Risk Statement

Risk Statement

No Canadian securities regulatory authority has assessed or endorsed the Crypto Contracts or any of the Crypto Assets made available for trading.

GENERAL  

This Risk Statement (Risk Statement) provides the user (User, you, your, and collectively, Users, them) with information about the risks associated with trading (and staking, where applicable) in (i) crypto assets that are not a security or a derivative (collectively, Crypto Assets) and crypto assets designed to maintain a stable value over time by referencing the value of a fiat currency and any other value or right, or combination (referred to as Value-Referenced Crypto Assets or VRCAs and, together with Crypto Assets, the Virtual Assets) that are available on our crypto trading platform (the Platform) and the services provided by Ndax Canada Inc. (Ndax, we, us or our). Our website, at https://ndax.io/ (Website), acts as the Platform for trade execution with us. 

Information provided on the Website is for informational purposes only and is not, nor intended to be, investment advice or trading recommendations. Such information is not and should not be considered as an offer to buy or sell, or solicitation of an offer to buy or sell, any Virtual Asset. Your decision as to whether such transaction is appropriate for you is your independent decision. We are not acting as an advisor or serving as a fiduciary to you. You are responsible for managing your own legal, financial and tax affairs and seeking independent professional advice.

This Risk Statement is presented to you at the time of account opening and is available to you online in the Ndax app and on the Website. We are required to provide you with this Risk Statement under the terms of the exemptive relief decision Re Ndax Canada Inc. dated December 19, 2024 (the Decision Document(found here). You must acknowledge having received, read and understood this Risk Statement in order to open and operate an Ndax account. Please read this Risk Statement in its entirety. The Risk Statement does not disclose or discuss all of the risks or relevant considerations of entering into a contract with Ndax to buy, sell, trade, transfer, stake, and hold Virtual Assets, as applicable (a Crypto Contract), through the Platform. In light of these risks, you should undertake such transactions only if you understand the nature of the contractual relationship with Ndax into which you are entering, and the extent of your exposure to the risks associated with trading or transferring Virtual Assets, and staking of certain Crypto Assets. Please see Ndax’s User Agreement and Relationship Disclosure Document for details on the nature of your contractual relationship with us. 

This Risk Statement only outlines some of the general risks associated with entering into a Crypto Contract with us or with buying, holding, trading or staking Virtual Assets, as applicable. You should carefully consider whether trading or staking is appropriate for you in light of your knowledge, experience, financial objectives, financial resources, risk tolerance and other relevant circumstances. Crypto Asset trading is not suitable for all people. You may incur significant losses in a short period of time. 

We do not make any representations or warranties regarding any Virtual Asset traded on the Platform. The risks associated with Virtual Assets and trading or staking Virtual Assets, as applicable, apply notwithstanding the Platform, and the risks associated with the use and trading or staking Virtual Assets, as applicable, are yours and yours alone.

Please be aware that the statutory rights of action for damages and the right of rescission in the securities legislation of each province and territory of Canada do not apply to a misrepresentation in this Risk Statement or the Crypto Asset Statements or Value-Referenced Crypto Assets Statement (located in the Learn pages on the Website with information on each Virtual Asset).

Ndax is offering Crypto Contracts in reliance on a prospectus exemption contained in the Decision Document. 

About Ndax

Ndax is registered as an Investment Dealer under the securities or derivatives legislation in each of the 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. Additionally, Ndax is registered with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) as a Money Service Business (MSB registration number: M18632135) and with Revenue Quebec registration as a Money-services business (License Number: 11885).

Ndax is not regulated as a bank, trust company or other depository institution. 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. A brochure describing the scope and nature of coverage, as well as the limitations and exclusions of coverage, is available upon request or at www.cipf.ca.

Ndax’s services are provided on an order execution only basis. In other words, Users that purchase Virtual Assets through the Ndax Platform or stake Crypto Assets make their own investment decisions. Ndax does not provide investment advice or recommendations to Users regarding any investment decision made by a User through the Ndax Platform, nor does Ndax conduct a determination that specific Virtual Assets offered on the Ndax Platform or specific staked Crypto Assets are suitable for you. The Website acts as the principal Platform for trade execution with us. 

Crypto Assets on the Platform are not Securities or Derivatives

Prior to offering a Crypto Contract on a particular Crypto Asset, we assess whether the Crypto Asset is a security and/or a derivative under the securities and derivatives laws of each of the provinces and territories of Canada. Our assessment includes a review of the history of the Crypto Asset (such as how it was created and its applicable governance structure), the characteristics of the Crypto Asset, its market capitalization and any regulatory concerns relating to it.

If the Crypto Asset is a security or a derivative under the securities or the derivatives laws of a province or territory of Canada, or it becomes characterized as such, then we are not permitted to offer that Crypto Asset on the Platform. However, Canadian securities regulators have expressed an opinion about VRCAs, and other stablecoin arrangements, including that VRCAs may constitute securities and/or derivatives. Notwithstanding this opinion, in accordance with the terms and conditions set out the Decision Document, Ndax is permitted by the Canadian securities regulators to allow Users to trade and enter into Crypto Contracts to buy, sell and deposit USDC. 

If it is subsequently determined that a Crypto Asset on the Platform is a security or a derivative, or if the Canadian securities regulators revoke the approval with respect to USDC in the future, then during a 60-day notice period we will continue to offer custodial services only for this Virtual Asset and will transfer the Virtual Asset during such period, or as soon as possible, to another digital wallet in accordance with your instructions. As the owner of the Virtual Asset, you bear the risk that no custodian will be willing to support the Virtual Asset, either during the notice period or at all.

What are Virtual Assets?

Generally, Crypto Assets are digital representations of value that function as a medium of exchange, a unit of account, or a store of value, but do not have legal tender status. Crypto Assets are sometimes exchanged for currencies, but they are not generally backed or supported by any government or central bank. Their value is derived by market forces of supply and demand, which may show a low correlation to the value changes in other asset classes and are sensitive to market sentiment and technological developments, including developments in functionality. Crypto Assets are traditionally more volatile than fiat currencies or securities. The value of Crypto Assets may be derived from the continued willingness of market participants to exchange fiat currency for Crypto Assets, which may result in the potential for permanent and total loss of value of a particular Crypto Asset should the market for a Crypto Asset disappear entirely. Federal, provincial, territorial or foreign governments may restrict the use and exchange of Crypto Assets, and regulation across the globe is still developing. Crypto Assets differ in their functions, structures, governance and rights. 

