GDLC Grayscale Digital Large Cap Fund LLC (QX)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 01, 2022

Registrant’s Telephone Number, Including Area Code: 212 668-1427

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

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 pursuant to Section 13(a) of the Exchange Act. ☐

Bitcoin

The Digital Asset Reference Rate for Bitcoin has historically been an Old Index Price and, effective February 1, 2022, is an Index Price for Bitcoin. The following table illustrates the movements in the Old Index Price for Bitcoin from the beginning of the Fund’s operations on February 1, 2018 to December 31, 2021. Since the beginning of the Fund’s operations, the Old Index Price has ranged from $3,228.07 to $67,397.98, with the straight average being $18,418.11. The Manager has not observed a material difference between the Old Index Price and average prices from the constituent Digital Asset Exchanges individually or as a group.

The following table illustrates the movements in the Index Price for Bitcoin from the beginning of the Fund’s operations on February 1, 2018 to December 31, 2021. Since the beginning of the Fund’s operations, the Index Price has ranged from $3,164.99 to $67,352.59, with the straight average being $18,463.24. The Manager has not observed a material difference between the Index Price and average prices from the constituent Digital Asset Exchanges individually or as a group.

Ethereum

The Digital Asset Reference Rate for Ethereum has historically been an Old Index Price and, effective February 1, 2022, is an Index Price for Ethereum. The following table illustrates the movements in the Old Index Price for Ethereum from the beginning of the Fund’s operations on February 1, 2018 to December 31, 2021. Since the beginning of the Fund’s operations, the Old Index Price has ranged from $84.31 to $4,790.65, with the straight average being $929.15 through December 31, 2021. The Manager has not observed a material difference between the Old Index Price and average prices from the constituent Digital Asset Exchanges included in the relevant index individually or as a group.

The following table illustrates the movements in the Index Price for Ethereum from the beginning of the Fund’s operations on February 1, 2018 to December 31, 2021. Since the beginning of the Fund’s operations, the Index Price has ranged from $82.41 to $4,776.32, with the straight average being $932.14 through December 31, 2021. The Manager has not observed a material difference between the Index Price and average prices from the constituent Digital Asset Exchanges included in the relevant index individually or as a group.

Solana

Effective October 1, 2021, the Manager adjusted the Fund’s portfolio in connection with its quarterly review by selling the existing Fund Components in proportion to their respective weightings and using the cash proceeds to purchase Solana in accordance with the Fund Construction Criteria.

The Digital Asset Reference Rate for Solana has historically been an Old Index Price and, effective February 1, 2022, is an Index Price for Solana. The following table illustrates the movements in the Old Index Price from the addition of the token to the Fund’s portfolio

on October 1, 2021 to December 31, 2021. Since the token was added to the Fund’s portfolio, the Old Index Price for Solana has ranged from $145.26 to $253.51 with the straight average being $192.98 through December 31, 2021. The Manager has not observed a material difference between the Old Index Price for Solana and average prices from the constituent Digital Asset Exchanges included in the relevant index individually or as a group.

The following table illustrates the movements in the Index Price from the addition of the token to the Fund’s portfolio on October 1, 2021 to December 31, 2021. Since the token was added to the Fund’s portfolio, the Index Price for Solana has ranged from $141.71 to $254.78 with the straight average being $193.72 through December 31, 2021. The Manager has not observed a material difference between the Index Price for Solana and average prices from the constituent Digital Asset Exchanges included in the relevant index individually or as a group.

Cardano

Effective July 1, 2021, the Manager adjusted the Fund’s portfolio in connection with its quarterly review by selling the existing Fund Components in proportion to their respective weightings and using the cash proceeds to purchase Cardano in accordance with the Fund Construction Criteria.

The Digital Asset Reference Rate for Cardano has historically been an Old Index Price and, effective February 1, 2022, is an Index Price for Cardano. The following table illustrates the movements in the Old Index Price from the addition of the token to the Fund’s portfolio on July 1, 2021 to December 31, 2021. Since the token was added to the Fund’s portfolio, the Old Index Price for Cardano has ranged from $1.07 to $2.98, with the straight average being $1.87 through December 31, 2021. The Manager has not observed a material difference between the Old Index Price for Cardano and average prices from the constituent Digital Asset Exchanges included in the relevant index individually or as a group.

