21Shares Ethereum ETF 10-Q

ceth-20260630 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2026 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from___________ to____________ Commission File Number 001-42151 21Shares Ethereum ETF (Exact Name of Registrant as Specified in Its Charter) Delaware 93-6828290 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 158 W. 27 th Street New York , New York 10001 (646) 370-6016 (Address, including zip code, and telephone number, including area code, of registrant’s primary executive offices) Securities registered pursuant to Section 12(b) of the Act: Title of each class: Trading Symbol(s) Name of each exchange on which registered: Shares of Beneficial Interest of 21Shares Ethereum ETF TETH Cboe BZX Exchange, Inc . Securities registered or to be registered pursuant to Section 12(g) of the Act: None. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large Accelerated Filer ☐ Accelerated Filer ☐ Non-Accelerated Filer ☒ Smaller Reporting Company ☒ Emerging Growth Company ☒ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided in Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.). ☐ Yes ☒ No The registrant had 1,620,000 outstanding shares as of August 7, 2026. STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This quarterly report on Form 10-Q includes “forward-looking statements” that generally relate to future events or future performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or the negative of these terms or other comparable terminology. All statements (other than statements of historical fact) included in this report that address activities, events or developments that will or may occur in the future, including such matters as movements in the digital asset markets and indexes that track such movements, the operations of 21Shares Ethereum ETF (the “Trust”), the plans of 21Shares US LLC (the “Sponsor”), as the sponsor of the Trust, and references to the Trust’s future success and other similar matters, are forward-looking statements. These statements are only predictions. Actual events or results may differ materially. These statements are based upon certain assumptions and analyses the Sponsor has made based on its perception of historical trends, current conditions and expected future developments, as well as other factors appropriate in the circumstances. Whether or not actual results and developments will conform to the Sponsor’s expectations and predictions, however, is subject to a number of risks and uncertainties, including the special considerations discussed in this report, general economic, market and business conditions, changes in laws or regulations, including those concerning taxes, made by governmental authorities or regulatory bodies, and other world economic and political developments. Consequently, all the forward-looking statements made in this report are qualified by these cautionary statements, and there can be no assurance that actual results or developments the Sponsor anticipates to occur will be realized or, even if substantially realized, that they will result in the expected consequences to, or have the expected effects on, the Trust’s operations or the value of its common shares of beneficial interest (the “Shares”). Should one or more of these risks discussed in “Risk Factors” herein or in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K filed on March 31, 2026, for the period ended December 31, 2025 (the “Annual Report”), or other uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those described in forward-looking statements. Forward-looking statements are made based on the Sponsor’s belief, estimates and opinions on the date the statements are made, and neither the Trust nor the Sponsor is under a duty or undertakes an obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, other than as required by applicable laws. Moreover, neither the Trust, the Sponsor, nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Investors are therefore cautioned against placing undue reliance on forward-looking statements. Emerging Growth Company The Trust is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). For as long as the Trust is an emerging growth company, unlike other public companies, it will not be required to, among other things: (i) provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002; or (ii) comply with any new audit rules adopted by the Public Company Accounting Oversight Board after April 5, 2012, unless the U.S. Securities and Exchange Commission (“SEC”) determines otherwise. The Trust will cease to be an “emerging growth company” upon the earliest of: (i) it having $1.235 billion or more in annual gross revenues, (ii) the date on which the Trust is deemed to be a “large accelerated filer,” (iii) it issuing more than $1.0 billion of non-convertible debt over a three-year period; or (iv) the last day of the fiscal year following the fifth anniversary of its initial public offering. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Trust intends to take advantage of the benefits of the extended transition period. 21Shares Ethereum ETF Table of Contents Page Part I. FINANCIAL INFORMATION 1 Item 1. Financial Statements (Unaudited) 1 Statements of Assets and Liabilities at June 30, 2026 (Unaudited) and December 31, 2025 1 Schedules of Investment at June 30, 2026 (Unaudited) and December 31, 2025 2 Statements of Operations for the three and six months ended June 30, 2026 and 2025 (Unaudited) 3 Statements of Changes in Net Assets for the three and six months ended June 30, 2026 and 2025 (Unaudited) 4 Notes to Unaudited Financial Statements 5 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 17 Item 3. Quantitative and Qualitative Disclosures About Market Risk 21 Item 4. Controls and Procedures 21 Part II. OTHER INFORMATION 22 Item 1. Legal Proceedings 22 Item 1A. Risk Factors 22 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 22 Item 3. Defaults Upon Senior Securities 22 Item 4. Mine Safety Disclosures 22 Item 5. Other Information 22 Item 6. Exhibits 23 Signatures 24 i PART I – FINANCIAL INFORMATION: Item 1. Financial Statements (Unaudited) 21SHARES ETHEREUM ETF STATEMENTS OF ASSETS AND LIABILITIES June 30, 2026 December 31, 2025 (Unaudited) Assets Investment in ether, at fair value (cost $ 19,528,111 , and $ 38,559,102 , respectively) $ 12,916,751 $ 31,298,450 Total assets 12,916,751 31,298,450 Liabilities – – Total liabilities – – Commitments and contingent liabilities (Note 8) Net assets $ 12,916,751 $ 31,298,450 Net assets consist of Paid-in-capital $ 19,285,351 $ 25,536,620 Accumulated earnings (loss) ( 6,368,600 ) 5,761,830 $ 12,916,751 $ 31,298,450 Shares issued and outstanding, no par value, unlimited amount authorized 1,640,000 2,110,000 Net asset value per Share $ 7.88 $ 14.83 The accompanying notes are an integral part of the financial statements. 1 21SHARES ETHEREUM ETF SCHEDULES OF INVESTMENT June 30, 2026 (Unaudited) Quantity of ether Cost Fair Value % of Net Assets Investment in ether * 8,185.4684 $ 19,528,111 $ 12,916,751 100.00 % Total investments 8,185.4684 $ 19,528,111 $ 12,916,751 100.00 % Liabilities in excess of other assets – ( 0.00 )% Net assets $ 12,916,751 100.00 % December 31, 2025 Quantity of ether Cost Fair Value % of Net Assets Investment in ether ** 10,534.5809 $ 38,559,102 $ 31,298,450 100.00 % Total investments 10,534.5809 $ 38,559,102 $ 31,298,450 100.00 % Liabilities in excess of other assets – (0.00 )% Net assets $ 31,298,450 100.00 % * 86.42% of ether held was staked as of June 30, 2026 – See Note 2. ** 23.73% of ether held was staked as of December 31, 2025 – See Note 2. The accompanying notes are an integral part of the financial statements. 