On the other hand, VRCAs (which are also commonly referred to as “stablecoins”) are a type of Virtual Asset whose value is tied to an outside asset to stabilize the price. VRCAs are generally pegged to a fiat currency, such as the U.S. dollar, or a commodity, such as gold. In the case of fiat-backed VRCAs, the value of the Virtual Asset is based on the value of the pegged currency, and that value is supported by a reserve of assets held for the benefit of the VRCA holders. VRCAs backed by fiat currency are the most common and were the first type of stablecoins available on the market. The characteristics of VRCAs are as follows: (i) the value is tied to an outside asset, such as the U.S. dollar or gold; (ii) the tether is realized off-chain, through banks or other types of financial institutions that serve as depositaries of the asset used to back the VRCA; and (iii) the amount of reserved asset used for backing the VRCA must reflect the circulating supply of the VRCA.

We provide a plain language description of each Virtual Asset offered on our Platform, including risks specific to each such Virtual Asset. Each of these Crypto Asset Statements or the Value-Referenced Crypto Asset Statement, as updated or amended from time to time, is available to you online in the Ndax app and on the Website at https://ndax.io.

What are Crypto Contracts?

The Canadian Securities Administrators (CSA) have provided guidance that the contractual relationships entered into by Ndax and its Users in connection with their purchase and sale of Virtual Assets using the Platform constitute Crypto Contracts. 

Pursuant to the Joint CSA/CIRO (formerly IIROC) Notice 21-329 – Guidance for Crypto-Asset Trading Platforms: Compliance with Regulatory Requirements (CSA SN 21-329), the term “crypto contract” is used by the CSA to refer to a contractual right or claim to an underlying crypto asset in situations where a crypto trading platform only requires users to transfer ownership, control and possession from the platform’s wallet to the user’s private wallet upon the user’s later request. Based on Ndax’s understanding of CSA SN 21-329, the contractual relationships entered into by Ndax and Users in connection with the buying, selling, transferring, staking, and holding of Virtual Assets using the Platform may constitute Crypto Contracts.

Ndax allows and encourages Users to withdraw Virtual Assets purchased on the Platform to their own private wallets. However, Ndax recognizes that certain Users may desire the convenience of relying on Ndax’s custodial solutions. If at any time a User decides that it no longer wishes to rely on these solutions, the User may request that Ndax transfer the User’s Virtual Assets to the User’s private wallet or another external wallet not in control of Ndax. 

Custody of Virtual Assets on the Platform 

Under the terms of the Decision Document, Ndax is required to hold not less than 80% of Virtual Assets held on behalf of clients with an acceptable third-party custodian that is regulated as a trust company, with the remaining being held by Ndax, through our own custody solution, in order to facilitate client deposit and withdrawal requests, to facilitate trade settlement with Liquidity Providers and to hold certain of the Stakeable Crypto Assets that have been staked by clients. For more information on how Virtual Assets are held on behalf of Users, please refer to Ndax’s Custody Disclosure Statement, which is incorporated by reference into this Risk Statement. The disclosure in the Custody Disclosure Statement may change from time to time. Any changes to our Custody Disclosure Statement will be communicated to you from time to time as required.

General Risks in Trading Virtual Assets

When trading in Virtual Assets and similar products, you must ensure that you fully understand any risks involved and seek independent advice from a reliable source, if necessary, taking into consideration investment objectives, levels of experience and risk tolerance. We do not provide investment, tax, legal or other advice to you. You should not risk more than you are fully prepared to lose. 

You should consider the following non-exhaustive risks, in no particular order, prior to engaging in Virtual Asset trading.

(1) Short History Risk

As a relatively new open-source technology, it is expected that there will continue to be technical developments in blockchain technology, which could impact the value of a Virtual Asset. Due to this short history, it is not certain whether the economic value, governance or functional elements of Virtual Assets will persist over time. The crypto asset community has successfully navigated a considerable number of technical and political challenges since the genesis of the Bitcoin blockchain, which Ndax believes is a strong indicator that it will continue to engineer its way around future challenges. That said, the continuation of a vibrant crypto asset community is not guaranteed, and insufficient software development, contribution rates, community disputes regarding the development of the network and scaling options, or any other unforeseen challenges that the community is not able to navigate could have an adverse impact on the price of a Virtual Asset.

Open-source developers of blockchain technology have signalled that they will continue to make efforts to improve the scalability and security of public blockchains. For example, in respect of the Ethereum blockchain, developers have recently replaced the current hash-based mining consensus mechanism of proof-of-work with a proof-of-stake mechanism. Changes may also occur to the Bitcoin blockchain, for example with the continued development of scalability protocols, like the Lightning Network, which operates on top of the Bitcoin blockchain. The expected timing and impacts of this change are uncertain.

Similar risks apply to other forks of Bitcoin source code, like Litecoin or Bitcoin Cash.

Tokens with their functions tied to applications of the Ethereum network are operating within a relatively new, competitive market of Virtual Assets. Demand for said Virtual Assets can fluctuate rapidly, and, much like a technology startup, they are often still proving value to the broader community and establishing a reliable business model. Like the risks noted above, Virtual Assets of this nature can be impacted by changes made to their code, design, or community governance, and most provide updates and relevant information via forums and social channels to help stakeholders continually re-assess their interest in holding the asset.

(2) Volatility in the Price of Virtual Assets and Loss of Liquidity

The crypto asset markets are sensitive to new developments, and since volumes are still maturing, any significant changes in market sentiment (by way of sensationalism in the media or otherwise) can induce large swings in volume and subsequent price changes. The prices of Virtual Assets on trading platforms have been volatile and subject to influence by many factors, including the levels of liquidity, public speculation on future appreciation in value, swings in investor confidence and the future growth of alternative Virtual Assets that may gain market share. In certain circumstances, it may become difficult or impossible to assess the value of your Virtual Assets. The trading of Virtual Assets on public trading platforms has a limited history. The prices available on those platforms have, in some cases, been more volatile and subject to influence by additional factors not specific to the value of Virtual Assets, including liquidity levels and operational interruptions.

