Legal

Canada Legal Disclosures

PLATFORM RISK STATEMENT

This Platform Risk Statement (Risk Statement) is being delivered to you in connection with the opening of an account with Payward Canada (doing business as Kraken, “Payward”) to buy, sell, hold and stake Crypto Assets (as defined below) on Payward’s Crypto Asset trading platform (the Platform). You must acknowledge having received, read and understood this Statement in order to open and operate a Payward account. Please read this Statement in its entirety. Capitalized terms used and not defined in this Risk Statement have the meanings given to them in the Terms of Service.

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.

The Canadian Securities Administrators (CSA) has provided guidance that the contractual relationships entered into by Payward and its users in connection with their purchase and sale of crypto assets using the Platform constitute “Crypto Contracts.”

Pursuant to the Joint Canadian Securities Administrators and Investment Industry Regulatory Organization of Canada 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 Payward’s understanding of CSA SN 21-329, the contractual relationships entered into by Payward and its users in connection with their purchase and sale of crypto assets using the Platform may constitute “Crypto Contracts.”

No securities regulatory authority has expressed an opinion about the Crypto Contracts or any of the Crypto Assets made available on the Platform, including any opinion that a Crypto Asset is not a security and/or derivative.

Payward is seeking to be registered as a Restricted Dealer and is seeking exemptive relief from registering as a Marketplace in all provinces and territories in Canada. Payward is operating pursuant to the provisions of a Pre-Registration Undertaking filed with its principal regulator the Ontario Securities Commission on March 24, 2023, which permit Payward to operate a crypto asset trading platform on which Canadian residents can buy, sell, hold and stake crypto assets that have been made available for trading by Payward.

By using the services made available on the Platform, you understand that there are substantial risks associated with the purchase, sale, holding and staking of Crypto Assets, and you are agreeing to familiarize yourself and assume any and all such risks, including:

Risks Associated with your Account

(a) Purchasing, selling, holding and staking Crypto Assets may not be suitable for you. You should carefully consider whether such activities are appropriate for you considering your knowledge, experience, financial objectives, financial resources and other relevant circumstances, particularly if you use funds drawn from retirement savings, student loans, mortgages, emergency funds, or funds set aside for other purposes. The volatility and unpredictability of the price of Crypto Assets may result in significant loss over a short period of time.
(b) By opening an Account, you agree that we will hold the Crypto Assets in your Account on your behalf in accordance with our custody policies and procedures. As set out in the Terms of Service, you have the right to withdraw your Crypto Assets from the Platform at any time, subject to payment of the withdrawal fee set out on the Payward website.
(c) An Account is not a bank account, and funds or Crypto Assets received or held in your Account do not earn interest.
(d) The funds, Crypto Assets or value in your Account are not insured in any way by us. Payward is not a member of the Canadian Investor Protection Fund (CIPF) and the Crypto Assets held by Payward (directly or indirectly through third parties) do not qualify for CIPF protection.
(e) You are permitted to transfer Crypto Assets to and from your Payward Account, meaning you have the ability to transfer your Crypto Assets to wallets outside the control of Payward, for example other trading platforms or personal wallets controlled by you.
If you transfer your Crypto Assets to a personal wallet controlled by you, you may be at increased risk of loss or theft of your Crypto Assets and you may have no means of recovering access to your Crypto Assets if you lose or forget the pass phrase, private key or other credentials required to access your personal wallet.
(f) Certain Crypto Assets confer a right to vote on topics that may directly and indirectly affect functionality and economics of a particular Crypto Asset, including: changes to block reward amounts, inflation percentages, consensus modeling or governance models. Purchasing, selling, holding or staking Crypto Assets with Payward does not currently enable any voting functionality in respect of the Crypto Assets held in your Account.
(g) We cannot reverse a Crypto Asset transaction which has been broadcast to a Crypto Asset network, and losses due to fraudulent or accidental transactions are not recoverable.
(h) Some Crypto Asset exchanges have been subject to cyberattacks and other technical issues that have resulted in the loss or theft of Crypto Assets to their users and there is a risk that a similar cyberattack could affect the services made available on the Platform and result in the theft or loss of your Crypto Assets.
(i) There are risks associated with utilizing an Internet-based trading system including, but not limited to, the failure of hardware, software, and Internet connections. Payward is not responsible for any communication failures, disruptions, errors, distortions or delays you may experience when trading via the Services, however caused.

General Risks Associated with Crypto Assets

(a) Volatility and Liquidity. Price and liquidity of Crypto Assets have been, and may be, subject to large fluctuations on any given day and you may lose any and all value in your Crypto Assets at any time.
(b) Not Legal Tender. Crypto Assets are not part of a central bank that can take corrective measures to protect the value of Crypto Assets in a crisis. Crypto Assets are not legal tender and are not backed by a government; therefore, Crypto Assets do not have the same protection as the money deposited in your bank account.
(c) Value dependent on Market Participants. Crypto Assets have value from the continued willingness of market participants to use Crypto Assets. Crypto Assets are susceptible to loss of confidence, which could collapse demand relative to supply and may result in permanent and total loss of value of a particular Crypto Asset if the market for such Crypto Assets disappears.
(d) 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 Crypto Asset. Due to this short history, it is not certain whether the economic value, governance or functional elements of Crypto 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 Payward 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 Crypto Asset.

Tokens with their functions tied to applications that are built on an underlying blockchain network, such as Bitcoin or Ethereum, are operating within a relatively new, competitive market of Crypto Assets. Demand for said tokens 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. Similar to the risks noted above, Crypto 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 reassess their interest in holding the asset.

Open source developers of blockchain technology have signaled 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 replaced the 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 operate 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.
(e) Blockchain Forks, Halts and 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 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 Crypto Asset. Payward may choose not to support any future fork of the underlying blockchain of the Crypto Assets available on our platform, in which case you may not have any rights to the new Crypto Assets that may be created as a result of that fork.

Similar to the blockchain networks themselves, Crypto Assets built on top of Ethereum (or other blockchains) or that integrate with Ethereum DApps are self-governed and subject to frequent upgrades by the open-source community. As new versions are released, the value of the Crypto Asset might be impacted and material changes to functionality could trigger changes in demand, supply or price. Payward 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. Payward 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 Payward’s ability to support a Crypto Asset.