2 21SHARES ETHEREUM ETF STATEMENTS OF OPERATIONS Three Months Ended June 30, 2026 Three Months Ended June 30, 2025 Six Months Ended June 30, 2026 Six Months Ended June 30, 2025 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Investment income Staking Rewards $ 27,730 $ – $ 90,018 $ – Total income 27,730 – 90,018 – Expenses Sponsor Fee 9,657 9,583 21,782 17,659 Staking Fee 6,933 – 22,488 – Total expenses 16,590 9,583 44,270 17,659 Less waiver and reimbursement ( 9,657 ) – ( 21,782 ) ( 2,169 ) Net expenses 6,933 9,583 22,488 15,490 Net investment income (loss) 20,797 ( 9,583 ) 67,530 ( 15,490 ) Realized and change in unrealized gain (loss) Net realized loss on investment in ether sold for income distribution ( 8,844 ) – ( 21,254 ) – Net realized loss on investment in ether sold for redemptions ( 3,646,146 ) – ( 12,768,869 ) ( 3,476,102 ) Net realized loss on investment in ether sold to pay Sponsor Fee – ( 1,843 ) – ( 320 ) Net change in unrealized appreciation (depreciation) on investment in ether ( 445,355 ) 6,469,118 649,292 88,594 Net realized and change in unrealized gain (loss) ( 4,100,345 ) 6,467,275 ( 12,140,831 ) ( 3,387,828 ) Net increase (decrease) in net assets resulting from operations $ ( 4,079,548 ) $ 6,457,692 $ ( 12,073,301 ) $ ( 3,403,318 ) The accompanying notes are an integral part of the financial statements. 3 21SHARES ETHEREUM ETF STATEMENTS OF CHANGES IN NET ASSETS Three Months Ended June 30, 2026 Three Months Ended June 30, 2025 Six Months Ended June 30, 2026 Six Months Ended June 30, 2025 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Net assets, beginning of period $ 18,191,793 $ 8,403,421 $ 31,298,450 $ 16,869,879 Contributions for Shares issued 22,602,970 8,141,441 42,174,350 15,212,030 Distributions for Shares redeemed ( 23,782,940 ) – ( 48,425,619 ) ( 5,676,037 ) Income distribution ( 15,524 ) – ( 57,129 ) – Net investment income (loss) 20,797 ( 9,583 ) 67,530 ( 15,490 ) Net realized loss on investment in ether sold for income distribution ( 8,844 ) – ( 21,254 ) – Net realized loss on investment in ether sold for redemptions ( 3,646,146 ) – ( 12,768,869 ) ( 3,476,102 ) Net realized loss on investment in ether sold to pay Sponsor Fee – ( 1,843 ) – ( 320 ) Net change in unrealized appreciation (depreciation) on investment in ether ( 445,355 ) 6,469,118 649,292 88,594 Net assets, end of period $ 12,916,751 $ 23,002,554 $ 12,916,751 $ 23,002,554 Shares issued and redeemed Shares issued 2,070,000 910,000 3,760,000 1,430,000 Shares redeemed ( 2,170,000 ) – ( 4,230,000 ) ( 610,000 ) Net increase (decrease) in Shares issued ( 100,000 ) 910,000 ( 470,000 ) 820,000 The accompanying notes are an integral part of the financial statements. 4 21Shares Ethereum ETF Notes to Financial Statements (Unaudited) 1. Organization The 21Shares 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 a Third Amended and Restated Trust Agreement (the “Trust Agreement”). CSC Delaware Trust Company, a Delaware trust company, is the trustee of the Trust (the “Trustee”). On August 27, 2025, the Trust’s sponsor, 21Shares US LLC (the “Sponsor”), caused a Certificate of Amendment to the Trust’s Certificate of Trust to be filed with the Secretary of State of the State of Delaware in order to change the name of the Trust from “21Shares Core Ethereum ETF” to “21Shares Ethereum ETF”. The Trust is managed and controlled by 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 21co Holdings Limited. The ultimate parent company of 21co Holdings Limited is FalconX Holdings Limited (“FalconX”). Coinbase Custody Trust Company, LLC (“Coinbase”), BitGo Bank & Trust, N.A. (“BitGo”), BitGo New York Trust Company, LLC (“BitGo New York”), and Anchorage Digital Bank N.A. (“Anchorage”, and, together with Coinbase, BitGo New York and BitGo, as the context may require, the “Ether Custodians”, “Custodians” and each an “Ether 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 shares 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 are listed for trading on the Exchange under the ticker symbol “TETH”. 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 “Pricing Benchmark”), adjusted for the Trust’s expenses and other liabilities, and to reflect rewards from staking a portion of the Trust’s ether, to the extent the Sponsor in its sole discretion determines that the Trust may do so without undue legal or regulatory risk, such as, without limitation, the risk of jeopardizing the Trust’s ability to qualify as a grantor trust for U.S. Federal income tax purposes. CF Benchmarks Ltd. is the administrator for the Pricing Benchmark (the “Pricing Benchmark Provider”). The Pricing Benchmark 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 the Administrator values the Shares daily based on the Pricing Benchmark. On June 30, 2026, the Sponsor provided notice to the Pricing Benchmark Provider of the termination, effective August 31, 2026, of the licensing agreement between the Sponsor and the Pricing Benchmark Provider relating to the use of the Pricing Benchmark. The Sponsor intends to enter into a licensing agreement with FTSE International Limited (“FTSE”) on or about August 24, 2026, whereby FTSE will provide each of the Sponsor, the Trust, and their affiliates a non-exclusive, non-transferable, non-sub-licensable, worldwide license to access, view and use FTSE index data to develop, create, calculate, settle, maintain or support and market the Trust. Accordingly, the change in pricing benchmark provider is not expected to have a material impact on the Trust's net asset value, the fair value measurement of the Trust's ether, or the Trust's results of operations, and does not represent a change in accounting principle. The change will be applied prospectively from the date the successor benchmark becomes effective. The Trust is an “emerging growth company” as that term is used in 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 two 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 Initial Seed Shares was made on May 1, 2024. On June 18, 2024, the Sponsor, in its capacity as Seed Capital Investor, purchased the initial 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 a designated third party, who may be an Authorized Participant or an affiliate of an Authorized Participant and with whom the Sponsor has entered into an agreement on behalf of the Trust (each such third party, 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 one or more of the Custodians. The statements of assets and liabilities and schedules of investment on June 30, 2026, and the statements of operations, and changes in net assets for the three and six months ended June 30, 2026 and 2025, 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 three and six months ended June 30, 2026 and 2025, and for all interim periods presented have been included. 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 31 st . 