Crypto Asset Statement - Algorand

About this Statement

Coinsquare Capital Markets Inc. (“Coinsquare”) is offering crypto contracts to purchase and sell Algorand in reliance on a prospectus exemption granted by the Canadian Securities Administrators (CSA) in the exemptive relief decision dated July 5, 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 CSA jurisdictions do not apply in respect of a misrepresentation in this statement to the extent that a crypto contract is distributed under the above-noted prospectus relief.

No securities regulatory authority in Canada or any other jurisdiction has expressed an opinion about any of the crypto assets (or crypto contracts) that are available through Coinsquare’s platform, including an opinion that the crypto assets are not themselves securities and/or derivatives.

Coinsquare has compiled the information contained in this Crypto Asset Statement to the best of its ability based on publicly available information.  Coinsquare is providing this Crypto Asset Statement on an “as is” basis and makes no representation or warranty as to accuracy or completeness of the contents.   

About Algorand

Algorand, founded by Silvio Micali, is positioned as the greenest blockchain currently in the market. Micali’s commitment to sustainable technology forms the backbone of Algorand’s unique consensus mechanism, as its Pure Proof of Stake system is more efficient than Proof of Work blockchains like Bitcoin in terms of electricity consumption. Algorand is going further by offsetting its small carbon footprint in partnership with ClimateTrade.

Risks

As with all assets, investing in Algorand is not without some general risks. Many of these risks are identified and explained in our Risk Statement. In addition to the general risks, we outline some risks that are specific to Algorand below. While we make an effort to identify every source of risk, we encourage you to do your own research and ensure you are comfortable investing in Algorand.

Algorand is a blockchain network that does not rely on any other network for its stability and security. Consequently, investors must be confident in Algorand’s risk management and security strategy.

Algorand’s elimination of common rewards or incentives

Most blockchain networks reward or incentivize desired behaviour, and penalize undesirable behaviour. Algorand uses a variant of Proof of Stake consensus mechanism, which requires only 1 ALGO stake. This low stake amount means that bad actors have little to lose when proposing invalid blocks to the network. Similarly, Algorand does not enforce any additional penalties on nodes that create invalid blocks.1 Also, Algorand rewards all nodes that have a stake in block consensus proportionally to their stake. However, Algorand does not provide any additional reward to nodes that create valid blocks, while many other networks incentivize this action through additional rewards. This system could affect participation in the Algorand network as nodes may receive greater rewards from participation in other networks.

Coinsquare’s Due Diligence for Digital Assets

To be made available for trading on Coinsquare’s platform, a digital asset must pass the following due diligence reviews:

  1. Coinsquare Securities Law Assessment
  2. Coinsquare Digital Asset Security Audit
  3. New Digital Asset Business Case

Coinsquare undertakes these three levels of due diligence in order to determine whether the digital asset is compliant with our legal and regulatory obligations, is secure, and has historical data supporting a beneficial business case. Coinsquare’s New Product Committee must provide final approval for a new digital asset to be made available on the platform.

References:

  1. Rob Behnke. “Exploring the Security of Algorand.” Halborn. July 7, 2021..  https://halborn.com/exploring-the-security-of-algorand/

Published Date: July 5, 2022