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The information contained in this Crypto Asset Statement was last updated on March 15, 2024.

No securities regulatory authority in Canada has expressed an opinion about Algorand 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 Algorand 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 8, 2024.  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 Algorand 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

Algorand is an open-source, fully decentralized blockchain that is secure and scalable with smart contract functionality.  It was founded in 2017 by Computer Scientist Silvio Micali, who has been an MIT professor since 1983, is a Turing award winner, and also world-renowned leader in the field of cryptography and information security.  Algorand can be used for buying and selling goods or services through e-commerce or retail.  Algorand uses a two-tiered structure to make transaction processing more efficient.

ALGO is the Algorand protocol’s native token which forms a key part of its network structure and uses a Pure Proof-of-Stake (PPoS) consensus algorithm to verify new transactions and produce new crypto tokens, thereby enabling the distribution of block rewards to ALGO holders.*

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

Risks of Algorand

Like an investment in other crypto assets, an investment in Algorand 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 Algorand 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 Algorand.

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

Newton’s Evaluation Process

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

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

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

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