Operational interruptions can limit the liquidity of Virtual Assets on the trading platform, which could result in volatile prices and reduced confidence in the Virtual Assets traded on those platforms. Ndax uses multiple brokers, which we refer to as liquidity providers, to buy and sell the Virtual Assets that we trade for you. These liquidity providers connect to multiple trading platforms in order to ensure ongoing liquidity of Virtual Assets. Use of multiple liquidity providers and multiple trading platforms is designed to reduce the liquidity risk and operational risk associated with any trading platform. However, there is a risk that the liquidity sources accessed directly and indirectly by Ndax are unable to return the best possible prices or execution quality on your behalf. Liquidity providers may also reject orders for a variety of reasons, including that the order exceeds the size or rate limits imposed by them. These risks may be greater during periods of high market volatility or operational outages at a major trading platform.

A shift in the regulatory characterization of a Crypto Asset as a security or derivative could also impact its liquidity and transactability. If there is a change in the regulatory status or characterization of a Crypto Asset available for trading, Ndax will re-assess the status and risks of the Crypto Asset and update you accordingly. We monitor changes by participating in open governance forums and also by actively communicating with our regulators, liquidity providers and vendors, each of which is similarly engaged in crypto asset communities and regulatory decisions. See also section 7 below.

Additionally, the market value of Virtual Assets may be affected by momentum pricing. Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing public, is impacted by anticipated future appreciation in value. Momentum pricing may result in speculation regarding future appreciation in the value of Virtual Assets, which inflates prices and may lead to increased volatility.

(3) Potential Decrease in Global Demand for Virtual Assets

Virtual Assets represent a new form of digital value that is still in the early adoption phase amongst the broader public. Investors should be aware that there is no assurance that Virtual Assets will maintain their long-term value in terms of purchasing power or that the acceptance of Virtual Assets for payments by mainstream retail merchants and commercial businesses will continue to grow. Their underlying value is driven by a number of factors, including their utility as a store of value, means of exchange, or unit of account. Similar to how commodities like oil are valued by global markets, Virtual Assets are priced by the global supply and demand for their unique utilities. Speculators and investors using Virtual Assets as a store of value then layer on top of the means of exchange Users, creating further demand. If consumers stop using Virtual Assets as a means of exchange, or their adoption slows, then the price may be impacted.

Given that the value of bitcoin may be derived at least partially from its capitalization and position as first mover, there is a risk that a competitor may gain popularity and negatively impact the price of bitcoin. Factors such as its broad base of holders and its proven resilience to security attacks may hedge against this.

The value of ether (and the assets built on top of the Ethereum platform) relies primarily on its underlying blockchain technology, but also on its utility as a store of value, means of exchange, and the demand of newly designed use cases. The Ethereum blockchain is intended to allow people to operate decentralized applications using blockchain technology that do not rely on the actions of a centralized intermediary. Ether, which is the primary currency of the Ethereum blockchain, can then be used to compensate for the effort of others to power these decentralized applications and ensure that any transactions that occur on these applications are recorded in the blockchain. Accordingly, the long-term value of ether may be tied to the success or failure of the blockchain technology, and the decentralized applications built upon the Ethereum blockchain.

Some Virtual Assets available for trading on Ndax have shorter histories than bitcoin or the Ethereum blockchain, which can mean that long-term global demand and trends are harder to predict. The value of most ERC 20 tokens — i.e., tokens built on top of the Ethereum blockchain — are derived from the volume of engagement with the decentralized application (also known as DApp) that is accessed via use of its token. ERC 20 tokens, therefore, are also reliant on the continued value, maintenance, and adoption of the Ethereum blockchain. As mentioned above, the value of newer Virtual Assets is less certain, which can mean a higher potential for fluctuation in global demand and price. We have published plain language descriptions of each Virtual Asset on our Platform on our Website at https://ndax.io. These Crypto Asset Statements and Value-Referenced Crypto Asset Statement are meant to be high level in nature and investors are, as always, encouraged to do their own research to ensure a strong appreciation for the risks of trading Virtual Assets.

(4) The Blockchains on which Virtual Assets operate may Temporarily or Permanently Fork or Halt; Airdrops

Blockchain networks are powered by open-source software. When a modification to that software is released by developers, and a substantial majority of miners or validators consent to the modification, a change is implemented and the blockchain network continues uninterrupted. However, if a change were to be introduced with less than a substantial majority consenting to the proposed modification, and the modification is not compatible with the software in operation prior to its modification, the consequence would be what is known as a “fork” (i.e., a split) of the blockchain. One blockchain would be maintained by the pre-modification software and the other by the post-modification software. The effect is that both blockchains would operate in parallel, but independently. There are examples of such forks occurring in the past on both the Bitcoin and Ethereum blockchain networks, in some cases creating new popular and valuable assets of their own such as Bitcoin Cash. In the future, such a fork could occur again, and affect the viability or value of a Virtual Asset. Ndax may choose not to support any future fork of the underlying blockchain of the Crypto Assets available on the Platform, in which case you may not have any rights to the new crypto asset that may be created as a result of that fork.

Similar to the blockchain networks themselves, Virtual Assets built on top of Ethereum (or other blockchains) or that integrate with DApps are self-governed and subject to frequent upgrades by the open-source community. As new versions are released, the value of the Virtual Asset might be impacted and material changes to functionality could trigger changes in demand, supply or price. Ndax reserves the right to decide how it will continue to support the resulting assets of a fork or protocol upgrade, if applicable, and will inform impacted Clients of their trading or liquidating options at that time.

Miners, validators, or other nodes that validate transactions on blockchains may halt processing of transactions in certain circumstances, which may delay or prevent the processing of transactions. Ndax does not have control over decisions by nodes on blockchain networks and reserves the right to determine whether and how it will continue to support a blockchain in light of network interruptions or other changes that affect Ndax’s ability to support a Crypto Asset.

In some circumstances, persons unrelated to Ndax may transfer, or attempt to transfer, new crypto assets to existing holders of a Virtual Asset supported by Ndax. This is commonly referred to as an airdrop. Due to technical limitations, Ndax and its vendors may be unable to access airdropped crypto assets. In the event of an airdrop, Ndax will consult with its vendors to determine whether to support the airdropped assets. Ndax reserves the right to determine, in its discretion, whether to support airdropped assets.

