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
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
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.
Bitbuy is wholly owned by Bitbuy Holdings Inc. (“BHI”), 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.
BHI is wholly owned by WonderFi Technologies Inc., a TSX-listed reporting issuer. WonderFi is the parent company of the following companies that Bitbuy is affiliated with:
· CoinSmart Financial Inc.
· Simply Digital Technologies Inc.
· Coinsquare Ltd.
· Coinsquare Capital Markets Ltd.
Coinsquare Ltd. owns a greater than 25% stake in Tetra Trusty Company.
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.
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).
Bitbuy uses Tetra Trust Company (“Tetra Trust”) for cold storage custodial services to securely hold certain digital assets belonging to clients. Tetra Trust received its Certificate of Registration from the Government of Alberta on July 5, 2021. Tetra Trust is regulated by the Alberta Treasury Board and Finance (“ATBF”). Bitbuy has identified a potential conflict between itself and its affiliated custody services provider, Tetra Trust, resulting from (a) the corporate affiliation between the two through ownership (in different proportions) by the same parent and (b) the relationship between two entities as a result of the custody services provided by Tetra Trust to Bitbuy. In order to minimize this potential conflict, Bitbuy’s entered into an arms-length service contract with Tetra Trust that contains detailed service-level standards and associated key performance indicators, which is closely monitored by Bitbuy’s senior management. Bitbuy does not provide any preference or benefits to Tetra Trust as compared to its other cold storage custodial services providers.
Bitbuy may enter into transactions or arrangements with other entities within the WonderFi group of companies. This could give rise to potential conflicts of interests that we may favour the business interests of our related entities. Bitbuy only enters into transactions and arrangements within the WonderFi group of companies where they are permitted under applicable securities laws. Bitbuy puts in place services agreements to contractually bound the affiliated entities to pursue their obligations. When engaging an affiliated entity to perform a service, Bitbuy provides no benefits to the affiliated entity and treats it like an arms-length third-party service provider.
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.
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.
Users’ cash assets are held separate from Bitbuy’s own funds in segregated accounts with Credit Union Atlantic, Canaccord Genuity Group, and Bank of Nova Scotia (each a Canadian financial institution),as well as People’s Trust, a Canadian trust company. When you wish to purchase cryptoassets using cash, you will instruct Bitbuy to transfer the cash held on your behalf with Credit Union Atlantic and/or People’s Trust to fund your purchase.When you sell crypto assets from your account with Bitbuy, the cash proceeds will be transferred by Bitbuy to Credit Union Atlantic, Canaccord Genuity, Bank of Nova Scotia and/orPeople’s Trust.There may be risk in permitting Bitbuy to have access to your cash in this manner insofar as it could be accessed improperly and misused. However, access to your cash is permitted only to settle transactions initiated by you.
Bitbuy may earn interest or revenue on the uninvested cash balances in your account and may retain excess amounts that we earn over the amount of interest we pay to you, if any.
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.
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:
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.
In respect of Bitbuy’s activities as a restricted dealer, a “conflict of interest” generally may arise where:
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.
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.
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 BHI 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.
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.
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.
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.
BHI has quarterly board meetings to review the ongoing operational soundness of the marketplace. The attendees include the UDP and CCO of Bitbuy.
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.
Bitbuy Personnel are made aware of and instructed not to maintain relationships with coin issuers. Bitbuy Personnel are also required to report any gifts or compensation received by a coin issuer that could be reasonably considered to give rise to a potential conflict of interest. Bitbuy does not charge coin listing fees nor does not accept compensation from coin issuers.
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 by properly mitigating the potential conflict. Bitbuy has processes to mitigate potential conflicts involving any decision to list, delist, or introduce additional functionality for a coin.
Bitbuy Personnel are prohibited from using insider knowledge to purchase or sell coins during the period between when Bitbuy makes the decision to list or delist a coin, and when the applicable public announcement of the decision has been made.
Bitbuy’s compliance team regularly monitor’s employee trading on the Bitbuy platform to identify any potential violations.
Bitbuy Personnel may receive compensation from third parties for approved outside business activities. This may give rise to the perception that these activities could influence the Personnel’s dealings with a Bitbuy client.
Bitbuy has established policies and procedures designed to identify and address this potential conflict of interest through an approval process. Bitbuy strictly prohibits its Personnel from engaging in any business opportunity that gives rise to a material conflict of interest.
