Crypto Asset Statement - Arbitrum
About this Statement
Coinsquare Capital Markets Inc. (“Coinsquare”) is offering crypto contracts to purchase and sell Arbitrum in reliance on a prospectus exemption granted by the Canadian Securities Administrators (CSA) in the exemptive relief decision dated October 12, 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.
ARB is the governance token of the Arbitrum DAO, which oversees the Arbitrum layer 2 scaling solution and all other components of the Arbitrum ecosystem. Arbitrum uses optimistic roll-up technology to offer transactions with increased throughput and decreased cost while leveraging the security of the Ethereum network. Arbitrum offers the ability for any Ethereum Dapp to function on its network and also facilitates the deployment of programs written in common languages like RUST, C++, and others. It has a continuously expanding ecosystem of Dapps and partners, which makes it one of the most popular layer 2 solutions for Ethereum.
As with all assets, investing in Arbitrum 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 Arbitrum 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 Arbitrum.
Ethereum Upgrade Plans and Layer 2 Solutions
The most prominent portion of Arbitrum’s technology is an Ethereum layer 2 scaling solution that is built on top of the Ethereum Mainnet (layer 1) to provide increased throughput and lower costs for transactions that are processed through the Arbitrum network, but then ultimately secured by the Ethereum Mainnet. Arbitrum utilizes optimistic rollup technology to roll multiple transactions up into one transaction on Ethereum layer 1. Layer 2 solutions are part of the Ethereum network’s plan to upgrade Ethereum to proof of stake consensus and eventually integrate those layer 2 solutions directly into Ethereum through a process called sharding.1
Unfortunately, the Ethereum Upgrades have been delayed multiple times. These delays mean that layer 2 solutions face a longer wait for integration to Ethereum. Investors should be aware that further delays to Ethereum Upgrades has the potential to negatively impact market sentiment towards layer 2 solutions, and ultimately affect ARB token price. Additionally, Arbitrum may simply not be chosen by the Ethereum Network for integration, which also could negatively impact market sentiment and ARB token price.
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:
- Coinsquare Securities Law Assessment
- Coinsquare Digital Asset Security Audit
- 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.
- Ethereum. “Sharding.” June 22, 2022. https://ethereum.org/en/upgrades/sharding/
Other useful links:
Arbitrum official website: https://arbitrum.io/
Arbitrum developer documents: https://docs.arbitrum.io/
Arbitrum Whitepaper: https://www.usenix.org/system/files/conference/usenixsecurity18/sec18-kalodner.pdf
Published Date: Nov 3, 2023