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The next dialogue and evaluation of our monetary situation and outcomes of operations needs to be learn along with, and is certified in its entirety by reference to, our unaudited monetary statements and associated notes included elsewhere on this Quarterly Report, which have been ready in accordance with usually accepted accounting ideas inthe USA ("U.S. GAAP"). The following dialogue might comprise forward-looking statements based mostly on assumptions we consider to be cheap. Our precise outcomes may differ materially from these mentioned in these forward-looking statements. Components that would trigger or contribute to those variations embody, however are usually not restricted to, these set forth below Half II, Merchandise 1A. Threat Components on this Quarterly Report and below "Threat Components" and the opposite sections of the Info Assertion.
Belief Overview
The Belief is a passive entity that's managed and administered by the Sponsor and doesn't have any officers, administrators or staff. The Belief holds LTC and, on occasion on a periodic foundation, points Creation Baskets in alternate for deposits of LTC. As a passive funding automobile, the Belief's funding goal is for the worth of the Shares (based mostly on LTC per Share) to mirror the worth of LTC held by the Belief, decided by reference to the index value (the "Index Value") of an LTC inU.S. {dollars} calculated by making use of a weighting algorithm to the worth and buying and selling quantity information for the instantly previous 24-hour interval as of4:00 p.m. New York time derived from the chosen digital asset exchanges which might be mirrored within the Index on such commerce date, much less the Belief's bills and different liabilities. So far, the Belief has not met its funding goal and the Shares quoted on OTCQX haven't mirrored the worth of LTC held by the Belief, much less the Belief's bills and different liabilities, however as an alternative have traded at each premiums and reductions to such worth, with variations which have at instances been substantial. The Belief just isn't managed like a enterprise company or an energetic funding automobile. Previous toFebruary 1, 2022 and for the intervals lined by this report, the Belief valued its LTC for operational functions by reference to the volume-weighted common index value (the "Previous Index Value") of an LTC inU.S. {dollars} calculated by making use of a weighting algorithm to the worth and buying and selling quantity information for the instantly previous 24-hour interval as of4:00 p.m. ,New York time derived from the chosen digital asset exchanges which might be mirrored within the Index on such commerce date. The Previous Index Value was calculated utilizing the identical methodology because the Index Value with an extra averaging mechanism overlaid to the worth produced ensuing within the Previous Index Value reflecting a mean value for the 24-hour interval. EfficientFebruary 1, 2022 , the Belief ceased utilizing the Previous Index Value and started valuing its LTC for operational functions by reference to the Index Value. There was no change to the Index used to find out the Index Value or the standards used to pick the digital asset exchanges included within the Index.
Crucial Accounting Insurance policies and Estimates
Funding Transactions and Income Recognition
The Belief considers funding transactions to be the receipt of LTC for Share creations and the supply of LTC for Share redemptions or for fee of bills in LTC. At the moment, the Belief just isn't accepting redemption requests from shareholders. The Belief data its funding transactions on a commerce date foundation and adjustments in truthful worth are mirrored as web change in unrealized appreciation or depreciation on investments. Realized beneficial properties and losses are calculated utilizing the particular identification technique. Realized beneficial properties and losses are acknowledged in reference to transactions together with settling obligations for the Sponsor's Payment in LTC.
