PLEASE READ THIS CAREFULLY. BY PROCEEDING TO TRANSACT IN XRP, YOU ACKNOWLEDGE AND ACCEPT THE STATEMENTS SET OUT BELOW.
About this Summary
NDAX Canada Inc. (“NDAX”, “we” and “our”) believes that our users should understand the crypto assets that they are able to trade and stake using our crypto trading platform (the “Platform”). One of the crypto assets we offer on the Platform is XRP. We created this summary to help you understand the basics of XRP as well as some of the risks involved in trading in XRP. While we tried to describe the key features of XRP, this summary isn’t meant to tell you everything you’d want to know before investing in XRP. You should also do your own research on XRP to make sure you are comfortable investing in it.
Description of XRP
History of XRP
Ripple has a long history of 16 years, long before Satoshi Nakamoto released the first version of Bitcoin. Ryan Fugger founded Rippleplay, the original brand name of Ripple, to transact money around the world securely.
In 2012, Jed McCaleb, Arthur Britto, and David Schwartz bought the company and renamed it “OpenCoin” — the company was then renamed “Ripple Labs” in 2013. Two years later, they shortened the name to just “Ripple.”
Ripple released its XRP coin to allow financial institutions to transfer money with negligible fees and wait-time.
What is XRP used for
XRP was established to complement the traditional payments, migrating transactions between databases controlled by financial institutions to a more open ecosystem.
Unlike Bitcoin’s proof-of-work, XRP uses a consensus mechanism to approve a transaction on the network. Therefore, the transaction settlement time for XRP is roughly 4 seconds.
Today, there are reputable financial institutions such as Santander and the Commonwealth Bank of Australia that support XRP on a trial basis, meaning more trust and fewer regulatory challenges.
How XRP works
XRP runs on a Ledger that uses a ledger managed by a network of independently validating servers that compare transaction records. These servers could belong to anyone, including banks and market makers.
Although Ripple’s XRP Ledger has a consensus mechanism and validating servers, it’s still not a blockchain. All of the XRP tokens are pre-mined and are controlled by a smart contract.
The token’s current circulation is over 50 billion, and the company has decided to release a maximum of 1 billion XRP tokens each month, with the total amount capped at 100 billion XRP.
Unused tokens will be shifted back to an escrow account to ensure there will be no possibility of misuse due to an oversupply.
Risks
Before entering into an agreement (a “Crypto Contract”) with NDAX to buy or sell any crypto assets through the Platform, it is important to understand the risks. This overview is a starting point for you to perform your own research prior to investing in a crypto asset.
Like other crypto assets, there are some general risks associated with investing in XRP. Each of these risks are described in more detail in the Risk Statement provided to you at the time that you open your account with us and is also available online on the NDAX website and app. You should review the Risk Statement.
While we tried to describe the key risks associated with XRP here and in our Risk Statement, we emphasize that this Crypto Asset Statement is not exhaustive of all of the risks associated with trading in XRP. You should also do your own research on XRP to make sure you are comfortable investing in such a crypto asset.
Regulatory Information
NDAX is offering Crypto Contracts in accordance with the terms of a pre-registration undertaking dated March 23, 2023 that we entered into with the Canadian securities regulators, while our application for registration in certain Canadian jurisdictions is reviewed. Please note that NDAX is not currently registered under securities or derivatives legislation of Canada and there is no guarantee that registration will be granted.
The statutory rights of action for damages and the right of rescission in the securities legislation of each province and territory of Canada would not apply in respect of a misrepresentation in this Crypto Asset Statement.
Prior to offering a Crypto Contract on XRP, NDAX assesses whether XRP is a security and/or a derivative under the securities and derivatives laws of Canada. NDAX’s assessment includes a review of the history of the XRP (such as how it was created and its governance structure), its characteristics, its market capitalization and any regulatory concern regarding XRP. Based on its assessment, NDAX concluded that XRP is not a security or a derivative. However, there is a risk that this conclusion could change in the future. In that case, NDAX may be required to halt or withdraw XRP from trading on the Platform and stop any future trading of Crypto Contracts based on XRP, and users holding XRP may be required to liquidate their positions, potentially at a significant loss. In this event, users holding positions in XRP will be notified via the Platform or other electronic means and advised of the options available to them and any applicable period to sell or withdraw their positions in XRP.
No Canadian securities regulatory authority has expressed an opinion about XRP, including an opinion that XRP is not itself a security and/or derivative.
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