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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 The Sandbox 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 The Sandbox 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 The Sandbox 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

The Sandbox utilizes the power of NFTs to create a virtual world where users can create, buy, sell and build virtual assets.  The Sandbox’s goal is to introduce blockchain into the world of video gaming and is one of the most popular tokens comprising the “Metaverse” with established players like PricewaterhouseCoopers investing in virtual property in The Sandbox’s world.  The Sandbox was founded by Arthur Madrid and Sebastien Borget who previously co-founded Pixowl, a mobile gaming studio.

The Sandbox’s token, SAND, is used for both liquidity in the exchange and to generate staking rewards for holders.*

* Currently, Newton does not provide its users with the ability to participate in the staking functions of SAND to generate rewards.

Risks of The Sandbox

Like an investment in other crypto assets, an investment in The Sandbox 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 The Sandbox 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 The Sandbox.

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

Newton’s Evaluation Process

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

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

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

A link to the The Sandbox White Paper is available at the following link.