What is Chiliz?
Chiliz (CHZ) is a digital currency for sports and entertainment, powering the world’s first blockchain-based fan engagement & rewards platform, Socios.com. Fans can purchase & trade branded Fan Tokens as well as having the ability to participate, influence, and vote in club-focused surveys & polls. Chiliz aims to foster a blockchain ecosystem built for sports and entertainment.
Football clubs including Juventus and Paris Saint-Germain are the first teams to join the platform to produce their Fan Tokens. Socios.com plans to onboard 50+ teams from football and other sporting verticals including esports and other conventional games such as cricket and the like. At present, Chiliz has onboarded 19 Official Partners to Socios.com, and has held Fan Token Offerings for 11 of those partners. In addition the Chiliz Blockchain Campus is an accelerator and industry hub connecting some of the industry’s largest stakeholders across Asia and Europe, together with other emerging blockchain entrepreneurs.
In March of 2022, Chilliz launched Chilliz Chain 2.0 (CC2) “Scoville” testnet, a curated, scalable, semi-decentralised blockchain for start-up and enterprise level sports & media organizations. CC2 mainnet launch is expected after approximately 6 months of testnet activity. CC2 is only available to a selected number of creators, for access to the network Brands and IP holders can go through a whitelisting process to be approved. Network validators will vote on which parties are approved to build on Chiliz Chain 2.0.This protocol is set to be the foundation of a web3 development ecosystem where stakeholders from the sports & entertainment industries are able to build web3 experiences. This initiative was created to enable further utility by expanding the Socios and Chilliz blockchain through transitioning $CHZ away from being an in-app currency to the network enabler of the open, multi-vertical Chiliz Chain v2 ecosystem.
On the technical side, CHZ is an ERC-20 token on the Ethereum Blockchain and is additionally supported as a BEP-2 token by the Binance Smart Chain (note that BEP-2 is not supported by Wealthsimple). To ensure integrity, Chiliz run their own permissioned instance of the Ethereum blockchain. This permissioned sidechain is the core of Socios.com. It hosts every team, league, game title or other organisation who connects with the platform, together with each organisation’s crowd voting mechanisms run as a semi-autonomous organization on this blockchain.
The total fixed supply of CHZ is fixed at 8,888,888,888.
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 CHZ can be supported by Wealthsimple’s platform, including whether CHZ is a security and/or a derivative and is being offered in compliance with securities and derivatives laws.
We evaluated CHZ based on publicly available information, including (but not limited to):
- The creation, governance, usage and design of CHZ, 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 CHZ;
- The supply, demand, maturity, utility and liquidity of CHZ;
- Material technical risks associated with CHZ, including any code defects, security breaches and other threats concerning CHZ 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 CHZ, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of CHZ; and
- Statements made by regulators or securities regulatory authorities in Canada and other jurisdictions regarding whether CHZ, 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 CHZ may result in changes to this Crypto Asset Statement and/or Wealthsimple’s ability to support CHZ.
Like all other crypto assets, there are some general risks to investing in CHZ. 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
Given that CHZ tokens are the base currency for trading Fan Tokens, the market price of CHZ may be dependent on the demand for Fan Tokens; as increased demand for Fan Tokens would tend to increase the demand for CHZ. The demand for Fan Tokens is in turn a function of fans’ interest in particular teams or players. As a result market price of CHZ - and any expectation of profit in purchasing CHZ - is therefore affected by factors other than the efforts of Chiliz / Socios.com.
CHZ has elevated regulatory risk. The United States Securities and Exchange Commission (SEC) has alleged that CHZ 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 Chiliz team or Socios.com are parties to this proceeding, and the U.S. courts have not determined that CHZ is a security. In the event that a U.S. court determines that CHZ is a security or there are other material developments affecting the treatment of CHZ under securities laws, Wealthsimple may cease to support CHZ and/or the market for CHZ may be adversely affected.
We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading CHZ. 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