Coinsquare Capital Markets Inc. (“Coinsquare”) is offering crypto contracts to purchase and sell Curve DAO 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.
Curve (CRV) is an Ethereum token that powers Curve DAO, a decentralized exchange and automated market maker protocol. Launched in August 2020, the CRV token was designed to incentivize users to contribute to Curves’ liquidity and encourage governance participation in the community. The CRV token can be locked for various periods of time in order to vote on governance and claim protocol fees as a reward.
As with all assets, investing in Curve DAO is not without some general risks. Many of these risks are identified and explained in our Risk Statement.
The relevant sections in the Risk Statement are as follows:
Platform Risk, Short History Risk, Price Volatility, Potential Decrease in Global Demand for Digital Assets, Potential for Illiquid Markets, Transfers of Digital Assets are Irreversible, Concentration Risks, Uncertainty in Regulation, Financial Institutions May Refuse to Support Transactions Involving Digital Assets, Digital Assets’ Blockchain May Temporarily or Permanently Fork and/or Split, Cyber-Security Risk, Airdrops, Issues with Cryptography Underlying Digital Asset Networks, Internet Risk, Open Loop System, Risk if Entity Gains a 51% Share of Digital Asset Network, Possible Increase in Transaction Fees, Possible Increase in Service Fees, Limited Canadian Investor Protection Fund Account, No Voting Rights, Custody of Digital Assets, Custody Risk Insurance, Threats to Coinsquare’s Physical Assets, Covid-19 Outbreak, Use of Leverage, Halting, Suspending, and Discontinuing Digital Assets.
In addition to the general risks, we outline some risks that are specific to Curve DAO 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 Curve DAO.
Although CRV was initially offered only as an ERC20 token on Ethereum Mainnet, it was subsequently made available as a token on Solana Network, the Fantom Network, and the DAI Network.1 Consequently, the supply of CRV is distributed among these various networks, meaning that the integrity of CRV token is dependent on the stability and security of these different blockchain systems. Any fundamental issues in any of these networks could impact CRV’s market cap and price.
Since CRV token’s purpose is to incentivize use and provide a means of governance of Curve DAO, it’s market capitalization could be influenced by risks within the Curve DAO protocol. Curve has taken steps to identify and disclose protocol risks on its website.2 The first risk they identify is the potential for loss of funds. To mitigate this risk, Curve Finance has created the Curve Emergency DAO, which can trigger the kill_me function which disables all functionality in a pool other than withdrawals. After the risk is resolved, the Emergency DAO or Curve DAO can reinstate the pool. Additionally, Curve has identified depegging of a stablecoin as a potential risk. If a stablecoin in the pool loses its peg and does not return to the peg, this could mean that pool liquidity providers hold all the majority of their liquidity in that asset. If either of these risks materializes, this could cause users to reduce their involvement with Curve DAO, which could impact CRV’s market capitalization.
To be made available for trading on Coinsquare’s platform, a digital asset must pass the following due diligence reviews:
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.
