning after December 15, 2024. Early adoption is permitted for both interim and annual financial statements that have not yet been issued. The Trust adopted this new guidance with no material impact on its financial statements and disclosures as the Trust uses fair value as its method of accounting for bitcoin in accordance with its classification as an investment company for accounting purposes. 3. Fair Value of Bitcoin The following represents the changes in quantity of bitcoin and the respective fair value on December 31, 2024 *: (Amounts in thousands, except Quantity of bitcoin) Quantity of bitcoin Fair Value Beginning balance as of January 1, 2024 – $ – Bitcoin purchased 95,498.6291 5,903,861 Bitcoin sold ( 48,891.5263 ) ( 3,448,694 ) Net realized gain on investment in bitcoin sold to pay Sponsor fee – 825 Net realized gain on investment in bitcoin sold for redemptions – 621,878 Change in unrealized appreciation on investment in bitcoin – 1,274,778 Ending balance as of December 31, 2024 * 46,607.1028 $ 4,352,648 * No prior year comparative period presented as this is the first fiscal year of the Trust’s operations. F- 9 4. Trust Expenses The Trust pays the unitary Sponsor Fee of 0.21 % of the Trust’s bitcoin holdings. The Sponsor Fee is paid by the Trust to the Sponsor as compensation for services performed under the Trust Agreement. The Sponsor agreed to waive the entire Sponsor Fee for (i) a nine-month period which commenced on January 11, 2024 (the day the Trust’s Shares were initially listed on the Exchange), or (ii) the first $ 1 billion of Trust assets, whichever came first. The Trust assets exceeded $ 1 billion in February 2024, at which time the waiver period ended. The aggregate Sponsor Fee paid to the Sponsor for the fiscal year ended December 31, 2024 was $ 5,732,049 . Except for during periods during which the Sponsor Fee has been waived, the Sponsor Fee accrues daily and is payable in bitcoin weekly in arrears. The Administrator calculates the Sponsor Fee on a daily basis by applying a 0.21 % annualized rate to the Trust’s total bitcoin holdings, and the amount of bitcoin payable in respect of each daily accrual is determined by reference to the Index. The Sponsor has agreed to pay all operating expenses (except for litigation expenses and other extraordinary expenses) out of the Sponsor Fee. The Sponsor has agreed to pay all operating expenses (except for litigation expenses and other extraordinary expenses) out of the Sponsor Fee. Operating expenses assumed by the Sponsor include (i) fees to the Sub-Adviser; (ii) the Marketing Fee, (iii) fees to the Administrator, if any, (iv) fees to the bitcoin Custodians, (v) fees to the Transfer Agent, (vi) fees to the Trustee, (vii) the fees and expenses related to any future listing, trading or quotation of the Shares on any listing exchange or quotation system (including legal, marketing and audit fees and expenses), (viii) ordinary course legal fees and expenses but not litigation-related expenses, (ix) audit fees, (x) regulatory fees, including, if applicable, any fees relating to the registration of the Shares under the Securities Act or Exchange Act, (xi) printing and mailing costs; (xii) costs of maintaining the Sponsor’s website and (xiii) applicable license fees (each, a “Sponsor-paid Expense,” and together, the “Sponsor-paid Expenses”), provided that any expense that qualifies as an Additional Trust Expense (as defined below) will be deemed to be an Additional Trust Expense and not a Sponsor-paid Expense. The Sponsor will not, however, assume certain extraordinary, non-recurring expenses that are not Sponsor-paid Expenses, including, but not limited to, 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 or the interests of Shareholders, any indemnification of the bitcoin Custodians, Administrator or other agents, service providers or counter-parties of the Trust, the fees and expenses related to the listing, and extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters (collectively, “Additional Trust Expenses”). Of the Sponsor-paid Expenses, ordinary course legal fees and expenses shall be subject to a cap of $ 100,000 per annum. In the Sponsor’s sole discretion, all or any portion of a Sponsor-paid Expense may be re-designated as an Additional Trust Expense. To the extent that the Sponsor does not voluntarily assume expenses, they will be the responsibility of the Trust. The Sponsor also pays the costs of the Trust’s organization and offering. The Trust is not obligated to repay any such costs related to the Trust’s organization and offering paid by the Sponsor. 