Crypto Asset Statement - Dogecoin

About this Statement

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

Dogecoin is a well-known cryptocurrency that trades using the ticker symbol DOGE. It uses the Scrypt algorithm and Proof of Work consensus for mining new coins, similar to Bitcoin mining. Dogecoin was founded in 2013 by Jackson Palmer and Billy Markus as a joke that was intended to poke fun at Bitcoin and function as a payments coin. However, Dogecoin gained a cult following in various internet groups, which caused its popularity to grow. In 2021, Dogecoin saw a significant market capitalization increase as it became one of the original “memecoins.” Elon Musk became a notable believer and promoter of Dogecoin, frequently tweeting about the coin and adding it as an accepted form of payment for Tesla merchandise. Dogecoin features the face of the Shiba Inu dog from the DOGE meme as its logo.

Risks

As with all assets, investing in Dogecoin 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 Dogecoin 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 Dogecoin.

DOGE as a Memecoin

Dogecoin is one of many digital assets that could be classified as a memecoin. Memecoins follow internet trends and are susceptible to volatility influenced by social media activity, online jokes, and adoption or comments by celebrities or public figures. On multiple instances, Dogecoin has seen very fast and very significant increases in its market capitalization as its meme status grew. However, as with typical internet memes, trends may be fleeting and those steep increases have sometimes level off very quickly as meme-followers lost interest.1

Elon Musk’s ability to influence Dogecoin

As Dogecoin’s adoption and meme status grew in late 2021, Elon Musk (CEO of Tesla, SpaceX) emerged as a supporter of the asset and its network. Elon Musk’s preferred mode of communication has been his twitter account, through which he has published numerous tweets about crypto and, specifically, Dogecoin. Among the numerous instances, Elon Musk tweeted in December 2021 to tell the public that Tesla planned to accept DOGE for merchandise purchases which caused DOGE price to increase by 20% within hours.2 In June 2022, Elon made comments in support of Dogecoin at the Qatar Economic Forum, after which the price of DOGE rose by 13% within the day.3 These are only two instances of Elon Musk’s influence on the price of DOGE. While it appears that Elon’s comments tend to have a positive impact on Dogecoin’s market capitalization, investors should weigh the potential impact of negative comments should Elon Musk’s sentiments towards Dogecoin ever change.

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. John Bogna. “What Is a Meme Coin and How Do They Work?” December 20, 2021. https://www.pcmag.com/how-to/what-is-a-meme-coin-how-do-they-work
  2. Ryan Browne. “Dogecoin spikes more than 20% after Elon Musk says Tesla will accept it as Payment for merch.” CNBC Markets. December 14, 2021. https://www.cnbc.com/2021/12/14/dogecoin-price-surges-after-elon-musk-tweet-about-tesla-merch.html
  3. Mat Di Salvo. “Dogecoin, Shiba Inu Prices Pump as Elon Musk Doubles Down on DOGE.” Decrypt. June 21, 2022. https://decrypt.co/103460/dogecoin-shiba-inu-prices-pump-elon-musk-doge

Published Date: July 5, 2022