Litecoin (LTC)

About this Statement

Coinut Canada Ltd. (“Coinut” 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 on the Platform is Litecoin (“LTC”). We created this summary to help you understand the basics of LTC as well as some of the risks involved in trading it. While we tried to describe the key features of LTC here, this summary isn’t meant to tell you everything you’d want to know before investing in it. You should also do your own research on LTC to make sure you are comfortable investing in it.

Description of LTC

LTC was created in 2013 by Charlie Lee, a former employee of Google and Coinbase (a U.S.-based crypto asset trading platform). LTC was created as a result of a fork from bitcoin’s (“BTC”) original code (for more information on forks, please see the risk statement published on our website. LTC is focused on handling simpler online transactions than BTC. Whereas BTC is more suited for use as a high-security store of value (like gold) and making large international transfers, LTC was designed for small online purchases and to make payments to friends.

LTC and BTC share many similarities. Both rely on underlying networks which have associated blockchains, utilize “private keys” and “wallets” to enable transfers and track ownership, facilitate the creation of new supply via “mining”, include software source code that governs the cryptographic operations that verify and secure transactions and allow participants in the network to modify the open-source software and persuade other users and miners to adopt the proposed modification.

Despite these similarities, LTC has considerably lower transaction fees and faster transaction speeds than BTC. LTC facilitates faster payments and lower transaction fees by tweaking the way blocks work on its network. Where transactions are confirmed on the BTC network by the addition of new blocks, which are added to the blockchain every ten minutes, LTC blocks are added to the blockchain every two and a half minutes, meaning that LTC confirmations happen four times faster than BTC confirmations. LTC’s transaction fees are also much cheaper than BTC transaction fees. Since its launch, LTC has seen average transaction fees that are only a fraction of BTC fees – at times even lower than a cent.

Risks

Like other crypto assets, there are some general risks associated with investing in LTC. We identify 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. We also point out some risks that are specific to LTC below. While we tried to describe the key risks associated with LTC here and in our risk statement, these aren’t all of the risks associated with trading in LTC. You should also do your own research on LTC to make sure you are comfortable investing in it.

Concentration of LTC Holdings

The largest LTC addresses hold a large portion of the LTC currently outstanding. Market volatility may result when large holders of LTC sell significant amounts of their LTC positions.

Decrease in Block Reward

A LTC halving is an event where the block reward for mining new LTC is halved, meaning that LTC miners will receive 50% less LTC for every transaction they verify. LTC halving occurs every 840,000 blocks, which equates to a halving occurring approximately once every 4 years. In 2019, a LTC halving occurred which reduced the amount of LTC miners receive from 25 LTCs per block to 12.5 LTCs per block. Some miners left the LTC network after this halving. Another halving event is scheduled to occur in 2023. If the LTC network lacks miners to develop the network, processing speeds may decrease, and the network may be more vulnerable to security threats (such as a 51% attack).

How Coinut Decides to List Crypto Assets

Coinut 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. 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.

Regulatory Information

Coinut is offering crypto contracts to purchase and sell LTC in reliance on a prospectus exemption contained in the exemptive relief decision Re Coinut Canada Ltd. 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 LTC, including an opinion that LTC is not itself a security and/or derivative.