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 Sushiswap 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 Sushiswap 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 Sushiswap 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
SushiSwap began as a fork from the Uniswap protocol; however, its founder, “Chef Nomi”, withdrew certain staked funds for their own benefit. These funds were eventually returned, and control of the SushiSwap protocol was handed over to the crypto exchange FTX. Like Uniswap, SushiSwap is a decentralized finance (DeFi) protocol that provides a “market-making” platform using its algorithmically-managed liquidity pools and smart contracts whereby traders can efficiently exchange crypto assets. Unlike a traditional financial services model which requires centralized institutions such as exchanges and intermediaries that manage exchange processes through custodians, DeFi was created to allow for decentralized communities to govern protocols and exchanges. In December 2020, SushiSwap teamed up with Yearn.Finance.
The SUSHI token was created to serve as a governance token for SUSHI. Holders of SUSHI make decisions and vote on how the SushiSwap protocol operates. SUSHI is an ERC-20 token which runs on the Ethereum blockchain, meaning that to process SUSHI transactions, miners must mine ETH, not SUSHI. SUSHI tokens can be staked by their holders to earn voting rights and participation rewards, the latter of which includes a percentage of the SushiSwap platform’s trading fees in proportion to the amount of SUSHI staked (subject to a vesting period).
* Currently, Newton does not provide its users with the ability to participate in the staking and governance functions of SUSHI.
Risks of Sushiswap
Like an investment in other crypto assets, an investment in Sushiswap 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 Sushiswap 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 Sushiswap.
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 Sushiswap. We encourage all Newton users to perform their own due diligence to assess the risks associated with Sushiswap and to determine whether this level of risk is acceptable to them. Neither Sushiswap nor Newton guarantees the value of Sushiswap, and holders of Sushiswap will not have any recourse to Sushiswap or Newton if the value of Sushiswap declines for any reason whatsoever.
Newton’s Evaluation Process
Newton has reviewed and assessed Sushiswap prior to making it available on the Newton Platform and has concluded that Sushiswap 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 Sushiswap 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 Sushiswap, including an opinion that Sushiswap is not itself a security and/or derivative.
Based on publicly available information Newton has reviewed Sushiswap, including, but not limited to, a review of the following:
- The creation, governance, usage, and design of Sushiswap, including the source code, security, and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that created Sushiswap.
- The supply, demand, maturity, utility, and liquidity of Sushiswap.
- Material technical risks associated with Sushiswap, including any code defects, security breaches and other threats concerning Sushiswap 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 Sushiswap, including (i) any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of Sushiswap, 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 Sushiswap about whether Sushiswap, or generally about whether the type of crypto asset, is a security and/or derivative.
A link to the Sushiswap White Paper is available here.