21Shares Ethereum ETF 10-Q

Item 1. Financial Statements (Unaudited) 21SHARES CORE ETHEREUM ETF STATEMENTS OF ASSETS AND LIABILITIES June 30, 2025 (Unaudited) December 31, 2024 Assets Investment in ether, at fair value (cost $ 21,597,228 , $ 15,551,512 , respectively) $ 23,004,189 $ 16,869,879 Total assets 23,004,189 16,869,879 Liabilities Sponsor fee payable 1,635 – Total liabilities 1,635 – Commitments and contingent liabilities (Note 9) Net assets $ 23,002 ,554 $ 16,869,879 Net assets consists of Paid-in-capital $ 22,019,765 $ 12,483,772 Accumulated earnings (loss) 982,789 4,386,107 $ 23,002,554 $ 16,869,879 Shares issued and outstanding, no par value, unlimited amount authorized 1,830,000 1,010,000 Net asset value per share $ 12.57 $ 16.70 The accompanying notes are an integral part of the financial statements. 1 21SHARES CORE ETHEREUM ETF SCHEDULES OF INVESTMENT June 30, 2025 (Unaudited) Quantity of Ether Cost Fair Value % of Net Assets Investment in ether 9,142.2874 $ 21,597,228 $ 23,004,189 100 .01% Total investments 9,142.2874 $ 21,597,228 $ 23,004,189 100 .01% Liabilities in excess of other assets 1,635 (0 .01)% Net assets $ 23,002,554 100.00 % December 31, 2024 Quantity of Ether Cost Fair Value % of Net Assets Investment in ether 5,050.0000 $ 15,551,512 $ 16,869,879 100 .00% Total investments 5,050.0000 $ 15,551,512 $ 16,869,879 100 .00% Liabilities in excess of other assets - - % Net assets $ 16,869,879 100.00 % The accompanying notes are an integral part of the financial statements. 2 21SHARES CORE ETHEREUM ETF STATEMENTS OF OPERATIONS For the three months ended June 30, 2025 For the six months ended June 30, 2025 For the period May 1, 2024 (initial seed creation date) through June 30, 2024 (Unaudited) (Unaudited) (Unaudited) Expenses Sponsor fee $ 9,583 $ 17,659 $ - Total expenses 9,583 17,659 - Less waiver and reimbursement - ( 2,169 ) - Net expenses 9,583 15,490 - Net investment loss ( 9,583 ) ( 15,490 ) - Realized and change in unrealized gain (loss) Net realized gain (loss) on investment in ether sold for redemptions - ( 3,476,102 ) - Net realized gain (loss) on investment in ether sold to pay Sponsor fee ( 1,843 ) ( 320 ) - Net change in unrealized appreciation on investment in ether 6,469,118 88,594 1,561 Net realized and change in unrealized gain (loss) 6,467,275 ( 3,387,828 ) 1,561 Net increase (decrease) in net assets resulting from operations $ 6,457,692 $ ( 3,403,318 ) $ 1,561 The accompanying notes are an integral part of the financial statements. 3 21SHARES CORE ETHEREUM ETF STATEMENTS OF CHANGES IN NET ASSETS For the three months ended June 30, 2025 For the six months ended June 30, 2025 For the period May 1, 2024 (initial seed creation date) through June 30, 2024 (Unaudited) (Unaudited) (Unaudited) Net assets, beginning of period $ 8,403,421 $ 16,869,879 $ - Contributions for Shares issued 8,141,441 15,212,030 340,839 Distributions for Shares redeemed - ( 5,676,037 ) ( 100 ) Net investment loss ( 9,583 ) ( 15,490 ) - Net realized gain (loss) on investment in ether sold for redemptions - ( 3,476,102 ) - Net realized gain (loss) on investment in ether sold to pay Sponsor fee ( 1,843 ) ( 320 ) - Net change in unrealized appreciation on investment in ether 6,469,118 88,594 1,561 Net assets, end of period $ 23,002,554 $ 23,002,554 $ 342,300 Shares issued and redeemed Shares issued 910,000 1,430,000 20,002 Shares redeemed – ( 610,000 ) ( 2 ) Net increase in Shares issued and outstanding 910,000 820,000 20,000 The accompanying notes are an integral part of the financial statements. 4 21Shares Core Ethereum ETF Notes to Financial Statements (Unaudited) 1. Organization The 21Shares Core Ethereum ETF (the “Trust”) is a Delaware statutory trust, formed on September 5, 2023, pursuant to the Delaware Statutory Trust Act (“DSTA”). The Trust operates pursuant to an Amended and Restated Trust Agreement (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 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 ether 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 common units of beneficial interest (the “Shares”) representing fractional undivided beneficial interests in its net assets that trade on the Cboe BZX Exchange, Inc. (the “Exchange”). The Shares were listed for trading on the Exchange on July 23, 2024, under the ticker symbol “CETH”. The Trust’s investment objective is to seek to track the performance of ether, as measured by the performance of the CME CF Ether-Dollar 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 ether in U.S. dollars. In seeking to achieve its investment objective, the Trust holds ether at its Custodians and values its Shares daily based on the Index. 