Crypto Asset Statement - ApeCoin
About this Statement
Coinsquare Capital Markets Inc. (“Coinsquare”) is offering crypto contracts to purchase and sell ApeCoin 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.
About ApeCoin
Launched in 2022, ApeCoin is the official token for the APE ecosystem, a new decentralized community built around the Bored Ape Yacht Club (BAYC) brand. ApeCoin’s aim is to empower the community to propose, vote on, and contribute to new projects and services within the ecosystem across art, gaming, and culture. APE tokens were distributed to BAYC and Mutant Ape Yacht Club (MAYC) holders in March, 2022 and are used to determine how the funds in the ApeCoin DAO Ecosystem Fund are deployed.
Risks
As with all assets, investing in ApeCoin 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 ApeCoin 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 ApeCoin.
ApeCoin’s reliance on Future Ape Ecosystem
ApeCoin was launched on March 17, 2022 as the governance token for the ApeCoin DAO.1 The token and the DAO are closely associated with Yuga Labs, the creators of the BAYC, MAYC, and Bored Ape Kennel Club (BAKC).2 At the time of launch, the DAO advertised the token as the governance and native token of the Ape ecosystem, but that ecosystem (as it was described) was not yet built or functional and solely comprised of the DAO and the various NFT collections. However, on March 18, 2022, Yuga Labs tweeted a trailer for the “Otherside”, which appeared to be a digital metaverse for the Ape ecosystem, which launched in April 2022.3
ApeCoin’s distribution to Founders and the DAO
Proportional distribution of the ApeCoin token was announced at its launch. Of all tokens that will ever be available, 47% are issued to the DAO treasury, 15% are issued to Yuga Labs, and 8% are issued to the two founders of Yuga Labs.4 Investors should consider this distribution schedule and its potential impacts when evaluating ApeCoin.
ApeCoin Reliance on Ethereum Network
As ApeCoin 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 APE’s smart contract or token value. Investors should consider this dependency when evaluating ApeCoin.
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.
References:
- Ape Foundation. “ApeCoin Protocol.” March 2022. https://apecoin.com/about
- Andrey Sergeenkov. “What’s the Story Behind Bored Ape Yacht Club Creator Yuga Labs?” Coindesk. March 23, 2022. https://www.coindesk.com/learn/whats-the-story-behind-bored-ape-yacht-club-creator-yuga-labs/
- Bored Ape Yacht Club. “Otherside Trailer.” YouTube. March 19, 2022. https://www.youtube.com/watch?v=qt1equGhkQE
- Ape Foundation. “ApeCoin Allocation.” March 2022. https://apecoin.com/about
Published Date: Feb 5 2024
FINTRAC Registered
Property as prescribed in the Coverage Policy of the Canadian Investor Protection Fund (CIPF) that is held in customers’ accounts, including cash balances but not crypto assets, is protected by CIPF within specified limits. A brochure describing the nature and limits of coverage is available upon request or at https://www.cipf.ca.