In some circumstances, persons unrelated to Payward may transfer, or attempt to transfer, new Crypto Assets to existing holders of a Crypto Asset supported by Payward. This is commonly referred to as an airdrop. Due to technical limitations, Payward may be unable to access airdropped Crypto Assets. In the event of an airdrop, Payward reserves the right to determine, in its discretion, whether to support the airdropped Crypto Assets.
(f) Code Defects. In the past, flaws in the source code for Crypto 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’ Crypto Assets. Although the Bitcoin and Ethereum blockchains have demonstrated resilience 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 Crypto Assets traded on the Platform.
(g) Cybersecurity 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 Payward to lose proprietary information or other information subject to privacy laws, suffer data corruption, or lose operational capacity. This in turn could cause Payward to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss. Cyber security breaches may involve unauthorized access to Payward’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 Payward’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, Payward has established risk management systems designed to reduce the risks associated with cyber security.
(h) Stablecoin Risks. Some of the Crypto Assets available on the Platform are “stablecoins”, which are pegged to the value of a fiat currency or other asset and may be redeemable for a specified amount of such fiat currency or asset. Payward conducts due diligence on all stablecoins made available for trading on the Platform, including by reviewing the risk that the stablecoin may be considered a security or derivative under applicable securities legislation. Specific risks associated with each stablecoin are set out in the Crypto Asset Statement for that stablecoin.
(i) Concentration Risks. Certain addresses on the Bitcoin and Ethereum blockchain networks hold a significant amount of the currently outstanding Bitcoin and Ether, respectively. If one of these addresses were to exit their Bitcoin or Ether positions, it could cause volatility that may adversely affect the price. Further, if anyone (i) gains control over 51% of the computing power (hash rate) used by the blockchain network, or (ii) gains control over 51% of available assets, they could use their majority share to double spend their Crypto Assets. If such a “51% attack” were to be successful, this would significantly erode trust in public blockchain networks like Bitcoin and Ethereum to store value and serve as a means of exchange, which may significantly decrease the value of Crypto Assets.

Regulatory Risk associated with Crypto Assets

(a) Changes to applicable law may adversely affect the use, transfer, exchange or value of your Crypto Assets and such changes may be sudden and without notice.
(b) Prior to making a Crypto Asset available for trading on the Platform, Payward conducts due diligence to determine whether the Crypto Asset is a security and/or derivative under the securities and derivatives laws of each of the jurisdictions of Canada and the jurisdiction with which the Crypto Asset has the most significant connection, including by reviewing publicly-available information concerning:
- (i) The creation, governance, usage and design of the Crypto Asset and, if applicable, the background of the developer(s) that created the Crypto Asset;
- (ii) The supply, demand, maturity, utility and liquidity of the Crypto Asset; and
- (iii) Legal and regulatory risks associated with the Crypto Asset, including:
  - (a) any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of the Crypto Asset; and
  - (b) statements made by any securities regulatory authorities in Canada, other regulators in IOSCO-member jurisdictions, or the regulator with the most significant connection to a Crypto Asset about whether the Crypto Asset, or generally about whether the type of Crypto Asset, is a security and/or derivative.
(c) Payward will monitor the Crypto Assets made available for trading on the Platform and analyze whether additional risks have arisen to challenge the initial determination. If new risks are identified, the Crypto Assets will be delisted. Additionally, if a regulator or court of competent jurisdiction disagrees with Payward’s assessment and determines that a Crypto Asset made available for trading on the Platform is a security or derivative, the Crypto Asset will be delisted. In this event, all existing holders of the Crypto Asset will be notified by electronic message and have the opportunity to transfer the Crypto Asset to another blockchain address under the control of the holder and outside of the Platform (“Transfer Instructions”). Crypto Assets in respect of which Transfer Instructions have not been received may be liquidated by Payward on your behalf, and the cash proceeds will be delivered to your Account.
(d) A plain language description of each Crypto Asset made available for trading on the Platform is available on the Kraken website (each, a Crypto Asset Statement).

Safekeeping of Crypto Assets

(a) Payward holds Crypto Assets in an account clearly designated for the benefit of clients or in trust for clients, separate and apart from the assets of non-Canadian clients, and separate and apart from its own assets and from the assets of any custodial service provider (Custody Account). However, client assets may still be subject to risk of loss if (i) Payward or its custodial service provider (Custodian) becomes bankrupt or insolvent; (ii) there is a breakdown in Payward’s or the Custodian’s information technology systems; or (iii) if Payward or the Custodian becomes a victim of a cybersecurity attack. Payward has reviewed the Custodian’s reputation, financial stability, relevant internal controls, and ability to deliver custodial services and has concluded that the Custodian’s system of controls and supervision is sufficient to manage risks of loss to client assets in accordance with prudent business practice.
(b) Payward has established systems and controls to ensure the functional independence of the Custody Account and periodically verifies and reconciles the client assets against the Custody Account. Reporting on the client assets held in the Custody Account is accessible daily. Transfers of the Crypto Assets will be governed by strict policies for approval and address verification.
(c) The Custodian will hold, at all times, at least 80% of client assets on behalf of clients.
(d) Payward will hold not more than 20% of client assets in hot wallets administered by Payward. These assets will also be held in trust by Payward for the benefit of clients or in trust for clients.
(e) You can access your Crypto Assets by logging into your Account on the Platform and selecting or adding a withdrawal address as described in the “How to withdraw cryptocurrencies from your Kraken account” article found on Payward’s Support page. You are responsible for protecting your username and password, and if you lose that information you may not be able to access your Account. We endeavour to honour all withdrawal requests in a timely manner, however, in periods of market volatility or other unusual market activity you may experience delays in withdrawing your assets. In addition, we are not responsible for any delays caused by circumstances beyond our control, including Internet service failures or delays.
(f) Holding crypto assets online in hot wallets is riskier than holding assets within cold wallets or at the Custodian because the assets are online and therefore susceptible to hacks and theft. Payward has policies, procedures and controls in place to help safeguard against these risks.
(g) Access to your Crypto Assets may be limited due to blockchain network outages, internet disruption at Payward or the Custodian, or application instability at Payward or the Custodian. To reduce this risk, Payward and the Custodian have robust business continuity plans and have taken efforts to ensure they meet industry standards for availability.

