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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 Cosmos 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 Cosmos 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 Cosmos 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

Cosmos is a blockchain protocol aiming to improve upon the issues traditional blockchains had regarding slow and expensive transactions, and scalability.  Cosmos’ SDK for developers looks to modularize the blockchain development process, and allow for secure blockchain applications to be created in a quicker fashion.  Cosmos is unique in that protocols built with their SDK can communicate with one another, which is not typically a feature of blockchain projects, as most have to rely on oracles such as Chainlink to achieve this.  Cosmos was founded by Jae Kwon, Zarko Milosevic and Ethan Buchman.

Cosmos’ token, ATOM, can be staked, and as Cosmos uses a proof-of-stake (PoS) consensus mechanism, ATOM is also used to secure the network and pay transaction fees.

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

Risks of Cosmos

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

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

Newton’s Evaluation Process

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

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

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

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