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 Ren 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 Ren 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 Ren 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 Ren Virtual Machine (RenVM) was created by Taiyang Zhang as a decentralized protocol for the creation of Ethereum-based tokens that represent non-Ethereum-based crypto assets such as Ren (BTC), Ren Cash (BCH), and Zcash (ZEC), with the aim of bringing these popular crypto assets to other (Ethereum) blockchains. These tokenized representations of non-Ethereum based crypto assets open the Ethereum-specific decentralized finance (DeFi) ecosystem to other crypto asset markets, providing inter-chain token liquidity and interoperability.
Ren (REN) is the token that is used by RenVM’s open protocol for transferring crypto assets between blockchains. RenVM is maintained by a network of computers called “DarkNodes”. Any users who have REN can run a DarkNode, provided they lock up a certain amount of REN tokens in smart contracts. Ren DarkNodes help power the RenVM by contributing bandwidth, computational power and storage capacity to the network, which together allow users to move crypto assets across different blockchains.
In exchange for helping maintain the RenVM, DarkNode operators earn rewards from the network fees in the form of REN tokens.
* Currently, Newton does not provide its users with the ability to participate in the staking of REN to earn rewards.
Risks of Ren
Like an investment in other crypto assets, an investment in Ren 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 Ren 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 Ren.
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 Ren. We encourage all Newton users to perform their own due diligence to assess the risks associated with Ren and to determine whether this level of risk is acceptable to them. Neither Ren nor Newton guarantees the value of Ren, and holders of Ren will not have any recourse to Ren or Newton if the value of Ren declines for any reason whatsoever.
Newton’s Evaluation Process
Newton has reviewed and assessed Ren prior to making it available on the Newton Platform and has concluded that Ren 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 Ren 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 Ren, including an opinion that Ren is not itself a security and/or derivative.
Based on publicly available information Newton has reviewed Ren, including, but not limited to, a review of the following:
- The creation, governance, usage, and design of Ren, including the source code, security, and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that created Ren.
- The supply, demand, maturity, utility, and liquidity of Ren.
- Material technical risks associated with Ren, including any code defects, security breaches and other threats concerning Ren 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 Ren, including (i) any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of Ren, 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 Ren about whether Ren, or generally about whether the type of crypto asset, is a security and/or derivative.
A link to the Ren White Paper is available at the following link.