Grayscale Litecoin Trust (LTC) SEC 10-K Report

Grayscale Litecoin Trust (LTC), a Delaware Statutory Trust formed to hold Litecoin (LTC), has released its annual 10-K report, providing a comprehensive overview of its financial performance, business operations, strategic initiatives, and the challenges it faces. The Trust aims to offer investors exposure to Litecoin through securities, with shares quoted on the OTCQX market under the ticker symbol 'LTCN'.

Financial Highlights

• Net realized and unrealized gain (loss) on investment: $23,755 thousand, driven by LTC price appreciation from $74.60 per LTC as of June 30, 2024, to $87.11 per LTC as of June 30, 2025.
• Net increase (decrease) in net assets resulting from operations: $19,410 thousand, which consisted of the net realized and unrealized gain on investment in LTC, less the Sponsor’s Fee of $4,345 thousand.
• Net assets: $175,867 thousand as of June 30, 2025, a 31% increase for the year, resulting from LTC price appreciation and the contribution of approximately 274,058 LTC with a value of $22,624 thousand to the Trust in connection with Share creations during the year.

Business Highlights

• Trust Overview: Grayscale Litecoin Trust (LTC) is designed to hold Litecoin (LTC), a digital asset created and transmitted through the peer-to-peer Litecoin Network. The Trust's purpose is to provide investors with exposure to LTC through securities.
• Operational Structure: The Trust issues shares in blocks of 100, known as Baskets, to accredited investors in exchange for LTC. These shares are quoted on the OTCQX market under the ticker symbol 'LTCN'.
• Custody and Security: The Trust's LTC is held by Coinbase Custody Trust Company, LLC, using cold storage mechanisms to secure the Trust's private key shards, ensuring enhanced security and minimizing credit risk.
• Market Position: As of June 30, 2025, the Trust holds approximately 2.7% of the LTC in circulation, making it a significant holder but not influential in the development of the Litecoin Network.
• Investment Objective: The Trust aims for the value of its shares to reflect the value of the LTC it holds, less expenses and liabilities. However, shares have historically traded at premiums or discounts to this value.
• Trading and Liquidity: The shares may trade at prices that differ from the NAV per share due to non-concurrent trading hours and liquidity differences between OTCQX and larger digital asset trading platforms.
• LTC Network Operations: Litecoin operates on a decentralized network with a proof-of-work model, similar to Bitcoin, but with faster block generation times and a different hashing algorithm, Scrypt.
• LTC Supply and Mining: The Litecoin Network is designed to allow a maximum of 84 million LTC, with approximately 76 million in circulation as of June 30, 2025. The mining reward is currently 6.25 LTC per block.
• Regulatory Environment: The Trust operates in a complex regulatory environment with ongoing scrutiny from U.S. and international regulators. Changes in regulation could impact the Trust's operations and the value of LTC.
• Future Outlook: The Trust may consider operating a redemption program subject to regulatory approval, which could impact the trading price of shares by allowing arbitrage opportunities.

Strategic Initiatives

• Strategic Focus: The Trust's strategic initiatives focus on maintaining its position as a passive investment vehicle for LTC, with no active management or leverage strategies. The Trust aims to provide investors with exposure to LTC by issuing shares in exchange for LTC deposits, although it has not yet met its investment objective of reflecting the value of LTC held.
• Capital Management: The Trust does not maintain a cash balance and relies on LTC transactions to manage expenses, specifically the Sponsor’s Fee. The Trust has issued 24,252,100 shares to accredited investors, receiving 2,208,967.90414780 LTC in return. The Trust's shares are quoted on OTCQX, and the price has varied significantly from the NAV per share, with historical premiums and discounts. The Trust does not currently accept redemption requests from shareholders. DCG, the indirect parent company of the Sponsor, has an authorization to purchase up to $30 million worth of shares, although no purchases were made from April 1, 2022, through June 30, 2025.
• Future Outlook: The Trust plans to continue its passive investment strategy without utilizing leverage or derivatives. It may consider operating a redemption program in the future, subject to regulatory approval and the Sponsor's discretion. The Trust will maintain its focus on selecting the most advantageous market for LTC transactions and managing its capital through share creations and LTC transactions to cover expenses.

Challenges and Risks

• Market Risks: The company faces significant market risks due to the extreme volatility of digital asset prices, including Litecoin (LTC), which could materially affect the value of shares. The digital asset market is subject to rapid changes, and the lack of regulation and transparency in digital asset trading platforms could lead to fraud, manipulation, and operational failures, impacting the company's financial performance.
• Regulatory Risks: Regulatory risks are prominent, with potential changes in U.S. and foreign regulations that could restrict the use of digital assets, affect mining activities, or alter the operation of digital asset networks. The classification of LTC or other digital assets as securities could lead to extraordinary expenses or termination of the trust.
• Operational Risks: Operational risks include reliance on third-party service providers for essential functions. Any disruption or replacement of these providers could pose challenges to the safekeeping of the Trust's LTC and overall operations. Additionally, the potential for a 'fork' or 'clone' in the Litecoin Network could adversely affect the value of shares.
• Emerging Risks: Emerging risks include the impact of U.S. government actions, such as the establishment of a Strategic Bitcoin Reserve, which could influence market dynamics and digital asset prices. The introduction of privacy-preserving features in digital asset networks could lead to increased regulatory scrutiny and potential delisting from trading platforms.
• Management Strategies: Management acknowledges the challenges posed by the evolving digital asset market and regulatory landscape. The company is monitoring developments closely and is prepared to adapt its strategies to mitigate potential adverse effects. This includes maintaining robust relationships with service providers and staying informed about regulatory changes to ensure compliance and operational continuity.
• Market Risk Disclosures: The company is exposed to market risks related to the liquidity and trading volume of digital assets. The limited history of the Index and potential discrepancies in LTC prices across trading platforms could affect the trust's ability to accurately track the market price of LTC. Additionally, the emergence of competing digital assets and financial vehicles could impact demand for LTC and the value of shares.

SEC Filing: Grayscale Litecoin Trust (LTC) [ LTCN ] - 10-K - Sep. 05, 2025