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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 Axie Infinity 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 Axie Infinity 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 Axie Infinity 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

Axie Infinity is a “play-to-earn” NFT game and ecosystem built on the Ethereum blockchain.  It was created in 2018 by Sky Mavis, a Vietnamese start-up and technology-focused game developer co-founded by Trung Nguyen and Aleksander Larsen.  Axie Infinity is a trading and battling game that allows players to breed, collect, and trade adorable NFT characters called Axies.  It is also partially owned and operated by its players.

Similar to Pokémon, players use a team of three Axies and can go through either an adventure mode or battle other Axie teams in a PvP (player vs. player) arena – the more a person plays, the more SLP (Smooth Love Potions) they can earn.  SLP is typically used for breeding new Axies whereas AXS (Axie Infinity Shard) is a governance token allowing its holders to vote on proposals that will determine the future of the protocol.  Both SLP and AXS are ERC-20 tokens and the platform’s native cryptocurrencies; however, only AXS is currently offered on Newton’s platform.  AXS tokens can be staked on the Ronin Network to receive newly created AXS tokens as a reward.

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

Risks of Axie Infinity

Like an investment in other crypto assets, an investment in Axie Infinity 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 Axie Infinity 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 Axie Infinity.

As “GameFi” coins/tokens (such as Axie Infinity) are generally crypto assets whose primary or sometimes sole functionality serves as a type of payment or other utility specifically related to a particular decentralized game or a particular ecosystem of decentralized games, aside from the typical risks associated with crypto assets such as security, liquidity, or price volatility, they carry the extra risk of being inextricably associated with a particular game or ecosystem of games.  Whether a game becomes more or less popular over time and its corresponding user base increases or decreases is highly unpredictable as such trends often occur based on sentiment and general pop culture or interest.  If that particular game or ecosystem of games becomes less popular over time and experiences a decline in users or in-game transactions, the demand for Axie Infinity could drop substantially which could cause significant declines in the value of Axie Infinity or may even cause the value of Axie Infinity to 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 Axie Infinity.  We encourage all Newton users to perform their own due diligence to assess the risks associated with Axie Infinity and to determine whether this level of risk is acceptable to them.  Neither Axie Infinity nor Newton guarantees the value of Axie Infinity, and holders of Axie Infinity will not have any recourse to Axie Infinity or Newton if the value of Axie Infinity declines for any reason whatsoever.

Newton’s Evaluation Process

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

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

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

A link to the Axie Infinity White Paper is available at the following link.