Relationship Disclosure Document

Please note that Ndax (as defined below) has submitted an application for registration under securities legislation in Canada, but is not currently registered, and is operating under the provisions of the PRU (as defined below). There can be no assurance that Ndax will be registered and if it fails to become registered in any province or territory in Canada, it will promptly cease carrying on registrable activity in such province or territory.

Please Review and Retain this Document

(1) Purpose

This document contains important information about your relationship with us, the products and services we offer, the nature of the accounts you have with us, the manner in which they are operated, and our responsibilities to you.

Other important information you need to know about your relationship with us is contained in other documents and materials that are provided or made available to you as a user in connection with your use of the Ndax Platform (as defined below), such as our User Agreement that you enter into on our website or mobile application or other documentation that you complete and receive in connection with the Crypto Contracts (as defined below) to buy and sell Virtual Assets (as defined below) through the Ndax Platform or in connection with your use of the Staking Services (as defined below), including our Privacy Policy, the Risk Statement, the Self-Custody Disclosure Statement and the Conflicts of Interest Statement, and the periodic reporting and updates about changes to information that will be provided to you from time to time.

This document is provided to you at the time you open your account(s) with us. If there is a significant change to the information contained in this document, we will provide you with updated information in a timely manner on the Ndax Platform.

Please direct any questions about this document to Ndax’s Compliance Department by e-mail: [email protected].

(2) Overview of Ndax Canada Inc.

Ndax Canada Inc. (Ndax, we, us, or our) is a private Alberta corporation with a head office in Calgary, Alberta. We operate a proprietary and fully automated internet-based order-execution-only platform (the Ndax Platform), found at https://ndax.io or our mobile application, for the trading of bitcoin, ethereum and anything commented considered a crypto asset, digital or virtual currency, or digital or virtual token, that are not themselves securities or derivatives (Crypto Assets) and crypto assets that are designed to maintain a stable value over time by referencing the value of a fiat currency or any other value or right, or combination (referred to as Value-Referenced Crypto Assets, and together with Crypto Assets, the Virtual Assets) in Canada that enables users to buy, sell, hold, stake, deposit and withdraw Virtual Assets, as applicable. We also offer over-the-counter (OTC) trading services to allow institutional and high net-worth individual users and other users who want to take immediate delivery of their Virtual Assets to place orders “off-platform” through Ndax’s OTC Desk.

Ndax is currently operating under a pre-registration undertaking (PRU) dated March 24, 2023 (found here) that it signed in favor of the Alberta Securities Commission and the other members of the Canadian Securities Administrators. While operating under the PRU, Ndax has made an application in each jurisdiction of Canada where Ndax carries on business as a crypto asset trading platform to obtain exemptive relief related to prospectus requirements and trade reporting requirements. Ndax is seeking registration in the category of investment dealer in all provinces and territories of Canada and membership with the Canadian Investment Regulatory Organization (formerly IIROC) (CIRO). In connection with this application, Ndax will seek approval to operate an alternative trading system, exchange, or clearing agency, as applicable, in each province and territory of Canada (other than British Columbia Saskatchewan, New Brunswick, and Nova Scotia), and will seek exemptive relief from certain marketplace and clearing agency requirements.

(3) Our Relationship with You

Our services are provided on an order-execution-only basis. In other words, users who purchase Virtual Assets through the Ndax Platform or participate in Staking Services make their own investment decisions. Ndax does not provide investment advice or recommendations to you regarding any of your investment decisions through the Ndax Platform, nor does Ndax conduct a determination that specific Virtual Assets offered on the Ndax Platform or specific Staking Services are suitable for you.

Before opening an account for you, we make a general assessment of whether an account to transact in Crypto Contracts to purchase and sell Virtual Assets through the Ndax Platform and participate in the Staking Service is appropriate for you. As a part of this account appropriateness assessment and before allowing you to transact on the Ndax Platform, we collect information relating to your experience and knowledge in investing in Virtual Assets and staking, financial assets and income, and risk and loss tolerance, and where applicable, we impose certain restrictions on the acquisition of Virtual Assets based on your information.

An account with us is intended for investors who are comfortable making their own investment decisions and taking responsibility for their investments. If you are looking for investment advice, you should not open an account with us.