The following table illustrates the movements in the Index Price from the addition of the token to the Fund’s portfolio on July 1, 2021 to December 31, 2021. Since the token was added to the Fund’s portfolio, the Index Price for Cardano has ranged from $1.08 to $2.99, with the straight average being $1.87 through December 31, 2021. The Manager has not observed a material difference between the Index Price for Cardano and average prices from the constituent Digital Asset Exchanges included in the relevant index individually or as a group.

Uniswap

Effective October 1, 2021, the Manager adjusted the Fund’s portfolio in connection with its quarterly review by selling the existing Fund Components in proportion to their respective weightings and using the cash proceeds to purchase Uniswap in accordance with the Fund Construction Criteria.

The Digital Asset Reference Rate for Uniswap has historically been an Old Index Price and, effective February 1, 2022, is an Index Price for Uniswap. The following table illustrates the movements in the Old Index Price from the addition of the token to the Fund’s portfolio on October 1, 2021 to December 31, 2021. Since the token was added to the Fund’s portfolio, the Old Index Price for Uniswap has ranged from $14.32 to $27.37 with the straight average being $21.90 through December 31, 2021. The Manager has not observed a material difference between the Old Index Price for Uniswap and average prices from the constituent Digital Asset Exchanges included in the relevant index individually or as a group.

The following table illustrates the movements in the Index Price from the addition of the token to the Fund’s portfolio on October 1, 2021 to December 31, 2021. Since the token was added to the Fund’s portfolio, the Index Price for Uniswap has ranged from $14.05 to $27.67 with the straight average being $21.90 through December 31, 2021. The Manager has not observed a material difference between the Index Price for Uniswap and average prices from the constituent Digital Asset Exchanges included in the relevant index individually or as a group.

Litecoin

The Digital Asset Reference Rate for Litecoin has historically been an Old Index Price and, effective February 1, 2022, is an Index Price for Litecoin. The following table illustrates the movements in the Old Index Price from the beginning of the Fund’s operations on February 1, 2018 to December 31, 2021. Since the beginning of the Fund’s operations, the Old Index Price for Litecoin has ranged from $22.81 to $391.06, with the straight average being $101.48 through December 31, 2021. The Manager has not observed a material difference between the Old Index Price for Litecoin and average prices from the constituent Digital Asset Exchanges included in the relevant index individually or as a group.

The following table illustrates the movements in the Index Price from the beginning of the Fund’s operations on February 1, 2018 to December 31, 2021. Since the beginning of the Fund’s operations, the Index Price for Litecoin has ranged from $22.48 to $371.71, with the straight average being $101.68 through December 31, 2021. The Manager has not observed a material difference between the Index Price for Litecoin and average prices from the constituent Digital Asset Exchanges included in the relevant index individually or as a group.

Chainlink

Effective April 2, 2021, the Manager adjusted the Fund’s portfolio in connection with its quarterly review by selling the existing Fund Components in proportion to their respective weightings and using the cash proceeds to purchase Chainlink in accordance with the Fund Construction Criteria.

The Digital Asset Reference Rate for Chainlink has historically been an Old Index Price and, effective February 1, 2022, is an Index Price for Chainlink. The following table illustrates the movements in the Old Index Price from the addition of the token to the Fund’s portfolio on April 2, 2021 to December 31, 2021. Since the token was added to the Fund’s portfolio, the Old Index Price for Chainlink has ranged from $13.81 to $50.40, with the straight average being $27.05 through December 31, 2021. The Manager has not observed a material difference between the Old Index Price for Chainlink and average prices from the constituent Digital Asset Exchanges included in the relevant index individually or as a group.

The following table illustrates the movements in the Index Price from the addition of the token to the Fund’s portfolio on April 2, 2021 to December 31, 2021. Since the token was added to the Fund’s portfolio, the Index Price for Chainlink has ranged from $13.99 to $50.54, with the straight average being $27.07 through December 31, 2021. The Manager has not observed a material difference between the Index Price for Chainlink and average prices from the constituent Digital Asset Exchanges included in the relevant index individually or as a group.

