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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 Polygon 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 Polygon 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 Polygon 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

Polygon, formerly called the Matic Network, was founded in 2017 by Jaynti Kanani, Sandeep Nailwal, and Anurag Arjun.  The Polygon protocol is a scaling solution for Ethereum and combines Ethereum and sovereign blockchains into a multi-chain system.  Polygon provides ETH compatibility and scalability, providing users with access to faster and cheaper transactions by using Layer 2 sidechains, which are blockchains that run alongside the Ethereum main chain.

MATIC is the Polygon platform’s native token.  It was officially launched in 2019 and is used to power the Polygon protocol as well as pay for transaction fees and participate in the Proof-of-Stake consensus.  Like other crypto platforms, Polygon’s network governance is distributed by assigning voting rights to each MATIC holder who can then earn rewards by staking MATIC.

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

Risks of Polygon

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

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

Newton’s Evaluation Process

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

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

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

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