Token Disclosures
Certain Risks Relating to Purchase, Sale and Use of Tokens
IMPORTANT NOTE: The Tokens are not being structured or sold as securities or any other form of investment product. Accordingly, none of the information presented is intended to form the basis for any investment decision, and no specific recommendations are intended. The Company expressly disclaims any and all responsibility for any direct or consequential loss or damage of any kind whatsoever arising directly or indirectly from: (i) reliance on any information; (ii) any error, omission or inaccuracy in any such information; or (iii) any action resulting from such information.
By purchasing, owning, and using Tokens, you expressly acknowledge and assume the following risks:
1. Risk of Losing Access to Tokens Due to Loss of Private Key(s), Custodial Error or Buyer Error.
A private key, or a combination of private keys, is necessary to control and dispose of Tokens stored in your digital wallet or vault. Accordingly, loss of requisite private key(s) associated with your digital wallet or vault storing Tokens will result in loss of such Tokens. Moreover, any third party that gains access to such private key(s), including by gaining access to login credentials of a hosted wallet service you use, may be able to misappropriate your Tokens. Any errors or malfunctions caused by or otherwise related to the digital wallet or vault you choose to receive and store Tokens in, including your own failure to properly maintain or use such digital wallet or vault, may also result in the loss of your Tokens. Additionally, your failure to follow precisely the procedures set forth in for buying and receiving Tokens, including, for instance, if you provide the wrong address for the Token Receipt Address, or provides an address that is not compatible with the blockchain, may result in the loss of your Tokens. The loss of your credentials will result in the loss of your Tokens. Best practices dictate that you safely store credentials in one or more backup locations geographically separated from the working location.
2. Risks Associated with Blockchain Protocol.
Because Tokens are based on the blockchain protocols, any malfunction, breakdown or abandonment of the blockchain protocols may have a material adverse effect on the Tokens. Moreover, advances in cryptography, or technical advances such as the development of quantum computing, could present risks to the Tokens including the utility of the Tokens for obtaining services, by rendering ineffective the cryptographic consensus mechanism that underpins the blockchain protocol.
3. Risks Associated with Third-party Payments Networks.
Because the Token’s utility is partially dependent of third-party payments networks, any abandonment, disruption, regulation or any other factor affecting the third-party payment networks may have a materially adverse effect on the utility of the Tokens.
4. Risk of Mining Attacks.
As with other decentralized cryptographic tokens based on the blockchain protocol, the Tokens are susceptible to attacks by miners in the course of validating Token transactions on the blockchain, including, but not limited, to double-spend attacks, majority mining power attacks, and selfish-mining attacks. Any successful attacks present a risk to the Tokens, including, but not limited to, accurate execution and recording of transactions involving Tokens.
5. Risk of Hacking and Security Weaknesses.
Hackers or other malicious groups or organizations may attempt to interfere with the Platform, third-party payments network or the Tokens in a variety of ways, including, but not limited to, malware attacks, denial of service attacks, consensus-based attacks, Xxxxx attacks, smurfing and spoofing. Furthermore, to the extent that the Platform or any supporting third-party payments network is based on open-source software, there is a risk that a third party or a member of the team may intentionally or unintentionally introduce weaknesses into the core infrastructure of the Platform or third-party payments network, which could negatively affect the Platform or third-party payments network and the Tokens, including the utility of the Tokens for obtaining services.
6. Risks Associated with Markets for Tokens.
The Tokens are intended to be used with third-party payments networks, and will not support or otherwise facilitate any secondary trading or external valuation of Tokens. This restricts the contemplated avenues for using Tokens to the provision or receipt of services, and could therefore create illiquidity risk with respect to the Tokens you own. Even if secondary trading of Tokens is facilitated by third party exchanges, such exchanges may subject to little or no regulatory oversight, making them more susceptible to fraud or manipulation. Furthermore, to the extent that third-parties do ascribe an external exchange value to Tokens (e.g., as denominated in a digital or fiat currency), such value may be extremely volatile and diminish to zero.
7. Risk of Uninsured Losses.
Unlike bank accounts or accounts at some other financial institutions, Tokens are uninsured unless you specifically obtain private insurance to insure them. Thus, in the event of loss or loss of utility value, there is no public insurer, such as the Federal Deposit Insurance Corporation, or private insurance arranged by the issuer, to offer recourse to you.
8. Risk of Future Inflationary or Deflationary Measures.
The Issuer may, from time to time and in its sole discretion, adopt deflationary or inflationary mechanisms deemed necessary or prudent to optimize viability and operation. ANY SUCH DEFLATIONARY OR INFLATIONARY MECHANISMS AND THE ADOPTION THEREOF ARE SUBJECT TO CHANGE WITHOUT NOTICE, AND MAY HAVE AN ADVERSE AFFECT ON THE UTILITY OF EACH TOKEN.