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 “1940 Act”). The Trust uses fair value as its method of accounting for ether in accordance with its classification as an investment company for accounting purposes. As an investment company for accounting purposes, the Trust is exempt from the requirement to present a statement of cash flows pursuant to ASC Topic 230, Statement of Cash Flows. Accordingly, a statement of cash flows has not been presented. Accounting Estimates 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 Sponsor’s determination of the Trust’s 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. The following table presents information about the Trust’s assets measured at fair value as of June 30, 2026 (Unaudited) and December 31, 2025: Amount at Fair Value Measurement Using Fair Value Level 1 Level 2 Level 3 June 30, 2026 (Unaudited) Assets Investment in ether $ 12,916,751 $ 12,916,751 $ – $ – Amount at Fair Value Measurement Using Fair Value Level 1 Level 2 Level 3 December 31, 2025 Assets Investment in ether $ 31,298,450 $ 31,298,450 $ – $ – 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 investment 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 Fee in ether. 7 The Trust earns staking rewards (“Staking Rewards”) by delegating a portion of its ether on the Ethereum blockchain’s proof-of-stake consensus protocol. The Sponsor has entered into contractual arrangements with Coinbase Crypto Services, LLC (“Coinbase Crypto”), Figment Inc. (“Figment”) and Twinstake Ltd (“Twinstake” and collectively with Coinbase Crypto and Figment, the “Staking Services Providers”) to facilitate the staking of the Trust’s ether. Each Staking Services Provider that generates staking rewards is entitled to compensation determined as a portion of the staking rewards, which is generally determined by a fixed percentage of the overall rewards amount (the “Staking Provider Consideration”). Staking rewards represent variable consideration based on a variety of factors such as the amount of the ether holdings the Trust has made available to the network, the staking yield, and other factors, for its contribution to the network. The Trust retains control of its ether throughout the staking process. The delegation of ether for staking purposes does not constitute a sale, transfer, or other derecognition event, as control of the ether is not transferred to the validator or Staking Services Provider. Staking rewards are recorded as staking income recognized at fair value when earned. Of the Staking Fee (as defined below), the Sponsor pays the Staking Provider Consideration. The Trust receives and retains the remainder of the Staking Rewards. As such, the Trust presents staking rewards on a gross basis. Staking Rewards are received in general daily at its Custodians’ account, as earned. The unbonding period for staked ether can vary subject to the discretion of the Sponsor’s request to unstake such assets. The Trust’s staked ether is unable to be moved on the blockchain or traded during this period. The Trust recognizes staking rewards as revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Under the staking arrangements, the validator (e.g., the Ether Custodian or other staking provider) is considered the customer, as it receives access to the Trust’s staking capacity (i.e., the delegation of ether), which represents the Trust’s performance obligation. In exchange, the Trust is entitled to staking rewards generated by the Ethereum protocol. Staking rewards represent variable consideration, as the amount of rewards is not known until the applicable validation activities are completed, and the Trust receives rewards in its custodial account. The contract term is the length of each staking epoch. Staking rewards are recognized as revenue when the Trust satisfies its performance obligations. Staking rewards are received in ether, which represents non-cash consideration. Non-cash consideration is measured at fair value at the date of inception of each contract in accordance with ASC 606. Temporary lock-up periods or transfer restrictions from staking could limit the Trust’s ability to meet redemptions. For the three months ended June 30, 2026, the Trust staked an average of 31.64 % of its ether holdings on a daily basis. For the six months ended June 30, 2026, the Trust staked an average of 27.32 % of its ether holdings on a daily basis. As of June 30, 2026 and December 31, 2025, the Trust had staked 86.42 % and 23.73 %, respectively, of its ether holdings. The staked percentage as of any particular date, including at the end of a reporting period, may differ from the quarterly average. The Sponsor Fee payable is settled in ether. The liability is remeasured at each reporting date by reference to the fair value of the ether required to settle it, with the effect of remeasurement recognized in net change in unrealized appreciation (depreciation) on the Sponsor Fee payable. On settlement, the difference between the carrying amount of the liability and the cost basis of the ether delivered is recognized in net realized gain (loss) on in-kind liabilities paid. Distributions to Shareholders The Trust pays cash distributions to Shareholders at least quarterly. Distributions are funded from staking rewards earned on the Trust’s ether holdings. Staking Rewards are recognized as income by the Trust on a daily basis as they accrue and are reflected in the Trust’s NAV prior to distribution. Distributions to Shareholders are recorded on the ex-dividend date, which also serves as the record date. Shareholders of record as of the ex-dividend date are entitled to receive distributions paid on the applicable payment date. The amount of each distribution is based on the staking rewards actually earned by the Trust during the relevant period, net of the Staking Fee (as defined below). Distributions are reflected as a reduction of net assets as of the ex-dividend date. The tax character of distributions is determined annually in accordance with U.S. federal income tax principles, which may differ from the treatment of such amounts for GAAP purposes. Any differences between the tax and book distributable amounts are reclassified within the components of net assets at year-end. 8 During the six months ended June 30, 2026, the Trust made cash distributions to shareholders derived from a portion of the ether received as Staking Rewards from the Trust’s staking activities, including $ 22,935 , or $ 0.010378 per Share, on January 8, 2026, $ 18,670 , or $ 0.012530 per Share, on March 30, 2026, and $ 15,524 , or $ 0.009466 per Share, on June 29, 2026, for aggregate distributions of $ 57,129 , or $ 0.032374 per Share. The distributions reduced the Trust’s ether holdings through the sale of ether to generate cash. 