Coinsquare Capital Markets Inc. (“Coinsquare”) is offering crypto contracts to purchase and sell Floki Inu (FLOKI) 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.
Floki Inu was created in honour of Elon Musk’s Shiba Inu dog, who is named Floki. While it is another installation in the ever-growing collection of dog-based meme coins, FLOKI is also the utility token of the Floki Inu ecosystem. The Floki Inu ecosystem consists of a play-to-earn NFT-based game, a token creation platform that requires no coding knowledge, an educational platform, NFT collections, prepaid credit cards, a DeFi marketplace, and a mysterious staking protocol for which limit documentation exists.1 Floki Inu’s community has made news for undertaking charitable projects; to date the community has built schools in Nigeria, Laos, Ghana and Guatemala.2 Note that CCML only supports FLOKI as an ERC20 token on the Ethereum Mainnet.
As with all assets, investing in FLOKI is not without some general risks. All of the risks of tranding and staking crypto that are identified and explained in our Risk Statement apply to FLOKI. 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 WIF 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 FLOKI.
As FLOKI is an ERC-20 token on the Ethereum network, it is highly dependent on the continued stability of that network. Any fundamental issues in the Ethereum network may impact FLOKI’s smart contract or token value. Investors should consider this dependency when evaluating Floki Inu. After its initial release as an ERC20 token, FLOKI was also introduced on BSC network, however CCML only recognized the ERC20 token as the true FLOKI token and consequently CCML only supports FLOKI on Ethereum Mainnet.
Floki Inu is one of many digital assets that are often classified as memecoins. 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. However, as with typical internet memes, trends may be fleeting and any steep increases could be met with rapid pullbacks as meme-followers lose interest.
FLOKI transactions are subject to a 0.3% taxation that is enforced by the smart contract. This tax goes to the Floki treasury and is used to fund community projects, ecosystem development, and to further FLOKI adoption.3 CCML does not factor this tax into its pricing of FLOKI, and instead pays the 0.3% tax on behalf of its clients.
In its whitepaper and throughout its blog and website, Floki inu is extremely light on its documentation. Floki Inu has a staking program for which no documentation is made public with respect to the mechanism through which any rewards are being earned. Additionally, the Hong Kong Securities and Futures Commission (SFC) issued a warning to investors against the Floki staking program due to its lack of documentation and abnormally high reward rates. 4 In addition to its staking program, the Floki Roadmap speaks of the establishment of a Decentralized Autonomous Organization (DAO) in 2022 for governance of the Floki ecosystem, however there is no available documentation about the DAO, ecosystem governance, or any open proposals. Investors should be aware of the lack of documentation related to FLOKI and the Floki Inu ecosystem when they are evaluating FLOKI.
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.