Risks in Staking Crypto Assets

Payward provides clients with the ability to stake certain Crypto Assets (“Staking Service”) through an entity within the Payward Group, which operates its own validator nodes and may, for certain Crypto Assets, sub-contract the operation of validator nodes to one or more unaffiliated service providers. Payward has an affiliate, Payward Commercial Ltd., which operates validators for Crypto Assets for Payward’s Staking Service. The following is a brief summary of some of the risks connected with staking and is not exhaustive of all risks nor does it contemplate an individual’s unique risk tolerance.

(a) Prior to making Crypto Assets available for staking to clients, Payward, or its affiliate, conducts a review of the staking protocols related to those Crypto Assets in addition to the risk described above under “General Risks Associated with Crypto Assets“. The review will include, at a minimum, the following:
- (i) the operation of the proof-of-stake blockchain;
- (ii) the staking protocols;
- (iii) the risk of loss of the staked Crypto Assets, including from software bugs and hacks of the protocol;
- (iv) due diligence with respect to the validators operated by Payward’s affiliate or third parties, including but not limited to, information about:
  - (1) the persons or entities that manage and direct the operations of the validator,
  - (2) publicly known information about the validator’s reputation and use by others,
  - (3) the approximate amount of Crypto Assets the validator has staked on its own nodes,
  - (4) the measures in place by the validator to operate the nodes securely and reliably,
  - (5) the quality of the validator’s work (i.e., the amount of downtime of the validator, any publicly known past history of “double signing” and “double attestation/voting”, etc.),
  - (6) any publicly known slashing, jailing or other penalties incurred by the validator, and
  - (7) any guarantees offered by the validator against slashing or other penalties and any insurance obtained by the validator that may cover this risk.
(b) client assets that are staked with Payward are in the custody and control as described under the “Safekeeping of Crypto Assets” section above. You retain ownership of the staked Crypto Assets and they shall remain your property when staked.
(c) Clients may choose to allocate a portion or their entire balance to staking, where available. Payward shall remit to the client the applicable percentage of Staking Rewards received from the staking protocol attributable to the amount of staked Crypto Assets. The applicable percentage and timing of such remittances will:
- (i) be determined by Payward in its sole discretion;
- (ii) be subject to Payward’s staking fee;
- (iii) vary by the staking protocol of each staked Crypto Asset; and
- (iv) be further detailed in your Payward Account.

You agree and understand that Payward does not guarantee that you will receive Staking Rewards and that the applicable percentage:

(i) is an estimate only and not guaranteed,
(ii) may change at any time in Payward’s sole discretion,
(iii) may be more or less than the actual Staking Rewards Payward receives from the staking protocol of each staked Crypto Asset, and

Additionally, historic returns and return rates are not indicative of expected or estimated return rates.

(d) Some blockchains on which staked Crypto Assets are maintained may prescribe bonding and/or unbonding periods, which are waiting periods after a token holder has transmitted an instruction to stake or un-stake a token prior to the beginning or ending of the staking process. During this waiting period, no Staking Rewards are earned and a holder cannot access their staked Crypto Assets (e.g. for a sale or transfer).
(e) A determination by a Crypto Asset’s staking protocol that the Staking Service has been erroneously operated may result in a “slashing penalty” and non-payment of the applicable Staking Rewards. Payward agrees to compensate you for any slashing penalties to the extent such penalties are not a result of:
- (i) your acts or omissions,
- (ii) a staked Crypto Asset’s maintenance, bugs, or errors,
- (iii) acts by a hacker or other malicious actor, or
- (iv) Force Majeure Events.
(f) While Payward employs measures to ensure that the Staking Services are accessible 24 hours a day and 7 days a week, Payward cannot guarantee uninterrupted or error-free operation of the Staking Services or that Payward will correct all defects or prevent third-party disruptions or unauthorized third party access. In the event of such disruptions, any staked Crypto Assets may not be generating the Staking Rewards.

MARKET CONDUCT REQUIREMENTS AND RISK DISCLOSURE

The Kraken Spot Market is a proprietary and automated internet-based platform that enables participants to facilitate the buying, selling, holding, deposit, withdrawal and staking of crypto assets. The Kraken Spot Market is operated in Canada by Payward Canada, Inc. (Payward Canada).

Payward Canada’s commitment to fostering an environment of transparency, trust and fairness is fundamental to our success. In support of this commitment, Payward Canada has developed these rules for all Participants (defined below) that trade crypto assets (Crypto) in Canada on the Kraken Spot Market. These Market Conduct Requirements are incorporated by reference into, and form part of, the Canadian terms of service (Terms of Service) which are accepted by each Participant that opens an account using Payward Canada’s website or mobile application (a Kraken Account).

1. MARKETPLACE HOURS

Trading hours are 24 hours a day, seven days a week.

At times, the Kraken Spot Market is down for scheduled maintenance. Participants will be notified well in advance. Refer to Kraken’s status page for maintenance updates to the Kraken Spot Market.

1.1 Access Criteria

The Kraken Spot Market may be accessed by any user that has successfully completed Kraken’s onboarding process and opened a Kraken Account (Participants)

1.2 Termination and/or Suspension of Access

Access to the Kraken Spot Market may be terminated or suspended for a Participant whose account is terminated or suspended by Payward Canada. For more details, refer to Kraken’s Terms of Service

2. ORDERS, MATCHING AND TRADES

Kraken Spot Market makes use of a central limit order book, which provides a publically available view of all available buy and sell liquidity posted by other Participants. Completion of trade “matching” is achieved when a buy order matches a standing sell order.

Participants using the Payward Canada API or Pro user interface feature enter limit or market buy and sell orders directly into the order book, where such orders interact directly with orders of other Participants. Once executed successfully, it is posted to a public trade ledger where anyone with an active connection to the exchange can view.

2.1 Entry of Orders

Please see our Order Types page for a description of the various types of orders that may be available to you.

2.1.1 Rejection of Orders

Any order entered by a Participant, or any unfilled portion of a Participant’s order which, upon entry, interacts with a resting order from the same Kraken Account, will be automatically rejected by the Kraken Spot Market.

2.2 Unfilled and Partial Filled Orders

2.2.1 The portion of a market order that is unfilled upon entry will be cancelled.

2.2.2 The unfilled portion of a limit order that is partially filled upon entry will either a) remain open and be filled once the limit price is met, or b) be cancelled by the Participant.

2.3 Liability for Bids, Offers and Trades

All bids and offers matched on the Kraken Spot Market shall be binding on the buyer and the seller.