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. ET, 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 based on the Pricing Benchmark price. The Administrator 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. As a grantor trust, the Trust can undertake only certain types of activities. For example, generally, the Trust cannot vary its investment portfolio to take advantage of market fluctuations. The Trust may receive income from investment activities that do not require such decision-making. If staking is treated for U.S. federal income tax purposes as a passive ministerial and administrative activity, it should be permissible for the Trust. To that end, on November 10, 2025, the Treasury Department and IRS issued a revenue procedure that provided a safe harbor for trusts that otherwise qualify as investment trusts and as grantor trusts to stake their digital assets without jeopardizing their tax status as investment trusts and grantor trusts for U.S. federal income tax purposes. The revenue procedure provides specific requirements that must be satisfied by a Trust in order to be eligible to rely on the safe harbor. The Trust intends to operate so that it will qualify to be treated for U.S. federal income tax purposes as a grantor trust. Because the treatment of staking in a grantor trust, including interpretation of the requirements under the safe harbor, is still developing, there remains a risk of adverse regulatory or legal determinations that could affect the tax treatment of the Trust as a grantor trust or affect the Trust’s operations. Each beneficial owner of Shares will be treated as directly owning its pro rata Share of the Trust’s assets and will be treated as if it directly received a pro rata portion of the Trust’s income, gain, losses and deductions. If the Trust sells ether (for example, to pay fees or expenses), such a sale is a taxable event to shareholders of the Trust (“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 recognizes gain or loss on such sale. The Sponsor has reviewed the tax positions as of June 30, 2026 and December 31, 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 Chief Executive Officer of 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 expenses, the Sponsor Fee and the Staking Fee, are included in the accompanying Statements of Operations. 9 3. Fair Value of Ether The following represents the changes in quantity of ether and the fair value during the six months ended on June 30, 2026 (Unaudited) and 2025 (Unaudited): Quantity of ether Fair Value Beginning balance as of January 1, 2026 10,534.5809 $ 31,298,450 Ether purchased for cash contributions 18,775.6394 42,174,350 Ether rewards received 36.1048 90,018 Ether sold for income distribution ( 26.5604 ) ( 57,129 ) Ether sold for cash redemptions ( 21,125.2745 ) ( 48,425,619 ) Ether sold to pay expenses ( 9.0218 ) ( 22,488 ) Net realized loss on investment in ether sold to pay Sponsor Fee – – Net realized loss on investment in ether sold for income distribution – ( 21,254 ) Net realized loss on investment in ether sold for redemptions – ( 12,768,869 ) Net change in unrealized appreciation on investment in ether – 649,292 Ending balance as of June 30, 2026 8,185.4684 $ 12,916,751 Quantity of ether Fair Value Beginning balance as of January 1, 2025 5,050.0000 $ 16,869,879 Ether purchased for cash contributions 7,147.4484 15,212,271 Ether rewards received – – Ether sold for income distribution – – Ether sold for cash redemptions ( 3,049.1610 ) ( 5,676,038 ) Ether sold to pay expenses ( 6.0000 ) ( 14,095 ) Net realized loss on investment in ether sold to pay Sponsor Fee – ( 320 ) Net realized loss on investment in ether sold for income distribution – – Net realized loss on investment in ether sold for redemptions – ( 3,476,102 ) Net change in unrealized appreciation on investment in ether – 88,594 Ending balance as of June 30, 2025 9,142.2874 $ 23,004,189 10 The following represents the changes in quantity of ether and the fair value during the three months ended on June 30, 2026 (Unaudited) and 2025 (Unaudited): Quantity of ether Fair Value Beginning balance as of April 1, 2026 8,685.3821 $ 18,191,793 Ether purchased for cash contributions 10,335.0903 22,602,970 Ether rewards received 13.3463 27,730 Ether sold for income distribution ( 9.8482 ) ( 15,524 ) Ether sold for cash redemptions ( 10,835.1655 ) ( 23,782,940 ) Ether sold to pay expenses ( 3.3366 ) ( 6,933 ) Net realized loss on investment in ether sold to pay Sponsor Fee – – Net realized loss on investment in ether sold for income distribution – ( 8,844 ) Net realized loss on investment in ether sold for redemptions – ( 3,646,146 ) Net change in unrealized depreciation on investment in ether – ( 445,355 ) Ending balance as of June 30, 2026 8,185.4684 $ 12,916,751 Quantity of ether Fair Value Beginning balance as of April 1, 2025 4,600.5880 $ 8,407,804 Ether purchased for cash contributions 4,547.6994 8,143,205 Ether rewards received - - Ether sold for income distribution - - Ether sold for cash redemptions - - Ether sold to pay expenses ( 6.0000 ) ( 14,095 ) Net realized loss on investment in ether sold to pay Sponsor Fee - ( 1,843 ) Net realized loss on investment in ether sold for income distribution - - Net realized loss on investment in ether sold for redemptions - - Net change in unrealized appreciation on investment in ether – 6,469,118 Ending balance as of June 30, 2025 9,142.2874 $ 23,004,189 4. Trust Expenses The Trust pays the unitary Sponsor fee of 0.21 % of the Trust’s ether holdings (the “Sponsor Fee”). 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. On October 8, 2025, the Sponsor agreed to voluntarily waive the Sponsor Fee for a period of one year beginning on October 9, 2025 and ending on October 8, 2026. 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 an 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 Pricing Benchmark. The Sponsor has agreed to pay all operating expenses (except for litigation expenses and other extraordinary expenses) out of the Sponsor Fee. The Trust incurred Sponsor Fee for the three months ended June 30, 2026 and 2025, of $ 0 and $ 9,583 net of Sponsor Fee waived of $ 9,657 and $ 0 , respectively. The Trust incurred Sponsor Fee for the six months ended June 30, 2026 and 2025, of $ 0 and $ 15,490 net of Sponsor Fee waived of $ 21,782 and $ 2,169 , respectively. 11 As partial consideration for receipt of the Sponsor Fee, the Sponsor shall assume and pay all fees and other expenses incurred by the Trust in the ordinary course of its affairs, excluding taxes, but including (i) the fee payable to marketing agent for services provided to the Trust (the “Marketing Fee”), (ii) fees to the Administrator, if any, (iii) fees to the 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 the Securities Exchange Act of 1934, as amended (the “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 will be deemed to be an Additional Trust Expense and not a Sponsor-paid Expense. There is currently no predetermined cap on the aggregate amount of Sponsor-paid expenses. Should the Trust implement a predetermined cap on aggregate Sponsor-paid expenses, the Trust will notify the owners of the beneficial interests of Shares in a prospectus supplement or in its periodic Exchange Act reports, as applicable. 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 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, if among other reasons, the Sponsor determines that a Sponsor-paid Expense is an extraordinary, non-recurring expense of the Trust. The Trust shall not be responsible for paying any fees or expenses associated with the transfer of ether as needed to pay the Sponsor Fee or Additional Trust Expenses. In consideration for the Sponsor’s facilitation of staking, the Trust pays 25 % of the staking rewards generated by the Trust’s Staking Activities to the Sponsor (“Staking Fee”) and retains the remainder. The Staking Fee is accrued in ether and converted to U.S. Dollars by reference to the Pricing Benchmark and is payable in ether weekly in arrears. The Trust incurred Staking Fees for the three months and the six months ended June 30, 2026, of $ 6,933 and $ 22,488 , respectively. The accrued liability as of June 30, 2026 and December 31, 2025, was $ 0 and $ 0 respectively. 