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 Shiba Inu 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 Shiba Inu 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 Shiba Inu 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
Shiba Inu is a community building coin, created on the Ethereum protocol. Using the charm of the Shiba Inu dog, SHIB captured the attention of millions of investors, and was one of the most traded tokens after its listing on Coinbase and, at one point, SHIB was the fourth largest cryptocurrency by market cap. Shiba Inu has evolved since inception and now hosts a decentralized exchange, NFT platform, and funds a campaign to help rescue Shiba Inu dogs in partnership with the Shiba Inu Rescue Association. Shiba Inu was founded by an anonymous developer who goes by “Ryoshi”, who has stated he intends to remain anonymous, as he sees more value in the community around Shiba Inu, rather than a corporate structure that could be built around it.
Shiba Inu’s token, SHIB, 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 and reward-earning functions of SHIB.
Risks of Shiba Inu
Like an investment in other crypto assets, an investment in Shiba Inu 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 Shiba Inu 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 Shiba Inu.
Shiba Inu is regarded by many as a “meme coin” which is a term that generally refers to a crypto asset created as part of a trend in pop culture, as a joke, or without a clearly defined use case or application. Risks with meme coins such as Shiba Inu mainly revolve around the legitimacy, volatility, liquidity, and future potential of a project. Meme coins, especially those with anonymous teams, are more at risk of being a fraudulent project. There have been instances where bad actors have tried to capitalize on popular pop culture trends in order to deceive people into buying a coin simply for the coin’s name or artistic design but offer little to no use case or roadmap to the future.
Limited Liquidity. Meme coins such as Shiba Inu may also have periods of limited liquidity, leading to high slippage fees when trading, and be more volatile than other coins since meme coins trade mainly based on sentiment due to their lack of specific use cases or applications. If interest and momentum were to decline, the value of Shiba Inu may decline significantly or could even 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 Shiba Inu. We encourage all Newton users to perform their own due diligence to assess the risks associated with Shiba Inu and to determine whether this level of risk is acceptable to them. Neither Shiba Inu nor Newton guarantees the value of Shiba Inu, and holders of Shiba Inu will not have any recourse to Shiba Inu or Newton if the value of Shiba Inu declines for any reason whatsoever.
Newton’s Evaluation Process
Newton has reviewed and assessed Shiba Inu prior to making it available on the Newton Platform and has concluded that Shiba Inu 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 Shiba Inu 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 Shiba Inu, including an opinion that Shiba Inu is not itself a security and/or derivative.
Based on publicly available information Newton has reviewed Shiba Inu, including, but not limited to, a review of the following:
- The creation, governance, usage, and design of Shiba Inu, including the source code, security, and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that created Shiba Inu.
- The supply, demand, maturity, utility, and liquidity of Shiba Inu.
- Material technical risks associated with Shiba Inu, including any code defects, security breaches and other threats concerning Shiba Inu 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 Shiba Inu, including (i) any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of Shiba Inu, 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 Shiba Inu about whether Shiba Inu, or generally about whether the type of crypto asset, is a security and/or derivative.
A link to the Shiba Inu White Paper is available at the following link.