2.4 Variation and Cancellation of Orders

Payward Canada reserves the right at all times to refuse to process or to cancel any order for a Crypto transaction entered by a Participant prior to execution, for any reason, including the following reasons:

2.4.1 if a Participant has insufficient assets in their Kraken Account to complete the order;

2.4.2 to prevent reputational risks associated with the transaction or with the Participant;

2.4.3 to enforce any limits associated with the Participant’s account;

2.4.4 in connection with Payward Canada’s obligations under AML Regulation (defined below);

2.4.5 for safety, security and fraud prevention purposes;

2.4.6 to correct an error caused by a system or technological malfunction of the Kraken Spot Market systems or equipment or caused by an individual acting on behalf of the Kraken Spot Market;

2.4.7 in instances where Payward Canada halts all trading on the Kraken Spot Market, as discussed in Section 4; or

2.4.8 if required by applicable law, including compliance with AML Regulation, any court order, or the request of any governmental authority; or

2.4.9 if a Participant adds incorrect order parameters, or adds non-permitted combinations of order parameters.

Payward Canada does not permit the amendment of an order for a Crypto transaction on the Kraken Spot Market. Rather, instances where a Participant would amend an order’s parameters will result in the existing order being cancelled and replaced with a new order. This new order is not guaranteed and will not have the prior order’s priority in the Kraken Spot Market’s central limit order book.

2.5 Variation and Correction of Trades

No trade executed on the Kraken Spot Market shall, subsequent to the execution of the trade, be cancelled, varied, or corrected with respect to the price of the trade, the volume of the trade, or the date for settlement of the trade, except if the variation, cancellation or correction would be necessary to:

2.5.1. correct an error caused by a system or technological malfunction of the Kraken Spot Market’s systems or equipment or caused by an individual acting on behalf of the Kraken Spot Market; or

2.5.2 if required by applicable law, including compliance with AML Regulation, any court order, or the request of any governmental authority

3. ABUSIVE TRADING

3.1 Artificial Pricing

Participants are prohibited from engaging in activities that create artificial pricing. A bid price or sale price will be considered artificial if it is not justified by real demand or supply in a Crypto. Whether or not a particular price is “artificial” depends on the particular circumstances. Some of the relevant considerations in determining whether a price is artificial are:

3.1.1 the prices of the preceding trades and succeeding trades;

3.1.2 the change in the last sale price, best ask price or best bid price that results from the entry of the order;

3.1.3 the recent liquidity of the Crypto;

3.1.4 the time the order is entered and any instructions relevant to the time of entry of the order; and

3.1.5 whether any Participant involved in the order has any motivation to establish an artificial price, or represents substantially all of the orders entered or executed for the purchase or sale of that Crypto.

The absence of any one or more of these considerations is not determinative that a price is or is not artificial.

3.2 Manipulative and Deceptive Activities

3.2.1 A Participant shall not, directly or indirectly, engage in or participate in the use of any manipulative or deceptive method, act or practice in connection with any order or trade.

3.2.2 A Participant shall not, directly or indirectly, enter an order or execute a trade if the Participant knows, or ought reasonably to know, that the entry of the order or the execution of the trade will create or could reasonably be expected to create:

(a) a false or misleading appearance of trading activity in or interest in the purchase or sale of the Crypto; or
(b) an artificial ask price, bid price or sale price for the Crypto or a related Crypto.

There are a number of activities which, by their very nature, will be considered to be a manipulative or deceptive method, act or practice. This includes, without limitation:

(a) making a fictitious trade;
(b) effecting a trade in a Crypto which involves no change in the beneficial or economic ownership (e.g., wash trading);
(c) entering an order for the purchase or sale of a Crypto with the knowledge that an order of Crypto of substantially the same size, at substantially the same time and at substantially the same price for the sale or purchase of that Crypto, has been or will be entered by or for the same or different persons;
(d) making purchases of, or offers to purchase, a Crypto at successively higher prices or in a pattern generally of successively higher prices;
(e) making sales of or offers to sell a Crypto at successively lower prices or in a pattern generally of successively lower prices; and
(f) entering an order or a series of orders for a Crypto that are not intended to be executed.

3.3 Improper Orders and Trades

A Participant shall not enter an order on the Kraken Spot Market or execute a trade if they know or ought reasonably to know that that the entry of the order or the execution of the trade would not comply with or would result in illegal insider trading, tipping, recommending or front-running, as such terms are generally understood under securities laws in Canada. If a Participant uses a nominee to trade for the benefit of a Participant that otherwise would not be able to trade on the Kraken Spot Market, that Participant is in breach of its agreement with Payward Canada and may be in breach of applicable securities laws in their jurisdiction.

3.4 Consequences of Breach

Potential consequences for trading by a Participant that breaches securities laws or these Market Conduct Requirements include:

3.4.1 disabling the Participant’s access to the Kraken Spot Market by reprogramming the Participant’s account so that it can only be closed in an orderly fashion;

3.4.2 restricting the Participant’s trading privileges to “sell only”; and

3.4.3 reporting the Participant’s activity to relevant law enforcement authorities and securities regulators.

4. HALTING OF TRADES

4.1 Maintenance

From time to time, Payward Canada performs maintenance on the Kraken Spot Market’s order matching engine to ensure that it is functioning properly and providing for an orderly market. During these maintenance periods, Payward Canada may halt all trading on the Kraken Spot Market. This halt in trading will result in the immediate cancellation of all open orders by Participants.

4.2 System Failures

As a result of unexpected system failures, including the failure of key services or systems that have been outsourced to a third party, Payward Canada may halt all trading on the Kraken Spot Market. This halt in trading will also result in the immediate cancellation of all open orders by Participants.

5. RISKS RELATED TO TRADING ON THE KRAKEN SPOT MARKET

Section 11 of the Terms of Service sets out risk factors relating to Kraken Accounts that are acknowledged by all Participants. The following risk factors are additional risks related specifically to trading on the Kraken Spot Market.

5.1 Short History Risk

Payward Canada has successfully navigated a considerable number of technical and regulatory challenges to enable the operation of the Kraken Spot Market and believes this is a strong indicator that it will continue to successfully navigate future challenges. That said, the continuation of a vibrant Kraken Spot Market community is not guaranteed and any unforeseen challenges that Payward Canada is not able to navigate could have an adverse impact on the price of Crypto on the Kraken Spot Market.