Principal Market and Truthful Worth Willpower
To find out which market is the Belief's principal market (or within the absence of a principal market, probably the most advantageous market) for functions of calculating the Belief's NAV, the Belief followsMonetary Accounting Requirements Board ("FASB") Accounting Requirements Codification ("ASC") 820-10, which outlines the appliance of truthful worth accounting. ASC 820-10 determines truthful worth to be the worth that could be acquired for LTC in a present sale, which assumes an orderly transaction between market contributors on the measurement date. ASC 820-10 requires the Belief to imagine that LTC is bought in its principal market to market contributors or, within the absence of a principal market, probably the most advantageous market. Market contributors are outlined as consumers and sellers within the principal or most advantageous market which might be unbiased, educated, and keen and capable of transact. The Belief solely receives LTC from the Licensed Participant and doesn't itself transact on any Digital Asset Markets. Due to this fact, the Belief appears to the Licensed Participant when assessing entity-specific and market-based quantity and degree of exercise for Digital Asset Markets. The Licensed Participant transacts in a Brokered Market, a Seller Market, Principal-to-Principal Markets and Alternate Markets, every as outlined within the FASB ASC Grasp Glossary. The Licensed Participant, as a associated celebration of the Sponsor, gives data concerning the Digital Asset Markets on which it transacts to the Belief. In figuring out which of the eligible Digital Asset Markets is the Belief's principal market, the Belief critiques these standards within the following order:
•
First, the Belief critiques an inventory of Digital Asset Markets and excludes any Digital Asset Markets which might be non-accessible to the Belief and the Licensed Participant(s). The Belief or the Licensed Participant doesn't have entry to Digital Asset Exchanges that should not have a BitLicense and has entry solely to non-Digital Asset Alternate Markets that the Licensed 15 -------------------------------------------------------------------------------- Participant fairly believes are working in compliance with relevant legislation, together with federal and state licensing necessities, based mostly upon data and assurances supplied to it by every market. • Second, the Belief types the remaining Digital Asset Markets from excessive to low by entity-specific and market-based quantity and exercise of LTC traded on every Digital Asset Market within the trailing twelve months. • Third, the Belief then critiques intra-day pricing fluctuations and the diploma of variances in value on Digital Asset Markets to determine any materials notable variances which will affect the quantity or value data of a selected Digital Asset Market. • Fourth, the Belief then selects a Digital Asset Market as its principal market based mostly on the very best market quantity, exercise and value stability compared to the opposite Digital Asset Markets on the record. Primarily based on data fairly accessible to the Belief, Alternate Markets have the best quantity and degree of exercise for the asset. The Belief subsequently appears to accessible Alternate Markets versus the Brokered Market, Seller Market and Principal-to-Principal Markets to find out its principal market. Because of the aforementioned evaluation, an Alternate Market has been chosen because the Belief's principal market. The Belief determines its principal market (or within the absence of a principal market probably the most advantageous market) yearly and conducts a quarterly evaluation to find out (i) if there have been current adjustments to every Digital Asset Market's buying and selling quantity and degree of exercise within the trailing twelve months, (ii) if any Digital Asset Markets have developed that the Belief has entry to, or (iii) if current adjustments to every Digital Asset Market's value stability have occurred that will materially affect the choice of the principal market and necessitate a change within the Belief's willpower of its principal market. The price foundation of the funding in LTC recorded by the Belief for monetary reporting functions is the truthful worth of LTC on the time of switch. The price foundation recorded by the Belief might differ from proceeds collected by the Licensed Participant from the sale of the corresponding Shares to buyers.
Funding Firm Issues
The Belief is an funding firm for GAAP functions and follows accounting and reporting steering in accordance with the FASB ASC Matter 946, Monetary Companies - Funding Corporations. The Belief makes use of truthful worth as its technique of accounting for LTC in accordance with its classification as an funding firm for accounting functions. The Belief just isn't a registered funding firm below the Funding Firm Act of 1940. GAAP requires administration to make estimates and assumptions that have an effect on the reported quantities within the monetary statements and accompanying notes. Precise outcomes may differ from these estimates and these variations could possibly be materials.
Overview of Monetary Outcomes (unaudited)
Monetary Highlights for the Three and Six Months Ended
2020
(All quantities within the following desk and the next paragraphs, besides Share
and per Share, LTC and value of LTC quantities, are in 1000’s)
Three Months EndedDecember 31 ,
Six Months Ended
