Crypto Asset Statement - Polkadot
About this Statement
Coinsquare Capital Markets Inc. (“Coinsquare”) is offering crypto contracts to purchase and sell Polkadot 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.
Founded in 2016 by Gavin Wood, former co-founder and CTO of Ethereum, Polkadot facilitates an internet where independent blockchains can exchange information and transactions in a trustless way via the Polkadot relay chain. Security and stability are Polkadot’s key organizational values, and it achieves this by uniting multiple blockchains. DOT is the protocol’s token. The DOT token serves three distinct purposes: governance over the network, staking and bonding.
As with all assets, investing in Polkadot 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 Polkadot 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 Polkadot.
Competition with Other Layer-1 Proof-of-Stake Platforms
Polkadot is a delegated proof-of-stake blockchain which is primarily used to process transactions and deploy smart contracts. Other blockchain platforms such as Ethereum, Cardano, Tezos,, Cosmos, Solana, Avalanche, and Binance Smart Chain provide very similar services. The number of platforms providing similar services poses a risk to DOT investors, as the platform may not be competitive enough to gain market share, with negative consequences for DOT’s market sentiment, market cap and token price.
Reliance on Web3 Foundation Development
Polkadot is developed primarily by a group called the Web3 Foundation, while community involvement is more focused on developing products and services, known as parachains, on top of the core protocol1. The project is heavily reliant on its core founders and the Web3 Foundation for its continued technical development. Significant influence from a single entity shows signs of centralization and could be harmful to the network if that entity ever acts in a way that is not in the best interests of the network. This scenario has impacts for the network and DOT’s token value, and should be considered by investors.
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.
- “Who Is Building Polkadot?” Web 3 Foundation, July 22, 2022. https://polkadot.network/about/
Published Date: July 22, 2022