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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 Enjin 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 Enjin 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 Enjin 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

Enjin was created in 2009 by Maxim Blagov and Witek Radomski, and was intended to be a community gaming and for-profit platform whose objective is to be a central repository for creating, storing, and distributing NFTs (Non-Fungible Tokens).  NFTs can contain anything digital, including drawings, GIFs, songs, or items in video games, and are unique and cannot be replicated.  Currencies and cryptocurrencies, unlike NFTs, are both fungible, meaning the currency’s units are all uniform and equal and can be swapped for another.

ENJ is the Enjin protocol's native token and is an ERC-20 token.  ENJ is mined using a Proof-of-Work (PoW) consensus model and is used for in-game item purchases, sales, and trades.  ENJ was built on unique technology that allows ENJ token to be used to pay for in-game items such as buying and selling NFTs throughout different games and platforms, traded for real world value, or earned as a resource for playing a game. All of this provides a deeper integration between various games and the real world.

Risks of Enjin

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

As “GameFi” coins/tokens (such as Enjin) 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 Enjin could drop substantially which could cause significant declines in the value of Enjin or may even cause the value of Enjin to 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 Enjin.  We encourage all Newton users to perform their own due diligence to assess the risks associated with Enjin and to determine whether this level of risk is acceptable to them.  Neither Enjin nor Newton guarantees the value of Enjin, and holders of Enjin will not have any recourse to Enjin or Newton if the value of Enjin declines for any reason whatsoever.

Newton’s Evaluation Process

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

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

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

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