9. Risks Associated with Uncertain Regulations and Enforcement Actions.
The regulatory status of the Tokens, the Platform, third party payments network and distributed ledger technology is unclear or unsettled in many jurisdictions. It is difficult to predict how or whether regulatory agencies may apply existing regulation with respect to such technology and its applications, including the Platform, third-party payments networks and the Tokens. It is likewise difficult to predict how or whether legislatures or regulatory agencies may implement changes to law and regulation affecting distributed ledger technology and its applications, including the Platform, third-party payments networks and the Tokens. Regulatory actions could negatively impact the Platform, third-party payments networks and the Tokens in various ways, including, for purposes of illustration only, through a determination that the purchase, sale, delivery, processing or exchange of the Tokens constitutes unlawful activity or that the Tokens are a regulated instrument that require registration or licensing of those instruments or some or all of the parties involved in the purchase, sale and delivery thereof. The Issuer may cease operations in a jurisdiction in the event that regulatory actions, or changes to law or regulation, make it illegal to operate in such jurisdiction, or commercially undesirable to obtain the necessary regulatory approval(s) to operate in such jurisdiction.
10. Risks Arising from Taxation.
The tax characterization of Tokens is uncertain. You must seek your own tax advice in connection with purchasing or using the Tokens, which may result in adverse tax consequences to you, including, but not limited to, withholding taxes, income taxes and tax reporting requirements.
11. Risk of Competing third-party payments networks.
It is possible that alternative platforms, third-party payments networks and tokens could be established that utilize the same code and protocol that are materially similar to those used or supported by the Issuer which may compete with the Issuer, which could negatively impact the Platform, third-party payments network and Tokens, including the utility of the Tokens for obtaining services.
12. Risk of Insufficient Interest in the Platform, third-party payments network or Distributed Applications.
It is possible that the Platform, Tokens or the third-party payments network will not be adopted by a large number of individuals, companies and other entities or that there will be limited public interest in the creation and development of third-party payments networks more generally. Such a lack of use or interest could negatively impact the development of the Platform, third-party payments network and therefore the potential utility of the Tokens, including the utility of the Tokens for obtaining services.
13. Risk of Lack of Adoption.
While a Token should not be viewed as an investment, it may have value over time. That value may be limited if the Platform, Token or the third-party payments network lacks use and adoption. If this becomes the case, there may be few or no markets following the launch of the Token, resulting in an adverse impact on the Token, from which it may never recover. Should adoption fail to occur, the Platform, Token or third-party payments networks may not honor any of the discounts or other benefits related to a specific token upon notice to token holders.
14. Risks Associated with the Development and Maintenance of a Third-party Payments Network.
The Platform and third-party payments networks are still being developed and may undergo significant changes over time. Although the Issuer intends for the Platform, Tokens and third-party payments network to function as described, and intends to take commercially reasonable steps toward those ends, the Issuer may have to make changes to the specifications of the Tokens which may also impact the Platform and third-party payments networks for any number of legitimate reasons. Moreover, the Issuer has no control over how other participants will use the third-party payments network, what products or services will be offered through the third-party payments network, or how third-party products and services will utilize Tokens (if at all). This could create the risk that the Platform, Tokens or third-party payments network, as further developed and maintained, may not meet your expectations at the time of purchase. Furthermore, despite the Issuer’s good faith efforts to develop and participate with third-party payments networks, it is still possible that the third-party payments network will experience malfunctions or otherwise fail to be adequately developed or maintained, which may negatively impact the Tokens, and the potential utility of the Tokens, including the utility of the Tokens for obtaining services.
15. Risk of Dissolution of the Issuer or Third-party Payments Network.
It is possible that, due to any number of reasons, including, but not limited to, an unfavorable fluctuation in the value of cryptographic and fiat currencies, decrease in the Tokens’ utility (including their utility for obtaining services), the failure of commercial relationships, or intellectual property ownership challenges, the Tokens or the third-party payments network, or both, may no longer be viable to operate and may be accordingly dissolved.
16. Risks Arising from Lack of Governance Rights.
Because Tokens confer no governance rights of any kind with respect to the Issuer, all decisions involving the Issuer’s products or services within the Platform, third-party payments network or the Issuer itself will be made by the Issuer at its sole discretion, including, but not limited to, decisions to discontinue its products or services, to create and sell more Tokens including for use in the third-party payments network, or to sell or liquidate the Issuer. These decisions could adversely affect utility of any Tokens you own, including their utility for obtaining services.
17. Unanticipated Risks.
Cryptographic tokens such as the Tokens are a new and untested technology. In addition to the risks included outlined herein, there are other risks associated with your purchase, possession and use of the Tokens, including unanticipated risks. Such risks may further materialize as unanticipated variations or combinations of the risks contemplated herein.
18. Prohibition Against Related Party Transactions.
Token holders are prohibited from using the Tokens for any related party transactions. Any such attempt may be immediately blocked, held, terminated or otherwise stopped pending investigation and all legal remedies shall be pursued.