5.2 Volatility in the Price of Crypto and Liquidity

The Kraken Spot Market may be sensitive to new developments, and since volumes are still maturing, any signiﬁcant changes in market sentiment can induce large swings in volume and subsequent price changes. Crypto prices may be 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 expected future growth of alternative assets. In certain circumstances, it may become diﬃcult to assess the value of your Crypto. The prices available on the Kraken Spot Market, in some cases, may be more volatile and subject to inﬂuence from additional factors not speciﬁc to the value of the Crypto, including liquidity levels and operational interruptions. Operational interruptions can limit the liquidity of Crypto on the Kraken Spot Market, which could result in volatile prices and reduced conﬁdence in the Crypto traded on the Kraken Spot Market. Participants may sustain a total loss of the funds in their Kraken Account, and, in some cases, may incur losses beyond such funds. Participants may not be able to sell the Crypto when they want to, at a competitive market price, or at all.

Under certain market conditions, Participants 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 suddenly drops, or if trading is halted due to recent news events, unusual trading activity, or changes in the Crypto markets more generally. The greater the volatility of the market price of a particular Crypto, 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.

5.3 Electronic Trading and Dependence on the Internet

There are risks associated with using an internet-based trade execution software application including, but not limited to, the potential failure of hardware, software and internet connections. Payward Canada maintains an independent and secure ledger of all transactions to minimize loss, and maintains contingency plans to minimize the possibility of system failure. However, Payward Canada 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. Payward Canada shall not be responsible for any communication failures, disruptions, errors, distortions or delays Participants may experience when trading via or otherwise utilizing the Kraken Spot Market, however caused.

5.4 Uncertainty in Regulation

The Kraken Spot Market is operated in Canada by Payward Canada, which is currently seeking an exemption from marketplace registration from the Canadian securities regulatory authorities. Payward Canada expects that over time, the Kraken Spot Market, as operated in Canada, will mature and become subject to the securities regulatory regime generally applicable to marketplaces in Canada, but there is no assurance that this will happen. If Payward Canada’s anticipated authorization to operate the Kraken Spot Market is suspended or terminated by the securities regulatory authorities, Payward Canada would seek to ensure that there is an orderly wind-down of the Kraken Spot Market which would allow for all Participants’ orders to be filled or otherwise handled in accordance with these Market Conduct Requirements.

5.5 Business Disruption

There is a risk that a transaction will be delayed because of business disruption, whether caused by external events or internally generated systems failure. To mitigate that risk, Payward Canada has robust business recovery policies and procedures as well as related systems risk management, data protection, and cyber-security policies and procedures. Payward Canada tests the effectiveness of these policies and procedures regularly.

5.6 Risk Your Trade Must Be Reversed

There is a risk that trades may have to be unwound because a legally binding order requires Payward Canada to unwind the transactions. This risk exists on all marketplaces for equity and debt securities trading.

5.7 Risk You Make a Mistake in Your Order

A Participant might make an order with the wrong amount of Crypto or the wrong price and not discover that error until after their offer is accepted. Furthermore, if a Participant sends their Crypto to an incorrect wallet address, it may be impossible for the Participant to recover that Crypto. Participants bear these risks under the Terms of Service they have agreed to with Payward Canada. To reduce the risks, Payward Canada requires Participants to review their orders and confirm they are correct before submitting them to the Kraken Spot Market. Participants are responsible for reviewing orders carefully and ensuring they have been prepared to accurately reflect which Crypto and what amount they intend to purchase or sell.

5.8 AML Regulation

Laws aimed at the prevention and detection of money laundering and terrorist financing (AML Regulation) require Payward Canada to verify the identity of Participants and record transactions on the Kraken Spot Market. Payward Canada must report suspicious activities and/or transactions (activity Payward Canada reasonably suspects is related to money laundering) to prescribed government agencies in accordance with AML Regulation. Payward Canada is prohibited from telling Participants that Payward Canada has made such a suspicious activity and/or transaction report or anything about what Payward Canada reported. Payward Canada may also be required to freeze assets in Kraken Accounts and suspend trading on the Kraken Spot Market if it has reasonable suspicion under AML Regulation.

5.9 Cybersecurity Risk

The nature of Crypto 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 Payward Canada to lose proprietary information or other information subject to privacy laws, suﬀer data corruption, or lose operational capacity. This in turn could cause Payward Canada to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or ﬁnancial loss. Cybersecurity breaches may involve unauthorized access to Payward Canada 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). There may be limited or no means for the recovery of lost or stolen Crypto.

In addition, cybersecurity breaches of Payward Canada third-party service providers can also give rise to many of the same risks associated with direct cybersecurity breaches. As with operational risk in general, Payward Canada has established risk management systems designed to reduce the risks associated with cybersecurity.

5.10 No Advice or Recommendations about Crypto

You are responsible for selecting your own Crypto on the Kraken Spot Market. Payward Canada will not provide you with any advice or recommendations about a particular Crypto or mix of Cryptos that you choose. You must rely on your own judgment and the information available on the Kraken Spot Market and, where necessary, seek independent advice.

5.11 No Securities Regulatory Review

No securities commission has reviewed the offerings of Crypto available on the Kraken Spot Market. Neither Payward Canada nor the issuer of any Crypto listed on the Kraken Spot Market is a reporting issuer under the securities laws of any jurisdiction, and there is no requirement for Payward Canada or the issuer of any Crypto to provide full, true, and plain disclosure to the public regarding investments in Crypto.

5.12 Using Borrowed Money

Using borrowed money to finance the purchase of Crypto, including by using your credit card, involves greater risk than using cash resources only. If you borrow money to purchase Crypto, 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 Crypto purchased declines. You can pay for Crypto on the Kraken Spot Market using your credit card, however, the credit is being provided by your credit card company, not by Payward Canada.

A Payward Canada affiliate also offers margin loans to finance the purchase of Crypto to certain qualified Participants, as described in the Terms of Service.

5.13 Data Location

Our service providers may store personal data within their own systems across various jurisdictions in order to perform the services requested by clients or to comply with our legal and regulatory obligations. We require them to protect the confidentiality of personal data, and comply with all relevant privacy and data protection laws. This is described more fully in our Privacy Notice.

5.14 Recordkeeping Risk

Ownership records and transaction histories are recorded in book entry only form in the books of Payward Canada. Payward Canada uses permissioned-based technology and audit tracking to create a complete audit trail of every action on the Kraken Spot Market.

