Disclaimer

Disclaimer regarding risks associated with digital assets

Digital assets are an evolving, non-uniform asset class characterized by the use of distributed ledger technology or similar technology. More specifically, Tokens are dematerialized assets constituted and existing as entries on a public, permissioned or other digital, distributed ledger only. The relevant distributed ledgers themselves and any data stored therein, including without limitation the Token as such or any references thereto, are, unless explicitly specified otherwise in relevant documentation, not operated nor controlled by the JPool and therefore outside of the sphere of influence of JPool.

1. Technology risks

Risks of Tokens stemming from or relating to the specific use of technology may include, without limitation:

• Risk of Tokens existing on a distributed ledger only: Unless explicitly specified otherwise, the distributed ledgers by which and on which Tokens exist are outside of the sphere of influence of the JPool. Tokens can be exposed to events specific to the relevant distributed ledger such as hard or soft forks in a blockchain which may inter alia lead to the creation of new or competing digital assets, adversely affect the functionality, convertibility or transferability or result in a full or partial loss of units or reduction (including reduction to zero) of value of the Tokens.

• Risk of irreversibility of transactions/faulty instructions: Base layer transactions on a blockchain or other distributed ledger are irreversible and final and the history of transactions is computationally impractical to modify. As a consequence, if the User initiates or requests a transfer of Tokens using an incorrect digital ledger address, it will be impossible to identify the recipient and reverse the defective transaction.

• Risk of delayed execution: The execution of transactions in Tokens on a blockchain or other distributed ledger is subject to verification and other processes involving multiple third party actors/nodes using evolving technology. This may result in significant waiting periods and delays during which the User may be precluded from disposing over the relevant Tokens while their value may fluctuate significantly or which may otherwise result in loss or damages.

• Risk of security weaknesses within the underlying code or technology: There is a risk that developers or other third parties may voluntarily or involuntarily introduce weaknesses or errors into the underlying code or technology of a Token, which may be exploited in various types of attacks. Successful attacks (or the perception of a technological weakness) might adversely affect the functionality, convertibility or transferability or result in a full or partial loss of units or reduction (including reduction to zero) of value of the Tokens.

• Risk of exploitable breakthroughs in the field of cryptography, e.g. development of quantum computers: The state-of-the-art in cryptography, including digital encryption, may evolve over time. Advances in code decryption techniques and technical advances (including with regard to the computing power required to deploy such techniques) could pose risks to the security of Tokens and, if exploited, may lead to the theft, loss of units or reduction in value (including reduction to zero) of the Tokens.

• Risks inherent to consensus mechanisms and concentration risk: DLT may be contingent on independent validators or other forms of consensus formation or validation susceptible to external attacks. Potential attacks include e.g. collision attacks, 51% attacks, dusting attacks and censorship attacks. If successful, such attacks may e.g. enable a perpetrator to take control of Tokens, engage in double spending of the same Tokens and/or otherwise abuse the identity or personal data of other users. Furthermore, any such attack may adversely affect the functionality, convertibility or transferability or result in a full or partial loss of units or reduction (including reduction to zero) of value of the Tokens. The risk of a successful attack is elevated in digital assets based on DLT architecture with a high degree of concentration of unit ownership or network functions with a small number of parties.

2. Legal and regulatory risks

Risks of Tokens relating to the legal and regulatory environment may include, without limitation:

• Risk of non-compliance or change of legal and regulatory framework: The legal and regulatory framework governing Tokens is far from settled and continuously evolving. Existing laws and regulations, changes to the legal and regulatory framework and related measures by regulators or other governmental authorities may affect the compliant issuance, domestic and international tradability and transferability or convertibility of the Tokens and may potentially result in a full or partial loss of units or reduction of value (including reduction to zero) thereof.

• Risk of supervisory measures in one or more jurisdictions: Tokens, JPool or other involved parties, financial and other service providers may become subject to regulatory investigations, injunctions or other measures which may potentially result in a full or partial loss or reduction of value of the Tokens, impact the ability to offer Tokens or otherwise affect the user. Further, such measures may impede, restrict or prohibit the user from holding or transacting Tokens.

• Risk of seizure of digital assets: The technology underlying Tokens enables thorough forensic investigations that may be able to reach back and cover a period of time and number of transactions that would not be possible with similar effort in the context of traditional assets. Depending on the individual case, such forensic investigations could cover a period reaching back to the generation of the relevant Tokens. As a result, the Token may be subject to a risk of seizure by courts or governmental authorities where they have been previously used for or in connection with criminal activities or may otherwise be considered “tainted”.

• Risk of legal ineffectiveness of tokenization or transfer of tokenized rights: As the Tokens represent staked assets, the legal effectiveness of such construct may be subject to differing rules in the potentially relevant jurisdictions, including in particular the jurisdiction of the JPool or the user. There is a risk that tokenization of the supposedly underlying rights and/or the transfer of such rights and obligations by transfer of a Tokens may not be legally effective and that, consequently, the Token does not constitute ownership and may result in a full or partial loss of rights or reduction of value (including reduction to zero) thereof.

• JPool cannot be held liable for any differing classification by authorities or other competent third parties in any jurisdiction at any given point in time, which may result in differing rights of the user in respect of his Tokens in various jurisdictions over time. These may include legal and regulatory duties, tax obligations or other requirements, non-compliance with which may result in measures and sanctions including criminal liability, or which may otherwise affect the legal position of the Token or the value, transferability or convertibility of the relevant Tokens.

3. Market risks

Risks of Tokens relating to the relevant markets, trading platforms and systems may include, without limitation:

• Markets in Tokens are evolving: The markets in Tokens are evolving and may be subject to elevated volatility and limited transparency and reliability, execution delays or failures, all of which may potentially result in losses or other adverse effects for the user.

• Limited regulation: Trading platforms and systems for Tokens and their participants may be unregulated or subject to limited regulation and may not provide for the same or similar safeguards as would apply in traditional financial markets, including with respect to market manipulation or insider trading. All of these inherent particularities may potentially result in losses or other adverse effects for the user.

• Delays in execution or settlement of transactions in Tokens: Execution and settlement of transactions of Tokens may be dependent on particularities of the relevant distributed ledger or on the participation of third parties on the relevant network, in particular on the availability of miners or other processing entities. Delays or failures to execute or settle transactions may potentially result in losses or other adverse effects for the user.

• Valuation risk of Tokens in particular: The Tokens are linked to staked assets traded on a regulated market and may be subject to elevated volatility.