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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 Chiliz 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 Chiliz 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 Chiliz 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

Chiliz is a digital currency used in the realm of sports and entertainment, designed to foster fan engagement and create a community of like-minded individuals.  Chiliz allows fans to participate in the governance of their favourite sports clubs, and provides an avenue for those clubs to connect with their fans, and has partnered with some of the largest clubs in the world, such as FC Barcelona, Juventus Turin, Paris Saint-Germain, and Manchester City.  Chiliz was founded by Alexandre Dreyfus, who has over 20 years of experience in the sporting and gaming industry, and previously founded Webcity, Winamax, and Chilipoker.

Chiliz’s token, CHZ, is used as a governance token that allows fans to have as much oversight in their favourite sports clubs as those clubs allow and, currently, decisions range from new jersey designs to which team should play whom in upcoming exhibition matches.*

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

Risks of Chiliz

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

As “GameFi” coins/tokens (such as Chiliz) 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 Chiliz could drop substantially which could cause significant declines in the value of Chiliz or may even cause the value of Chiliz to go to zero.  In the case of Chiliz, the Chiliz token is the official token of the socios.com fan engagement platform which has partnerships with various sports teams and clubs.  Thus, the success of the Chiliz token is in large part influenced by the reputation and performance of the socios.com website and ecosystem.

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

Newton’s Evaluation Process

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

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

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

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