Coinut Canada Ltd. (“Coinut” or “we”) operates a proprietary platform (the “Platform”) that permits clients resident in Ontario to purchase, sell, hold, deposit and withdraw bitcoin, ether and certain other assets commonly referred to as crypto assets, digital or virtual currencies or digital or virtual tokens that are not themselves securities or derivatives (each a “crypto asset”) through Coinut.
This marketplace transparency information statement (this “Statement”) is intended to provide information reasonably necessary to enable a user of the Platform (“you” or “user”) to understand the marketplace operations of Coinut. This Statement is presented to you at the time of opening your account and is available to you on the website and mobile applications of Coinut. By opening an account on the Platform, you are acknowledging having received, read and understood this Statement.
Access will only be granted to individual users that are: (i) at least 18 years old; and (ii) have the legal capacity to open and administer an account.
Access will only be granted to legal entities where: (i) such legal entity is duly organized and validly existing under the applicable laws of the jurisdiction of its organization; (ii) the individual opening the account on the entity’s behalf is duly authorized by such legal entity to act on its behalf; and (iii) such entity or its owners (and any affiliate entity) has not had their access to the Platform previously suspended or terminated.
To receive access, a user must also: (i) agree to be bound by the terms and conditions of use of the Platform (the “Terms”); and (ii) complete the Platform’s onboarding process which verifies a participant’s identity and requires participants to submit sufficient information to allow Coinut to complete its know-your-client obligations under applicable securities and anti-money laundering laws.
Among other purposes, Coinut’s onboarding process is designed to tell us whether you are (or are not) an appropriate candidate for the Platform. Although we accept applications from all types of investors, Coinut may deny you access to the Platform based on the responses you provide to our on-boarding questions. Coinut will not unreasonably prohibit or limit your access to our products or services.
Participants seeking access to Coinut’s application programming interface (“API”) are required to complete a questionnaire (the “API User Questionnaire”). The API User Questionnaire asks prospective API users to discuss their level of sophistication, planned trading strategies, experience with API tech algo strategies and understanding of the prohibited uses of the Platform outlined in the Terms. Coinut may deny access to its API if a user’s responses to the API User Questionnaire do not demonstrate a sufficient level of sophistication and experience.
Pursuant to the Terms, Coinut may suspend or terminate your access to the Platform should you use the Platform in any manner prohibited by Section 32 of the Terms. For more information on these prohibited uses, please see “Rules Governing Trading” below.
In keeping with the “Fair Access” requirements set out in applicable securities laws, Coinut does not provide any preferences, benefits, information or special pricing to any user, including any Coinut affiliate or related party that may access the Platform.
RISKS RELATED TO TRADING ON THE PLATFORM
For more information on the risks related to operation and trading on the Platform, please review the risk statement published on our website.
HOURS OF TRADING
The Platform allows for trading 24 hours a day, 7 days a week.
For more information on the fees charged by Coinut in connection with its operation of the Platform, please see our fee schedule.
HANDLING OF ORDERS
Types and Entering of Orders
Orders may be entered using the Platform’s website, mobile applications or through its API. Users may only place market and limit orders on the Platform. The Platform does not facilitate indications of interest.
In order to enter a market order, a participant may choose to input the amount of crypto assets it wishes to buy or sell by populating the quantity field or by selecting a percentage of its total holdings of an asset it wishes to buy or sell. Upon choosing one of these options, the “Total” field will pre-populate to inform the participant of the approximate value it is likely to receive on execution of the order. The interface for entering limit orders on the Platform is similar, although it also provides a price field which participants are able to populate in order to indicate the price at which they wish their order to be executed.
Participants seeking to access the marketplace are provided with instructional content through the “Support” page accessible on Coinut’s website. Through the use of Zendesk, support staff are able to provide responses and support to participants. The Support page hosts a catalogue of support documents. Under the Support page, the FAQ section provides participants with instructions as to how one can transact on the marketplace. These instructional documents help ensure that participants have knowledge of the marketplace.
In real time, API users have the ability to request information from the order book and view or perform actions (e.g., bid, offer, cancel, etc.) in a method desired by the API user. The API user has no preferential access to information or order priority. The API user can design their own interface to make use of the same data available to other participants.