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 on a continuous basis but only in blocks consisting of 10,000 Shares (“Creation Baskets”) (other than in the case of the Initial Seed Shares) or multiples thereof at the NAV on 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. Authorized Participants may purchase Shares in cash by depositing cash in the Trust’s account with the Cash Custodian. This will cause the Sponsor, on behalf of the Trust, to automatically instruct an Ether Counterparty to (i) purchase the amount of ether equivalent in value to the cash deposit amount associated with the order and (ii) deposit the resulting ether amount in the Trust’s accounts with the Ether Custodians, resulting in the Transfer Agent crediting the applicable amount of Shares to the Authorized Participant. Authorized Participants may also purchase Shares in-kind. To purchase Shares in-kind, an Authorized Participant delivers, or arranges for the delivery by such Authorized Participant’s designee of, ether to the Trust’s accounts with an Ether Custodian in exchange for Shares. 12 When such an Authorized Participant redeems its Shares in cash, the Sponsor, on behalf of the Trust will direct an Ether Custodian to transfer ether to an Ether Counterparty, who will sell the ether to be executed, in the Sponsor’s reasonable efforts, at the Pricing Benchmark price used to calculate the Trust’s NAV, taking into account any spread, commissions, or other trading costs and deposit the cash proceeds of such sale in the Trust’s account with the Cash Custodian for settlement with the Authorized Participant. Any slippage incurred (including, but not limited to, any trading fees, spreads, or commissions), on a cash equivalent basis, will be the responsibility of the Authorized Participant and not of the Trust or Sponsor. Authorized Participants may also redeem Shares in-kind. When such an Authorized Participant redeems Shares in-kind, the Trust, through an Ether Custodian, will deliver ether to the Authorized Participant or its designee in exchange for Shares. Three Months Ended June 30, 2026 Three Months Ended June 30, 2025 Six Months Ended June 30, 2026 Six Months Ended June 30, 2025 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Activity in Capital Shares: Shares issued 2,070,000 910,000 3,760,000 1,430,000 Shares redeemed ( 2,170,000 ) – ( 4,230,000 ) ( 610,000 ) Net Change in Capital Shares ( 100,000 ) 910,000 ( 470,000 ) 820,000 Three Months Ended June 30, 2026 Three Months Ended June 30, 2025 Six Months Ended June 30, 2026 Six Months Ended June 30, 2025 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Activity in Capital Transactions: Contributions for Shares issued $ 22,602,970 $ 8,141,441 $ 42,174,350 $ 15,212,030 Distributions for Shares redeemed ( 23,782,940 ) – ( 48,425,619 ) ( 5,676,037 ) Net Change in Capital Transactions $ ( 1,179,970 ) $ 8,141,441 $ ( 6,251,269 ) $ 9,535,993 13 Ether purchased payable represents the quantity of ether purchased for the creation of Shares or Staking Rewards where the ether has not yet settled. Generally, ether is transferred within two Business Days of the trade date. June 30, 2026 December 31, 2025 (Unaudited) Ether purchased payable $ - $ - Ether sold receivable represents the quantity of ether sold for the redemption of Shares or Staking Rewards where the ether has not yet been settled. Generally, ether is transferred within two Business Days of the trade date. June 30, 2026 December 31, 2025 (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, 2026 and December 31, 2025, the Sponsor owned zero 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. For the three and six months ended June 30, 2026, the Trust engaged in no digital asset trading activity with FalconX Bravo, Inc. (“FalconX Bravo”), a registered swap dealer and a subsidiary of FalconX, which became an affiliated entity in November 2025. 14 7. Financial Highlights Per Share Performance (for a Share outstanding throughout the periods presented) Three Months Ended June 30, 2026 Three Months Ended June 30, 2025 Six Months Ended June 30, 2026 Six Months Ended June 30, 2025 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Net asset value per Share, beginning of period $ 10.46 $ 9.13 $ 14.83 $ 16.70 Net investment income (loss) (1) 0.01 ( 0.01 ) 0.04 ( 0.01 ) Net realized and change in unrealized gain (loss) (2) ( 2.58 ) 3.45 ( 6.96 ) ( 4.12 ) Net change in net assets from operations ( 2.57 ) 3.44 ( 6.92 ) ( 4.13 ) Less distributions from: Net investment income ( 0.01 ) – ( 0.03 ) – Total distributions ( 0.01 ) – ( 0.03 ) – Net asset value per Share, end of period $ 7.88 $ 12.57 $ 7.88 $ 12.57 Total return, at net asset value (3) ( 24.58 )% 37.68 % ( 46.70 )% ( 24.73 )% Ratio to average net assets (4) Net investment income (loss) 0.45 % ( 0.21 )% 0.65 % ( 0.18 )% Gross expenses 0.36 % 0.21 % 0.43 % 0.21 % Net expenses 0.15 % 0.21 % 0.22 % 0.18 % (1) Calculated using average Shares outstanding method. (2) The amount shown for a Share outstanding throughout the period may not agree with the change in the aggregate gains and losses for such period because of the timing of sales and repurchases of the Trust’s Shares in relation to fluctuating market value for the Trust. (3) Total return is calculated based on the change in the 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. 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. 15 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 The Trust has evaluated all subsequent events and transactions for potential recognition or disclosure through the issuance of the financial statements and has noted no events requiring adjustment or additional disclosure in the financial statements. 16 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations This information should be read in conjunction with the financial statements and notes included in Item 1 of Part I of this Form 10-Q. This Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, and such forward-looking statements involve risks and uncertainties. All statements (other than statements of historical fact) included in this Form 10-Q that address activities, events or developments that may occur in the future, the Trust’s operations, the Sponsor’s plans and references to the Trust’s future success and other similar matters are forward-looking statements. Words such as “could,” “would,” “may,” “expect,” “intend,” “estimate,” “predict,” and variations on such words or negatives thereof, and similar expressions that reflect our current views with respect to future events and Trust performance, are intended to identify such forward-looking statements. These forward-looking statements are only predictions, subject to risks and uncertainties that are difficult to predict and many of which are outside of our control, and actual results could differ materially from those discussed. Forward-looking statements involve risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed therein. We express our estimates, expectations, beliefs, and projections in good faith and believe them to have a reasonable basis. However, we