5.15 If We Ever Go Out of Business

If we go out of business for any reason and Payward Canada is unable to continue operating, we will, subject to regulatory permission and with your instructions, transfer your Crypto to another account or digital wallet under your ownership and control and we will return any funds to your credit to the financial institution of your choice.

5.16 Lack of Investor Protection Insurance

Crypto purchased and held in your Kraken Account is not protected by deposit insurance (e.g. CIPF, CDIC) or other investor protection insurance schemes.

5.17 Waiver; Limitation of liability

Any up-to-date market information, including quotes or charts that we provide you is provided ‘as is’ and ‘where is’ without representations or warranties of any kind, and may contain typographical errors, be incomplete, or inaccurate. While Payward Canada may correct any such errors, missing information, or inaccuracies, Payward Canada is under no obligation to do so.

Payward Canada makes no representation or warranty as to the ongoing availability of the site or services. Although Payward Canada strives to provide uninterrupted services, Payward Canada does not guarantee the absence of interruptions. Outages and downtime may occur for a variety of reasons.

6. DISPUTE RESOLUTION

Payward Canada documents and responds fairly and promptly to legitimate complaints made by Participants about any product or service available on the Kraken Spot Market, whether the complaint is received verbally or in writing.

In addition, Payward Canada makes available an independent dispute resolution service if the resolution has not produced a timely decision that is satisfactory to the client as referenced in the Complaints and Dispute Policy.

7. CONFLICTS OF INTEREST

A conflict of interest includes any circumstance where:

(a) The interests of different parties, such as the interests of Payward Canada and other Participants on the Kraken Spot Market, are inconsistent or divergent;
(b) Payward Canada or our representatives may be influenced to put their interests ahead of other Participants’ interests; or
(c) Monetary or non-monetary benefits available to Payward Canada or its personnel, or potential detriments to which Payward Canada or its personnel may be subject, may compromise the trust that Participants have in Payward Canada and the Kraken Spot Market.

Payward Canada does not trade or otherwise use crypto or fiat beneficially owned by Participants and held on the Kraken Spot Market for the benefit of Participants.

Payward Canada does not engage in proprietary trading on the Kraken Spot Market. For clarity, Payward Canada does fill some client orders on the Kraken Spot Market on a principal basis.

8. PROCESS FOR PAYMENT AND SETTLEMENT OF TRANSACTIONS

For Spot Trading: The Kraken Spot Market maintains a series of central limit order books where the matching of buyers and sellers takes place based on price-time priority. Payward Canada executes these orders on behalf of clients on an agency basis and they are settled to the client’s account immediately upon execution.

For Instant Buy & Sell: Payward Canada allows clients to purchase or sell supported crypto assets with a specified trading pair and quantity through the Instant Buy & Sell feature. Payward Canada executes these orders on behalf of clients on a principal basis and they are settled to the client’s account immediately upon execution.

9. FEES PAYABLE IN CONNECTION WITH TRADING ON THE KRAKEN SPOT MARKET

All fees payable to Payward Canada and all benefits received by Payward Canada are disclosed in Section 7 of the Terms of Service.

Relationship Disclosure

1. PURPOSE

This document sets out important information concerning our relationship with you. It contains information about Payward Canada (doing business as Kraken, “Payward”), the services that we offer and your account with us. Other important information you need to know about your relationship with us is contained in the Terms of Service that you entered into on our website or mobile application (the Payward Platform), and other disclosures on the Payward Platform.

2. AN OVERVIEW OF Payward

Payward is a wholly-owned subsidiary of Payward, Inc. which operates an international digital currency exchange and custody platform. Payward relies upon non-Client-facing support from its affiliates, pursuant to an inter-company agreement.

Payward is seeking to be registered as a Restricted Dealer and is seeking exemptive relief from registering as a Marketplace in all provinces and territories in Canada. Payward is operating pursuant to the provisions of a Pre-Registration Undertaking filed with its principal regulator the Ontario Securities Commission on March 24, 2023, which permits Payward to operate a crypto asset trading platform on which Canadian residents can buy, sell, hold and stake crypto assets that have been made available for trading by Payward.

3. THE PRODUCTS AND SERVICES WE OFFER

The Payward Platform offers a central limit order book on which our clients can buy and sell crypto assets, and we are therefore considered to be a marketplace for securities or derivatives in Canada.

Before listing crypto on the Payward Platform, Payward performs a product assessment by reviewing publicly available information about the creation, governance and use of the crypto asset, the supply, demand, maturity, utility and liquidity of the crypto asset, material technical risks associated with the crypto asset and legal and regulatory risks associated with the crypto asset.

The Payward Platform includes a Crypto Asset Statement for every listed crypto asset, which are available here. We will update the relevant Statement if there is a material change in the crypto asset, including a change in the risk profile or a determination made by a court or regulator that the crypto asset is a security or a derivative. If this happens, we will stop making the crypto asset available to trade and you may be required to sell it or withdraw it from the Payward Platform.

4. CUSTODIAL ARRANGEMENTS

Payward will hold, at all times, at least 80% of clients’ crypto assets in segregated cold wallets at an acceptable third party custodian (“Custodian”) that meets all regulatory requirements. Not all assets listed on Payward’s platform are supported by the Custodian. Therefore, Payward will utilize segregated proprietary hot and cold wallets dedicated to Payward for custodying no more than 20% of clients’ crypto assets. Payward has established systems and controls to ensure the functional independence of the custody accounts and periodically verifies and reconciles client assets against the custody accounts. Payward or its Custodian holds crypto assets in an account clearly designated for the benefit of clients or in trust for clients, separate and apart from the assets of non-Canadian clients, and separate and apart from its own assets.

5. RISKS TO CONSIDER WHEN MAKING AN INVESTMENT DECISION

Please refer to the Payward Platform Risk Statement for a description of the risks to consider when deciding to invest in crypto.

6. RISK OF USING BORROWED MONEY TO FINANCE AN INVESTMENT

Payward does not lend money, extend credit or provide margin to our clients.

Clients who qualify as a permitted client as defined under Canadian law (Section 1.1. of National Instrument 31-103) may be eligible for margin trading. The extension of margin for permitted clients is offered by Payward Trading Ltd., a British Virgin Islands company. Payward Trading Ltd. is an affiliate of Payward Canada. For more information, please refer to Annex A of the Terms of Service.

