Conflict of Interest

Policy Purpose

The purpose of this policy is to let participants in Bitbuy’s marketplace (“Clients”) and regulators alike know how Bitbuy Technologies Inc. (“Bitbuy”) identifies and addresses potential conflicts of interest in order to best serve Clients

Introduction to Bitbuy

Bitbuy operates a proprietary platform (the “Platform”) that enables users to buy, sell, hold, withdraw and deposit crypto assets that are not themselves securities and/or derivatives (collectively, the “Crypto Assets”) through Bitbuy. The Platform is made available through Bitbuy’s website and mobile application. Bitbuy has been registered as a restricted dealer in every jurisdiction of Canada subject to specified terms and conditions that are the subject of a specific order and as such may not be subject to all requirements otherwise applicable to an investment dealer and IIROC member, including those that apply to marketplaces and to trading on marketplaces. Bitbuy’s principal regulator is the Ontario Securities Commission

Regulatory Background

Applicable securities laws require marketplaces 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 are related to: (i) the commercial interests of the marketplace; (ii) the interest of the marketplace’s owners or operators; (iii) referral arrangements; and (iv) the responsibilities and sound functioning of the marketplace.

Bitbuy is registered as a restricted dealer in all provinces and territories in Canada. Applicable securities laws require restricted dealers to: (i) identify existing and reasonably foreseeable material conflicts of interest between a Client and Bitbuy or any individual acting on Bitbuy’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

Bitbuy is wholly owned by First Ledger Corp. (“FLC”), which owns 100% of the issued and outstanding securities of several operating companies, including Bitbuy and Twenty One Digital Inc (“21D”), the latter of which provides liquidity services to Clients.

Bitbuy recognizes that potential or perceived conflicts of interest may have a negative effect on investor confidence. In accordance with applicable securities laws, this document serves to capture some of these potential conflicts of interest and how they are addressed.

Participation of 21D on the Platform

21D’s primary business purpose is to support and enhance liquidity and price discovery on the Platform. 21D gathers pricing data from third-party liquidity providers, aggregates that external pricing data and, in turn, places bids and offers across the Platform’s order books. 21D’s trading strategies are designed to provide liquidity around the prevailing market trading price and to offset any purchases or sales simultaneously through third-party liquidity providers. No compensation is provided to 21D for participating on the Platform, although it may earn a spread through its offsetting transactions through third-party liquidity providers by using its capital to perform arbitrage strategies.

Due to potential conflicts of interest arising in connection with 21D’s participation on the Platform, Bitbuy implements specific escalation procedures to ensure appropriate governance oversight: (i) where a user complains about the conduct of 21D on the Platform, (ii) where 21D is a contra-party to a trade completed on the Platform which is requested to be amended, cancelled or corrected (whether the request is made by 21D or the other contra-party); and (iii) in connection with its monitoring and supervision of 21D’s trading activities on the Platform. In keeping with the “Fair Access” requirements set out in applicable securities laws, Bitbuy does not provide any preferences, benefits, information or special pricing to any Client, including any Bitbuy affiliate or related party that may access the Platform (such as 21D).

Trading Fees

All Clients pay Bitbuy the same standard Bitbuy Client fees to trade on the Platform and no Client receives any rebates or any other preferential price incentives.

Referral Arrangements

Bitbuy does not currently support any referral arrangements between the marketplace and any service providers or vendors. Bitbuy only gets paid directly by the Clients and the financial terms are equal for all of the Clients.

Disclosure to Clients and Regulators

Applicable securities laws require public disclosure of these policies on the marketplace’s website. This document is published on the “Policies” page of the Bitbuy website under the heading “Regulatory Policies”.

Bitbuy recognizes that new actual or perceived conflicts may arise as the result of business developments and/or regulatory changes. Consequently, these policies and procedures may be amended from time to time and each time a material amendment is made, the most current version of this document will be published to the Bitbuy website.

