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The information contained in this Crypto Asset Statement was last updated on March 15, 2024.

No securities regulatory authority in Canada has expressed an opinion about Fantom 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 Fantom 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 March 8, 2024.  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 Fantom 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 and Project Background

Fantom is an open-source smart contract platform that provides decentralized financial (DeFi) services to developers.  It was created in 2018 by South Korean computer scientist Dr. Ahn Byung Ik.  In 2019, Fantom's mainnet, OPERA, officially launched.

FTM, the native token of Fantom, is a called an EVM-compatible token. EVM stands for Ethereum Virtual Machine, and it is the main computation engine that powers the Ethereum blockchain. Being EVM-compatiable allows for smart contracts that were written for Ethereum to be deployed to Fantom with minimal changes.

Unlike Ethereum, however, Fantom does not use miners to process and validate FTM transactions; instead, it uses the Proof-of-Stake (PoS) protocol which requires validators to hold FTM.  FTM holders can earn rewards for staking and have the ability to participate in governance-related activities such as voting (with voting power proportional to the amount a validator has staked).  FTM holders also have the ability to pay transaction or deployment fees and send and receive payments.

* Currently, Newton does not provide its users with the ability to participate in the staking of FTM to earn rewards or to participate in governance.

Risks of Fantom

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

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 Fantom.  We encourage all Newton users to perform their own due diligence to assess the risks associated with Fantom and to determine whether this level of risk is acceptable to them.  Neither Fantom nor Newton guarantees the value of Fantom, and holders of Fantom will not have any recourse to Fantom or Newton if the value of Fantom declines for any reason whatsoever.

Newton’s Evaluation Process

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

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

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

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