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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 Kyber Network 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 Kyber Network 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 Kyber Network 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 and Project Background

Kyber Network employs the Kyber protocol and was launched in Singapore in 2018 by Loi Luu, Victor Tran and Yaron Velner, after securing US$60 million in funding during its initial coin offering in 2017.  Kyber Network is an Ethereum-based decentralized exchange that aggregates liquidity and trading of Ether (ETH) and other ERC-20 tokens.  The Kyber Network allows for the instant settlement of token-to-token transactions and has the functionality of the Ethereum blockchain (including smart contract support) and uses liquidity pools (called “reserves”) which are used by decentralized exchanges to allow users to deposit certain pairs of crypto assets into trading pools that other users can trade against.  Those who provide deposits and provide liquidity receive a share of transaction fees charged to those who use the pools to trade crypto assets.  Effectively, those providing liquidity to the reserves allows liquidity “takers” (such as decentralized applications, exchanges and wallets) to access and trade the crypto assets that the liquidity providers have deposited in the reserves.

KNC is the native ERC-20 token of the Kyber Network which is governed by the KyberDAO, a decentralized community of KNC token holders who vote and decide on project developments of the Kyber Network through staking.

* Currently, Newton does not provide its users with the ability to participate in the staking or governance functions of KNC.

Risks of Kyber Network

Like an investment in other crypto assets, an investment in Kyber Network 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 Kyber Network 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 Kyber Network.

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 Kyber Network.  We encourage all Newton users to perform their own due diligence to assess the risks associated with Kyber Network and to determine whether this level of risk is acceptable to them.  Neither Kyber Network nor Newton guarantees the value of Kyber Network, and holders of Kyber Network will not have any recourse to Kyber Network or Newton if the value of Kyber Network declines for any reason whatsoever.

Newton’s Evaluation Process

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

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

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

A link to the Kyber Network White Paper is available at the following link.