Conflict Identification and Management

Bitbuy treats seriously the management of all potential conflicts of interest. Consequently, Bitbuy operates its marketplace with an eye to maintaining a robust level of integrity. To do so, Bitbuy operates its marketplace in a fair, orderly and transparent manner, addressing the following subject matter:

  • the identification and addressing of possible conflicts of interest;
  • the disclosure of ownership interests, such as FLC’s ownership of Bitbuy;
  • the ensuring of proper supervision from several viewpoints: commercial, regulatory, financial and compliance; and
  • reviewing any personal dealings.

Identification of Conflicts

It is important to have a means to properly identify and address situations wherein even unintended conflicts may arise. In all cases, Bitbuy employees, officers and directors and any employees, officers, directors or contractors of any Bitbuy outsourced service provider working directly on behalf of Bitbuy (collectively, “Bitbuy Personnel”) are advised to refer to any and all applicable conflicts-related policies and procedures of Bitbuy.

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

  • Bitbuy’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 Bitbuy or any of its affiliates, Clients or outsourced service providers.
  • Bitbuy 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.
  • Bitbuy Personnel and Clients should similarly not attempt to inappropriately influence such decisions.
  • Such decisions should also be in accordance with the letter and spirit of the marketplace rules identified in applicable securities laws, other applicable regulations and internal Bitbuy and FLC policies and procedures.
  • Bitbuy Personnel must maintain the confidentiality of all Client information.

In respect of Bitbuy’s activities as a restricted dealer, a “conflict of interest” generally may arise where:

  • the interests of different parties, such as the interests of a Client and those of Bitbuy or any of its employees, are inconsistent or divergent;
  • Bitbuy may be influenced to put its interests ahead of a Client’s interests; or
  • monetary or non-monetary benefits or disadvantages to Bitbuy that may compromise the trust that a reasonable Client has in Bitbuy.

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

Bitbuy is the sponsoring firm for certain registered individuals (the “Registered Individuals”). Registered Individuals must take reasonable steps to identify existing material conflicts of interest, and material conflicts of interest that are reasonably foreseeable, between the Registered Individual and the Clients. If a Registered Individual identifies a material conflict of interest, the Registered Individual must promptly report that conflict of interest to Bitbuy. A Registered Individual must address all material conflicts of interest between the Client and the Registered Individual in the best interest of the Client. A Registered Individual must avoid any material conflict of interest between a Client and the Registered Individual if the conflict is not, or cannot be, otherwise addressed in the best interest of the Client. A Registered Individual must not engage in any trading or advising activity in connection with a material conflict of interest identified by the Registered Individual unless: (i) the conflict has been addressed in the best interest of the Client; and (ii) Bitbuy has given the Registered Individual its consent to proceed with the activity.

Affiliate Support Services

Bitbuy relies upon non-Client-facing support from certain operational personnel of its affiliates for the following functions: finance, development, legal, human resources, technology and infrastructure.

Confidentiality

All Bitbuy Personnel are required to follow the confidentiality procedures set out in internal Bitbuy 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.

No employee of FLC or any of its affiliates, including 21D, has access to any confidential Client identity or trading information under any circumstances unless they are also employees of Bitbuy.

Compliance Oversight

In order to preserve proper controls and oversight, Bitbuy has appropriate levels of oversight by means of an Ultimate Designated Person (“UDP”) and a Chief Compliance Officer (“CCO”), as prescribed by applicable securities laws.

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

Compliance

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 directors of Bitbuy quarterly.

Governance

FLC has quarterly board meetings to review the ongoing operational soundness of the marketplace. The attendees include the UDP and CCO of Bitbuy.

Personal Dealings

Bitbuy Personnel are made aware of and are trained to determine what constitutes a conflict of interest. Bitbuy 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 Bitbuy to be material or otherwise adverse to the interests of Clients, Bitbuy will take reasonable steps to resolve the conflict either by denying approval for the activity or by properly mitigating the potential conflict.

Availability of Bitbuy's Conflict Management Policies

This document is made available to all Bitbuy Personnel and is also available on the “Policies” page of the Bitbuy website under the heading “Regulatory Policies”.