(4) The Products and Services that We Offer

We only trade Crypto Contracts based on (a) Crypto Assets that we have reasonably determined are not securities and/or derivatives under Canadian securities legislation, or (b) Value-Referenced Crypto Assets that have been approved for trading in accordance with the PRU. A current list of Virtual Assets (including any approved Value-Referenced Crypto Asset) approved by us for trading on the Ndax Platform can be found here. If we hold the Virtual Assets beneficially owned by you in a custody account on your behalf, our obligation to you is referred to as a “Crypto Contract”, which may be considered a security and/or derivative in Canada pursuant to CSA Staff Notice 21-327 Guidance on the Application of Securities Legislation to Entities Facilitating the Trading of Crypto Assets and Joint CSA/IIROC Staff Notice 21‑329 Guidance for Crypto-Asset Trading Platforms: Compliance with Regulatory Requirements.

The Ndax Platform offers a central-limit order book on which our users trade Virtual Assets with each other and with us under the terms of our Crypto Contracts. As such, we may be considered to be a marketplace for securities and/or derivatives in Canada.

Before offering a Crypto Asset on the Ndax Platform, we perform a product assessment by reviewing publicly available information about the creation, governance, usage, and design of each Crypto Asset, the supply, demand, maturity, utility, and liquidity of the Crypto Asset, the material-technical risks associated with the Crypto Asset, and the legal and regulatory risks associated with each Crypto Asset. Additionally, with respect to certain Crypto Assets that we offer Staking Services for, we also review the operation of the proof-of-stake blockchain, staking protocols, and the risk of loss of such Crypto Assets. In the case of Value-Referenced Crypto Assets, we perform a due diligence review of the issuer, including the attestation reports with respect to the reserve of assets, the redemption right offered by the issuer, and the policies of the issuer that are made available to us.

The Ndax Platform provides users with additional information for each Virtual Assets offered for purchase, sale, holding, or staking on the Ndax Platform (each, a Crypto Asset Statement) including any risks specific to the Virtual Asset and a description of the due diligence performed by Ndax with respect to the Virtual Asset. Ndax updates the Crypto Asset Statement and/or reviews any prior offering approval if there is a material change in the Virtual Asset, including a change in the risk profile or a determination made by a court or regulator that the Virtual Asset is a security and/or a derivative. If a determination is made by a court or regulator that the Virtual Asset is a security or a derivative, we will stop offering the Virtual Asset and you will be required to sell it or withdraw it from the Ndax Platform. In the event a Crypto Asset Statement is updated, existing users will be promptly notified through the Ndax Platform.

Ndax also offers optional proof-of-stake validating staking services (Staking Services) for certain Crypto Assets through the Ndax Platform. Under the Staking Service, Ndax identifies the Crypto Assets in respect of which the Staking Service is available, and you identify the Crypto Assets that you wish to stake by opting into the Staking Services. The Staking Service is offered pursuant to a Crypto Contract. Under the Staking Service, Ndax guarantees a fixed reward payment to you in respect of each applicable Crypto Asset, which fixed reward payment may be changed by Ndax from time to time. The Staking Service is provided by Ndax through experienced third-party validators engaged by Ndax that operate staking nodes.

Ndax does not list any proprietary crypto assets on the Ndax Platform. Subject to the risks related to Virtual Assets outlined in the Risk Statement and the specific risks identified in any Crypto Asset Statement or Value-Referenced Crypto Asset Statement, including with respect to Staking Services, where applicable, the Virtual Assets available on the Ndax Platform will generally be able to be liquidated or sold.

You are responsible for confirming which Virtual Assets are supported on the Ndax Platform and should only deposit those Virtual Assets. Ndax does not permit the deposit of any tokens and other digital assets that are not supported by the Ndax Platform (Non-Supported Assets). If you deposit any Non-Supported Assets, you assume all risks associated with the deposit of such assets and any loss resulting from such deposit. The return of any Non-Supported Assets will be done in accordance with our Deposit of Non-Supported Digital Assets Policy. The Deposit of Non-Supported Digital Assets Policy is available on our website (see here). We will also provide you with a copy on request.

(5) Custody of Assets

Under the terms of the PRU, Ndax is permitted to custody your Virtual Assets, rather than using the custodial services of a third-party custodian, until the earlier of (i) the launch of Ndax Trust Co., an affiliated Alberta trust company and (ii) March 24, 2024. Please refer to our Self-Custody Disclosure Statement, which is incorporated by reference into this document. The disclosure in the Self-Custody Disclosure Statement may change from time to time. Any changes to our Self-Custody Disclosure Statement will be communicated to you from time to time as required.

(6) How We Conduct Know Your Client (KYC) and Account Appropriateness Assessments

When you open your account with us, we are generally required by securities laws to take reasonable steps to: (1) establish your identity, (2) if applicable, establish whether you are an insider of any reporting issuer or issuer whose securities are publicly traded, and (3) ensure that we have sufficient information regarding your financial assets and income, experience and knowledge in investing in Virtual Assets and staking, to enable us to evaluate whether entering into a Crypto Contract with us through the Ndax Platform, participating in Staking Services and opening an account with us is appropriate for you. If we do not think an account is appropriate for you, we will send you a prominent message that this is the case.

