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The information contained in this Crypto Asset Statement was last updated on June 19 2025.

No securities regulatory authority in Canada has expressed an opinion about Optimism or any of the other Crypto Contracts or Crypto Assets made available through Newton Crypto Ltd. (Newton) on the Newton Platform, including an opinion that Optimism itself is not a security and/or derivative.  Changes to applicable law may adversely affect the use, transfer, exchange, or value of any of your crypto assets, and such changes may be sudden and without notice.

Newton is offering Crypto Contracts in reliance on a prospectus exemption contained in the exemptive relief decision Re Newton Crypto Ltd. dated March 12, 2025. The statutory rights of action for damages and the right of rescission in section 130.1 of the Securities Act (Ontario) and similar legislation in the other provinces and territories of Canada would not apply in respect of a misrepresentation in this Crypto Asset Statement or the Newton Platform Risk Statement.

This overview provides a summary of certain risks associated with Optimism and is not an exhaustive description or summary of these risks and, in addition, does not take into account an individual’s particular situation or risk tolerance.  Investors are encouraged to conduct their own research prior to trading any crypto asset.

Newton users should read the Newton Platform Risk Statement for additional discussion of general risks associated with crypto assets made available through the Newton platform.  A copy of the Newton Platform Risk Statement acknowledged by you is available in your account in the “Statements & Reports” section.

Token Description & Project Background

Optimism was first introduced in 2019 as a layer 2 scaling solution for the Ethereum network. Optimism is an “optimistic rollup”, which is a type of scaling solution that leverages the security of the parent chain (in this case, the Ethereum blockchain) as well as maintaining full compatibility with the parent chain to allow smart contracts that were written for Ethereum to be deployed on Optimism with minimal changes. Optimism can allow for transactions to execute for a fraction of the gas fees as on the Ethereum blockchain as well as at a much higher “transactions per second” (TPS) count. 

In May 2022, the Optimism Network distributed the OP token to eligible wallet addresses through a method called an “airdrop”. The purpose of the OP token is for decentralized governance. Holders of the OP token would be allowed to vote on policy proposals and influence the development of the Optimism Network with the magnitude of their influence in proportion to the amount of OP they hold.

* Currently, Newton does not provide its users with the ability to participate in the governance functions of OP.

Risks of Optimism

There was some controversy with the airdrop of the OP token drop in May 2022, as it was reported that some parties were able to get access to the airdrop at an earlier time than what the development team had planned by bypassing the website (since the website was not fully operational yet at that stage) and interacting directly with the Optimism smart contract. Further, when the airdrop occurred, the Optimism network quickly became congested as the performance began to degrade. Such performance issues and issues with the fair distribution of the OP token have the potential to erode trust in the Optimism network. In recent times, competition among layer 2 scaling solutions for Ethereum is becoming more fierce and users can potentially migrate to other layer 2s if users lose trust in a particular layer 2 regarding the project’s ability to execute goals and promises, which could negatively impact the value of OP.

It is also worth noting that the current plan calls for further distribution of OP tokens over time. According to Coingecko, as of [insert date], the fully diluted market cap of the OP token sits at around $4.1B USD while the market cap sits at around US$205M. Such a large difference in diluted and current market cap implies that a large number of tokens may become unlocked in the short to medium term, which gives the risk of dilution for current token holders, which could negatively impact the value of OP.

Like an investment in other crypto assets, an investment in OP includes the following general risks:  (i) volatility risk and liquidity risk, (ii) short history risk, (iii) demand risk, (iv) forking risk, (v) code defects, (vi) regulatory risk, (vii) electronic trading risk, and (viii) cyber security risk.

For additional information of general risks associated with crypto assets, you may refer to the Newton Platform Risk Statement.  In terms of specific risks, as Optimism is one of the longest-standing crypto assets and its community base is widely decentralized, there is no central working group or authority to disclose material information to the public regarding Optimism.

Please note that these risks and the associated summaries or overviews provided for each herein are not intended to be an exhaustive discussion pertaining to all such risks and, in addition, there may be other risks that come with exposure to Optimism.  We encourage all Newton users to perform their own due diligence to assess the risks associated with Optimism and to determine whether this level of risk is acceptable to them.  Neither Optimism nor Newton guarantees the value of Optimism, and holders of Optimism will not have any recourse to Optimism or Newton if the value of Optimism declines for any reason whatsoever.

Newton’s Evaluation Process

Newton has reviewed and assessed Optimism prior to making it available on the Newton Platform and has concluded that Optimism is not a security or derivative under Canadian securities legislation; however, there is a risk that this conclusion could change in the future and that, in such event, Newton will be required to halt, suspend, and then remove Optimism from its platform as described in the Newton Platform Risk Statement.

Further, as indicated above, no Canadian securities regulatory authority has expressed an opinion about Optimism, including an opinion that Optimism is not itself a security and/or derivative.

Based on publicly available information Newton has reviewed Optimism, including, but not limited to, a review of the following:

• The creation, governance, usage, and design of Optimism, including the source code, security, and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that created Optimism.
• The supply, demand, maturity, utility, and liquidity of Optimism.
• Material technical risks associated with Optimism, including any code defects, security breaches and other threats concerning Optimism and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them.
• Legal and regulatory risks associated with Optimism, including (i) any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of Optimism, and (ii) statements made by any securities regulatory authorities in Canada, other regulators in IOSCO-member jurisdictions, or the regulator with the most significant connection to Optimism about whether Optimism or generally about whether the type of crypto asset, is a security and/or derivative.

A link to the Optimism White Paper is available at the following link.