5. Creation and Redemption of Shares The Trust creates and redeems Shares at the NAV of date of the creation and redemption on a continuous basis but only in Creation Baskets consisting of 5,000 Shares or multiples thereof. Only Authorized Participants, which are registered broker-dealers who have entered into written agreements with the Sponsor and the Administrator, can place orders. The Trust engages in bitcoin transactions for converting cash into bitcoin (in association with purchase orders) and bitcoin into cash (in association with redemption orders). The Trust conducts its bitcoin purchase and sale transactions by, in its sole discretion, choosing to trade directly with third parties (each, a “bitcoin Trading Counterparty”), who are not registered broker-dealers pursuant to written agreements between such bitcoin Trading Counterparties and the Trust, or choosing to trade through the Prime Broker acting in an agency capacity with third parties through its Coinbase Prime service pursuant to the Prime Broker Agreement. A bitcoin Trading Counterparty may be an affiliate of an Authorized Participant. The Authorized Participants deliver only cash to create Shares and receive only cash when redeeming Shares. Further, Authorized Participants will not directly or indirectly purchase, hold, deliver, or receive bitcoin 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 bitcoin as part of the creation or redemption process. F- 10 The Trust creates Shares by receiving bitcoin from a third-party that is not the Authorized Participant and the Trust—not the Authorized Participant—is responsible for selecting the third-party to deliver the bitcoin. Further, the third-party will not be acting as an agent of the Authorized Participant with respect to the delivery of the bitcoin to the Trust or acting at the direction of the Authorized Participant with respect to the delivery of the bitcoin to the Trust. The Trust redeems Shares by delivering bitcoin to a third-party that is not the Authorized Participant and the Trust—not the Authorized Participant—is responsible for selecting the third-party to receive the bitcoin. Further, the third-party will not be acting as an agent of the Authorized Participant with respect to the receipt of the bitcoin from the Trust or acting at the direction of the Authorized Participant with respect to the receipt of the bitcoin from the Trust. The third-party is unaffiliated with the Trust and the Sponsor. Year Ended December 31, 2024 Period Ended December 31, 2023 Activity in Capital Transactions Issued and Redeemed: Shares issued 95,560,000 2 Shares redeemed ( 48,870,002 ) - Net Change in Capital Transactions Issued and Redeemed 46,689,998 2 (Amounts in thousands) Year Ended December 31, 2024 Period Ended December 31, 2023 Activity in Capital Transactions Issued and Redeemed: Shares issued $ 5,904,040 $ - ^ Shares redeemed ( 3,443,401 ) - Net Change in Capital Transactions Issued and Redeemed $ 2,460,639 $ - ^ ^ Amount rounds to less than $ 1,000 . See Note 1 to the Notes to Financial Statements. Bitcoin purchased payable represents the quantity of bitcoin purchased for the creation of Shares where the bitcoin has not yet settled. Generally, bitcoin is transferred within two Business Days of the trade date. (Amounts in thousands) December 31, 2024 December 31, 2023 Bitcoin purchased payable $ - $ - Bitcoin sold receivable represents the quantity of bitcoin sold for the redemption of Shares where the bitcoin has not yet been settled. Generally, bitcoin is transferred within two Business Days of the trade date. (Amounts in thousands) December 31, 2024 December 31, 2023 Bitcoin sold receivable $ 11,227 $ - 6. Related Parties The Sponsor is a related party to the Trust. The Trust’s operations are supported by its Sponsor, who is in turn supported by its parent company and affiliated companies and external service providers. As of December 31, 2024, the Sponsor did not own any Shares of the Trust. The Sponsor arranged for the creation of the Trust and is responsible for the ongoing registration of the Shares for their public offering in the United States and the listing of Shares on the Exchange. F- 11 7. Quarterly Statement of Operations (unaudited) Fiscal Year Ended December 31, 2024* (Amounts in thousands) Three Months Ended (unaudited) Year Ended Mar-31, 2024 Jun-30, 2024 Sept-30, 2024 Dec-31, 2024 December 31, 2024 Expenses Sponsor fee $ 721 $ 1,555 $ 1,509 $ 2,140 $ 5,925 Waiver and Reimbursement ( 93 ) - - - ( 93 ) Net expenses 628 1,555 1,509 2,140 5,832 Net investment loss ( 628 ) ( 1,555 ) ( 1,509 ) ( 2,140 ) ( 5,832 ) Realized and change in unrealized gain (loss) Net realized gain on investment in bitcoin sold to pay Sponsor fee ( 85 ) 327 83 500 825 Net realized gain on investment in bitcoin sold for redemptions - 135,325 53,132 433,421 621,878 Net change in unrealized appreciation (depreciation) on investment in bitcoin 845,323 ( 543,311 ) ( 5,609 ) 978,375 1,274,778 Net realized and change in unrealized gain (loss) 845,238 ( 407,659 ) 47,606 1,412,296 1,897,481 Net increase (decrease) in net assets resulting from operations $ 844,610 $ ( 409,214 ) $ 46,097 $ 1,410,156 $ 1,891,649 * No prior year comparative table has been provided as this is the first fiscal year of the Trust’s operations. 