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 dYdX 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 dYdX 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 dYdX 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
dYdX is a decentralized exchange that brings modern financial products such as derivatives and margin trading into the DeFi realm. dYdX is able to accomplish this through both perpetual swaps and through cross margin trading, which allows a user to employ the value of their crypto assets as collateral in exchange for margin options. dYdX was founded byAntonio Juliano, who graduated from Princeton with a degree in computer science and worked at Coinbase prior to founding dYdX.
dYdX’s token DYDX, is used as a governance token, allowing users to help define the future of dYdX.
* Currently, Newton does not provide its users with the ability to participate in the governance functions of dYdX.
Risks of dYdX
Like an investment in other crypto assets, an investment in dYdX 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 dYdX 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 dYdX.
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 dYdX. We encourage all Newton users to perform their own due diligence to assess the risks associated with dYdX and to determine whether this level of risk is acceptable to them. Neither dYdX nor Newton guarantees the value of dYdX, and holders of dYdX will not have any recourse to dYdX or Newton if the value of dYdX declines for any reason whatsoever.
Newton’s Evaluation Process
Newton has reviewed and assessed dYdX prior to making it available on the Newton Platform and has concluded that dYdX 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 dYdX 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 dYdX, including an opinion that dYdX is not itself a security and/or derivative.
Based on publicly available information Newton has reviewed dYdX, including, but not limited to, a review of the following:
- The creation, governance, usage, and design of dYdX, including the source code, security, and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that created dYdX.
- The supply, demand, maturity, utility, and liquidity of dYdX.
- Material technical risks associated with dYdX, including any code defects, security breaches and other threats concerning dYdX 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 dYdX, including (i) any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of dYdX, 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 dYdX about whether dYdX, or generally about whether the type of crypto asset, is a security and/or derivative.
A link to the dYdX White Paper is available at the following link.