(5) Cryptographic and Contract Code Risk

In the past, flaws in the source code for digital assets have been exposed and exploited, including flaws that disabled some functionality for Users, exposed Users’ personal information and/or resulted in the theft of Users’ digital assets. Although the Bitcoin and Ethereum blockchains have demonstrated resiliency and integrity over time, the cryptography underlying either one could, in the future, prove to be flawed or ineffective. For example, developments in mathematics and/or technology, including advances in digital computing, algebraic geometry, and quantum computing, could result in the cryptography of the blockchain network being vulnerable to attack. Generally, any reduction in public confidence on the security or source code of a core blockchain network could negatively affect the broader sector, and this could negatively affect the value of Virtual Assets traded on the Platform.

Virtual Assets that are “minted” or issued by a public offering event, instead of by cryptographic mining, carry different risks associated with the distribution process. Tokens that are purchased or distributed via DApp follow a different model than Virtual Assets that are rewarded for mining effort. Each protocol involves its own rules and compensation structure, which Ndax will assess prior to making a token available, but not all economic models will be the right fit for all investors, so it is important for each individual to make their own assessment. In addition to unique economic model factors, all Virtual Assets are impacted by the underlying cryptography technology supporting the blockchain network to which they are associated.

(6) Custodial and Wallet System Risk

When you enter into a contract with Ndax in connection with buying and selling Virtual Assets, that contract provides you with certain rights and imposes certain responsibilities. The Crypto Contract, and your contractual right to the Virtual Assets that you may buy, hold and sell, or transfer externally, pursuant to the Crypto Contract, constitute a security or derivative. In particular, the Crypto Contract you enter into with Ndax enables you to, among other things, buy, sell and hold, or transfer externally, Virtual Assets without the need for you to receive and hold your Virtual Assets in your own private wallet. We refer to this as a “custodial wallet” system. A custodial wallet system may also expose you to insolvency risk (credit risk), fraud risk or proficiency risk on the part of Ndax or its vendors. For more information about Ndax’s custodial arrangement, see our Custody Disclosure Statement.

There is a risk that some or all of your holdings of Virtual Assets could be lost, stolen, destroyed or rendered inaccessible, potentially by the loss or theft of the private keys associated with the public addresses that hold Users’ Virtual Assets and/or the destruction of storage hardware. Because of the decentralized process for transferring Virtual Assets, thefts can be difficult to trace, which may make Virtual Assets a particularly attractive target for theft. The Platform has adopted security procedures intended to protect Users’ assets, but there can be no assurance that those procedures will be successful in preventing such loss, theft or restriction on access. Access to Users’ Virtual Assets could be restricted by natural events (such as an earthquake or flood) or human actions (such as a terrorist attack). Users’ Virtual Assets held in custody accounts will likely be an appealing target for hackers or malware distributors seeking to destroy, damage or steal Virtual Assets or private keys. 

No storage system is impenetrable, and storage systems employed by the Platform may not be free from defects or immune to force majeure events. Storage systems and operational infrastructure may be breached due to the actions of outside parties, error or insider malfeasance of an employee of Ndax or its vendors, or otherwise, and, as a result, an unauthorized party may obtain access to Ndax’s storage systems or private keys, data or Users’ Virtual Assets. Additionally, outside parties may attempt to fraudulently induce employees of Ndax to disclose sensitive information in order to gain access to the Platform’s infrastructure. Ndax and its employees or any technological consultant engaged by Ndax may periodically examine and propose modifications to storage systems, protocols and internal controls to address the use of new devices and technologies to safeguard the Platform’s systems and Users’ Virtual Assets Virtual Assets. As the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, or may be designed to remain dormant until a predetermined event and often are not recognized until launched against a target, Ndax may be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of a storage system occurs, a loss of confidence in crypto asset networks may decrease the market price of such Virtual Assets.  

If Users’ Virtual Asset holdings are lost, stolen or destroyed under circumstances rendering a party liable to Ndax, the responsible party may not have the financial resources sufficient to satisfy Ndax’s claim. For example, as to a particular event of loss, the only source of recovery for Ndax may be limited to the relevant custodian or, to the extent identifiable, other responsible third parties (for example, a thief or terrorist), any of which may not have the financial resources (including liability insurance coverage) to satisfy a valid claim of Ndax. 

(7) Regulatory Risks

The regulation of Virtual Assets continues to evolve in Canada and in foreign jurisdictions, which may restrict the use of Virtual Assets or otherwise impact the demand for Virtual Assets. There may be limitations on the ability of a securities regulator in Canada to enforce Canadian laws on foreign entities, and foreign rules that apply to crypto asset activities which occur in other jurisdictions may not necessarily be enforced in that jurisdiction. Furthermore, banks and other financial institutions may refuse to process funds for crypto asset transactions, process wire transfers to or from crypto trading platforms, crypto asset-related companies or service providers, or maintain accounts for persons or entities transacting in Virtual Assets.

Other than any VRCA approved by the Canadian securities regulators for trading on crypto asset trading platforms, Ndax does not intend to offer Crypto Assets that are, or have the potential to be deemed, securities or derivatives by a regulator. However, our own policies and assessments do not have the force of law. Regulators (either in Canada or in foreign jurisdictions) could come to a different decision or change the characterization of a Crypto Asset. Should this occur, Ndax would re-assess and determine the status and risks of the Crypto Assets. 

As noted above in this Risk Statement, if it is subsequently determined that a Crypto Asset on the Platform is a security or a derivative, or if Canadian securities regulators revoke the approval with respect to USDC in the future, then Ndax will provide notice of the decision and during a 60-day notice period we will continue to offer custodial services only for this Virtual Asset and will transfer the Virtual Asset during such period, or as soon as possible, to another digital wallet in accordance with your instructions. 

(8) Currency Risks

Some transactions may be executed in a currency that may be different from the currency the User deposited to their account, and accordingly the User should be aware of the relevant currency fluctuation and any risks related to it. In respect of any foreign exchange transaction, a movement in an exchange rate may have a favourable or an unfavourable effect on the gain or loss achieved on such transaction.

(9) Concentration Risks

Certain addresses on a Crypto Asset blockchain networks hold a significant amount of the Crypto Assets in circulation, and may be considered to be founder addresses. If one of these addresses were to liquidate their positions in such a Crypto Asset, it could cause volatility that may adversely affect the price.