In addition, in certain circumstances, we may also be required to make inquiries as to your reputation. Anti-money laundering laws also require us to take reasonable steps to determine whether you are a “politically exposed person” within the meaning of those laws.

We also use your KYC information to recommend a loss limit for your account, and we may remind you of your loss limit from time to time. We do not implement the loss limit by liquidating assets from your account, however, you can enter stop loss orders at any time to implement your loss limit.

We will not approve an account if any sign of fraud is identified or if you clearly demonstrate a poor understanding of Virtual Assets trading or risks associated with trading Virtual Assets or staking.

Ndax conducts a screening process during the user onboarding process to verify your identity, perform sanction screening, and determine the appropriateness of the account. Ndax’s Compliance Department phones individuals who are identified as potentially vulnerable based on multiple parameters that we use, such as age, occupation, or if it is identified that you are having difficulties with completing verification steps and other factors to ensure that they are not victims of financial exploitation or address concerns about your mental capacity as it relates to your ability to make decisions involving financial matters, and will help them understand the risks outlined in the Risk Statement.

After completion of an account appropriateness assessment, a prospective user will receive appropriate messaging about using the Ndax Platform, which could include messaging to a prospective user that Ndax believes that using the Ndax Platform is not appropriate for them.

We are required to determine that an account on the Ndax Platform is appropriate for you and to put your interests first. For a user to open and operate an account on the Ndax Platform, Ndax must obtain, among other things, an electronic acknowledgment from the user confirming that they have received, read, and understood the User Agreement and the Risk Statement. Additionally, the documentation provided to users clearly states that Ndax and its representatives will provide no advice or recommendations in connection with the trading of Crypto Contracts to buy and sell Virtual Assets through the Ndax Platform or participate in Staking Services.

You should promptly advise us of any change to your KYC information that could reasonably result in a change to the account appropriateness assessment of your account, such as a change to your financial assets, income, investment time horizon, or risk profile. Ndax performs an appropriateness assessment prior to opening an account, on an ongoing basis and at least annually.

Providing a Trusted Contact Person

To properly serve you and to help prevent financial exploitation or address circumstances involving potentially diminished mental capacity, Canadian securities laws require us to take reasonable steps to obtain (and keep current) from each user the name and contact information of a trusted contact person, and written consent from each user for us to contact the trusted contact person in certain circumstances. This information may be obtained from you as part of the KYC information that you complete and provide us with. By providing us with a trusted contact person, you are authorizing us to contact this person and to release confidential information about you or your account(s) to the trusted contact person if, at any time, we believe that financial exploitation of you has occurred, is occurring, has been attempted or will be attempted, or we have concerns about your mental capacity as it relates to your ability to make decisions involving financial matters.

We will rely on the trusted contact person you provide us with unless you advise us in writing that you have revoked your consent and provide us with the name and contact information of a new trusted contact person.

If you do not consent to us releasing confidential information about you and your account(s) to your trusted contact person, or if you do not appoint a new trusted contact person (if a revocation of a previous trusted contact person has occurred), we may suspend your account(s) until we have received such consent or details of the new trusted contact person.

What is a trusted contact person? – A trusted contact person is typically a reliable friend, family member or other individual of your choosing who has your best interest in mind and who can speak to us about your health and mental capacity and your financial circumstances should a question arise relating to your decision-making capacity or if fraud, exploitation or abuse is suspected. A trusted contact person is not granted power of attorney over your account(s) unless specifically granted such authority by you (and we receive documentation to evidence such a power of attorney). No instructions related to your account(s) will be accepted by the trusted contact person unless your trusted contact person also has a valid, continuing power of attorney or other authority.

When will we contact a trusted contact? – We will only contact a trusted contact person if financial exploitation is suspected, or we have concerns or reason to believe that you have diminished or loss of mental capacity. It is up to our discretion whether or not a trusted contact person is contacted.

What happens if you are incapable of making financial decisions? – Only a valid, continuing power of attorney can provide the authority to give instructions on your behalf if you are incapable of making financial decisions. Absent such an authority, the court will have to appoint someone to manage your affairs. We recommend that you talk to your legal advisor about having a power of attorney document prepared.

