Coinsquare Capital Markets Inc. (“Coinsquare”) is offering crypto contracts to purchase and sell Loopring 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.
Loopring is an open source protocol for building decentralized exchanges. It is network-agnostic and can be used on any blockchain with smart contract functionality. It provides a solution for the most outstanding challenge of all decentralized protocols – high performance without a tradeoff in security.
As with all assets, investing in Loopring 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 Loopring 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 Loopring.
The most prominent portion of Loopring’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 Loopring network, but then ultimately secured by the Ethereum Mainnet. Loopring utilizes Zero-Knowledge (zk) Succinct Non-Interactive Argument of Knowledge (SNARK, together zk-SNARK) technology to roll multiple transactions up into one transaction on Ethereum layer 1.1 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.2 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 could negatively impact market sentiment towards layer 2 solutions, and ultimately affect LRC token price. Additionally, Loopring may simply not be chosen by the Ethereum Network for integration, which also could negatively impact market sentiment and LRC token price.
In July 2022, GameStop Corp (NYSE: GME) launch an NFT marketplace (nft.gamestop.com) that leverages Loopring’s technology.<sup>3</sup> GameStop specifically leverages Loopring’s wallet service, ability to mint NFTs on layer 2, and exchange protocols.4 This institutional adoption of Loopring’s technology may have affected market sentiment towards Loopring, and LRC token price. Investors should be aware of this situation and recognize that any departure from this partnership could negatively impact market sentiment towards Loopring and LRC token price.
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.
