About this Statement

Coinsquare Capital Markets Inc. (“Coinsquare”) is offering crypto contracts to purchase and sell Basic Attention Token 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 Basic Attention Token

BAT is the native token of the decentralized advertising exchange associated with the Brave web browser (“Brave”), which is a competitor to other online browsers such as Google’s Chrome and Mozilla’s Firefox. Brendan Eich, the creator of the JavaScript programming language and co-founder of Mozilla’s Firefox, developed Brave in 2015 as a means to compensate users for engaging with advertising content.

BAT is an Ethereum-based token (known as an ERC-20 token) that compensates the browser user for participating in Brave’s decentralized advertisement exchange. BAT is premised on the idea that digital advertising today is inefficient and is failing internet users, publishers and advertisers. Brave blocks invasive ads and trackers and uses a ledger system that anonymously measures user attention in an attempt to accurately reward publishers and consumers. Brave rewards consumers in BAT for viewing ads in addition to allowing consumers to pay contributions in BAT to various websites and content creators in the form of a tip. Brave uses a micropayment ledger whereby users, publishers and advertisers can track the movement of BAT. Through Brave’s micropayment ledger, users, publishers and advertisers can enter smart contracts in order to move payments between each other.(1)

Risks

As with all assets, investing in Basic Attention Token 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 Basic Attention Token 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 Basic Attention Token.

BAT reliance on the Ethereum Network

Coinsqaure only supports BAT as an ERC20 token on the Ethereum network, therefore it is highly dependent on the continued stability of that network. Any fundamental issues in the Ethereum network may impact BAT’s smart contract or token value. Investors should consider this dependency, and the Ethereum network’s history with respect to stability, when evaluating BAT.  

Concentration of BAT tokens following initial token sale

When the BAT token sale occurred in 2017, there were immediate concerns around token concentration. During the token sale, only 130 addresses were able purchase BAT, with 5 buyers purchasing approximately half of the available supply of BAT. At the end of the sale, the top 20 addresses held over two thirds of the entire supply of BAT tokens.(2)

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:

  1. Coinsquare Securities Law Assessment
  2. Coinsquare Digital Asset Security Audit
  3. 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:

  1. Brave Software. “Basic Attention Token (BAT): Blockchain Based Digital Advertising”. February 10, 2021. https://basicattentiontoken.org/static-assets/documents/BasicAttentionTokenWhitePaper-4.pdf  
  2. Jonathan Keane. “$35 Million in 30 Seconds: Token Sale for Internet Browser Brave Sells Out”. Coindesk. May 31, 2017.  https://www.coindesk.com/markets/2017/05/31/35-million-in-30-seconds-token-sale-for-internet-browser-brave-sells-out/  

Other Useful Links:

BAT Twitter: https://twitter.com/AttentionToken

Last updated on Jun 17, 2024