Whenever Ndax reviews a new crypto asset (or monitors existing Crypto Assets offered on the Platform), we assess the ownership concentration of that particular asset. There are a number of ways in which a Crypto Asset could be negatively impacted by a concentration of assets or power, including but not limited to: (i) if a participant or node operator gains control of a significant portion of a particular asset, (ii) a 51% attack is successful which means a mining entity gains control of enough hash power or stake in a proof-of-stake system to control which blocks are mined which would significantly erode trust in the public blockchain networks, (iii) a protocol’s decision-making power is concentrated to one or few holders which means consensus processes are threatened leading to poor or disruptive changes, or (iv) if applicable, key actors make certain changes against the will of the broader community that could adversely impact the protocol or Crypto Asset’s value. This is not an exhaustive list and new protocols can present unique concentration risks.

(10) Platform Risks

There are risks associated with using an internet-based trade execution software application including, but not limited to, the failure of hardware and software. Ndax maintains an independent and secure ledger of all transactions to minimize loss and maintains contingency plans to minimize the possibility of system failure. However, Ndax does not control signal power, reception, routing via the internet, configuration of your equipment or the reliability of your connection to the internet. The result of any failure of the foregoing may be that you are unable to place an order, your order is not executed according to your instructions, or your order is not executed at all. Under certain market conditions, you may find it difficult or impossible to liquidate a position quickly at a reasonable price. This can occur, for example, when the market for a particular Crypto Asset suddenly drops, or if trading is halted due to recent news events, unusual trading activity, or changes in the underlying crypto asset system. The greater the volatility of a particular Crypto Asset, the greater the likelihood that problems may be encountered in executing a transaction. In addition to normal market risks, you may experience losses due to one or more of the following: system failures, hardware failures, software failures, network connectivity disruptions, and data corruption.

Should a price quoting error occur, Ndax is not liable for any resulting errors in account balances and reserves the right to make necessary corrections or adjustments to the relevant account. Any dispute arising from such price quoting errors will be resolved based on the fair market value, as determined by Ndax in its sole discretion and acting in good faith, of the relevant market at the time such an error occurs. In cases where the prevailing market represents prices different from the prices we have posted on our platform, Ndax will attempt, on a best-efforts basis, to execute orders on or close to the prevailing market prices. This may or may not adversely affect the User’s realized and unrealized gains and losses.

(11) Cyber Security Risk

The nature of Crypto Assets may lead to an increased risk of fraud or cyber-attack. A breach in cyber security refers to both intentional and unintentional events that may cause Ndax to lose proprietary information or other information subject to privacy laws, suffer data corruption, or lose operational capacity. This in turn could cause Ndax to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or monetary loss. Cyber security breaches may involve unauthorized access to Ndax’s digital information systems (e.g., through “hacking” or malicious software coding), but may also result from outside attacks such as denial-of-service attacks (i.e., efforts to make network services unavailable to intended Users). In addition, cyber security breaches of Ndax’s third-party service providers can also give rise to many of the same risks associated with direct cyber security breaches. As with operational risk in general, Ndax has established risk management systems designed to reduce the risks associated with cyber security. Notwithstanding Ndax’s efforts to implement robust cyber security risk management systems, Ndax may not successfully detect and prevent a cyber security breach or attack that results in the theft or loss of proprietary information.

(12) Inadequate Due Diligence Risk

Ndax has established and applies policies and procedures to review crypto assets before making them available for trading on the Platform. Such review includes, but is not limited to, publicly-available information concerning: (i) the creation, governance, usage and design of the crypto asset, including the source code, security and roadmap for growth in the developer community and, if applicable and available, the background of the developer(s) that created the crypto asset; (ii) the supply, demand, maturity, utility and liquidity of the crypto asset; (iii) material technical risks associated with the crypto asset, including any code defects, security breaches and other threats concerning the crypto asset and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them; and (iv) the legal and regulatory risks associated with the crypto asset, including any pending, potential, or prior civil, regulatory, criminal or enforcement action relating to the issuance, distribution or use of the crypto asset. Ndax’s review process is fulsome and flexible in nature and does not prioritize any one factor over another.

Should new facts come to light which demonstrate that our initial review of a Virtual Asset did not account for an unacceptable risk to our Users, we may determine that it is advisable to discontinue support for trading the Virtual Asset on the Platform. While Ndax cannot predetermine with certainty what risks may constitute such unacceptable risks to our Users, Ndax anticipates that those risks would be so severe such that Ndax will have determined that the relevant Virtual Asset is very likely to decrease in value over the long-term; provided, however, that under no circumstances shall Ndax be liable if such a determination proves incorrect. Upon Ndax making such a determination, Ndax may further determine to remove other Virtual Assets that have similar characteristics to the relevant Virtual Asset under review. Ndax’s undertaking of these steps may occur concurrently with a rapid decline in the value of the Virtual Asset(s) in question and may also be a contributing factor to such decline. Users are subject to the risk that there may be very little liquidity in the Virtual Asset (s) while Ndax is undertaking these steps and, as a result, Users may be unable to liquidate their positions in the Virtual Asset (s) or may only be able to liquidate their positions in the Virtual Asset(s) for very little value. 

(13) Reliance on Vendors and Third-Party Service Providers

Ndax’s operations could be interrupted or disrupted if Ndax’s vendors and third-party service providers, or even the vendors and third-party service providers of such vendors and third-party service providers, experience operational or other systems difficulties, terminate their service, fail to comply with regulations, raise their prices or dispute key intellectual property rights sold or licensed to, or developed for, Ndax. Ndax may also suffer the consequences of such vendors and third-party providers’ mistakes. Ndax outsources some of its operational activities and accordingly depends on relationships with many vendors and third-party service providers. For example, Ndax relies on vendors and third parties for certain services, including know-your-client and anti-money-laundering background checks, and systems development and maintenance. The failure or capacity restraints of vendors and third-party services, a cybersecurity breach involving any third-party service providers or the termination or change in terms or price of a vendor and third-party software license or service agreement on which Ndax relies could interrupt Ndax’s operations. Replacing vendors and third-party service providers or addressing other issues with Ndax’s vendors and third-party service providers could entail significant delay, expense and disruption of service. As a result, if these vendors and third-party service providers experience difficulties, are subject to cybersecurity breaches, terminate their services, dispute the terms of intellectual property agreements or raise their prices, and Ndax is unable to replace them with other vendors and service providers, particularly on a timely basis, Ndax’s operations could be interrupted. Finally, notwithstanding Ndax’s efforts to implement and enforce strong policies and practices regarding third-party service providers, Ndax may not successfully detect and prevent fraud, incompetence or theft by its third-party service providers.