Interaction, Matching and Execution of Orders
Orders are entered electronically by users and match according to the established, non-discretionary methods embedded in the Platform’s matching engine. All eligible orders match within the Platform according to a strict price/time priority. Coinut offers full depth of book visibility insofar as its order-entry systems make available pre-trade order data and order and trade information in real-time and electronically to users.
Circumstances Where Users Trade with a Liquidity Provider
A Singaporean company wholly owned by the Founder of Coinut, Block Calculus Pte. Ltd. (“BCP”), may participate from time to time on the Platform. BCP’s primary business purpose is to support and enhance liquidity and price discovery on the Platform. BCP gathers pricing data from third-party liquidity providers, aggregates that external pricing data and, in turn, places bids and offers across the Platform’s order books. BCP’s trading strategies are designed to provide liquidity around the prevailing market trading price and to offset any purchases or sales simultaneously through third-party liquidity providers. No compensation is provided to BCP for participating on the Platform, although it may earn a spread through its offsetting transactions through third-party liquidity providers by using its capital to perform arbitrage strategies.
Due to potential conflicts of interest arising in connection with BCP’s participation on the Platform, Coinut implements specific escalation procedures to ensure appropriate governance oversight: (i) where a user complains about the conduct of BCP; (ii) where BCP is a contra-party to a trade which is requested to be amended, cancelled or corrected (whether the request is made by BCP or the other contra-party); and (iii) in connection with its monitoring and supervision of BCP’s trading activities.
CANCELLATIONS, AMENDMENTS AND CORRECTIONS OF TRADES
Circumstances for Cancellation, Amendment or Correction
Coinut may cancel, amend or correct executed trades where: (i) instructed to do so by a regulator; (ii) the cancellation, amendment or correction is requested by a party to the trade, and consent is provided by both parties to the trade; and (iii) the cancellation, amendment or correction is necessary to correct an error caused by a system or technological malfunction of the marketplace systems or equipment, or caused by an individual acting on behalf of Coinut, or otherwise for the purpose of mitigating errors made by Coinut in order execution.
A cancellation or correction may be appropriate where an order was filled at a price that was excessively different than the prevailing market price at the time of the error and where it was clear that the contra-party was able to capture a significant financial advantage as a result of the error. Where a correction is required due to a Coinut technical issue, the trade will be corrected, the contra-party will be notified of the issue and all attempts will be made to resolve the matter in a fair manner. If a user experiences a technical issue that is not a Coinut issue, the user may notify Coinut of the error and efforts will be made by Coinut to resolve the error though discussion with the contra-party.
Process for Users to Request Cancellation, Amendment or Correction
A user wanting to cancel, amend or correct an executed trade can seek the consent of the contra-party to the trade, can request Coinut to seek consent from the contra-party or can call the applicable securities regulatory authority, who can then instruct Coinut to cancel, amend or correct the trade.
Requests for trade cancellations or amendments must be notified to Coinut’s Customer Service Desk promptly on discovery. In general, Coinut will not consider requests more than 12 hours after execution of the trade.
Coinut assumes no responsibility or liability for trades that are canceled, amended or corrected.
Determining the Price of a Corrected Trade
The price to which a trade should be corrected will be determined by comparing the expected executable price at the time the trade was placed relative to the price at which the trade was executed. If required, Coinut may reference executable pricing at the time the trade was placed from competing marketplaces.
COMPLAINTS AND DISPUTE RESOLUTION
If you have a complaint about Coinut’s services, please send a written complaint either: (i) by mail to: Coinut Canada Ltd., 1 Yonge Street, Suite 1801, Toronto, Ontario; or (ii) fill up the complaint form.
Content of Complaint
In your written complaint, please tell Coinut: (i) the issue you experienced; (ii) when it occurred; and (iii) how you expect Coinut to respond (e.g., by returning your money, offering an apology, correcting information). Please try to be as specific as possible in describing your complaint so that we can assist you better.
How Coinut Responds to Complaints
Coinut will typically acknowledge your complaint in writing within 5 business days of receiving it and, in all cases, will attempt to acknowledge your complaint as soon as reasonably practicable. In order to assist you, you may be requested to provide further information.
