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 Dogecoin 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 Dogecoin 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 Dogecoin 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
Dogecoin (DOGE) was created by software engineers Billy Markus and Jackson Palmer as a peer-to-peer digital payment network (and as a homage to the popular internet meme called “doge” which is a picture of a dog of the Shiba Inu breed). DOGE is an open-source cryptocurrency based on Litecoin and has the same technology behind its “Proof-of-Work” which forms the basis of many cryptocurrencies, allowing for secure, decentralized transactions.. Generally, DOGE has an extraordinarily low sticker price and unlimited supply. It is “merge mined” with Litecoin meaning that those who mine Litecoin can also mine Dogecoin simultaneously. This is done to allow Dogecoin to piggyback off of the security of the Litecoin Network, which continues to be one of the largest Proof of Work blockchains.
Risks of Dogecoin
Like an investment in other crypto assets, an investment in Dogecoin 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 Dogecoin 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 Dogecoin.
Dogecoin 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 Dogecoin 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 Dogecoin 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 Dogecoin 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 Dogecoin. We encourage all Newton users to perform their own due diligence to assess the risks associated with Dogecoin and to determine whether this level of risk is acceptable to them. Neither Dogecoin nor Newton guarantees the value of Dogecoin, and holders of Dogecoin will not have any recourse to Dogecoin or Newton if the value of Dogecoin declines for any reason whatsoever.
Newton’s Evaluation Process
Newton has reviewed and assessed Dogecoin prior to making it available on the Newton Platform and has concluded that Dogecoin 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 Dogecoin 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 Dogecoin, including an opinion that Dogecoin is not itself a security and/or derivative.
Based on publicly available information Newton has reviewed Dogecoin, including, but not limited to, a review of the following:
- The creation, governance, usage, and design of Dogecoin, including the source code, security, and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that created Dogecoin.
- The supply, demand, maturity, utility, and liquidity of Dogecoin.
- Material technical risks associated with Dogecoin, including any code defects, security breaches and other threats concerning Dogecoin 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 Dogecoin, including (i) any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of Dogecoin, 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 Dogecoin about whether Dogecoin, or generally about whether the type of crypto asset, is a security and/or derivative.
A link to the Dogecoin White Paper is available at the following link.