(14) Liquidity Constraint Risk

While the liquidity and traded volume of Virtual Assets have generally seen continuous growth, Virtual Assets are still maturing assets. The Platform may not always be able to facilitate the trading of Virtual Assets at prevailing market prices. It may become difficult for Users to execute a trade at a specific price when there is a relatively small volume of buy and sell orders in the Platform’s order book. The Platform may face competition for liquidity with other crypto trading platforms. Unexpected market illiquidity and other conditions beyond Ndax’s control may cause major losses to Users. While the Platform has implemented procedures to ensure sufficient liquidity for its Users, there is no guarantee that such procedures will be effective. 

(15) No Voting Rights

Certain Virtual Assets confer a right to vote on topics that may directly and indirectly affect the functionality and economics of a particular Virtual Asset, including changes to block reward amounts, inflation percentages, consensus modelling or governance models. Ndax does not enable any voting functionality to Users.

(16) Default/Counterparty Risk

We administer and operate the Platform for Virtual Assets. We may not be the counterparty to the trade or transaction of Virtual Assets on the Platform, and we are not responsible for a third-party buyer or seller failing to honour that party’s financial obligations. We are not responsible for losses you may suffer as a result of any default or insolvency of other Users.

(17) Lack of Investor Protection Insurance

As noted above, given that Ndax is registered as an investment dealer, any fiat currency held in Users’ accounts will be eligible for protection from CIPF. However, at no time will any Virtual Asset held in Users’ accounts be eligible for deposit insurance or any protection from either the CIDC or CIPF.

(18) Applicable Fees and Other Charges 

There are certain fees and charges applicable to your purchase and sale of Virtual Assets. Fees are based in part on the fees charged to us by third parties, which are subject to change. For more information on the fees and other charges that you pay through your account on the Platform, see the Relationship Disclosure Document. Please also refer to Ndax’s Fee Schedule at https://ndax.io/fees for further details.

(19) No Advice Risk

We do not provide advice to you, even if you trade over-the-counter (OTC) through the Ndax’s OTC Desk. All executed trades made by account executives through the OTC Desk are under the express instructions of the applicable User acting in that User’s sole discretion and providing Ndax account executives with trading instructions through secure communication channels.

(20) Transfers Risk

Ndax provides you with functionality to transfer Virtual Assets to and from your Ndax account, meaning you have the ability to transfer your Virtual Assets to wallets outside the control of Ndax, such as other trading platforms or personal wallets controlled by you, as well as transfer Virtual Assets from a wallet outside the control of Ndax to Ndax. Transfer functionality may not be available for all Virtual Assets. As blockchain transfers are practically irreversible, you may permanently lose your Virtual Assets in the event you provide Ndax with incorrect information when withdrawing Virtual Assets, fail to follow Ndax’s instructions when depositing Virtual Assets, attempt to transfer unsupported Virtual Assets to Ndax, attempt to transfer Virtual Assets to a deposit address intended for deposits of a different type of Virtual Asset, fail to protect your login credentials or provide a third party with access to your Ndax account. 

All blockchain transfers require the payment of fees (which may be referred to as miners’ fees, gas, network fees or otherwise) to entities unrelated to Ndax. These fees are outside the control of Ndax. The failure to pay a sufficient fee may delay your transfers indefinitely or result in the failure of your transfers to your Ndax account. When you transfer Virtual Assets from your Ndax account to an external wallet, you will pay a per asset flat rate withdraw fee, which is available on the Website.

Ndax does not cover nor record fees charged by, or paid while accessing the services of, an entity unrelated to Ndax.

If you transfer your Virtual Assets to a personal wallet controlled by you, you may be at increased risk of loss or theft of your Virtual Assets and you may have no means of recovering access to your Virtual Assets if you lose or forget the pass phrase, private key or other credentials required to access your personal wallet. 

To provide transfer functionality, Ndax administers “hot wallets” holding limited amounts of Virtual Assets that will be used to facilitate User deposit and withdrawal requests. A hot wallet is administered using devices connected to the Internet. As a result, Ndax may be exposed to an increased risk of fraud or cyber-attack relating to the hot wallets and you may be exposed to fraud risk or proficiency risk on the part of Ndax in connection with its administration of the hot wallets. 

(21) Beta Features

From time to time, Ndax may add new features and invite you to participate in a “beta phase” of the feature and provide feedback on the feature. These features will be identified by a “beta” label in the Ndax app or desktop browser. You are not under any obligation to join a beta phase or use a beta feature, but if you do, there are additional risks that may apply while the product feature is still in the “beta phase”, including that the feature may not work correctly, may be changed and may be discontinued entirely. Ndax makes best efforts to address and correct any issues that arise during beta phases and new product feature launches.

(22) Unforeseeable risks

Crypto assets have gained commercial acceptance only within recent years and, as a result, there is little data on their long-term investment potential. Additionally, due to the rapidly evolving nature of the crypto assets market, including advancements in the underlying technology, changes to Virtual Assets may expose Users to additional risks which are impossible to predict. 

STAKING RISK STATEMENT

What is Staking?

Certain blockchains use a consensus mechanism to achieve distributed consensus called “Proof of Stake” or “Delegated Proof of Stake” to verify, append, and secure new data on the blockchain. These mechanisms rely on certain nodes, called validators, to verify transactions included in each new block. In exchange for verifying transactions, validators earn crypto asset rewards. To ensure validators follow the protocol rules, validators must put assets “at stake”, in the sense that if a validator fails to follow the rules, some or all of the “staked” assets will be lost, or “slashed”.

Delegated Proof of Stake networks allow other participants to participate in staking without operating a validator. Instead, other participants can delegate the right to stake their assets to a validator. Delegated Crypto Assets never leave the owner’s wallet; delegation only permits the validator to stake the owner’s Crypto Assets on their behalf. When a validator verifies a block of transactions, the rewards earned are split between the validator and all of its delegators, in proportion to each delegator’s share of all assets delegated to the validator. 

General Staking Risks

In accordance with the terms of the Decision Document, you have the option to opt-in to the staking services (the Staking Services) that we provide. In addition to the risks set out above, staking is subject to other risks. Staking services are subject to all of the terms and conditions of the User Agreement, which terms are subject to change. You have no right to rewards associated with the Staking Services unless and until such rewards are received by Ndax pursuant to a successful validation transaction, at which time the rewards will be credited to your account. Ndax cannot guarantee that you will receive any specific staking reward. Any estimate of a rewards percentage provided by Ndax is an estimate only and may change at any time in Ndax’s sole discretion. The Staking Services provided by Ndax are opt-in accessible services only and Ndax bears no liability for losses incurred because of such Staking Services, including those resulting from on-chain contract security breaches. A determination by a crypto-asset’s network, which is outside of the control of Ndax, may result in the Staking Services being operated erroneously. This may result in a “slashing penalty” and/or the non-payment of expected staking rewards. Ndax has no obligation to compensate you for any slashing penalty or any non-payment of staking rewards. 