make no assurances that management’s estimates, expectations, beliefs, or projections will be achieved or accomplished. These forward-looking statements are based on assumptions about many important factors that could cause actual results to differ materially from those in the forward-looking statements. We do not intend to update any forward-looking statements even if new information becomes available or other events occur in the future, except as required by the federal securities laws. Organization and Trust Overview The Trust is a Delaware statutory trust, formed on September 5, 2023, pursuant to the DSTA. The Trust operates pursuant to the Trust Agreement. The Trust is not registered as an investment company under the 1940 Act, and is not a commodity pool for purposes of the Commodity Exchange Act. The Trust is managed and controlled by 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 21co Holdings Limited. The ultimate parent company of 21co Holdings Limited is FalconX. The Sponsor is not subject to regulation by the Commodity Futures Trading Commission as a commodity pool operator with respect to the Trust, or a commodity trading advisor with respect to the Trust. The Trust is an exchange-traded fund that issues common shares of beneficial interest representing fractional undivided beneficial interests in its net assets that trade on the Exchange. The Shares are listed for trading on the Exchange under the ticker symbol “TETH”. The Trust’s investment objective is to seek to track the performance of ether, as measured by the performance of the Pricing Benchmark, adjusted for the Trust’s expenses and other liabilities, and to reflect rewards from staking a portion of the Trust’s ether, to the extent the Sponsor in its sole discretion determines that the Trust may do so without undue legal or regulatory risk, such as, without limitation, the risk of jeopardizing the Trust’s ability to qualify as a grantor trust for U.S. Federal income tax purposes. CF Benchmarks Ltd. is the Pricing Benchmark Provider. The Pricing Benchmark 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 the Administrator values the Shares daily based on the Pricing Benchmark. The Trust is a passive investment vehicle and is not a leveraged product. The Sponsor does not actively manage the ether held by the Trust. On June 30, 2026, the Sponsor provided notice to the Pricing Benchmark Provider of the termination, effective August 31, 2026, of the licensing agreement between the Sponsor and the Pricing Benchmark Provider relating to the use of the Pricing Benchmark. The Sponsor intends to enter into a licensing agreement with FTSE on or about August 24, 2026, whereby FTSE will provide each of the Sponsor, the Trust, and their affiliates a non-exclusive, non-transferable, non-sub-licensable, worldwide license to access, view and use FTSE index data to develop, create, calculate, settle, maintain or support and market the Trust. Accordingly, the change in pricing benchmark provider is not expected to have a material impact on the Trust's net asset value, the fair value measurement of the Trust's ether, or the Trust's results of operations, and does not represent a change in accounting principle. The change will be applied prospectively from the date the successor benchmark becomes effective. The Trust issues Shares only in Creation Baskets of 10,000 or multiples thereof. Creation Baskets are issued and redeemed in exchange for cash or in-kind for ether. Individual Shares will not be redeemed by the Trust but are listed and traded on the Exchange under the ticker symbol “TETH”. The Trust issues Shares in Creation Baskets on a continuous basis at the applicable NAV per Share on the creation order date. 17 The Trust pays the unitary Sponsor fee of 0.21% of the Trust’s ether holdings (the “Sponsor Fee”). 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. On October 8, 2025, the Sponsor agreed to voluntarily waive the Sponsor Fee for a period of one year beginning on October 9, 2025 and ending on October 8, 2026. Except for during periods during which the Sponsor Fee is 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 an 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 Pricing Benchmark. In consideration for the Sponsor’s facilitation of staking, the Trust also pays 25% of the staking rewards generated by the Trust’s Staking Activities to the Sponsor (“Staking Fee”) and retains the remainder. The Staking Fee is accrued in ether and is payable in ether weekly in arrears. The Trust is an “emerging growth company” as that term is used in the Securities Act, and, as such, the Trust may elect to comply with certain reduced public company reporting requirements. Calculation of NAV and NAV per Share The NAV of the Trust is used by the Trust in its day-to-day operations to measure the net value of the Trust’s assets. The NAV is calculated on each day other than a day when the Exchange is closed for regular trading (a “Business Day”) and is equal to the aggregate value of the Trust’s assets less its liabilities based on the Pricing Benchmark price. In determining the NAV of the Trust on any Business Day, the Administrator calculates the price of the ether held by the Trust as of 4:00 p.m. ET on such day. The Administrator also calculates the “NAV per Share” of the Trust, which equals the NAV of the Trust divided by the number of outstanding Shares. In addition to calculating NAV and NAV per Share, for purposes of the Trust’s financial statements, the Trust determines the net asset value of the Trust determined on a GAAP basis (the “Principal Market NAV”) and net asset value of the Trust per Share determined on a GAAP basis (the “Principal Market NAV per Share”) on each valuation date for such financial statements. The determination of the Principal Market NAV and Principal Market NAV per Share is identical to the calculation of NAV and NAV per Share, respectively, except that the value of ether is determined using the fair value of ether based on the price in the ether market that the Trust considers its “principal market” as of 4:00 p.m. ET on the valuation date, rather than using the Pricing Benchmark. NAV and NAV per Share are not measures calculated in accordance with GAAP and are not intended as substitutes for Principal Market NAV and Principal Market NAV per Share, respectively. Staking The Trust’s staking model aims to maximize the portion of the Trust’s ether available for staking while controlling for liquidity and redemption risks. The model determines an optimal utilization rate by balancing expected yield against potential costs (including borrowing costs during redemptions, assuming we have access to suitable credit). The Staking Services Providers exercise no discretion as to the amount of the Trust’s ether to be staked or the timing of the Trust’s staking activities. While the Trust may stake a maximum of 100% of its ether holdings, the amount of ether that remains unstaked is determined based on the Trust’s utilization rate analysis, and accordingly may vary from time to time. Based on utilization rate analysis applied to historical data, the Trust generally intends to stake between 40% and 70% of the ether it holds, although the amount of ether that is staked may be lesser or greater from time to time. The precise percentage to be staked is based on the estimated liquidity needs of the Trust and other factors, as determined by the Sponsor. 