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The information contained in this Crypto Asset Statement was last updated on August 15, 2022.

No securities regulatory authority in Canada has expressed an opinion about 1inch 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 1inch 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 August 15, 2022.  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 1inch 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

1inch is an aggregator protocol that scans decentralized exchanges (DEXs) to find the lowest cryptocurrency prices for traders without a central intermediary by sourcing quotes and liquidity from different DEXs simultaneously.  1inch aims to deepen liquidity pools by searching through multiple DEXs to source the lowest market price for a trade.

1inch was created in New York in May 2019 by Sergej Kunz and Anton Bukov.  Anton created a DEX aggregator solution at a hack-a-thon, which became the basis for the 1inch protocol.  In December 2020, the 1inch development team also launched the 1inch decentralized autonomous organization (DAO) and its governance token, 1INCH, through which DAO members can vote on protocol proposals.

The 1INCH token was distributed in December 2020 and serves as the governance token for the 1inch platform.  This initial distribution was retroactive because the 1INCH tokens distributed were guaranteed to users of the platform prior to the launch of the token in December 2020.  1INCH is an ERC-20 token that allows 1inch members to decide on how the protocol operates and changes over time.  1INCH tokens represent equal voting rights in the decentralized governance administration of 1inch.  1INCH token holders can also stake their tokens to earn voting rights and governance participation rewards.  Voting weight for each 1INCH token holder is determined in proportion to the number of 1INCH tokens that holder has staked, calculated and applied across a 24-hour voting period.*

* Currently, Newton does not provide its users with the ability to participate in the staking functions of 1INCH.

Risks of 1inch

Like an investment in other crypto assets, an investment in 1inch 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 1inch 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 1inch.

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 1inch.  We encourage all Newton users to perform their own due diligence to assess the risks associated with 1inch and to determine whether this level of risk is acceptable to them.  Neither 1inch nor Newton guarantees the value of 1inch, and holders of 1inch will not have any recourse to 1inch or Newton if the value of 1inch declines for any reason whatsoever.

Newton’s Evaluation Process

Newton has reviewed and assessed 1inch prior to making it available on the Newton Platform and has concluded that 1inch 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 1inch 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 1inch, including an opinion that 1inch is not itself a security and/or derivative.

Based on publicly available information Newton has reviewed 1inch, including, but not limited to, a review of the following:

• The creation, governance, usage, and design of 1inch, including the source code, security, and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that created 1inch.
• The supply, demand, maturity, utility, and liquidity of 1inch.
• Material technical risks associated with 1inch, including any code defects, security breaches and other threats concerning 1inch 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 1inch, including (i) any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of 1inch, 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 1inch about whether 1inch, or generally about whether the type of crypto asset, is a security and/or derivative.