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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 Decentraland 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 Decentraland 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 Decentraland 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

Decentraland was created in 2017 by the Decentraland Foundation which was founded by Esteban Ordano and Ariel Meilich in 2015.  It is the first NFT-powered virtual reality platform where users can create avatars, events and experiences, buy land, goods and services, and interact with other users—all through a blockchain-powered world owned by its users. The virtual space itself is called LAND and is further subdivided into unique, non-fungible tokens (NFTs) called “parcels” that users can buy and sell. LAND holders can also create and vote on proposals as decentralized autonomous organization (DAO) members.

MANA is the digital asset token underlying Decentraland and can be used to pay for in-world goods and services. It is built on Ethereum in accordance with the ERC-20 standard for tokens and can be bought and sold for fiat or other digital currencies. To help control the supply of MANA, MANA tokens are “burned” (i.e., removed from circulation) in exchange for LAND tokens.  MANA is also used to establish governance, and MANA holders can create and vote on proposals via Decentraland’s governance platform.

* Currently, Newton does not provide its users with the ability to participate in the governance functions of MANA.

Risks of Decentraland

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

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

Newton’s Evaluation Process

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

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

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

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