Crypto Asset Statement - Cosmos

About this Statement

Coinsquare Capital Markets Inc. (“Coinsquare”) is offering crypto contracts to purchase and sell Cosmos 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 Cosmos

Developers Jae Kwon and Ethan Buchman co-founded the Cosmos network in 2014. Cosmos aims to create an Internet of Blockchains – basically, a network of interconnected blockchains built for the decentralized future. Blockchains historically work in silos. They are hard to build and can only handle a small amount of transactions per second. Cosmos solves these problems with a new technical vision – by allowing them to run on their own dedicated blockchains.

Risks

As with all assets, investing in Cosmos 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 Cosmos 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 Cosmos.

Adoption and activity on Cosmos

Cosmos connects different blockchains through a hub-and-zone structure utilizing the Inter-Blockchain Communication protocol. Cosmos has grown to over 40 unique zones, however 80% of all network activity occurs in only 5 zones.1 This could be indicative of reduced usability or dwindling adoption, or it may simply be consolidation of user preferences. Regardless, investors should consider this when investing in Cosmos.

Cosmos reliance on Multiple Networks

Cosmos is available on multiple networks. It’s commonly traded as an ERC-20 token on the Ethereum network. Additionally it is available as a BEP-20 on the BNB Smart Chain, and also on the Polygon network, Cronos network and its own unique network. Consequently, it is dependent on the continued stability of each of those networks. Any fundamental issues in the Ethereum, BNB Smart Chain, Cronos, Polygon, or Cosmos network may impact ATOM’s smart contract or token value. Investors should consider this dependency when evaluating Cosmos.

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. CryptoEQ Fundamentals Team. “Cosmos (ATOM): Strengths, Weaknesses, Risks.” CryptoEQ. April 30, 2022.  https://www.cryptoeq.io/corereports/cosmos-abridged

Published Date: July 5, 2022