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 Ethereum Name Service 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 Ethereum Name Service 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 Ethereum Name Service 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
Ethereum Name Service aims to create decentralized Web3 websites that are not privy to geographical restrictions. Users are able to use .eth domain names and have these domains function as catch all domains for all their crypto addresses on ethereum, store NFTs, use profiles, and even receive payments to their .eth domain. Ethereum Name Service domains can also be used to upload files to IPFS and host decentralized websites and landing pages. As their token, ENS follows the ERC721 standard, and is functionally an NFT itself, domains can be sold and traded on platforms like Opensea with other users. Ethereum Name Service was founded by Nick Johnson, a software engineer who previously worked at Google, and the Ethereum Foundation.
Ethereum Name Service’s token, ENS, is a governance token that allows holders to vote on future ENS developments, such as its pricing oracle and the pricing of .eth addresses.
* Currently, Newton does not provide its users with the ability to participate in the governance functions of ENS.
Risks of Ethereum Name Service
Like an investment in other crypto assets, an investment in Ethereum Name Service 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 Ethereum Name Service 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 Ethereum Name Service.
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 Ethereum Name Service. We encourage all Newton users to perform their own due diligence to assess the risks associated with Ethereum Name Service and to determine whether this level of risk is acceptable to them. Neither Ethereum Name Service nor Newton guarantees the value of Ethereum Name Service, and holders of Ethereum Name Service will not have any recourse to Ethereum Name Service or Newton if the value of Ethereum Name Service declines for any reason whatsoever.
Newton’s Evaluation Process
Newton has reviewed and assessed Ethereum Name Service prior to making it available on the Newton Platform and has concluded that Ethereum Name Service 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 Ethereum Name Service 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 Ethereum Name Service, including an opinion that Ethereum Name Service is not itself a security and/or derivative.
Based on publicly available information Newton has reviewed Ethereum Name Service, including, but not limited to, a review of the following:
- The creation, governance, usage, and design of Ethereum Name Service, including the source code, security, and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that created Ethereum Name Service.
- The supply, demand, maturity, utility, and liquidity of Ethereum Name Service.
- Material technical risks associated with Ethereum Name Service, including any code defects, security breaches and other threats concerning Ethereum Name Service 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 Ethereum Name Service, including (i) any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of Ethereum Name Service, 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 Ethereum Name Service about whether Ethereum Name Service, or generally about whether the type of crypto asset, is a security and/or derivative.
A link to the Ethereum Name Service White Paper is available at the following link.