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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 Tezos 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 Tezos 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 Tezos 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

Tezos was created in 2014 by Arthur and Kathleen Brietman through their start-up Dynamic Ledger Solution.  Tezos is a decentralized, open-source “liquid” Proof-of-Stake blockchain network that can execute peer-to-peer transactions and serve as a platform for deploying smart contracts.  Relative to a traditional proof-of-stake blockchain, the Tezos “liquid” proof-of-stake requires a more significant level of assets to be staked, but Tezos participants can more easily change nodes to which they delegate votes.  These features, together with the adaptable nature of the Tezos infrastructure, provide developers with a solid platform on which to build applications.  Following the launch of Tezos, the Tezos Foundation was created to support the long-term development of Tezos in a sustainable fashion.  The Foundation sources and otherwise provides funding for the development of Tezos in addition to overseeing advisory and governance committees allowing the Foundation to serve an active role in the Tezos community.

The “tez” (XTZ) is the native crypto asset for the Tezos blockchain, which serves as the Tezos validation mechanism and governance token.  Holders of XTZ are able to participate in on-chain governance of the Tezos blockchain.  Participants can stake XTZ to assist in securing the Tezos blockchain and, in return, earn rewards for this staking.* 

* Currently, Newton does not provide its users the ability to participate in the on-chain governance of XTZ or in earning XTZ rewards.

Risks of Tezos

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

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

Newton’s Evaluation Process

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

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

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

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