Bitcoin Cash

The Digital Asset Reference Rate for Bitcoin Cash has historically been an Old Index Price and, effective February 1, 2022, is an Index Price for Bitcoin Cash. The following table illustrates the movements in the Old Index Price for Bitcoin Cash from the beginning of the Fund’s operations on February 1, 2018 to December 31, 2021. Since the beginning of the Fund’s operations, the Old Index Price Bitcoin Cash has ranged from $83.82 to $1,646.79, with the straight average being $463.34 through December 31, 2021. The Manager has not observed a material difference between the Old Index Price and average prices from the constituent Digital Asset Exchanges included in the relevant index individually or as a group.

The following table illustrates the movements in the Index Price for Bitcoin Cash from the beginning of the Fund’s operations on February 1, 2018 to December 31, 2021. Since the beginning of the Fund’s operations, the Index Price Bitcoin Cash has ranged from $76.92 to $1,714.45, with the straight average being $463.55 through December 31, 2021. The Manager has not observed a material difference between the Index Price and average prices from the constituent Digital Asset Exchanges included in the relevant index individually or as a group.

The following chart sets out the historical closing prices for the Shares as reported by OTCQX and the Fund’s Digital Asset Holdings per Share based on the Index Prices and the Old Index Prices.

GDLC Premium/(Discount): GDLC Share Price vs. Digital Asset Holdings per Share ($)

The following chart sets out the historical premium and discount for the Shares as reported by OTCQX and the Fund’s Digital Asset Holdings per Share based on the Index Prices and the Old Index Prices.

GDLC Premium/(Discount): GDLC Share Price vs. Digital Asset Holdings per Share (%)

Determination of Digital Asset Reference Rates When Indicative Prices or Index Prices are Unavailable

The Manager will continue to use the same cascading set of rules to determine the appropriate Digital Asset Reference Rate in the event that the Indicative Price or Index Price is unavailable, which are set forth below for reference:

1. Digital Asset Reference Rate = The price set by the relevant Indicative Price or Index Price as of 4:00 p.m., New York time, on the valuation date. If the relevant Indicative Price or Index Price becomes unavailable, or if the Manager determines in good faith that the Indicative Price or Index Price does not reflect an accurate digital asset price, then the Manager will, on a best efforts basis, contact the Reference Rate Provider to obtain the Digital Asset Reference Rate directly from the Reference Rate Provider. If after such contact the Indicative Price or Index Price remains unavailable or the Manager continues to believe in good faith that the Indicative Price or Index Price does not reflect an accurate price for the relevant digital asset, then the Manager will employ the next rule to determine the Digital Asset Reference Rate. There are no predefined criteria to make a good faith assessment and it will be made by the Manager in its sole discretion.

2. Digital Asset Reference Rate = The price set by Coin Metrics Real-Time Rate as of 4:00 p.m., New York time, on the valuation date (the “Secondary Digital Asset Reference Rate”). The Secondary Digital Asset Reference Rate is a real-time reference rate price, calculated using trade data from constituent markets selected by Coin Metrics (the “Secondary Reference Rate Provider”). The Secondary Digital Asset Reference Rate is calculated by applying weighted-median techniques to such trade data where half the weight is derived from the trading volume on each constituent market and half is derived from inverse price variance, where a constituent market with high price variance as a result of outliers or market anomalies compared to other constituent markets is assigned a smaller weight. If the Secondary Digital Asset Reference Rate for the relevant Fund Component becomes unavailable, or if the Manager determines in good faith that the Secondary Digital Asset Reference Rate does not reflect an accurate price for such Fund

Component, then the Manager will, on a best efforts basis, contact the Secondary Reference Rate Provider to obtain the Secondary Digital Asset Reference Rate directly from the Secondary Reference Rate Provider. If after such contact the Secondary Digital Asset Reference Rate remains unavailable or the Manager continues to believe in good faith that the Secondary Digital Asset Reference Rate does not reflect an accurate price for such Fund Component, then the Manager will employ the next rule to determine the Digital Asset Reference Rate. There are no predefined criteria to make a good faith assessment and it will be made by the Manager in its sole discretion.

