Filecoin (FIL) Crypto Asset Statement

PLEASE READ THIS CAREFULLY. BY PROCEEDING TO TRANSACT IN FIL, 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 FIL. We created this summary to help you understand the basics of FIL as well as some of the risks involved in trading in FIL. While we tried to describe the key features of FIL, this summary isn’t meant to tell you everything you’d want to know before investing in FIL. You should also do your own research on FIL to make sure you are comfortable investing in it.

Description of FIL

History of FIL

Filecoin was first proposed in 2014 by Protocol Labs founder Juan Benet as an incentive layer for the InterPlanetary File System (IPFS). A $205 million token sale in 2017 funded development, and the Filecoin mainnet officially launched on 15 October 2020. Since launch, the network has introduced upgrades such as “Lotus” client improvements and the “Filecoin Virtual Machine” (FVM) in 2023, enabling on-chain smart contracts and DeFi applications.

What is FIL used for

Filecoin is a decentralized marketplace where independent storage miners compete to offer spare hard-drive capacity. The network’s Proof-of-Space-Time and Proof-of-Replication cryptographic proofs verify that miners store clients’ data over time. Block rewards and client payments are denominated in FIL, with new FIL issued to miners who successfully create blocks and submit storage proofs. Total supply is capped at 2 billion FIL, released on a declining-emission curve through block rewards and vesting schedules, while burn mechanisms retire a portion of transaction fees.

How FIL works

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 FIL. 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.

Specific risks that are unique to the FIL token are outlined below. These risks are in addition to the general crypto-asset risks outlined in our Risk Statement:

Market-driven storage demand: If demand for decentralized storage remains lower than miner supply, token rewards could outpace actual network usage, putting sell pressure on FIL prices..
Sector-fault slashing: Miners that lose client data or go offline can be heavily slashed, which may undermine confidence if large providers fail.
Hardware & energy concentration: Successful storage miners require significant hardware investment, potentially leading to geographic or corporate centralization of network power.
Technical upgrade risk: Major features such as the Filecoin Virtual Machine expand the attack surface; undiscovered bugs in the FVM could disrupt the network or create loss events.

While we have tried to describe the key risks associated with FIL 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 FIL. You should also do your own research on FIL to make sure you are comfortable investing in such a crypto asset.

Regulatory Information

Ndax is a registered investment dealer under securities legislation in all provinces and territories of Canada and is a member of the Canadian Investment Regulatory Organization (CIRO) and of the Canadian Investor Protection Fund (CIPF). Ndax is offering Crypto Contracts in accordance with the terms of the Decision Document dated December 19, 2024 that we entered into with the Canadian securities regulators. Any fiat currency held in user's accounts are protected by the CIPF's Investment Dealer Fund in accordance with its Coverage Policy. However, CIPF coverage does not extend to any virtual assets held in user's accounts. These assets are not eligible for deposit insurance or any protection from the Canada Deposit Insurance Corporation (CDIC) or CIPF.

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 FIL, Ndax assesses whether FIL 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 FIL (such as how it was created and its governance structure), its characteristics, its market capitalization and any regulatory concern regarding FIL. Based on its assessment, Ndax concluded that FIL 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 FIL from trading on the Platform and stop any future trading of Crypto Contracts based on FIL, and users holding FIL may be required to liquidate their positions, potentially at a significant loss. In this event, users holding positions in FIL 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 FIL.

No Canadian securities regulatory authority has expressed an opinion about FIL, including an opinion that FIL is not itself a security and/or derivative.

Last Updated: 05/23/2025