Temporary Holds

We may place a temporary hold on transactions in Crypto Contracts to purchase or sell Virtual Assets through the Ndax Platform or on the withdrawal or transfer of cash or Virtual Assets from your account where we reasonably believe that financial exploitation of you has occurred, is occurring, has been attempted or will be attempted, or that you do not have the mental capacity to make decisions involving financial matters. If we impose a temporary hold, we will provide you with notice of the temporary hold and the reasons for the temporary hold as soon as possible after placing the temporary hold.

(7) Account Documentation and User Reporting

Account Opening Documents

In addition to this document, we encourage you to read the following documents related to your account opening that you will be provided access to:

User Profile – a legally binding contract between you and Ndax.
User Agreement – a legally binding document containing the terms and conditions defining the relationship between you and us.
Conflicts of Interest Statement – a document containing disclosure about the material conflicts of interest identified by us that a reasonable user would expect to be informed of those conflicts of interest.
Risk Statement – a document containing disclosure about the risks associated with investing in Virtual Assets, the purchase or sale of Crypto Contracts through the Ndax Platform and the Staking Services.
Self-Custody Disclosure Statement – a document containing disclosure about how Ndax custodies your Virtual Assets.
Privacy Policy- a document containing information on the purpose of personal information collection and how we collect, use, and disclose your personal information.
Cookies Policy - a document describing how Ndax uses cookies, how you can manage your cookie choices, and how you can contact Ndax with questions about Ndax’s use of cookies.

Transaction Confirmations, Account Statements, and Other Information

You will receive electronic transaction confirmations and monthly statements setting out the details of the transaction history in your account with us.

You have access through your account portal on the Ndax Platform to detailed information relating to the transactions conducted through the Ndax Platform and your account with us, including a list of all positions in Virtual Assets (including the value of the Virtual Assets), details of all transactions conducted, the amount of all currency deposited into your account, the value of all Virtual Asset deposits to your account as at the time of deposit, and fees paid per transaction. Each month you will receive an electronic communication that indicates that information relating to your account is available through the Ndax Platform.

Investment Performance Reports

You have access through the user portal on the Ndax Platform to investment performance summary information about your account. Additionally, you receive an electronic communication that provides access to an investment performance report about your account at the end of the 12-month period covered by the report. The investment performance report contains information about:

the market value of cash and Virtual Assets in your account at the beginning of the period covered and the date of the report;
the changes in the market value of cash and Virtual Assets in your account over the period covered by the report and since your account was opened; and
the annualized total percentage return for your account over one, three, five and ten years periods and since your account was opened. Total percentage return represents gains and losses of an investment over a specified period of time, including realized and unrealized capital gains and losses plus income, expressed as a percentage.

We will provide a separate investment performance report to you with this information for each of your accounts with us. You have access to investment performance reports through your account portal on the Ndax Platform.

Reports on Charges and Other Compensation

You receive reports on the charges and other compensation that we receive in respect of your account(s) every 12 months, except that the first report(s) that we provide in respect of your account(s) may be for a period of less than 12 months. Each report provides information about applicable operating charges and transaction charges and certain compensation we may have received from third parties. We only send this report to users if there are charges or compensation to report.

If there are charges or compensation to report, we provide you with a separate report for each of your accounts with us. However, we can provide a single report, consolidating this information for each of your accounts, provided that you give us consent in writing to do this.

You have access to reports on charges and other compensation through your account portal on the Ndax Platform.

(8) Performance Benchmarks

An investment performance benchmark is a standard against which the performance of an investment can be compared. Some firms use performance benchmarks so that users can assess the performance of investments held by the firm with the performance of the benchmark. We do not currently use investment performance benchmarks.

(9) Account Fees, Service Charges, and Other Costs of Making an Investment

Operating Charges Associated with Your Account

Ndax may charge users a fee in any amount that is deemed reasonable for the services provided in respect of the operation, transfer, special request processing, dealing with Non-Supported Assets, or termination of their account(s) with us. These types of charges are referred to as “operating charges”. If we decide to impose any new or increased operating charge, we will provide you with at least 60 days prior written notice. All operational charges are disclosed to users prior to applying the charge to your account and are disclosed on the “Fees” page on the Ndax Platform at https://ndax.io/fees.

Transaction Charges Associated with Your Account

Except as described below, we do not currently charge users any commission or other amounts in connection with the purchase or sale of Virtual Assets through the Ndax Platform. These types of charges are referred to as “transaction charges”. If we decide to impose transaction charges, these charges will be disclosed to users prior to the completion of each transaction.