2021 2020 2021 2020 Internet realized and unrealized (loss) acquire on funding in Litecoin$ (11,407 ) $ 69,595 $ 4,932$ 67,171 Internet (lower) improve in web property ensuing from operations$ (13,267 ) $ 69,206 $ 1,511$ 66,691 Internet property$ 225,204 $ 143,705 $ 225,204 $ 143,705 Internet realized and unrealized loss on funding in LTC for the three months endedDecember 31, 2021 was ($11,407 ) which features a realized acquire of$937 on the switch of LTC to pay the Sponsor's Payment and web change in unrealized depreciation on funding in LTC of ($12,344 ). Internet realized and unrealized loss on funding in LTC for the interval was pushed by LTC value depreciation from$151.61 per LTC as ofSeptember 30, 2021 to$144.08 per LTC as ofDecember 31, 2021 . Internet lower in web property ensuing from operations was ($13,267 ) for the three months endedDecember 31, 2021 , which consisted of the web realized and unrealized loss on funding in LTC, plus the Sponsor's Payment of$1,860 . Internet property decreased to$225,204 atDecember 31, 2021 , a 6% lower for the three-month interval. The lower in web property resulted from the aforementioned LTC value depreciation and the withdrawal of roughly 9,881 LTC to pay the foregoing Sponsor's Payment. Internet realized and unrealized acquire on funding in LTC for the three months endedDecember 31, 2020 was$69,595 which features a realized acquire of$104 on the switch of LTC to pay the Sponsor's Payment and web change in unrealized appreciation on funding in LTC of$69,491 . Internet realized and unrealized acquire on funding in LTC for the interval was pushed by LTC value appreciation from$45.88 per LTC as ofSeptember 30, 2020 to$124.49 per LTC as ofDecember 31, 2020 . Internet improve in web property ensuing from operations 16 -------------------------------------------------------------------------------- was$69,206 for the three months endedDecember 31, 2020 , which consisted of the web realized and unrealized acquire on funding in LTC, much less the Sponsor's Payment of$389 . Internet property elevated to$143,705 atDecember 31, 2020 , a 437% improve for the three-month interval. The rise in web property resulted from the aforementioned LTC value appreciation and the contribution of roughly 575,594 LTC with a price of$47,717 to the Belief in reference to Share creations throughout the interval, partially offset by the withdrawal of roughly 4,983 LTC to pay the foregoing Sponsor's Payment. Internet realized and unrealized acquire on funding in LTC for the six months endedDecember 31, 2021 was$4,932 which features a realized acquire of$1,576 on the switch of LTC to pay the Sponsor's Payment and web change in unrealized appreciation on funding in LTC of$3,356 . Internet realized and unrealized acquire on funding in LTC for the interval was pushed by LTC value appreciation from$141.61 per LTC as ofJune 30, 2021 to$144.08 per LTC as ofDecember 31, 2021 . Internet improve in web property ensuing from operations was$1,511 for the six months endedDecember 31, 2021 , which consisted of the web realized and unrealized acquire on funding in LTC, much less the Sponsor's Payment of$3,421 . Internet property elevated to$225,204 atDecember 31, 2021 , a 3% improve for the interval. The rise in web property resulted from the aforementioned LTC value appreciation and the contribution of roughly 36,070 LTC with a price of$4,659 to the Belief in reference to Share creations throughout the interval, partially offset by the withdrawal of roughly 19,765 LTC to pay the foregoing Sponsor's Payment. Internet realized and unrealized acquire on funding in LTC for the six months endedDecember 31, 2020 was$67,171 which features a realized acquire of$102 on the switch of LTC to pay the Sponsor's Payment and web change in unrealized appreciation on funding in LTC of$67,069 . Internet realized and unrealized acquire on funding in LTC for the interval was pushed by LTC value appreciation from$41.15 per LTC as ofJune 30, 2020 to$124.49 per LTC as ofDecember 31, 2020 . Internet improve in web property ensuing from operations was$66,691 for the six months endedDecember 31, 2020 , which consisted of the web realized and unrealized acquire on funding in LTC, much less the Sponsor's Payment of$480 . Internet property elevated to$143,705 atDecember 31, 2020 , a 7,168% improve for the interval. The rise in web property resulted from the LTC value appreciation and the contribution of roughly 1,113,036 LTC with a price of$75,037 to the Belief in reference to Share creations throughout the interval, partially offset by the withdrawal of roughly 6,739 LTC to pay the foregoing Sponsor's Payment.
Off-Steadiness Sheet Preparations
The Belief just isn’t a celebration to any off-balance sheet preparations.
Money Sources and Liquidity
The Belief has not had a money steadiness at any time since inception. When promoting LTC, Incidental Rights and/or IR Digital Foreign money within the Digital Asset Market to pay Further Belief Bills, the Sponsor endeavors to promote the precise variety of LTC, Incidental Rights and/or IR Digital Foreign money wanted to pay bills in order to attenuate the Belief's holdings of property apart from LTC. As a consequence, the Sponsor expects that the Belief won't document any money circulate from its operations and that its money steadiness can be zero on the finish of every reporting interval. In alternate for the Sponsor's Payment, the Sponsor has agreed to imagine many of the bills incurred by the Belief. Because of this, the one unusual expense of the Belief throughout the intervals lined by this Quarterly Report was the Sponsor's Payment. The Belief just isn't conscious of any traits, calls for, situations or occasions which might be fairly prone to lead to materials adjustments to its liquidity wants.
