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 ApeCoin 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 ApeCoin 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 ApeCoin 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
ApeCoin is a utility and governance token, created by Yuga Labs’ Bored Ape Yacht Club (BAYC) project, one of the most popular NFT collections in the crypto ecosystem. ApeCoin was given to all holders of a Bored Ape NFT in an airdrop, and is designed to be used as a governance token for ApeCoin Dao.* ApeCoin is built on the Ethereum block chain, and will benefit from the protocol’s decentralization and security. Unlike BAYC NFT’s, Apecoin is designed to be a fungible token and can be traded freely in the same manner as popular tokens such as Bitcoin or Ethereum.
ApeCoin’s token, APE, is used as a governance token for the ApeCoin Dao, allowing users to vote on user driven initiatives from the Ecosystem Fund, as well as grant access to holders of APE to exclusive games and services.
* Currently, Newton does not provide its users with the ability to participate in the governance functions of APE.
Risks of ApeCoin
Like an investment in other crypto assets, an investment in ApeCoin 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 ApeCoin 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 ApeCoin.
ApeCoin is regarded by many as a “meme coin” which is a term that generally refers to a crypto asset created as part of a trend in pop culture, as a joke, or without a clearly defined use case or application. Risks with meme coins such as ApeCoin mainly revolve around the legitimacy, volatility, liquidity, and future potential of a project. Meme coins, especially those with anonymous teams, are more at risk of being a fraudulent project. There have been instances where bad actors have tried to capitalize on popular pop culture trends in order to deceive people into buying a coin simply for the coin’s name or artistic design but offer little to no use case or roadmap to the future.
Limited Liquidity. Meme coins such as ApeCoin may also have periods of limited liquidity, leading to high slippage fees when trading, and be more volatile than other coins since meme coins trade mainly based on sentiment due to their lack of specific use cases or applications. If interest and momentum were to decline, the value of ApeCoin may decline significantly or could even go to zero.
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 ApeCoin. We encourage all Newton users to perform their own due diligence to assess the risks associated with ApeCoin and to determine whether this level of risk is acceptable to them. Neither ApeCoin nor Newton guarantees the value of ApeCoin, and holders of ApeCoin will not have any recourse to ApeCoin or Newton if the value of ApeCoin declines for any reason whatsoever.
Newton’s Evaluation Process
Newton has reviewed and assessed ApeCoin prior to making it available on the Newton Platform and has concluded that ApeCoin 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 ApeCoin 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 ApeCoin, including an opinion that ApeCoin is not itself a security and/or derivative.
Based on publicly available information Newton has reviewed ApeCoin, including, but not limited to, a review of the following:
- The creation, governance, usage, and design of ApeCoin, including the source code, security, and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that created ApeCoin.
- The supply, demand, maturity, utility, and liquidity of ApeCoin.
- Material technical risks associated with ApeCoin, including any code defects, security breaches and other threats concerning ApeCoin 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 ApeCoin, including (i) any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of ApeCoin, 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 ApeCoin about whether ApeCoin, or generally about whether the type of crypto asset, is a security and/or derivative.
A link to the ApeCoin White Paper is available at the following link.