About this Statement

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

Litecoin is a cryptocurrency that was founded in 2011, two years after Bitcoin, by a former Google engineer named Charlie Lee. Litecoin has always been viewed as a reaction to Bitcoin. In fact, when Lee announced the debut of Litecoin, he called it the “lite version of Bitcoin.” However, Litecoin has some inherent advantages when compared to bitcoin. It was founded with the goal of prioritizing transaction speed, and this is a major reason for its popularity.

Risks

As with all assets, investing in Litecoin 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 Litecoin 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 Litecoin.

New Privacy Features Raise AML Concerns

In mid 2022, Litecoin upgraded their network and activated a portion called the Mimblewimble Extension Blocks (MWEB). The MWEB contains a feature that allows users to transact on the network without exposing transaction information on the public blockchain. This feature is contrary to many countries’ anti-money laundering (AML) laws. Exchanges have the ability to refuse transactions with privacy features enabled, or force users to only send assets on the Litecoin network without privacy features. However, a collection of South Korean centralized exchanges (CEXs) delisted Litecoin in June 2022 due to this new feature.1 Investors should be aware of this feature and its contravention of AML laws, and consider how governments may view privacy features when evaluating Litecoin.

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. André Beganski. “Crypto Exchanges Delist Litecoin Over Privacy Feature Concerns.” Decrypt. June 8, 2022. https://decrypt.co/102350/crypto-exchanges-delist-litecoin-privacy-feature-concerns

Last updated on Jun 17, 2024