Chosen Working Knowledge
Three Months EndedDecember 31 ,
Six Months Ended
2021 2020 2021 2020 LTC: Opening steadiness 1,572,925 583,738 1,546,739 48,052 Creations - 575,594 36,070 1,113,036 Sponsor's Payment, associated celebration (9,881 ) (4,983 ) (19,765 ) (6,739 ) Closing steadiness 1,563,044 1,154,349 1,563,044 1,154,349 Accrued however unpaid Sponsor's Payment, associated celebration - - - - Internet closing steadiness 1,563,044 1,154,349 1,563,044 1,154,349 Variety of Shares: Opening steadiness 17,204,700 6,227,300 16,812,000 509,400 Creations - 6,165,100 392,700 11,883,000 Closing steadiness 17,204,700 12,392,400 17,204,700 12,392,400 17
-------------------------------------------------------------------------------- As of
2021
2020
Value of LTC on principal market (1)$ 144.08 $ 124.49 NAV per Share (2)$ 13.09 $ 11.60 Previous Index Value (3)$ 148.49
(1)
The Belief carried out an evaluation of the principal market atDecember 31, 2021 and 2020, and recognized the principal market as Coinbase Professional. (2) As ofDecember 31, 2021 and 2020 the NAV per Share was calculated utilizing the truthful worth of LTC based mostly on the worth supplied by Coinbase Professional, the Digital Asset Alternate that the Belief at present considers its principal market, as of4:00 p.m. ,New York time, on the valuation date. (3) Previous toFebruary 1, 2022 and for the intervals lined by this report, theDigital Asset Holdings per Share was derived from the Previous Index Value. The Previous Index Value was calculated utilizing non-GAAP methodology and isn't used within the Belief's monetary statements. EfficientFebruary 1, 2022 , theDigital Asset Holdings per Share is derived from the Index Value. See "-Historic Digital Asset Holdings and LTC Costs" for additional data on theBelief's Digital Asset Holdings andDigital Asset Holdings per Share calculated utilizing the Index Value. The Digital Asset Exchanges included within the Index as ofDecember 31, 2021 and 2020 had been Coinbase Professional,Bitstamp , Kraken and LMAX Digital. For accounting functions, the Belief displays creations and the LTC receivable with respect to such creations on the date of receipt of a notification of a creation however doesn't situation Shares till the requisite variety of LTC is acquired. At the moment, the Belief just isn't accepting redemption requests from shareholders. Topic to receipt of regulatory approval from theSEC and approval by the Sponsor in its sole discretion, the Belief might sooner or later function a redemption program. The Belief at present has no intention of searching for regulatory approval to function an ongoing redemption program. As ofDecember 31, 2021 , the Belief had a web closing steadiness with a price of$232,096,431 , based mostly on the Previous Index Value (non-GAAP methodology). As ofDecember 31, 2021 , the Belief had a complete market worth of$225,203,406 , based mostly on the principal market (Coinbase Professional). As ofDecember 31, 2020 , the Belief had a web closing steadiness with a complete worth of$145,448,033 , based mostly on the Previous Index Value (non-GAAP methodology). As ofDecember 31, 2020 , the Belief had a complete market worth of$143,704,965 , based mostly on the principal market (Coinbase Professional).
