Crypto Asset Statement - Bonk

About this Statement

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

BONK is a memecoin that was originally airdropped to the Solana community in December 2022. At the time, there was very little information available about BONK, with a short whitepaper produced that explained that BONK intended to provide a secure way to settle payments.(1) Since its launch, the BONK ecosystem has developed as it has been integrated into numerous dApps and games built on the Solana network, and associated with numerous Solana-based nft collections such as BONKZ.(2, 3) BONK is another instalment in the saga of memecoins, following in the foot steps of Dogecoin, Shiba Inu, and other dog-related coins.

Risks

As with all assets, investing in Bonk 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 Bonk 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 Bonk.

BONK reliance on the Solana Network

As BONK is an SPL token on the Solana network, it is highly dependent on the continued stability of that network. Any fundamental issues in the Solana network may impact BONK’s smart contract or token value. Investors should consider this dependency, and the Solana network’s history with respect to stability, when evaluating BONK.

BONK and the Nature of Memecoins

BONK is one of many digital assets that could be classified as a memecoin. Memecoins follow internet trends and are susceptible to volatility influenced by social media activity, online jokes, and adoption or comments by celebrities or public figures. However, as with typical internet memes, trends may be fleeting and those steep increases could level off very quickly as meme-followers lose interest.

BONK Burning

Shortly after it’s launch, a large portion of the BONK supply was permanently burned by the anonymous development team. Since then, numerous NFT projects have surfaced which have introduced additional burning mechanisms for BONK.4 For example, the BONKZ nft project publishes on its website that it’s mehcnaism has burned over 580 billion BONK.5 Potential investors should be aware of the deflationary impact of burning, and also be aware that there has been increasing regulatory scrutiny from the United States SEC on tokens that employ a burning mechanism.

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:

“Bonk Paper” https://assets-global.website-files.com/63d9862f53dc8e65d16eb0e0/63de6fb910d0b94a933c4a2f_BONK-PAPER-040223.pdf
Bonkcoin. “BONK – The Dog Coin of the People.” 2023. https://bonkcoin.com/
“Bonk (BONK).” CoinMarketCap. 2023. https://coinmarketcap.com/currencies/bonk1/
Shaurya Malwa. “Bonk Inu Developers Burn All Their Team Tokens as Solana Ecosystem Frenzy Continues.” CoinDesk. January 9, 2023. https://www.coindesk.com/markets/2023/01/06/bonk-inu-developers-burn-all-their-team-tokens-as-solana-ecosystem-frenzy-continues/
“BONKZ.” 2023. https://bonkz.io/