Using borrowed money to finance the purchase of crypto, including by using your credit card, involves greater risk than using cash resources only. If you borrow money to purchase crypto, 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 crypto purchased declines.

7. CONFLICTS OF INTEREST

Payward has implemented policies and procedures which allow it to identify, handle and prevent conflicts of interest arising in connection with its operation of the Platform. For more information, please refer to the Payward Conflict of Interest Policy.

8. COSTS ASSOCIATED WITH YOUR ACCOUNT

Payward charges a fee for Trading and Funding (Fiat and Crypto). Details are available on the Payward website here.

Fee schedules for Instant Buy and Kraken Pro are available on the Payward website here. There are currently no fees associated with staking or unstaking eligible crypto assets.

9. THE COSTS OF BUYING, HOLDING, SELLING OR STAKING CRYPTO ASSETS

Other than the fees described above, there are no other costs directly paid by you associated with buying, holding, selling or staking crypto assets on the Payward Platform.

10. REPORTING TO YOU

Information about your investments, including trade confirmations, monthly account statements, annual reports of charges and compensation and investment performance reports, are available in your account portal on the Payward Platform. By agreeing to the Terms of Service, you are consenting to electronic delivery of all reports and documents to which you are entitled to have delivered under applicable securities laws and under your relationship with Payward.

11. COMPLAINTS AND DISPUTE RESOLUTION

Payward is committed to providing a high standard of service. If you are dissatisfied with the service you have received and wish to raise a complaint, please refer to the Payward Client Complaint & Dispute Resolution Policy to submit your complaint.

12. KYC AND Suitability

As part of our account opening, Payward is required to gather know your client (KYC) information about your experience and knowledge in investing in crypto assets, your financial assets and income, your risk tolerance and time horizon. We use this information, together with our product assessments of all crypto assets that are listed on the Payward Platform, to determine whether a crypto account is suitable for you. Additionally, we will use the KYC information to determine if a crypto transaction is suitable for you. If we do not think an account is suitable for you, you will receive prominent messaging that this is the case. You should promptly advise us of any change to your KYC information that could reasonably result in a change in the suitability of your account, such as a change to your financial assets and income or risk tolerance.

The amount of crypto assets you are able to trade on the Payward Platform may be limited to the extent that: (i) you are not an accredited crypto investor or eligible crypto investor; and (ii) your knowledge in investing in crypto assets, your financial assets and income, your risk tolerance and time horizon demonstrates it would not be suitable for you to invest more than a specified portion of your net financial assets in crypto assets.

Payward ensures that the maximum amount of crypto assets, excluding Bitcoin, Ether, Bitcoin Cash and Litecoin, that an investor may purchase on a net basis on the Platform in the preceding 12 months, excluding residents of British Columbia, Manitoba and Québec:

in the case of an investor that is not an eligible crypto investor, accredited crypto investor, permitted client or registered crypto trading platform does not exceed a net acquisition cost of $30,000;
in the case of an investor that is an eligible crypto investor, but is not an accredited crypto investor, permitted client or registered crypto trading platform does not exceed a net acquisition cost of $100,000; and
in the case of an accredited crypto investor, permitted client or registered crypto trading platform, is not limited.

Conflict of Interest

Policy Purpose
The purpose of this policy is to inform participants (“Clients”) and regulators alike about how Payward Canada (doing business as Kraken, “Payward”) identifies and manages potential conflicts of interest,

Introduction

Payward operates a proprietary Crypto Trading Platform (the “Platform”) that enables Clients to buy, sell, deposit, hold, withdraw and stake crypto assets that are not securities and/or derivatives (collectively, the “Crypto Assets”). The Platform is made available through Payward’s website and mobile application. Payward is seeking to be registered in all provinces and territories in Canada as a Restricted Dealer and Marketplace. Payward’s principal regulator is the Ontario Securities Commission.

Regulatory Background
As a result of Payward’s pending registration, applicable securities laws require Payward to establish, maintain and ensure compliance with policies and procedures that identify and manage conflicts of interest arising from the operation of the marketplace or the services the marketplace provides. Such conflicts may include those, actual or perceived, which may occur as between: i) the interests of the marketplace’s owners or operators, ii) its commercial responsibilities, iii) the responsibilities and sound functioning of the marketplace services, and iv) any clearing and settlement services.

Applicable securities laws also require restricted dealers to: i) identify existing and reasonably foreseeable material conflicts of interest between a Client and Payward or any individual acting on Payward’s behalf; ii) address all material conflicts of interest in the best interests of the Client; iii) avoid material conflicts of interest that cannot be otherwise addressed in the best interests of the Client; and iv) provide affected Clients with disclosure of material conflicts of interest at account opening or in a timely manner if they are identified later.

Ownership

Referral arrangements

Payward may engage in referral arrangements, in accordance with NI 31-103, in which existing or prospective clients are referred to or from another non-Payward party. Referrals will be governed by a referral arrangement, and the referral details will be provided to the Clients prior to the first trade.

Disclosure to Clients and Regulators

Unless avoided, an existing or potential material conflict of interest must be disclosed to the Client in all cases where a reasonable Client would expect to be informed:

for new Clients, prior to opening an account; and
for existing Clients, either as the conflict of interest occurs or, in the case of a transaction-related conflict of interest, prior to entering into the transaction with the Client.
Payward will also disclose on the Payward website any applicable conflicts in the Payward Relationship Disclosure Document.

Identification of Conflicts

It is important to properly identify and address situations which may create conflicts, even where they are unintended. In all cases, Payward employees, officers and directors and any employees, officers, directors or contractors of any Payward outsourced service provider working directly on behalf of Payward Canada (collectively, “Payward Personnel”) are advised to refer to any and all applicable conflicts-related policies and procedures of Payward.

Specific to operating a marketplace, below are some principles which govern conflict situation identification. In addition to specific written procedures, Payward manages conflicts of interest by reference to the following overarching principles.

Payward’s priority is to provide a stable, fair and orderly market with transparency of policies and process. This aim must not be overridden by any commercial interests of Payward or any of its affiliates, Clients or outsourced service providers.
Payward must make similar prioritization of the good of the marketplace and all Clients, over commercial interests of any affiliate owner or any client of any such affiliate owner, when making regulatory, financial, supervisory or compliance decisions.
Payward Personnel and Clients should similarly not attempt to inappropriately influence such prioritization decisions.
Such decisions should also be made in accordance with the letter and spirit of the marketplace rules identified in applicable securities laws, other applicable regulations and internal Payward policies and procedures.
Payward Personnel must maintain the confidentiality of all Client information.

