Coinsquare Capital Markets Inc. (“Bitbuy”) is offering crypto contracts to purchase and sell Axie Infinity 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 Capital Markets Ltd (CCML)’s platform, including an opinion that the crypto assets are not themselves securities and/or derivatives.

Coinsquare Capital Markets Ltd (CCML) has compiled the information contained in this Crypto Asset Statement to the best of its ability based on publicly available information.

Axie Infinity was founded in 2018 by Sky Mavis, a technology-focused game developer with a team primarily based in Vietnam, along with Trung Nguyen and Aleksander Larsen. Axie Infinity is a Pokémon and Tamagotchi inspired universe where users can earn tokens through gameplay and contributing to the ecosystem. Players can battle, collect, raise, and build a land-based kingdom for their pets. The ecosystem is governed by Axie Infinity Shards (AXS), which serves as the primary governance and utility token. While AXS is available as an ERC-20 token on the Ethereum mainnet, it functions natively on the Ronin Network to facilitate governance, staking, and in-game transactions within the Axie Infinity universe.

As with all assets, investing in Axie Infinity 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 Bitbuy’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 Axie Infinity 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 Axie Infinity.

Axie Infinity is an ERC20 token associated with the Axie Infinity game, which operates on the Ronin Network, a side-chain of Ethereum. Sky Mavis, the creators of the Axie Infinity game, created the Network specifically to process in-game transactions.1 Ronin utilizes a Proof of Authority consensus mechanism that intends to provide transaction fees that are significantly lower than those (gas fees) on Ethereum layer 1. While Ronin operates as a sidechain rather than a layer-2 rollup, it has transitioned to a Delegated Proof of Stake (DPoS) consensus mechanism to increase decentralization and security. Furthermore, following Ethereum’s transition to a Proof of Stake consensus mechanism, Ronin’s validator set has been significantly expanded to include various independent partners, reducing the risks associated with the initial centralized control by Sky Mavis.

On March 23, 2022, hackers exposed a vulnerability in the Ronin Bridge to maliciously remove 173,600 ETH and 25.5M USDC. The Ronin Bridge is designed to move assets between Ethereum layer 1 and the Ronin Network. The bad actors used hacked private security keys to compromise the network nodes that validate transfers to and from the Ronin blockchain.3 Sky Mavis discovered the breach on March 28, 2022 and exercised their centralized control of the Ronin Bridge to stop the flow of assets onto or off the blockchain. The Ronin Bridge was officially reopened in June 2022 following a series of rigorous internal and external security audits. Sky Mavis, supported by a $150 million funding round led by Binance and the utilization of its own balance sheet assets, ensured that all users affected by the March 2022 exploit were fully reimbursed for their losses.