Relationship Disclosure Information

Last updated: May 25, 2023

This document sets out important information concerning our relationship with each client (hereinafter referred to as either the “Client” or “you”). It contains information about Shakepay Inc. (“Shakepay” or “we”), 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 Use, Privacy Policy, and other disclosures provided to you.

Information about Shakepay

Shakepay, whose office is located in Montreal, Quebec, is registered as a restricted dealer in each province and territory of Canada, subject to specific terms and conditions contained in the exemptive relief decision Re Shakepay Inc., dated May 25, 2023, which permits Shakepay to operate a crypto asset trading platform (the “Shakepay Platform”).

Crypto assets purchased and held in an account with Shakepay are not protected by the Canadian Investor Protection Fund, the Canadian Deposit Insurance Corporation or any other investor protection insurance scheme.

Products and Services

The Shakepay Platform allows Canadian residents to buy and sell bitcoin and ether (“Crypto Assets”), send and receive Canadian dollars and Crypto Assets, and access other Shakepay services, such as prepaid cards.

Different accounts are available on the Shakepay Platform. Based on a Client’s account opening appropriateness assessment, some Clients have full access to all services available on the Shakepay Platform, other Clients are unable to purchase or receive Crypto Assets, but they can earn Crypto Asset rewards using the prepaid card, and some Clients are limited to holding fiat assets only.

The Shakepay Platform provides a Crypto Asset Statement (the “Statements”) which can be found here for Bitcoin, and here for Ether. The Statements will be updated if there is a material change with respect to one of the Crypto Assets or in the event that Shakepay decides to make other Crypto Assets available on the Shakepay Platform.

Shakepay does not have any authority to act on a discretionary basis on behalf of a Client. That means Shakepay may not buy, sell or transfer Crypto Assets or Canadian dollars if requested by you.

Shakepay does not offer Crypto Assets that are considered securities or derivatives under securities legislation in Canada. However, regulators have indicated that securities and/or derivatives legislation may apply to platforms that facilitate the buying and selling of Crypto Assets, including Crypto Assets that are considered commodities, because your contractual right to the Crypto Asset through the Shakepay Platform may itself constitute a security and/or a derivative.

Custodial Arrangements

The vast majority of Crypto Assets held at Shakepay are stored offline in cold storage wallets. We have partnered with a cold storage provider regulated under the New York State Department of Financial Services who holds SOC 1 Type II and SOC 2 Type II certifications. At a minimum, 80% of all Client-owned Crypto Assets on Shakepay is held in cold storage with Coinbase Custody Trust Company, LLC (“Coinbase Custody”), a US qualified custodian. Client-owned Crypto Assets stored by Coinbase Custody are held in “For Benefit Of (FBO) accounts, owned by you, which means you have the legal and rightful claim to these assets. The remaining Crypto Assets purchased by Clients are held by Shakepay using multi-signature hot wallets secured by Fireblocks Inc. (“Fireblocks”) and BitGo Inc. (“BitGo”) (together, Fireblocks and BitGo are the “Hot Wallet Providers”). Client fiat assets are limited to Canadian dollar balances held in accounts with a Canadian financial institution that is a qualified custodian for cash under applicable securities laws (the “Cash Custodian”), separate and apart from Shakepay’s assets. The accounts are designated as “in-trust” meaning all balances belong to Shakepay Clients.

Coinbase Custody and the Cash Custodian (together, the “Custodians”) are required to segregate client assets from their own assets and are subject to regulatory oversight, minimum capital and insurance requirements. Client assets are subject to risk of loss: (i) if a Custodian becomes bankrupt or insolvent; (ii) if there is a breakdown in a Custodian’s information technology systems; or (iii) due to the fraud, willful or reckless misconduct, negligence or error of a Custodian or its personnel. Shakepay has reviewed each Custodian’s reputation, financial stability, relevant internal controls and ability to deliver custodial services and has concluded that such Custodian’s system of controls and supervision is sufficient to manage risks of loss to Client assets in accordance with prudent business practice.

Although Client assets are generally held by a Custodian, Shakepay has access to Client assets held online in hot wallets provided by the Hot Wallet Providers to the extent necessary to facilitate trading on the Shakepay Platform. We also have access to Client assets when accepting or making delivery of crypto or cash in accordance with Client instructions on a temporary basis. Finally, Shakepay has access to Client Crypto Assets held in trust on your behalf at Coinbase Custody because the custody account is in the name of Shakepay, in trust for our Clients. Client assets are exposed to risk of loss: (i) if there is a breakdown in Shakepay’s information technology systems; or (ii) due to the fraud, willful or reckless misconduct, negligence or error of Shakepay or its personnel. In addition, Shakepay is required under applicable securities laws to insure against the additional risk of loss which arises due to its access to Client assets.