8. Financial Highlights Per Share Performance (for a Share outstanding throughout the period presented) For the Year Ended December 31, 2024* Net asset value per Share, beginning of year $ 50.00 Net investment income (loss) on investment in bitcoin 1 ( 0.14 ) Net realized and change in unrealized gain (loss) on investment in bitcoin 2 43.36 Net change in net assets from operations 43.22 Net asset value per Share, end of year $ 93.22 Total return, at net asset value 3 86.44 % Ratio to average net assets 4 Net investment income (loss) ( 0.21 )% Gross expenses 0.21 % Net expenses 0.21 % * No prior year comparative financial statements have been provided as this is the first fiscal year of the Trust’s operations. 1 Calculated using average Shares outstanding. 2 The amount shown for a share outstanding throughout the year may not agree with the change in the aggregate gains and losses for the year because of the timing of sales and repurchases of the Trust’s shares in relation to fluctuating market values for the Trust. 3 Total return is calculated based on the change in value during the period and is not annualized. An individual shareholder’s total return and ratio may vary from the above total returns and ratios based on the timing of contributions to and withdrawals from the Trust. 4 Annualized. F- 12 9. 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. 10. Concentration Risk Unlike other funds that may invest in diversified assets, the Trust’s investment strategy is concentrated in a single asset within a single asset class. This concentration maximizes the degree of the Trust’s exposure to a variety of market risks associated with bitcoin and digital assets. By concentrating its investment strategy solely in bitcoin, any losses suffered as a result of a decrease in the value of ether can be expected to reduce the value of an interest in the Trust and will not be offset by other gains if the Trust were to invest in underlying assets that were diversified. 11. Indemnification The Sponsor will not be liable to the Trust, the Trustee or any Shareholder for any action taken or for refraining from taking any action in good faith, or for errors in judgment or for depreciation or loss incurred by reason of the sale of any bitcoin or other assets of the Trust. However, the preceding liability exclusion will not protect the Sponsor against any liability resulting from its own gross negligence, bad faith, or willful misconduct. The Sponsor and each of its shareholders, members, directors, officers, employees, affiliates, and subsidiaries will be indemnified by the Trust and held harmless against any losses, liabilities or expenses incurred in the performance of its duties under the Trust Agreement without gross negligence, bad faith, or willful misconduct. The Sponsor may rely in good faith on any paper, order, notice, list, affidavit, receipt, evaluation, opinion, endorsement, assignment, draft, or any other document of any kind prima facie properly executed and submitted to it by the Trustee, the Trustee’s counsel or by any other person for any matters arising under the Trust Agreement. The Sponsor shall in no event be deemed to have assumed or incurred any liability, duty, or obligation to any Shareholder or to the Trustee other than as expressly provided for in the Trust Agreement. Such indemnity includes payment from the Trust of the costs and expenses incurred in defending against any indemnified claim or liability under the Trust Agreement. The Trustee will not be liable or accountable to the Trust or any other person or under any agreement to which the Trust or any series of the Trust is a party, except for the Trustee’s breach of its obligations pursuant to the Trust Agreement or its own willful misconduct, bad faith or gross negligence. The Trustee and each of the Trustee’s officers, affiliates, directors, employees, and agents will be indemnified by the Trust from and against any losses, claims, taxes, damages, reasonable expenses, and liabilities incurred with respect to the creation, operation or termination of the Trust, the execution, delivery or performance of the Trust Agreement or the transactions contemplated thereby; provided that the indemnified party acted without willful misconduct, bad faith or gross negligence. 12. Subsequent Events The Trust has evaluated subsequent events and transactions for potential recognition or disclosure through the date the financial statements were issued and has determined that there are no material events that would require disclosure in the financial statements. F- 13