Coinut can resolve your complaint most efficiently if you communicate your complaint as soon as possible, reply promptly for further information requests and keep and provide copies of all relevant documents or other information that are stored outside the Platform.
After acknowledging your complaint, Coinut will typically provide a written decision to you within 90 days of receiving your complaint. The written decision will provide: (i) a summary of the complaint; (ii) the results of Coinut’s investigation; (iii) a decision to make an offer to resolve the complaint or deny it, and (iv) an explanation of the decision.
If Coinut cannot provide you with its decision within 90 days, Coinut will contact you to explain that the decision will be delayed and the reasons why Coinut was unable to provide the decision within 90 days. Coinut will also inform you of the new date for the decision. You may be eligible for the independent dispute resolution service offered by the Ombudsman for Banking Services and Investments (the “OBSI”).
Responding to Coinut’s Decision
If you are dissatisfied with our decision or if Coinut has not made a decision within 90 days, you may be eligible for the dispute resolution service we subscribe to with the OBSI if: (i) your complaint relates to a trading or advising activity of Coinut or by one of its representatives; (ii) you brought your complaint within 6 years from the time that you first knew, or ought to have known, about the event that caused the complaint, and (iii) you file your complaint with OBSI within the following timelines: (A) if Coinut does not provide you with its decision within 90 days, you can take your complaint to OBSI any time after the 90-day period; or (B) within 180 days after Coinut provides you with its decision if you are not satisfied with it. The OBSI can recommend compensation of up to $350,000. The service is available to you at Coinut’s expense. You are not restricted in any way from taking your complaint to a dispute resolution service of your choosing at your own expense. You may also be able to start an action in a civil court.
You always have the right to go to a lawyer or seek other ways to resolve your complaint. A lawyer will advise you of your options. There are time limits for taking legal action, so any delay could limit your options and your legal rights.
Contact Information for the OBSI
Toll-Free Telephone: 1 (888) 451-4519
CRYPTO ASSETS AVAILABLE FOR TRADING ON THE PLATFORM
For more information on the crypto assets made available for trading on the Platform, please review the crypto asset statements Coinut publishes on its website. These statements are intended to identify information relevant to understanding the nature, risks and use of the crypto assets made available for trading on the Platform.
CONFLICTS OF INTEREST
For more information on conflicts of interest arising from Coinut’s operation of the Platform and the policies and procedures it has implemented to manage them, please review the conflicts of interest policy Coinut publishes on its website.
PROCESS FOR PAYMENT
As Coinut does not offer margin or leverage, your account will need to be pre-funded to complete any trades on the Platform. Coinut allows you to fund your account in Canadian and United States dollars. Coinut also allows you to fund your account with any of the crypto assets we make available for trading on the Platform that you hold in a personal wallet. Similarly, you are able to withdraw: (i) Canadian and United States dollars from your account; and (ii) crypto assets to a personal wallet. For more information on the steps you need to take to fund or withdraw from your account, please visit Coinut’s support page.
SETTLEMENT OF TRANSACTIONS
The matching of buyers and sellers takes place via the order book and the Platform’s matching engine. An internal ledger records all transactions that take place between participants for reconciliation purposes. All users transacting in the marketplace must have the necessary funds to complete the order available in their account prior to being able to enter an order. When an order from a user is matched through the matching engine with another user’s order, an update to the internal ledger takes place. Because all assets are already verified as being available from both the buyer and the seller prior to order entry, all transactions are updated to the internal ledger when matching takes place.
How Your Cash Is Handled
Users’ cash assets are held separate from Coinut’s own funds in segregated accounts with DBS Bank. When you wish to purchase crypto assets using cash, you will instruct Coinut to transfer the cash held on your behalf with DBS Bank to fund your purchase. When you sell crypto assets from your account with Coinut, the cash proceeds will be transferred by Coinut to DBS Bank. There may be risk in permitting Coinut to have access to your cash in this manner insofar as it could be accessed improperly and misused. However, access to your cash is permitted only to settle transactions initiated by you.