Generally, a conflict of interest is considered material if the conflict may be reasonably expected to influence either a Client’s decisions or Payward’s or its representatives’ recommendations or decisions in the circumstances.

Confidentiality

All Payward Personnel are required to follow the rules around confidentiality set out in internal Payward policies and procedures. Compliance with these policies and procedures ensures that information is disclosed only on a “need-to-know” basis and that Client identity and trading information is released only as permitted by applicable regulations.

Compliance Oversight

In order to preserve proper controls and oversight, including the mitigation and management of any conflicts of interest within Payward’s affiliates or third-party outsourced service providers, Payward has appropriate levels of oversight by means of an Ultimate Designated Person (“UDP”), a Chief Compliance Officer (“CCO”), and a Chief Financial Officer (“CFO”) as prescribed by applicable securities laws.

UDP

The UDP has ultimate control and responsibility to ensure Payward operates in accordance with good governance principles, including confidentiality of information, managing conflicts of interest and upholding relevant rules and regulations inside Payward.

CCO

The CCO is charged with ensuring that a proper governance structure and appropriate supervision are in place and oversees the business from a detached view with a regulatory eye. The CCO reports directly to the UDP on an ongoing basis and provides a compliance report to the UDP and the Board of Payward at least annually.

CFO

The CFO must ensure compliance with applicable financial requirements, as well as applicable legislation and is charged with ensuring proper financial controls and oversight. The CFO reports directly to the UDP and reports all appropriate financial issues directly to the UDP and the Board of Payward.

Personal dealings

Payward Personnel are made aware of and are trained to determine what constitutes a conflict of interest. Payward Personnel are required to report any personal dealings, trades made through personal accounts and outside business activities that could reasonably be considered to give rise to a potential conflict of interest.

If a potential conflict of interest is determined by Payward to be material or otherwise adverse to the interests of Clients, Payward will take reasonable steps to resolve the conflict either by denying approval for the activity or by properly mitigating the potential conflict.

Gifts & Entertainment

Entertainment of, or by Clients of Payward must not be excessive or be seen to unduly influence any parties. Gifts received or given must be disclosed to the CCO to ensure they are only nominal in value and frequency. Additional policies and procedures concerning gifts and entertainment are set out in other Payward policies and procedures.

Continuous Compliance with Conflict Management Policies

The information and examples contained herein have been compiled to the best of Payward’s ability and are not meant to be exhaustive of all possible conflicts of interest but rather a compilation of those conflicts that have been identified to date. Payward undertakes to continue taking the necessary steps to identify and respond to such situations in a fair, equitable and transparent manner and consistent with the best interests of our Clients.

Availability of Payward’s Conflict Management Policies

This document is made available to all Payward Personnel and officers and is also available to the public on the Payward website:

For any inquiries, please contact the CCO of Payward at [email protected]

Client Complaint & Dispute Resolution Policy

Payward Canada (doing business as Kraken, “Payward”) is committed to providing a high standard of service. If you are dissatisfied with the service you have received and wish to raise a complaint then please submit your complaint via our support form with the subject "PAYWARD CANADA COMPLAINT"

Content of Complaint

Please provide the following details in order for us to be able to process your complaint in time:

(a) your name;
(b) the email address you used to register your Account;
(c) a clear description of your concern or complaint;
(d) details of what you would like us to do to fix this matter;
(e) copies of any relevant correspondence.

How Payward Responds to Complaints

Payward will provide you with an acknowledgement of your complaint within 5 business days of receipt. Once our review is complete, we will provide you with a written response to our decision within 90 days of receiving the complaint. The written decision will provide: (i) a summary of the complaint; (ii) the results of Payward’s investigation; (iii) a decision to make an offer to resolve the complaint or deny it, and (iv) an explanation of the decision.

If Payward cannot provide you with its decision within 90 days, Payward will contact you to explain that the decision will be delayed, the reasons for the delay and the new date for the decision.

If we do not provide you with a decision within 90 days, you can take your complaint to the Ombudsman for Banking Services and Investments (“OBSI”) or, in Quebec, the Autorité des marchés financiers (“AMF”) any time after the 90-day period has ended.

How to escalate a Complaint

If you are not satisfied with our decision, you may use these additional options to escalate your complaint. This service is available to you at the expense of Payward.

CONTACT INFORMATION FOR the OBSI (all Canadian customers except those residing in Quebec)

Website: https://www.obsi.ca/en/consumer-complaint-process.aspx

Email: [email protected]

Telephone:

Toll free 1-888-451-4519

Toronto 416-287-2877

‍RESIDENTS OF QUEBEC

Residents of Quebec can consider completing the Complaint and Allegation Report available from the AMF or may also want to consider engaging the free mediation service the AMF offers.

CONTACT INFORMATION FOR the AMF:

Website: https://lautorite.qc.ca/grand-public/

Telephone:

Toll Free: 1-877-525-0337

Quebec: 1-418-525-0337

Montreal: 1-514-395-0337

Legal Advice

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.

Other Legal Disclosures

Not Investment Advice. The information about digital assets on any Kraken website (including www.kraken.com and blog.kraken.com), the Kraken exchange, e-mails, or any other communications is for general information purposes only. Kraken does not provide investment, tax, or legal advice, and you are solely responsible for determining whether any investment, investment strategy or related transaction is appropriate for you based on your personal investment objectives, financial circumstances, and risk tolerance. The information should not be construed as a recommendation or solicitation to buy, sell, stake, or hold any digital asset or to open an account or engage in any specific trading strategy. You should consult your financial advisor, or legal or tax professional regarding your specific situation and financial condition and carefully consider whether trading, staking, or holding digital assets is suitable for you.

Kraken Ventures. Kraken holds tokens on its balance sheet for operational purposes or other reasons. Kraken Ventures, in which Kraken is a limited partner, is an investor in certain tokens. Kraken may therefore benefit from listing certain tokens on the platform. However, Kraken Ventures may be subject to a contractual lock-up for a period of time after its investment during which it cannot sell the tokens. All tokens, regardless of whether held by Kraken or Kraken Ventures, are subject to the same strict review process and guidelines in determining whether to make them available to trade on Kraken.

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