3. Digital Asset Reference Rate = The price set by the Fund’s principal market for the relevant Fund Component (the “Tertiary Pricing Option”) as of 4:00 p.m., New York time, on the valuation date. The Tertiary Pricing Option is a spot price derived from the relevant principal market’s public data feed that is believed to be consistently publishing pricing information as of 4:00 p.m., New York time, and is provided to the Manager via an application programming interface. If the Tertiary Pricing Option becomes unavailable, or if the Manager determines in good faith that the Tertiary Pricing Option does not reflect an accurate price for such Fund Component, then the Manager will, on a best efforts basis, contact the Tertiary Pricing Provider to obtain the Tertiary Pricing Option directly from the Tertiary Pricing Provider. If after such contact the Tertiary Pricing Option remains unavailable after such contact or the Manager continues to believe in good faith that the Tertiary Pricing Option does not reflect an accurate price for such Fund Component, then the Manager will employ the next rule to determine the Digital Asset Reference Rate. There are no predefined criteria to make a good faith assessment and it will be made by the Manager in its sole discretion.

4. Digital Asset Reference Rate = The Manager will use its best judgment to determine a good faith estimate of the Digital Asset Reference Rate. There are no predefined criteria to make a good faith assessment and it will be made by the Manager in its sole discretion.

Updates to Risk Factors disclosure:

Digital Asset Reference Rates have a limited history and a failure of a Digital Asset Reference Rate could adversely affect the value of the Shares.

Each Digital Asset Reference Rate has a limited history and is an average composite reference rate calculated using volume-weighted trading price data from various Digital Asset Exchanges chosen by the Reference Rate Provider. The Digital Asset Exchanges chosen by the Reference Rate Provider have also changed over time. Although each Digital Asset Reference Rate is designed to accurately capture the market price of the digital asset it tracks, third parties may be able to purchase and sell such digital assets on public or private markets not included among the constituent Digital Asset Exchanges of such Digital Asset Reference Rate, and such transactions may take place at prices materially higher or lower than the Digital Asset Reference Rate. Moreover, there have been variances in the prices of digital assets on the various Digital Asset Exchanges, including as a result of differences in fee structures or administrative procedures on different Digital Asset Exchanges, in the past. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Historical Fund Component Prices” in the Fund’s Information Statement. To the extent such prices differ materially from the Digital Asset Reference Rates, investors may lose confidence in the Shares’ ability to track the market price of such digital asset, which could adversely affect the value of the Fund.

For example, the Digital Asset Reference Rate for Bitcoin is an Index Price for Bitcoin. Based on data provided by the Reference Rate Provider, on any given day during the twelve months ended December 31, 2021, the maximum differential between the 4:00 p.m., New York time spot price of any single Digital Asset Exchange included in the Index and the Index Price for Bitcoin was 0.64% and the average of the maximum differentials of the 4:00 p.m., New York time spot price of each Digital Asset Exchange included in the Index and the Index Price for Bitcoin was 0.32%. During this same period, the average differential between the 4:00 p.m., New York time spot prices of all the Digital Asset Exchanges included in the Index and the Index Price for Bitcoin was 0.0003%. All Digital Asset Exchanges that were included in the Index for Bitcoin throughout the period were considered in this analysis.

As another example, the Digital Asset Reference Rate for Ethereum is an Index Price for Ethereum. Based on data provided by the Reference Rate Provider, on any given day during the twelve months ended December 31, 2021, the maximum differential between the 4:00 p.m., New York time spot price of any single Digital Asset Exchange included in the Index and the Index Price for Ethereum was 0.30% and the average of the maximum differentials of the 4:00 p.m., New York time spot price of each Digital Asset Exchange included in the Index and the Index Price for Ethereum was 0.26%. During this same period, the average differential between the 4:00 p.m., New York time spot prices of all the Digital Asset Exchanges included in the Index and the Index Price for Ethereum was 0.0009%. All Digital Asset Exchanges that were included in the Index for Ethereum throughout the period were considered in this analysis.

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This report supplements and where applicable amends the Memorandum, as defined in the Fund’s Second Amended and Restated Limited Liability Company Agreement, for general purposes.