Applicable laws, rules and interpretations and judicial and similar decisions may affect Ndax’s ability to offer the Staking Services and may adversely affect the value, use and transfer of your Crypto Assets and the operations of the Staking Service. The tax treatment of certain crypto-asset transactions is uncertain, and it is your responsibility to determine what taxes, if any, arise from all transactions with your crypto-assets, including staking. You are solely responsible for reporting and paying all taxes arising from or related to your Crypto Assets, including from staking. Ndax does not provide any investment, legal, tax or other advice to you in connection with the Staking Services or otherwise. You should conduct your own due diligence and consult your own advisors before making any decision to participate in the Staking Services. Neither your Ndax account balance, nor any of your staked Crypto Assets, are eligible for deposit insurance or any protection from either the CIDC or the CIPF.

Risks in Staking Crypto Assets

The following is a brief summary of some of the risks connected with the Staking Services. These risks are in addition to the risks described above, all of which continue to apply to Crypto Assets that are staked using the Staking Services.

Ndax has assessed the Crypto Assets for which the Staking Services are available, including how the blockchain for those Crypto Assets operate and the staking protocols for those Crypto Assets. As part of its assessment, Ndax reviews: (i) the design and operation of the staking protocols, including  bonding/unbonding or warm-up/cool-down periods, any limits on the number of active validators, the mechanism for selecting validators, slashing or similar penalties, and token inflation; (ii) any publicly available security assessments of the staking protocols; and (iii)where feasible, the number and identity of validators participating in staking.

The summary below is not an exhaustive discussion of all risks nor does it contemplate an individual’s unique risk tolerance. As detailed within this Risk Statement, there are many factors to consider when staking in general and these factors are likely to evolve over time. Many risks in trading Crypto Assets described above also apply to staked Crypto Assets and staking rewards. Specific risks regarding the staking of different Crypto Assets are set out in the Crypto Asset Statements.

(1) Staking Depends on Third Parties

The Staking Services provided relies upon third party operators of validator nodes.

Ndax does not operate validator nodes and will not have an ownership interest in any approved third-party validator nodes. Instead, we select and approve third-party vendors (“validators”) that operate or supply validator nodes on various Proof of Stake blockchain networks. When you use the Staking Services, Ndax will, on your behalf, arrange to stake or delegate your Crypto Assets held in trust by Ndax to one or more approved validators and, if and as required, Ndax may, as your agent, arrange for approved validators to operate validator nodes on your behalf.

Before approving a validator, Ndax conducts due diligence on the validator, by considering the validator’s: (i) management; (ii) infrastructure and internal control documentation; (iii) security measures and procedures; (iv) reputation of operating validator nodes; (v) use by others; (vi) measures to operate validator nodes securely and reliably; (vii) amount of crypto assets staked by the validator on its own nodes; (viii) quality of work, including any slashing incidents or penalties; (ix) financial status and insurance; and (x) registration, licensing or other compliance under applicable laws, particularly securities laws.

Ndax conducts periodic reviews of validators for any changes to the above factors, and Ndax will also monitor approved validators for downtime or slashing events and take appropriate actions required in the event of downtime, slashing or jailing, including arranging to re-stake your Crypto Assets with different validators, if required.

As the Staking Services relies on third party validators the staking of Crypto Assets is subject to various risks associated with the performance of those third parties, including: (i) validators may be subject to regulatory or legal action that prevent them from continuing to operate validator nodes; (ii) nodes operated by validators may be subject to unscheduled downtime as a result of denial of service or other cyber attacks, system outages or other operational issues; (iii) validators may cease to support certain blockchain protocols; (iv) agreements between Ndax and validators may be terminated; (v) Ndax, in its capacity as custodian, may have limited ability to stake or delegate due to outages or other reasons; (vi) errors in data provided by validators or custodians; and (vii) Ndax may cease to support the Staking Services.

(2) Staking Rewards Are Subject to Various Risks

While Ndax will pay an annual percentage yield (APY) as advertised on the Platform at a point in time, this does not have to correspond directly with the rewards generated on the blockchain at the time of a transaction validation. We reserve the right to modify the advertised APY and the right to withhold reward payments if a validator fails to perform. There is no guarantee or assurance that you will receive any staking rewards by using the Staking Services. The advertised APY may be affected by, among other factors, the following: (i) changes in the inflation rate of the blockchain on which Crypto Assets are staked; (ii) the total amount of Crypto Assets staked by Users of the protocol; (iii) the total amount of Crypto Assets staked by Users using the Staking Services; (iv) changes to the blockchain protocol as a result of protocol governance decisions; (v) changes to “validator commissions” set by approved validators; (vi) scheduled or unscheduled downtime by approved validators; (vii) halts, outages or other interruptions affecting the blockchain on which Crypto Assets are staked; (viii) temporary outages or other interruptions affecting services provided by Ndax’s custodians; (ix) “slashing” of delegated Crypto Assets or other penalties applied to delegated Crypto Assets or staking rewards as a result of a breach of protocol rules by approved validators; (x) “jailing” of validators in accordance with protocol rules, resulting in delegated Crypto Assets being temporarily or permanently ineligible for staking rewards; (xi) approved validators to which Crypto Assets were delegated ceasing to be eligible to participate in consensus and earn rewards; (xii) warm-up, cooldown, bonding, unbonding or other lock-up periods specified by the protocol; (xiii) whether staking rewards are re-staked, either automatically by the protocol, as part of operational processes by Ndax or manually by you; (xiv) re-delegation of Crypto Assets to different validators; (xv) delays or other operational factors when delegating Crypto Assets on your behalf.

