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LEGAL MEMORANDUM Subject: Legal Classification of OZ7 Coin under U.S. Securities Laws Date: January 14, 2025 Prepared By: McMillan LLP To: OptimusZ7 Team

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I. Introduction

This memorandum assesses whether OZ7 Coin constitutes a security or an investment contract under U.S. securities laws, specifically under the Securities Act of 1933 and relevant SEC regulations. The Howey Test, established in SEC v. W.J. Howey Co., 328 U.S. 293 (1946), is the primary legal framework used to determine whether an asset qualifies as a security.

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II. The Howey Test Analysis

Under the Howey Test, a transaction is considered a security if it meets the following four criteria:

1. Investment of Money – There is a monetary investment.

2. Common Enterprise – The investment is part of a common enterprise.

3. Expectation of Profit – Investors expect profits derived from the efforts of others.

4. Efforts of a Third Party – Profits come primarily from the managerial or entrepreneurial efforts of others.

A token does not qualify as a security if it fails to meet one or more of these conditions.

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III. Application to OZ7 Coin

1. Investment of Money:

   • OZ7 Coin will be available for purchase, meaning some users may provide funds in exchange for the asset.

   • However, mere purchase of an asset does not automatically classify it as a security unless other elements of the Howey Test are met.

2. Common Enterprise:

   • OptimusZ7 is a decentralized Layer 1 blockchain, and OZ7 Coin is designed as a utility token for network transactions, staking, and validator incentives.

   • OZ7 holders do not share in the company’s profits or losses, nor do they have ownership rights in OptimusZ7.

   • There is no pooling of investor funds for the purpose of generating returns, which is a key component of the common enterprise criterion.

3. Expectation of Profit:

   • OZ7 Coin is not marketed as an investment opportunity but as a functional asset within the OptimusZ7 ecosystem.

   • The token serves as gas fees for transactions, staking rewards, validator incentives, and liquidity provisioning.

   • Users are incentivized to use the token rather than hold it for speculative gains.

4. Efforts of a Third Party:

   • The value of OZ7 is driven by its utility rather than the managerial efforts of OptimusZ7 or its team.

   • Unlike securities, OZ7 Coin does not promise profits based on the efforts of the company or developers.

   • The network operates in a decentralized manner, further distancing the token from security classification.

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IV. Conclusion

Based on the above analysis, OZ7 Coin does not meet the criteria of an investment contract under the Howey Test and should not be considered a security under U.S. law. The token serves as a utility asset for network operations, transaction processing, staking, and validator participation.

However, given the evolving regulatory landscape, it is recommended that OptimusZ7 continues to engage with legal professionals and regulatory authorities to ensure compliance with any future guidance from the Securities and Exchange Commission (SEC) and other relevant bodies.

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V. Disclaimer

This memorandum is for informational purposes only and does not constitute legal advice. A final determination regarding OZ7 Coin’s classification should be made in consultation with licensed U.S. securities attorneys.

Prepared by: Stephen Abosi Associate, Business Law McMillan LLP Email: [e-mail] Phone: [phone] Toronto, Canada