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 PEPE. We created this summary to help you understand the basics of PEPE as well as some of the risks involved in trading in PEPE. While we tried to describe the key features of PEPE, this summary isn’t meant to tell you everything you’d want to know before investing in PEPE. You should also do your own research on PEPE to make sure you are comfortable investing in it.
PEPE emerged from the popular internet meme culture, specifically drawing inspiration from the Pepe the Frog character. This character gained significant attention and popularity online, leading to the creation of a cryptocurrency that embodies the spirit and humor of the meme. The development of PEPE was motivated by the desire to integrate the playful and viral aspects of meme culture with the innovation of digital currencies.
PEPE is primarily used as a medium of exchange within its designated ecosystem. It is designed to facilitate transactions and interactions within a community that appreciates the cultural and humorous value of its underlying meme concept. As an integral part of this digital ecosystem, PEPE enables users to engage in the exchange and holding of digital assets, underpinned by the principles of blockchain technology. The usage of PEPE underscores a blend of cultural relevance with the technological advancements of decentralized finance.
How PEPE works
PEPE operates on blockchain technology, similar to other crypto assets, ensuring secure and decentralized transactions. Its functionality includes the ability to be stored in digital wallets, sent, and received across the network. PEPE distinguishes itself by leveraging the community and viral elements of meme culture, aiming to create an enjoyable and interactive experience for its users.
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 PEPE. 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.
In addition to the general risks set out in the Risk Statement, we also point out other specific risks to PEPE below.
Pepe and the Nature of Memecoins
Pepe 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.
Internal team dynamics.
An incident on August 25, 2023 involved former team members allegedly stealing $15 million worth of PEPE tokens. This event led to a substantial financial loss and raised concerns about the security and management practices within the PEPE team. In October 2023, the remaining PEPE developers announced that a new team of advisors has been brought on to help guide the PEPE community, and that 6.9 trillion tokens had been burned and permanently removed from the total token supply. The situation underscores the potential risks associated with team integrity and internal controls in crypto projects, which can directly impact token value and investor confidence.
While we have tried to describe the key risks associated with PEPE 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 PEPE. You should also do your own research on PEPE to make sure you are comfortable investing in such a crypto asset.
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 PEPE, NDAX assesses whether PEPE 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 PEPE (such as how it was created and its governance structure), its characteristics, its market capitalization and any regulatory concern regarding PEPE. Based on its assessment, NDAX concluded that PEPE 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 PEPE from trading on the Platform and stop any future trading of Crypto Contracts based on PEPE, and users holding PEPE may be required to liquidate their positions, potentially at a significant loss. In this event, users holding positions in PEPE 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 PEPE.
No Canadian securities regulatory authority has expressed an opinion about PEPE, including an opinion that PEPE is not itself a security and/or derivative.
Last Updated: 7/8/2024