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. The Sponsor served as the “Seed Capital Investor” to the Trust. On May 1, 2024, the Sponsor, in its capacity as Seed Capital Investor, subject to certain conditions, purchased 2 Shares at a per-Share price of $ 50.00 (the “Initial Seed Shares”). Total proceeds to the Trust from the sale of these Initial Seed Shares were $ 100 . Delivery of the Seed Shares were made on May 1, 2024. On June 18, 2024 (the “Seed Capital Purchase Date”), the Sponsor, in its capacity as Seed Capital Investor, purchased the Seed Creation Baskets comprising 20,000 Shares (the “Seed Creation Baskets”). In its capacity as the Seed Capital Investor, the Sponsor, has acted as a statutory underwriter in connection with this purchase. The total proceeds to the Trust from the sale of the Seed Creation Baskets were $ 340,739 . On June 18, 2024, the Trust purchased ether with the proceeds of the Seed Creation Baskets by transacting with an Ether Counterparty to acquire ether on behalf of the Trust in exchange for cash provided by the Sponsor, in its capacity as Seed Capital Investor. All ether acquired in connection with the Seed Creation Baskets is held by the one or more of the Custodians. The statement of assets and liabilities and schedule of investment on June 30, 2025, and the statements of operations, and changes in net assets for the three and six months ended June 30, 2025, and for the period May 1, 2024 (initial seed creation date) through June 30, 2024, have been prepared on behalf of the Trust and are unaudited. In the opinion of management of the Sponsor of the Trust, all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position and results of operations for the period ended June 30, 2025, and for all interim periods presented have been made. In addition, interim period results are not necessarily indicative of results for a full-year period. The fiscal year-end of the Trust is December 31st. 5 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 ether 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. 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 ether 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 ether 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. 6 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 Fair Value Level 1 Level 2 Level 3 June 30, 2025 (Unaudited) Assets Investment in ether $ 23,004,189 $ 23,004,189 $ – $ – Amount at Fair Value Measurement Using Fair Value Level 1 Level 2 Level 3 December 31, 2024 Assets Investment in ether $ 16,869,879 $ 16,869,879 $ – $ – The cost basis of the investment in ether recorded by the Trust for financial reporting purposes is the fair value of ether 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 ether for Share creations and the delivery of ether for Share redemptions or for payment of expenses in ether. 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 redemption of shares and settling obligations for the Sponsor’s Fee in ether. Calculation of 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 NAV of the Trust is obtained by subtracting all accrued fees, expenses and other liabilities of the Trust from the fair value of the ether and other assets held by the Trust. 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. 7 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 passed through to each beneficial owner of Shares. If the Trust sells ether (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 ether 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 June 30, 2025, and has determined that no provision for income tax is required in the Trust’s financial statements. Segment Reporting 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 that the CODM leverages to assess the segment’s performance and to make decisions for the Trust’s single segment, is consistent with the financial information that is presented within the Trust’s financial statements. Segment assets are reflected on the accompanying Statements of Assets and Liabilities as Total assets and the only significant segment expense, the Sponsor fee, is included in the accompanying Statements of Operations. 