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 EOS 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 EOS 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 EOS 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
EOS was created in 2017 by Dan Larimer, the former Block.one CTO. EOS is the native token of the EOS.IO blockchain protocol which is an efficient open-source platform providing transaction speeds and a block time latency rate of less than one second. EOS is used to facilitate transactions and applications on the blockchain and can be staked for a reward in a consensus model called Delegated Proof-of-Stake (DPoS). There are no fees associated with sending or receiving EOS as the protocol periodically rewards the entities running the network with new EOS.
EOS was designed to support industrial-scale decentralized applications (dApps) and process transactions quickly at no cost. It is also a smart contract platform that provides upgradeable smart contracts and is built with the C++ programming language.
* Currently, Newton does not provide its users with the ability to participate in the staking functions of EOS.
Risks of EOS
Like an investment in other crypto assets, an investment in EOS 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 EOS 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 EOS.
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 EOS. We encourage all Newton users to perform their own due diligence to assess the risks associated with EOS and to determine whether this level of risk is acceptable to them. Neither EOS nor Newton guarantees the value of EOS, and holders of EOS will not have any recourse to EOS or Newton if the value of EOS declines for any reason whatsoever.
Newton’s Evaluation Process
Newton has reviewed and assessed EOS prior to making it available on the Newton Platform and has concluded that EOS 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 EOS 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 EOS, including an opinion that EOS is not itself a security and/or derivative.
Based on publicly available information Newton has reviewed EOS, including, but not limited to, a review of the following:
- The creation, governance, usage, and design of EOS, including the source code, security, and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that created EOS.
- The supply, demand, maturity, utility, and liquidity of EOS.
- Material technical risks associated with EOS, including any code defects, security breaches and other threats concerning EOS 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 EOS, including (i) any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of EOS, 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 EOS about whether EOS, or generally about whether the type of crypto asset, is a security and/or derivative.
A link to the EOS White Paper is available at the following link.