What is The Sandbox?
The vision of the team behind The Sandbox is “to offer a deeply immersive metaverse in which players will create virtual worlds and games collaboratively and without central authority.” A virtual gaming world built on top of Ethereum in which users can build, own, and monetize their activities. Users create assets in the form of NFTs, or non-fungible tokens, which conveys ownership of those assets to the user instead of the game owners. Users can also earn rewards based on participation in The Sandbox, distributed as SAND, The Sandbox’s utility token.
Created by Arthur Madrid and Sebastien Borget, the co-founders of video game company Pixowl, the original Sandbox game launched in 2012. At that time it was not built on Ethereum or leveraging blockchain technology, that shift came in 2019. The team has since raised traditional venture funding over the last couple of years to help fund the development of the now decentralized, blockchain-powered, metaverse world.
What is SAND?
As mentioned above, The Sandbox economy is powered by its utility token, SAND. SAND is an ERC-20 token which means that it is compatible with and secured by the Ethereum network. SAND was launched in 2020 and has a max supply of 3 billion tokens. The value of SAND is closely tied to the popularity of The Sandbox game but SAND can also be traded on public exchanges independent of the game.
SAND has multiple uses in The Sandbox ecosystem: it allows users to purchase LAND and ASSETS, both NFTs that hold value in The Sandbox world; SAND holders can stake their assets to earn rewards; players can spend SAND in The Sandbox marketplace; all SAND transactions charge a small fee that is then re-distributed to the Sandbox Foundation and staking pool contributors; and soon, SAND holders will be able to participate in the upcoming Sandbox DAO (Decentralized Autonomous Organization.) The Sandbox Foundation supports the development of the ecosystem and funds grants for creators of ASSETS.
Before trading any crypto assets it is important to understand the risks. This overview is a starting point for you to perform your own research prior to investing in a crypto asset.
No securities regulatory authority or regulator in Canada has evaluated or endorsed the Crypto Contracts or any of the crypto assets made available through the platform.
Wealthsimple has performed an assessment of whether SAND can be supported by Wealthsimple’s platform, including whether SAND is a security and/or a derivative and is being offered in compliance with securities and derivatives laws.
We evaluated SAND based on publicly available information, including (but not limited to):
- The creation, governance, usage and design of SAND, including the source code, security and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that first created The Sandbox;
- The supply, demand, maturity, utility and liquidity of SAND;
- Material technical risks associated with SAND, including any code defects, security breaches and other threats concerning SAND and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them;
- Legal and regulatory risks associated with SAND, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of SAND; and
- Statements made by regulators or securities regulatory authorities in Canada and other jurisdictions regarding whether SAND, or generally about whether the type of crypto asset, is a security and/or a derivative.
Wealthsimple monitors ongoing developments related to crypto assets available on its platform for significant changes that may affect Wealthsimple’s original assessment of those assets, including Wealthsimple’s assessment of the application of securities and derivatives laws. Any significant changes relating to SAND may result in changes to this Crypto Asset Statement and/or Wealthsimple’s ability to support SAND.
Like all other crypto assets, there are some general risks to investing in SAND. These include short history risk, volatility risk, liquidity risk, demand risk, forking risk, cryptography risk, regulatory risk, concentration risk, electronic trading risk and cyber security risk. Please review the Wealthsimple Crypto Product Risk Disclosure for additional discussion of general risks associated with the crypto assets made available through the platform.
Additional Risks / Information
SAND has elevated regulatory risk. The United States Securities and Exchange Commission (SEC) has alleged that SAND is a security under U.S. federal securities laws in one or more enforcement proceedings pending before U.S. courts against crypto trading platforms. None of the Sandbox team or Sandbox Foundation are parties to this proceeding, and the U.S. courts have not determined that SAND is a security. In the event that a U.S. court determines that SAND is a security or there are other material developments affecting the treatment of SAND under securities laws, Wealthsimple may cease to support SAND and/or the market for SAND may be adversely affected.
As the founding team continues to play an important role in ongoing development of The Sandbox, fixes to any issues or bugs with the game’s operations may be dependent on the core team. SAND also presents higher short history risk and its value is tied to the popularity of The Sandbox which could unexpectedly see a drop in active players.
We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading SAND. Investors should perform their own assessment to determine the appropriate level of risk for their personal circumstances.
Wealthsimple is offering Crypto Contracts in reliance on a prospectus exemption contained in the exemptive relief decision Re Wealthsimple Investments Inc. dated December 18, 2023 (the Decision).
The statutory rights of action for damages and rescission in section 130.1 of the Securities Act (Ontario), and, if applicable, similar statutory rights under securities legislation of other jurisdictions of Canada, do not apply in respect of this Crypto Asset Statement to the extent a Crypto Contract is distributed under the prospectus relief in the Decision.
Last updated: January 1, 2024