3. Fair Value of Ether The following represents the changes in quantity of ether and the respective fair value for the six months ended June 30, 2025 (Unaudited): Quantity of ether Fair Value Beginning balance as of January 1, 2025 5,050.0000 $ 16,869,879 Ether purchased 7,147.4484 15,212,271 Ether sold ( 3,049.1610 ) ( 5,690,133 ) Net realized gain (loss) on investment in ether sold to pay Sponsor fee ( 6.0000 ) ( 320 ) Net realized gain (loss) on investment in ether sold for redemptions – ( 3,476,102 ) Change in unrealized appreciation on investment in ether – 88,594 Ending balance as of June 30, 2025* 9,142.2874 $ 23,004,189 * No comparative table has been provided as the Trust commenced operations on May 1, 2024. The following represents the changes in quantity of ether and the respective fair value for the three months ended June 30, 2025 and 2024 (Unaudited): Quantity of ether Fair Value Beginning balance as of April 1, 2025 4,600.5880 $ 8,407,804 Ether purchased 4,547.6994 8,143,205 Ether sold – ( 14,095 ) Net realized gain on investment in ether sold to pay Sponsor fee ( 6.0000 ) ( 1,843 ) Net realized gain (loss) on investment in ether sold for redemptions – – Change in unrealized appreciation on investment in ether – 6,469,118 Ending balance as of June 30, 2025 9,142.2874 $ 23,004,189 8 Quantity of ether Fair Value Beginning balance as of May 1, 2024 (initial seed creation date) – $ – Ether purchased 100.0000 340,739 Ether sold – – Net realized gain on investment in ether sold to pay Sponsor fee – – Net realized gain on investment in ether sold for redemptions – – Change in unrealized appreciation on investment in ether – 1,561 Ending balance as of June 30, 2024 100.0000 $ 342,300 4. Trust Expenses The Trust pays the unitary Sponsor fee of 0.21 % of the Trust’s ether 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 six-month period which commenced on July 23, 2024 (the day the Trust’s Shares were initially listed on the Exchange), or (ii) the first $ 500 million of Trust assets, whichever came first. The six-month waiver period ended on January 23, 2025, at which time the Sponsor began collecting the Sponsor fee. Except for during periods in which the Sponsor fee was being waived, the Sponsor fee accrues daily and is payable in ether 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 ether holdings, and the amount of ether payable in respect of each daily accrual is determined by reference to the Index. The Trust incurred Sponsor fees for the six-month period ended June 30, 2025 and for the period May 1, 2024 (initial seed creation date) through June 30, 2024 of $ 15,490 and $ 0 , net of Sponsor fees waived of $ 2,169 respectively. 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) the fee payable to marketing agents for services provided to the Trust (the “Marketing Fee”), (ii) fees to the Administrator, if any, (iii) fees to the ether Custodians, (iv) fees to the Transfer Agent, (v) fees to the Trustee, (vi) 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), (vii) ordinary course legal fees and expenses but not litigation-related expenses, (viii) audit fees, (ix) regulatory fees, including, if applicable, any fees relating to the registration of the Shares under the Securities Act or Exchange Act, (x) printing and mailing costs; (xi) costs of maintaining the Sponsor’s website and (xii) 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 ether 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. 9 5. Creation and Redemption of Shares The Trust creates and redeems Shares on a continuous basis but only in Creation Baskets consisting of 10,000 Shares or multiples thereof on the NAV of the date of the creation or redemption. 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 ether transactions for converting cash into ether (in association with purchase orders) and ether into cash (in association with redemption orders). The Trust conducts its ether purchase and sale transactions by, in its sole discretion, choosing to trade directly with third parties (each, an “ether Trading Counterparty”), who are not registered broker-dealers pursuant to written agreements between such ether Trading Counterparties and the Trust, or choosing to trade through the Prime Broker acting in an agency capacity with third parties such as through its Coinbase Prime service pursuant to the Prime Broker Agreement. An ether 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 ether 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 ether as part of the creation or redemption process. The Trust creates Shares by receiving ether 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 ether. Further, the third-party will not be acting as an agent of the Authorized Participant with respect to the delivery of the ether to the Trust or acting at the direction of the Authorized Participant with respect to the delivery of the ether