Ndax may calculate and show you a historical reward rate based on rewards actually received or an estimated future reward rate. These rates do not constitute a promise, representation or forecast regarding any rewards you may receive from using the Staking Services. Historic returns and return rates are not indicative of expected or estimated return rates. Historic reward rates will be calculated as an annualized rate based on the quantity of rewards actually received by Users during a period as a percentage of the quantity of Crypto Assets staked during the same period. Historic rate will be net of fees received by validators and Ndax. Estimated future reward rates will be from reputable third-party sources, which may include approved validators, with adjustments for estimated fees received by validators and Ndax. All historic and estimated future reward rates are as at a point in time, are subject to change and may be different from the actual reward rate you receive. Ndax is not responsible for any losses (including any lost profits, lost revenues or opportunity costs) arising from or relating to any of the factors listed above.

Due to price volatility of Crypto Assets and potential illiquidity of Crypto Assets when disposing of staking rewards, your realized staking return in fiat terms may be significantly different from historic or estimated future rates expressed in Crypto Asset terms.

Different blockchain protocols may calculate and distribute rewards on a daily, weekly, monthly or other periodic basis. When you unstake your Crypto Assets during one of these periods, you may be ineligible to receive any staking rewards for that period. Some blockchain protocols have “warm-up” or “bonding” periods during which staked Crypto Assets are not eligible for rewards. When you stake your Crypto Assets, you may not be immediately eligible to receive any staking rewards until any such periods elapse. Ndax regularly and periodically determines, for each User using the Staking Services during a relevant “epoch” or other period, the amount of staking rewards earned by the User during that period. The amount earned will depend on whether your Crypto Assets were staked during a period during which staking rewards were received in connection with staking by Users and whether your staked Crypto Assets were eligible to earn rewards under the rules of the underlying protocol. Ndax distributes your staking rewards, once received, by crediting your account accordingly. In addition, some blockchain protocols may not distribute rewards immediately after they are earned. As a result of the volatility of Crypto Asset prices, the fiat value of staking rewards may fluctuate between the time rewards are earned and the time they are distributed to you.

Staking rewards are received and distributed in the same Crypto Asset that is staked. As a result of the volatility of Crypto Asset prices, the fiat value of staking rewards may fluctuate and the reward rate in fiat terms may be different than the reward rate in Crypto Asset terms. Additionally, depending on the protocol, and if you elect to participate in reoccurring staking, paid-out staking rewards may, or may not, be staked automatically. Where staking rewards are not staking automatically, you may need to manually delegate or stake any staking rewards earned by you.

Ndax arranges to stake Crypto Assets belonging to Users on an aggregated, not individualized, basis. For operational reasons, Ndax may not be able to immediately stake or unstake your Crypto Assets when you instruct Ndax to do so. As a result, the amount of staking rewards you receive using the Staking Services may differ from staking rewards you would receive by staking Crypto Assets from your own wallet.

(3) Custody of Staked Crypto Assets

Crypto Assets staked using the Staking Services are staked with approved validators from dedicated wallets. Ndax will continue to hold the private keys or other cryptographic key material required to control staked Crypto Assets for so long as such assets are staked. Custody, possession and control of staked Crypto Assets will not be transferred to validators. In accordance with the terms of the Decision Document, your staked Crypto Assets will remain in the possession, custody and control of Ndax, and Ndax will hold the staked Crypto Assets in one or more omnibus staking wallet accounts in the name of Ndax, separate and distinct from the Crypto Assets held for Users that have not agreed to staking those specific Crypto Assets. Your Crypto Assets will continue to be attributed to your account. To the extent there are material differences or risks relating to the custody of staked Crypto Assets, this is described in the Crypto Asset Statement for such Crypto Asset.

For more information on how Ndax custodies staked Crypto Assets, see our Custody Disclosure Statement.

(4) Bonding, Unbonding and Other Lock-up Periods

Crypto Assets staked using the Staking Services may be subject to technical restrictions specified by the protocol of the underlying blockchain. These restrictions, which may be referred to as warm-up, cooldown, bonding, unbonding or lock-up periods, prevent Ndax from transferring your Crypto Assets during and potentially after they are staked.

Specifically, some blockchain protocols impose lock-up periods upon staking, where the Crypto Assets cannot be withdrawn until the lock-up period has elapsed. Other blockchain protocols may also impose lock-up periods when Crypto Assets are unstaked. During these lock-up periods, previously staked Crypto Assets cannot be transferred and may not continue to accrue staking rewards.

Unless otherwise stated in the Crypto Asset Statement for the applicable Crypto Assets, notwithstanding any lock-up periods that may apply to a Proof of Stake blockchain network, if you select instant redemption, your opt-out will be effective immediately and Ndax will make best efforts to allow you to sell or transfer the Crypto Asset, but you are not entitled to any rewards generated within the reward period. This is subject to Ndax having sufficient liquid Crypto Assets necessary for it to fulfill User instructions to sell or transfer Crypto Assets prior to the unbonding period. As a result, if you select instant redemption, you may be unable to sell or transfer previously staked Crypto Assets until applicable lock-up periods elapse. Due to the volatility of Crypto Asset prices, staked Crypto Assets may decline in value while lock-up periods are in effect.

(5) Slashing and Jailing

Certain Proof of Stake protocols impose penalties where a validator fails to comply with protocol rules. This penalty is often referred to as “slashing”. If a validator is “slashed”, a percentage of the staked Crypto Assets with that validator is permanently lost. Accordingly, if a validator fails to comply with protocol rules, a percentage of the staked Crypto Assets by you may be lost. 

Validators may also be temporarily or permanently “jailed”, which means that they will not be selected to participate in transaction validation and will not be eligible to earn staking rewards.

To mitigate the risk of slashing or jailing, Ndax will: (i)  as set out above, conduct due diligence on selected validators regarding their security and reliability; (ii) stake Users’ Crypto Assets with multiple validators, where feasible, so that a slashing penalty or jailing of a selected validator does not affect all staked Crypto Assets of a User and Ndax can, if appropriate, re-stake Crypto Assets with alternative validators; and (iii) secure indemnities from validators, where feasible, to compensate Users for losses arising as a result of slashing events.

(6) Tax Matters

Canadian tax authorities have not published any guidance regarding the application of sales or income taxes to staking rewards. As a result, the tax treatment of staking rewards earned using the Staking Services may be unclear. You should consult a qualified tax professional or otherwise obtain advice regarding the tax implications of using the Staking Services.

(7) Applicable Fees or Other Charges

Ndax charges a fee for using the Staking Services based on the gross rewards earned by you. Please refer to Ndax’s Fee Schedule at https://ndax.io/fees for further details.

Last Updated on December 19, 2024.