18 The rewards owed or paid to the Staking Services Provider reduces the amount of staking rewards that are generated from the Trust’s staking activities that are available in the assets of the Trust. Each Staking Services Provider that generates staking rewards is entitled to compensation determined as a portion of the Staking Rewards, which is generally determined by a low single-digit percentage of the overall rewards amount (the “Staking Provider Consideration”). The portion of the consideration paid to the Sponsor for arranging for the staking of the Trust’s ether (the “Staking Fee”) is comprised of an aggregate of 25% of the Staking Rewards. Of the Staking Fee, the Sponsor pays the Staking Provider Consideration. The Trust receives and retains the remainder of the Staking Rewards. The Trust intends to pay cash distributions at least quarterly to Shareholders to distribute staking rewards earned by the Trust. The amount of any distribution, if any, will depend on the staking rewards actually earned by the Trust during each quarter and cannot be predicted with certainty. The amount of staking rewards earned will vary based on factors including, but not limited to, the amount of ether held by the Trust, the percentage of the Trust’s ether that is staked, network staking participation rates, protocol reward rates on the Ethereum network, and network conditions. Accordingly, there can be no assurance as to the amount of distributions that will be paid in any quarter, and it is possible that no distributions will be paid in a given quarter if insufficient staking rewards are earned. Critical Accounting Estimates The financial statements and accompanying notes are prepared in accordance with GAAP. The preparation of these financial statements relies on estimates and assumptions that impact the Trust’s financial position and results of operations. These estimates and assumptions affect the Trust’s application of accounting policies. Below is a summary of accounting policies on cash and investment valuation. There were no material estimates involving a significant level of estimation uncertainty that had or are reasonably likely to have had a material impact on the Trust’s financial condition used in the preparation of the financial statements. In addition, please refer to Note 2 to the Financial Statements included in this report for further discussion of the Trust’s accounting policies. 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 The Trust’s policy is to value investments held at fair value. The Trust follows the provisions of ASC 820, Fair Value Measurements (“ASC 820”). ASC 820 provides guidance for determining fair value and requires increased disclosure regarding the inputs to valuation techniques used to measure fair value. ASC 820 determines fair value to be the price that would be received for ether in a current sale, which assumes an exit price resulting from an orderly transaction between market participants on the measurement date. ASC 820-10 requires the assumption that ether is sold in its principal market to market participants (or in the absence of a principal market, the most advantageous market). The Trust utilizes an exchange traded price from the Trust’s principal market for ether as of 4:00 p.m. ET on the Trust’s financial statement measurement date. 19 Results of Operations For the Three Months Ended June 30, 2026 The Trust’s NAV decreased from $18,191,793 on March 31, 2026 to $12,916,751 on June 30, 2026, a 29.00% decrease. The decrease resulted primarily from a 24.66% decrease in the price of ether, which fell from $2,094.53 on March 31, 2026 to $1,578.01 on June 30, 2026. The decrease was further amplified by a net decrease in outstanding Shares, which fell from 1,740,000 on March 31, 2026 to 1,640,000 on June 30, 2026, as a result of 2,070,000 Shares (207 Creation Baskets) being created and 2,170,000 Shares (217 Creation Baskets) being redeemed during the quarter. The Trust had 86.42% of its ether holdings staked as of June 30, 2026, with an average of 31.64% staked on a daily basis during the quarter. Net decrease in net assets resulting from operations for the three months ended June 30, 2026 was $(4,079,548), resulting from a net change in unrealized depreciation on investment in ether of $(445,355), a net realized loss of $(3,646,146) from ether sold for redemptions, and a net realized loss of $(8,844) from ether sold for income distributions, partially offset by net investment income of $20,797. Net investment income comprised Staking Rewards of $27,730, less the Staking Fee of $6,933. The Sponsor Fee of $9,657 was fully waived during the three month period pursuant to the Sponsor’s one-year fee waiver effective October 9, 2025. In addition to net assets resulting from operations, the Trust paid a total staking income distributions of $15,524 ($0.009466 per Share on June 29, 2026) to Shareholders during the quarter. Except for the Staking Fee, the Trust had no other net expenses during the three months ended June 30, 2026. For the Three Months Ended June 30, 2025 The Trust’s NAV increased from $8,403,421 on March 31, 2025 to $23,002,554 on June 30, 2025. The increase in the Trust’s NAV resulted primarily from an increase in the price of ether of 37.68% (from $1,827.55 per ether on March 31, 2025 to $2,516.24 per ether on June 30, 2025) and a net increase of 910,000 in the number of shares outstanding from March 31, 2025 to June 30, 2025. Net increase in net assets resulting from operations for the three months ended June 30, 2025 was $6,457,692. This was the result of a change in unrealized appreciation on investment in ether of $6,469,118, a net realized loss of $(1,843) on the sale of ether for purposes of distributing to the Sponsor as the Sponsor Fee. The Trust’s expenses for the quarter were $9,583, relating to the Sponsor Fees. For the Six Months Ended June 30, 2026 The Trust’s NAV decreased from $31,298,450 on December 31, 2025 to $12,916,751 on June 30, 2026, a 58.73% decrease. The decrease resulted primarily from a 46.89% decrease in the price of ether, which fell from $2,971.02 on December 31, 2025 to $1,578.01 on June 30, 2026. The decrease was further amplified by a net decrease in outstanding Shares, which fell from 2,110,000 on December 31, 2025 to 1,640,000 on June 30, 2026, as a result of 3,760,000 Shares (376 Creation Baskets) being created and 4,230,000 Shares (423 Creation Baskets) being redeemed during the six month period. The Trust had 86.42% of its ether staked as of June 30, 2026, with an average of 27.32% staked on a daily basis during the six month period. Net decrease in net assets resulting from operations for the six months ended June 30, 2026 was $(12,073,301), resulting from a net realized loss of $(12,768,869) from ether sold for redemptions and a net realized loss of $(21,254) from ether sold for income distributions, partially offset by a net change in unrealized appreciation on investment in ether of $649,292 and net investment income of $67,530. Net investment income comprised Staking Rewards of $90,018, less the Staking Fee of $22,488. The Sponsor Fee of $21,782 was fully waived during the six-month period pursuant to the Sponsor’s one-year fee waiver effective October 9, 2025. In addition to