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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 Bitcoin 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 Bitcoin 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 Bitcoin 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

Bitcoin was introduced in 2009 following the publication of the white paper “Bitcoin: A Peer-to-Peer Electronic Cash System” by an individual, or group of individuals, using the pseudonym “Satoshi Nakamoto”.  Bitcoin is considered by most to be the first decentralized crypto asset, including the first crypto asset to utilize the “blockchain” (the decentralized distributed ledger technology that records all transactions that occur on the Bitcoin Network).  To date, Bitcoin has a market capitalization value that exceeds US$400 billion.

Unlike many crypto assets, Bitcoin has no centralized development team and is exclusively self governed by a community of developers.  New Bitcoins are brought into circulation through a principle known as “Proof-of-Work” (i.e., where computers compete to correctly solve a mathematical puzzle; the computer to correctly solve the problem first is rewarded with  bitcoins). The process of acquiring new bitcoin is called “mining”.

Risks of Bitcoin

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

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

Newton’s Evaluation Process

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

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

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

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