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 PAX Gold 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 PAX Gold 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 PAX Gold 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
PAX Gold (PAXG) is a commodity-backed, gold stablecoin issued by Paxos, a start-up specializing in the development of infrastructure for the exchange of cryptocurrency. Paxos was founded in 2012 by Charles Cascarilla and Rich Teo. Through the Paxos platform, users have the ability to exchange or redeem their tokens for physical allocated gold, unallocated gold, or fiat currency (and vice versa) quickly and efficiently, thereby reducing their exposure to settlement risk.
PAXG is an ERC-20 token built on the Ethereum blockchain, making it compatible with all Ethereum wallets that accept ERC-20 tokens, and was initially issued in September 2019. PAXG has the ability to integrate with other smart contract applications such as distributed exchanges (DEXs), decentralized applications (dApps), and swap contracts.
PAXG provides its users with exposure to Gold markets as each PAXG token is backed by gold stored in vaults managed by Paxos. Holders of PAXG have ownership rights to the gold under the custody of Paxos Trust Company. PAXG is also available for trading against other digital assets on the Paxos itBit exchange as well as other crypto-asset exchanges, wallets, lending platforms and elsewhere within the crypto ecosystem.
Risks of PAX Gold
Like an investment in other crypto assets, an investment in PAX Gold 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 PAX Gold 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 PAX Gold.
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 PAX Gold. We encourage all Newton users to perform their own due diligence to assess the risks associated with PAX Gold and to determine whether this level of risk is acceptable to them. Neither PAX Gold nor Newton guarantees the value of PAX Gold, and holders of PAX Gold will not have any recourse to PAX Gold or Newton if the value of PAX Gold declines for any reason whatsoever.
Newton’s Evaluation Process
Newton has reviewed and assessed PAX Gold prior to making it available on the Newton Platform and has concluded that PAX Gold 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 PAX Gold 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 PAX Gold, including an opinion that PAX Gold is not itself a security and/or derivative.
Based on publicly available information Newton has reviewed PAX Gold, including, but not limited to, a review of the following:
- The creation, governance, usage, and design of PAX Gold, including the source code, security, and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that created PAX Gold.
- The supply, demand, maturity, utility, and liquidity of PAX Gold.
- Material technical risks associated with PAX Gold, including any code defects, security breaches and other threats concerning PAX Gold 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 PAX Gold, including (i) any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of PAX Gold, 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 PAX Gold about whether PAX Gold, or generally about whether the type of crypto asset, is a security and/or derivative.
A link to the PAX Gold White Paper is available at the following link.