net assets resulting from operations, the Trust paid a total staking income distributions of $57,129 ($0.010378 per Share on January 8, 2026, $0.012530 per Share on March 30, 2026, and $0.009466 per Share on June 29, 2026) to Shareholders during the six month period. Except for the Staking Fee, the Trust had no other net expenses during the six months ended June 30, 2026. For the Six Months Ended June 30, 2025 The Trust’s NAV increased from $16,869,879 on December 31, 2024 to $23,002,554 on June 30, 2025. The increase in the Trust’s NAV resulted primarily from a net increase of 820,000 in the number shares outstanding from December 31, 2024 to June 30, 2025. Net decrease in net assets resulting from operations for the six months ended June 30, 2025 was $3,403,318. This was the result of a change in unrealized appreciation on investment in ether of $88,594, a net realized loss of $(320) on the sale of ethers for purposes of distributing to the Sponsor as the Sponsor Fee, and net realized loss on investment in ether sold for redemptions of $(3,476,102). The Trust expenses for the six month period were $15,490, relating to the Sponsor Fees. 20 Liquidity and Capital Resources The Trust is not aware of any trends, demands, commitments, events, or uncertainties that are reasonably likely to result in material changes to its liquidity needs. The Trust’s only ordinary recurring expenses are the Sponsor Fee and the Staking Fee. 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. On October 8, 2025, the Sponsor agreed to voluntarily waive the Sponsor Fee for a period of one year beginning on October 9, 2025 and ending on October 8, 2026. In exchange for the Sponsor Fee, the Sponsor has agreed to assume the ordinary fees and expenses incurred by the Trust, including but not limited to the following: fees charged by the Administrator, the Custodians, the Transfer Agent and the Trustee, the Marketing Fee, the Exchange’s listing fees, typical maintenance and transaction fees of the Depository Trust Company (“DTC”), SEC registration fees, printing and mailing costs, website fees, tax reporting fees, audit fees, license fees and expenses, up to $100,000 per annum in ordinary legal fees and expenses. The Sponsor bears expenses in connection with the Trust’s organization and initial offering costs. The Sponsor is not required to pay any extraordinary or non-routine expenses. Extraordinary expenses are fees and expenses which are unexpected or unusual in nature, such as legal claims and liabilities and litigation costs or indemnification or other unanticipated expenses. Extraordinary fees and expenses also include material expenses which are not currently anticipated obligations of the Trust. The Trust will be responsible for the payment of such expenses to the extent any such expenses are incurred. Routine operational, administrative, and other ordinary expenses are not deemed extraordinary expenses. The Trust will sell ether on an as-needed basis to pay the Sponsor Fee and Staking Fee. Off-Balance Sheet Arrangements The Trust does not have any off-balance sheet arrangements. Item 3. Quantitative and Qualitative Disclosures about Market Risks The Trust is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information otherwise required under this item. Item 4. 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. Changes in Internal Control over Financial Reporting During the quarter ended June 30, 2026, there have been no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 21 PART II – OTHER INFORMATION: Item 1. Legal Proceedings From time to time, the Trust may be a party to certain legal proceedings in the ordinary course of business. As of June 30, 2026, the Trust was not subject to any material legal proceedings, nor, to our knowledge, are any material legal proceedings threatened against the Trust. Item 1A. Risk Factors There have been no material changes to the Risk Factors last reported under “Part I, Item 1A. Risk Factors” of the Trust’s Annual Report on Form 10-K for the period ended December 31, 2025 and under “Part II, Item 1A. Risk Factors” of the Trust’s Quarterly Report on Form 10-Q for the period ended March 31, 2026. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds a) None. b) Not applicable. c) The Trust does not purchase Shares directly from its Shareholders. In connection with its redemption of Creation Baskets held by Authorized Participants, the Trust redeemed 217 Creation Baskets (comprising 2,170,000 Shares) during the quarter ended June 30, 2026. The following table summarizes the redemptions of Shares by Authorized Participants during the period: Period Total Shares Redeemed Average Price Per Share Maximum number of shares that may yet be purchased April 1, 2026 – April 30, 2026 1,600,000 $ 11.33 N/A May 1, 2026 – May 31, 2026 250,000 $ 11.45 N/A June 1, 2026 – June 30, 2026 320,000 $ 8.73 N/A Market Information The Shares are listed on the Exchange under the symbol “TETH” and have been listed since July 23, 2024. Holders As of June 30, 2026, there was approximately one DTC participating shareholder of record of the Trust. Because most of the Trust’s Shares are held by brokers and other institutions on behalf of shareholders, we are unable to estimate the total number of shareholders represented by these record holders. Item 3. Defaults Upon Senior Securities None. Item 4. Mine Safety Disclosures Not applicable. Item 5. 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) for the quarter ended June 30, 2026 . 22 Item 6. Exhibits. Listed below are the exhibits, which are filed as part of this quarterly report on Form 10-Q (according to the number assigned to them in Item 601 of Regulation S-K): Exhibit Number Description of Document 3.1 (2) Trust Agreement 3.2 (5) Amended and Restated Trust Agreement 3.3 (3) Second Amended and Restated Trust Agreement 3.4 (4) Third Amended and Restated Trust Agreement 3.5 (2) Certificate of Trust 3.6 (2) Certificate of Amendment to Certificate of Trust 3.7 (3) Certificate of Amendment to Certificate of Trust 31.1 (1) Certification by Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 (1) Certification by Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 (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. 32.2 (1) 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. 101.INS XBRL Instance Document. 101.SCH XBRL Taxonomy Extension Schema Document. 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB XBRL Taxonomy Extension Label Linkbase Document. 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) (1) Filed herewith. (2) Incorporated by reference to the Trust’s Amendment No. 3 to Registration Statement on Form S-1, filed on May 31, 2024. (3) Incorporated by reference to the Trust’s Current Report on Form 8-K, filed on August 27, 2025. (4) Incorporated by reference to the Trust’s Current Report on Form 8-K, filed on October 8, 2025. (5) Incorporated by reference to the Trust’s Quarterly Report on Form 10-Q filed on May 15, 2026. 23 SIGNATURES Pursuant to the requirements 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. 21Shares Ethereum ETF By: 21Shares US LLC, its Sponsor By: /s/ Russell Barlow Russell Barlow Chief Executive Officer (Principal Executive Officer) Date: August 13, 2026 By: /s/ Duncan Moir Duncan Moir President (Principal Financial Officer) Date: August 13, 2026 24