Note: Right now this currency is only being offered to select Private Wealth clients. Click here to learn more about our Private Wealth (OTC) team and what they can do for you.
About this Statement
Bitbuy Technologies Inc. (“Bitbuy” or “we”) believes that our users should understand the crypto assets that they are able to trade using our crypto trading platform (the “Platform”). One of the crypto assets we offer through the Platform is LRC. We created this summary to help you understand the basics of LRC as well as some of the risks involved in acquiring it. While we tried to describe the key features of LRC here, this summary isn’t meant to tell you everything you’d want to know before acquiring it. You should also do your own research on LRC to make sure you are comfortable acquiring it.
Description of LRC
LRC is an Ethereum-based token (known as an ERC-20 token) associated with the Loopring protocol (“Loopring”), an open source and non-custodial exchange and payment protocol on the Ethereum network. Loopring was developed by David Wang, a software engineer and entrepreneur based in Shanghai, China.
Loopring is designed using a technology known as a “zkRollup” (short for a “zero knowledge roll-up”) to increase the speed of validating transactions for decentralized exchanges. A decentralized exchange is a kind of crypto trading platform that relies on smart contracts to process transactions as opposed to a centralized intermediary like Bitbuy. When transactions are settled on decentralized exchanges it can take an extended period of time while blocks are validated because they are validated on the Ethereum network. Also, the large throughput of transactions occurring through decentralized exchanges can add to network congestion, slowing transaction processing and increasing related fees. In general terms, a zkRollup can increase the efficiency of a decentralized exchange by bundling all of the data relating to hundreds of transactions into a single package known as a “validity proof”. This is done by having the transactions occur off of the main Ethereum blockchain on what is known as “Layer 2”. Once all the transactions are processed, the data necessary to verify their validity is packaged as a validity proof, which is then recorded on the main blockchain. In theory, the zkRollup allows users to maintain the benefits of an immutable blockchain and also gain the added benefits of increased speed and lower fees.
LRC is necessary part of the functionality of Loopring. In order to operate a decentralized exchange on Loopring, the exchange must lock up at least 250,000 LRC or 1,000,000 LRC depending on whether the exchange will use on-chain data proofs. These deposits are used by Loopring to incentivize performance of these exchanges, which could lose their deposit if they operate poorly. Holders of LRC who stake their tokens may also earn a portion of trading fees paid to Loopring.
LRC’s value is linked to the success of Loopring more generally. Should demand decline for Loopring, it is likely that the value of LRC will also decline.
Loopring faces competition from centralized crypto asset trading platforms and other Layer 2 scaling solutions (i.e., solutions to increase the speed and lower the fees of blockchains like the Ethereum network and the Bitcoin network). Over time, demand for Loopring may decline if centralized crypto asset trading platforms grow more dominant. On the other hand, demand for Loopring may decline in the face of competition from other Layer 2 scaling solutions. Should demand decline for Loopring, it is likely that the value of LRC will also decline.
Like other crypto assets, there are also some general risks associated with acquiring LRC. We describe many of these general risks in the risk statement we publish on our website, including risks relating to: (i) volatility; (ii) access, loss or theft, (iii) control of processing power; (iv) settlement of transactions on crypto asset networks; (v) momentum pricing; (vi) private keys; (vii) internet disruptions; (viii) faulty code; (ix) network development and support; (x) regulatory risk; (xi) network forks; (xii) air drops; (xiii) voting rights; (xiv) cybersecurity incidents and other systems and technology problems; and (xv) unforeseeable risks. While we tried to describe the key risks associated with LRC here and in our risk statement, these aren’t all of the risks associated with trading in LRC. You should also do your own research on LRC to make sure you are comfortable acquiring it.
How Bitbuy Decides to List Crypto Assets
Bitbuy reviews crypto assets before making them available for trading on the Platform. In making our decision to list a new crypto asset, we consider publicly available information about the crypto asset, including (among other things) its creation, design, governance, usage, supply, demand, maturity, utility, liquidity, material technical risks and legal and regulatory risks.
To date, we have only made crypto assets available for trading on the Platform which have significant supply, demand and liquidity. In our experience, crypto assets with these qualities tend to also satisfy the other criteria we evaluate as part of our review. That being said, our review process is fulsome and flexible, and we don’t prioritize any one factor over another. You should review the risk statement published on our website for more information about our procedures for determining whether to make a crypto asset available for trading on the Platform.
Bitbuy is offering crypto contracts to purchase and sell LRC in reliance on a prospectus exemption contained in the exemptive relief decision Re Bitbuy Technologies Inc. dated November 30, 2021. 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 provinces and territories of Canada would not apply in respect of a misrepresentation in this statement.
No Canadian securities regulatory authority has expressed an opinion about LRC, including an opinion that LRC is not itself a security and/or derivative.