Historic
As actions within the value of LTC will instantly have an effect on the worth of the Shares, buyers ought to perceive current actions within the value of LTC. Buyers, nevertheless, also needs to remember that previous actions within the LTC value are usually not indicators of future actions. Actions could also be influenced by numerous components, together with, however not restricted to, authorities regulation, safety breaches skilled by service suppliers, in addition to political and financial uncertainties world wide. For the interval fromJanuary 1, 2019 toDecember 31, 2021 , the typical distinction in value between the Previous Index Value and the Index Value and the typical distinction inDigital Asset Holdings of the Belief as calculated utilizing the Previous Index Value and the Index Value was 0.31%. The next chart illustrates the motion within the Index Value, the Previous Index Value, theBelief's Digital Asset Holdings per Share based mostly on the Previous Index Value and the Index Value and the Belief's web asset worth per share as calculated in accordance with GAAP fromMarch 1, 2018 (date of the primary Creation Basket of the Belief) toDecember 31, 2021 . 18 -------------------------------------------------------------------------------- [[Image Removed: img84845398_0.jpg]] The next desk illustrates the actions within the Previous Index Value from the starting of the Belief's operations onMarch 1, 2018 toDecember 31, 2021 . Since the start of the Belief's operations, the Previous Index Value has ranged from$22.81 to$391.06 , with the straight common being$99.90 . The Sponsor has not noticed a fabric distinction between the Previous Index Value and common costs from the constituent Digital Asset Exchanges individually or as a gaggle. Excessive Low Final Previous Index Previous Index Finish of enterprise Interval Common Value Date Value Date interval dayMarch 1, 2018 (the primary Creation Basket of the Belief) to December 31, 2018$ 87.16 $ 212.04 3/5/2018$ 22.81 12/14/2018$ 30.69 $ 30.69 Twelve months ended December 31, 2019$ 68.88 $ 138.93 6/12/2019$ 30.64 1/29/2019$ 41.77 $ 41.77 Twelve months ended December 31, 2020$ 56.01 $ 132.00 12/27/2020$ 32.75 3/13/2020$ 126.00 $ 126.00 Twelve months ended December 31, 2021$ 185.60 $ 391.06 5/11/2021$ 108.07 7/20/2021$ 148.49 $ 148.49 March 1, 2018 (the primary Creation Basket of the Belief) to December 31, 2021$ 99.90 $ 391.06 5/10/2021 $
22.81
The next desk illustrates the actions within the Index Value from the starting of the Belief's operations onMarch 1, 2018 toDecember 31, 2021 . Since the start of the Belief's operations, the Index Value has ranged from$22.48 to$371.71 , with the straight common being$100.04 . The Sponsor has not noticed a fabric distinction between the Index Value and common costs from the constituent Digital Asset Exchanges individually or as a gaggle. Excessive Low Final Finish of enterprise Interval Common Index Value Date Index Value Date interval dayMarch 1, 2018 (the primary Creation Basket of the Belief) to December 31, 2018$ 87.05 $ 213.58 3/1/2018$ 22.48 12/14/2018$ 29.87 $ 29.87 Twelve months ended December 31, 2019$ 69.24 $ 142.00 6/22/2019$ 29.96 1/13/2019$ 40.99 $ 40.99 Twelve months ended December 31, 2020$ 56.14 $ 133.63 12/26/2020$ 32.16 3/16/2020$ 124.33 $ 124.33 Twelve months ended December 31, 2021$ 185.76 $ 371.71 5/11/2021$ 108.80 7/20/2021$ 144.08 $ 144.08 March 1, 2018 (the primary Creation Basket of the Belief) to December 31, 2021$ 100.04 $ 371.71 5/11/2021$ 22.48 12/14/2018$ 144.08 $ 144.08 19
-------------------------------------------------------------------------------- The next desk illustrates the actions within the Digital Asset Market value of LTC, as reported on the Belief's principal market, from the start of the Belief's operations onMarch 1, 2018 toDecember 31, 2021 . Because the starting of the Belief's operations, the worth of LTC has ranged from$22.47 to$371.96 , with the straight common being$100.05 . Excessive Low Digital Digital Asset Asset Final Market Market Finish of enterprise Interval Common Value Date Value Date interval dayMarch 1, 2018 (the primary Creation Basket of the Belief) to December 31, 2018$ 87.08 $ 213.49 3/1/2018$ 22.47 12/14/2018$ 29.86 $ 29.86 Twelve months ended December 31, 2019$ 69.24 $ 141.89 6/22/2019$ 29.93 1/13/2019$ 41.01 $ 41.01 Twelve months ended December 31, 2020$ 56.14 $ 133.64 12/26/2020$ 32.27 3/16/2020$ 124.49 $ 124.49 Twelve months ended December 31, 2021$ 185.77 $ 371.96 5/11/2021$ 108.83 7/20/2021$ 144.08 $ 144.08 March 1, 2018 (the primary Creation Basket of the Belief) to December 31, 2021$ 100.05 $ 371.96 5/11/2021 $
22.47
The next chart units out the historic closing costs for the Shares as reported by OTCQX and theBelief's Digital Asset Holdings per Share based mostly on the Index Value and the Previous Index Value. LTCN Premium/(Low cost): LTCN Share Value vs.Digital Asset Holdings per Share ($) [[Image Removed: img84845398_1.jpg]] The next chart units out the historic premium and low cost for the Shares as reported by OTCQX and theBelief's Digital Asset Holdings per Share based mostly on the Index Value and the Previous Index Value. LTCN Premium/(Low cost): LTCN Share Value vs.Digital Asset Holdings per Share (%) [[Image Removed: img84845398_2.jpg]] 20
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