The Shakepay Platform enables you to buy and sell Crypto Assets but it is not intended to be a storage facility for your Crypto Assets. Shakepay encourages Clients to keep their Crypto Assets in their own private wallets for maximum security.

Risks

Trading Crypto Assets can be risky and it may not be appropriate for everyone to buy strictly for speculative reasons or with borrowed funds. Trading Crypto Assets can lead to large and immediate financial losses including the possibility that those losses may not be recovered. Crypto Asset prices have historically been much more volatile than traditional security prices. Please see the Shakepay Risk Statement for a description of the risks to consider when deciding to invest in Crypto Assets.

By purchasing Crypto Assets, you acknowledge that:

• the purchase of Crypto Assets is risky;

• you are purchasing Crypto Assets entirely at your own risk;

• no securities regulatory authority or regulator has evaluated or endorsed the merits of the Crypto Assets; and

• you could lose all of the money or Crypto Assets used to purchase the Crypto Assets.

Borrowed Money & Leveraging

Using borrowed money to finance the purchase of Crypto Assets involves greater risk than purchasing using cash resources only. If you borrow money to purchase Crypto Assets, your responsibility to repay the loan and pay interest as required by its terms remains the same even if the value of the Crypto Assets purchased declines.

You should only invest using borrowed money if:

• the additional risk is something you are comfortable with;

• you are comfortable taking on debt to buy investments that will fluctuate in value; and

• you have a stable income.

Your Costs and Compensation We Receive

Shakepay does not charge a commission when a Client purchases or sells Crypto Assets. To make money, we set the price at which you can buy or sell Crypto Assets on Shakepay. At any point in time, there will be a difference between the price Clients can buy Crypto Assets from Shakepay and the price at which they can sell to Shakepay. Shakepay will often benefit from this difference as revenue to cover our costs as a business, and to maintain the Shakepay Platform. For further information, please click here.

Account Opening Appropriateness Assessment

Shakepay performs an account opening appropriateness assessment prior to opening an account and on an ongoing basis. We are required to determine that holding Crypto Assets on the Shakepay Platform is appropriate for you and to put your interests first. We gather “Know Your Client” (“KYC”) information and require you to acknowledge that you are not looking for “investment advice” from Shakepay. If we determine that holding Crypto Assets is not appropriate for you, then you will be limited to having a fiat-only account and will be unable to purchase, receive or earn Crypto Assets.

Should there be any changes to your KYC information, you should promptly advise Shakepay of such a change.

No Advice or Financial Recommendations

You acknowledge that Shakepay will not provide any advice or financial recommendations to you and will not be responsible for making any trade-by-trade suitability determinations when accepting orders to buy or sell Crypto Assets. You alone are responsible for your own decisions and we will not consider your financial situation, investment knowledge, investment objectives, savings objectives or risk tolerance when accepting orders from you. Shakepay does not provide financial, legal, tax or investment advice or recommendations.

Conflict of Interest

Shakepay offers Crypto Assets for sale directly to you. Shakepay maintains its own inventory of Crypto Assets, such that when a Client buys Crypto Assets on Shakepay, we sell them the Crypto Assets. Similarly, when a Client sells their Crypto Assets, we buy them. As such, Shakepay is the counterparty to each transaction whereby its Clients purchase or sell Crypto Assets and Shakepay derives its revenue from these transactions, as further detailed here. In order to address this material conflict of interest, in determining the prices at which it sells Crypto Assets to its Clients, Shakepay regularly evaluates prices obtained from its liquidity providers against global benchmarks to provide fair and reasonable pricing to its Clients.

Except for the material conflict of interest that arises due to the fact that Shakepay earns revenue when you buy or sell Crypto Assets from Shakepay’s inventory, Shakepay does not believe that there are any potential conflicts of interest with the use of the Shakepay Platform.

Referrals

No compensation will be paid to Shakepay by any other party in connection with your account with Shakepay.

Shakepay may offer you the opportunity to earn rewards for activities such as referring other people to the Shakepay Platform. Shakepay’s reward offers and applicable terms are made available to you separately here or in the Shakepay Platform. Shakepay may modify, suspend or cancel the rewards at any time.

Reporting

Information about your assets, including trade confirmations, transaction summary and/or account statements are available either via email or on the Shakepay Platform. By entering into the Terms of Use, you are consenting to electronic delivery of all reports and documents to which you are entitled to have delivered pursuant to applicable laws and under your relationship with Shakepay.

Complaint Resolution Service

Shakepay has a Client dispute resolution process in place should a Client have a dispute. The Client dispute resolution process is further explained here.

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