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 Cardano 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 Cardano 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 Cardano 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
Created by Ethereum co-founder Charles Hoskinson, and launched in September 2017, Cardano is an open-sourced, public smart contract blockchain platform. In addition to being a smart contract platform, which allows the automation of the execution of an agreement upon the trigger of certain requirements so that all participants can be certain of the outcome without any intermediary's involvement or time loss, Cardano is built on the Ouroboros Proof-of-Stake consensus protocol. Out of the 5 stages of development (Byron, Shelley, Goguen, Basho, and Voltaire), Cardano is currently in the Basho, or scaling, stage.
Cardano is decentralized and facilitates peer-to-peer transactions with ADA (its native token) which can be used for conducting transactions and staking in the ecosystem.* ADA tokens are named after Augusta Ada King, Countess of Lovelace, an English mathematician and writer who is largely known for her work on the Analytical Engine, (i.e., Charles Babbage's mechanical computer).
* Currently, Newton does not provide its users with the ability to participate in the staking functions of ADA.
Risks of Cardano
Like an investment in other crypto assets, an investment in Cardano 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 Cardano 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 Cardano.
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 Cardano. We encourage all Newton users to perform their own due diligence to assess the risks associated with Cardano and to determine whether this level of risk is acceptable to them. Neither Cardano nor Newton guarantees the value of Cardano, and holders of Cardano will not have any recourse to Cardano or Newton if the value of Cardano declines for any reason whatsoever.
Newton’s Evaluation Process
Newton has reviewed and assessed Cardano prior to making it available on the Newton Platform and has concluded that Cardano 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 Cardano 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 Cardano, including an opinion that Cardano is not itself a security and/or derivative.
Based on publicly available information Newton has reviewed Cardano, including, but not limited to, a review of the following:
- The creation, governance, usage, and design of Cardano, including the source code, security, and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that created Cardano.
- The supply, demand, maturity, utility, and liquidity of Cardano.
- Material technical risks associated with Cardano, including any code defects, security breaches and other threats concerning Cardano 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 Cardano, including (i) any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of Cardano, 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 Cardano about whether Cardano, or generally about whether the type of crypto asset, is a security and/or derivative.
A link to the Cardano White Paper is available at the following link.