How Your Crypto Assets Are Handled
Coinut allows and encourages users to withdraw crypto assets purchased on the Platform to their own private wallets. However, Coinut recognizes that certain customers may desire the convenience of relying on Coinut’s custodial solutions. If you do not withdraw your crypto assets to a private wallet, Coinut deposits all of the crypto assets transacted through the Platform with Coinbase Custody Trust Company, LLC (“Coinbase Custody”) or in online (or “hot”) wallets secured by software provided by Fireblocks Inc. Coinbase Custody is regulated by the New York Department of Financial Services under the New York Banking Law and is licensed to custody its clients’ crypto assets in trust on their behalf.
The holding of your crypto assets with a third party custodian may increase certain risks when compared to you holding your assets on a private wallet. In particular, you may be exposed to insolvency risk (credit risk), fraud risk or proficiency risk on the part of Coinut. You may also face risk in permitting Coinut to have access to crypto assets owned by you that are held with Coinbase Custody, in the event that crypto assets could be accessed improperly and misused. Neither Coinut nor Coinbase Custody will pledge, re-hypothecate or otherwise use your crypto assets in the business of Coinut or its affiliates.
RULES GOVERNING TRADING
The rules governing trading on the Platform are contained in Section 32 of the Terms. Pursuant to that provision, users agree to not violate any law, contract, intellectual property or other third-party right or commit a tort, and that they are solely responsible for their conduct while using Coinut’s services. Without limiting the foregoing, users are prohibited from:
- using Coinut’s services in any manner that could interfere with, disrupt, negatively affect or inhibit other users from fully enjoying Coinut’s services, or that could damage, disable, overburden or impair the functioning of Coinut’s services in any manner;
- using Coinut’s services to pay for, support or otherwise engage in any illegal gambling activities, fraud, money-laundering, terrorist activities or other illegal activities;
- using any robot, spider, crawler, scraper or other automated means or interface not provided by us to access Coinut’s services or to extract data;
- using or attempting to use another user's account without authorization or sub-delegating or otherwise allowing another person to trade using its access to the Platform;
- attempting to circumvent any content filtering techniques we employ, or attempting to access any service or area of Coinut’s services that the user is not authorized to access;
- developing any third-party applications that interact with Coinut’s services without our prior written consent;
- providing false, inaccurate, or misleading information;
- encouraging or inducing any third party to engage in any of the activities prohibited by the Terms;
- using Coinut’s services to take advantage of or profit from any technical glitch, malfunction, failure, delay, default or security breach;
- using any automated means to purchase or sell crypto assets or otherwise using Coinut’s services without our prior written consent;
- impersonating another person;
- violating the Terms;
- undertaking any trading activity that could be considered to constitute a manipulative or deceptive practice;
- violating any market misconduct prohibitions pursuant to applicable securities laws and criminal laws;
- engaging in an action or communication that creates a misleading impression of the market price for a crypto asset, which includes trading back and forth with another party, knowing that the reason for trading back and forth is to drive the price of a crypto asset up or down;
- placing orders if you do not intend to trade;
- committing fraud;
- colluding with others to help them commit fraud; or
- acting on information, or tipping another person off, or recommending another person trade on information that is not yet generally disclosed to the general public.
Coinut monitors and supervises trading activity to determine whether it is in breach of securities laws or our trading requirements identified in Section 32 of the Terms. Coinut may share anonymized data relating to such trading activity with third-party service providers in order to make such determinations. Pursuant to the Terms, users acknowledge that Coinut will be responsible for monitoring and supervising trading activity on the Platform and that no securities regulatory authorities will be monitoring or supervising trading activity. If a user’s activity appears, after investigation, to be in breach of securities laws or the trading requirements identified in Section 32 of the Terms, we may:
- withdraw the user’s right to make any further trades on the Platform;
- require the user to liquidate its crypto asset holdings on the Platform in an orderly fashion, including requiring that all subsequent proposed sell trades receive our prior approval;
- when all crypto assets have been sold, require that the use provide us with wire transfer instructions so that we can return its funds and close its account; and
- report what we know about the prohibited trading activity to relevant securities and law enforcement authorities.
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