to the Trust. The Trust redeems shares by delivering ether 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 ether. Further, the third-party will not be acting as an agent of the Authorized Participant with respect to the receipt of the ether from the Trust or acting at the direction of the Authorized Participant with respect to the receipt of the ether from the Trust. The third-party is unaffiliated with the Trust and the Sponsor. For the three months ended June 30, 2025 For the six months ended June 30, 2025 For the period May 1, 2024 (initial seed creation date) through June 30, 2024 (Unaudited) (Unaudited) (Unaudited) Activity in Capital Transactions Issued and Redeemed: Shares issued 910,000 1,430,000 20,002 (1) Shares redeemed - ( 610,000 ) ( 2 ) (1) Net Change in Capital Transactions Issued and Redeemed 910,000 820,000 20,000 (1) Included 2 initial seed shares issued and redeemed in cash. For the three months ended June 30, 2025 For the six months ended June 30, 2025 For the period May 1, 2024 (initial seed creation date) through June 30, 2024 (Unaudited) (Unaudited) (Unaudited) Activity in Capital Transactions Issued and Redeemed: Shares issued $ 8,141,441 $ 15,212,030 $ 340,839 Shares redeemed $ - $ ( 5,676,037 ) $ ( 100 ) Net Change in Capital Transactions Issued and Redeemed $ 8,141,441 $ 9,535,993 $ 340,739 10 Ether purchased payable represents the quantity of ether purchased for the creation of Shares where the ether has not yet settled. Generally, ether is transferred within two Business Days of the trade date. June 30, 2025 December 31, 2024 (Unaudited) Ether purchased payable $ - $ - Ether sold receivable represents the quantity of ether sold for the redemption of Shares where the ether has not yet been settled. Generally, ether is transferred within two Business Days of the trade date. June 30, 2025 December 31, 2024 (Unaudited) Ether sold receivable $ - $ - 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 June 30, 2025, the Sponsor owned 20,000 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. 7. Financial Highlights Per Share Performance (for a Share outstanding throughout each period presented) For the three months ended June 30, 2025 For the six months ended June 30, 2025 For the period May 1, 2024 (initial seed creation date) through June 30, 2024 (Unaudited) (Unaudited) (Unaudited) Net asset value per Share, beginning of period $ 9.13 $ 16.70 $ 17.04 (1) Net investment loss ( 2) ( 0.01 ) ( 0.01 ) - Net realized and change in unrealized gain (loss) on investment in ether (3) 3.45 ( 4.12 ) 0.08 Net change in net assets from operations 3.44 ( 4.13 ) 0.08 Net asset value per Share, end of period $ 12.57 $ 12.57 $ 17.12 Total return, at net asset value (4)(6) 37.68 % ( 24.73 )% 0.47 % Ratio to average net assets (5) Net investment income (loss) ( 0.21 )% ( 0.18 )% - % Gross expenses 0.21 % 0.21 % - % Net expenses 0.21 % 0.18 % - % 1 The amount represents the NAV per Share on June 18, 2024, the Seed Capital Purchase Date. 2 Calculated using average Shares outstanding. 3 The amount shown for a share outstanding throughout the period may not agree with the change in the aggregate gains and losses for the period because of the timing of sales and repurchases of the Trust’s shares in relation to fluctuating market values for the Trust. 4 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. 5 Annualized. 6 Not annualized. 11 8. 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. 9. 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 ether and digital assets. By concentrating its investment strategy solely in ether, 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. 10. 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 ether 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. 11. Subsequent Events On July 22, 2025, the Sponsor, in its capacity as Seed Capital Investor, redeemed the Seed Creation Baskets comprising 20,000 Shares (the “Seed Creation Baskets”) for $ 374,052 . On July 29, 2025, the SEC issued 19b-4 orders permitting in-kind creations and redemptions by authorized participants for the Trust. On July 31, 2025, the amendment to the Trust's S-1 registration statement was declared effective. As a result of these regulatory actions, the Trust is authorized to create and redeem shares with authorized participants on an in-kind basis. The Trust has evaluated all subsequent events through the issuance of the financial statements and has noted no other events requiring adjustment or additional disclosure in the financial statements other than the items noted above. 12