We earn fees for transactions conducted by users on the Ndax Platform. All transaction fees are disclosed to users prior to the completion of each transaction and on the “Fees” page on the Ndax Platform available at https://ndax.io/fees. Currently, transaction fees charged by the Ndax Platform are:

Trade Fee – Ndax charges a trade fee for any trade a user makes between one Virtual Asset to fiat or another Virtual Asset. The trade fee is a percentage of the total value of the trade and is paid in the asset that the trade results in. The percentage is indicated on the “Fees” page on the Ndax Platform from time to time. For example, using a 0.2% trade fee, buying 1 Bitcoin for $1,000 CAD would result in a fee charged to the user of 0.002 BTC. The trade fee to sell 1 Bitcoin for $1,000 CAD would be $2.00 CAD.
Withdrawal Fee – Ndax pays a network fee for any transaction a user makes to withdraw Virtual Assets to an external wallet or to transfer fiat to a bank account. To offset this network fee, Ndax charges the user a flat-rate withdrawal fee specific to each Virtual Asset or fiat currency the user withdraws from the Ndax Platform. The withdrawal fee is adjusted from time to time as the price of the Virtual Asset changes and is disclosed on our website and the Ndax Platform on the “Fees” page.

Compensation Paid to Us

We do not currently receive any compensation from any third party in relation to the Virtual Assets that you purchase through the Ndax Platform. If this changes, we will provide you with a description of any such compensation that we may receive.

Staking Services Fees

Ndax charges a fee for the Staking Services. The fee for Staking Services is disclosed to users prior to participating in the Staking Services. The Staking Services fee is as listed from time to time on the “Fees” page on the Ndax Platform available here.

(10) Impact of Fees, Charges, and Other Expenses on Your Returns

The fees, charges, and other expenses described above under the headings “Operating Charges Associated with Your Account”, “Transaction Charges Associated with Your Account” and “Compensation Paid to Us” will affect the returns on the investments in your account(s) by reducing the returns in proportion to the fees, charges, and expenses. When considering the fees, charges, and other expenses applicable to your account(s) and the investments you hold, you should understand that a fee, charge, or other expense charged to your account(s) or the investments you hold will compound over time as a deduction to the overall value of your account(s) and/or the investments. Every dollar used to cover fees, charges, and other expenses is one less dollar left to invest to compound and grow over time.

(11) Conflicts of Interest

Conflicts of interest may arise at account opening or while a user’s account is held at Ndax. Existing material conflicts of interest and material conflicts of interest that are reasonably foreseeable, which are not avoided, will be addressed in your best interest and will be disclosed to you where required, in a timely manner. Please refer to our Conflicts of Interest Statement {hyperlink}. The disclosure in the Conflicts of Interest Statement may change from time to time, for example, if we later consider we have another material conflict that we have not previously disclosed to you or change how we address a conflict in your best interest. Any changes to our Conflicts of Interest Statement will be communicated to you from time to time as required.

(12) Risks of Transacting on the Ndax Platform

Securities laws require us to provide all users with a description of risks that they should consider when making an investment decision. Information about the specific risks associated with investments in Virtual Assets, the purchase or sale of Crypto Contracts through the Ndax Platform, and the Staking Services offered are described in the Risk Statement and in the Crypto Asset Statements or the Value-Referenced Crypto Asset Statements for each specific Virtual Asset.

You should carefully consider whether trading in Crypto Contracts through the Ndax Platform or using the Staking Services is appropriate for you in light of your experience, objectives, risk tolerance, financial resources, and other relevant circumstances. You should understand the nature of the investment and the extent of your exposure to risk.

(13) Using Borrowed Money to Purchase Virtual Assets

We do not lend money, extend credit, or provide margin to our users. Using borrowed money to purchase Virtual Assets involves greater risk than using cash resources only. If you borrow money to purchase Virtual Assets, your responsibility to repay the loan, and pay interest as required by the terms of the loan, remains the same even if the value of the purchased Virtual Asset declines.

(15) Privacy Policy

Ndax’s Privacy Policy is available on our website (see here). We will also provide you with a copy on request.

(16) Your Relationship with Us

It is important that you actively participate in our relationship. In particular, we encourage you to:

Keep us fully and accurately informed regarding your personal circumstances, and promptly advise us of any change to the information that could reasonably result in a change to the types of investments appropriate for you, such as a change to your income, investment objectives, risk profile, investment time horizon or net worth.
Review the documentation and other information available to you on the Ndax Platform regarding your account(s), holdings, performance, and transactions conducted in your account(s).
Ask questions of and request information from us to address any questions you have about your account(s), transactions, or the holdings in your portfolio, or your relationship with us or anyone acting on our behalf.

Last Updated on June 14, 2023