Participant Protection Reserve Terms
ARCBDS PARTICIPANT PROTECTION RESERVE TERMS
Document No.: 4 of 14
Version: 1.0
Effective Date: [●]
Last Updated: [●]
IMPORTANT NOTICE
These ARCBDS Participant Protection Reserve Terms govern the operation of the protection reserve established in connection with qualifying participation in the ARCBDS Founding Circle.
The Participant Protection Reserve is designed as a limited ecosystem protection mechanism for qualifying circumstances in which an eligible Participant is genuinely unable to liquidate qualifying Released ARCBDS through recognised available market mechanisms.
THE PARTICIPANT PROTECTION RESERVE IS NOT:
an insurance policy;
a bank deposit guarantee;
a guaranteed redemption programme;
a guaranteed buyback programme;
a guarantee of capital;
a guarantee of the original Contribution;
a guarantee of the Founding Circle allocation price;
a guarantee of any minimum ARCBDS market price;
a guarantee of continuous liquidity; or
a guarantee that every claim will be paid.
The Protection Reserve is finite and all claims are subject to eligibility requirements, verification, applicable coverage limits, available reserve assets, these Terms and Applicable Law.
Participants must read these Terms together with the ARCBDS Founding Circle Participation Agreement and ARCBDS Risk Disclosure Statement.
1. PARTIES
These Participant Protection Reserve Terms are issued by:
[ARCB Investment LLC / confirmed ARCBDS contracting or reserve-operating entity], a company established in Dubai, United Arab Emirates, with registered office at [●] and commercial licence/registration number [●] (the “Company”);
for the benefit of Participants who qualify under these Terms.
The individual or legal entity seeking protection under these Terms is referred to as the “Participant.”
2. PURPOSE
2.1 The Protection Reserve forms part of the ARCBDS Founding Circle participant-protection framework.
2.2 Its intended purpose is to provide a limited source of potential liquidity assistance to eligible Founding Circle Participants who satisfy the qualifying conditions set out in these Terms.
2.3 The Protection Reserve is specifically intended to address certain genuine liquidity-failure circumstances.
2.4 It is not designed to compensate Participants merely because:
a. ARCBDS decreases in value;
b. the Participant is dissatisfied with the available market price;
c. the Participant wishes to realise a particular profit;
d. the Participant does not wish to accept prevailing market conditions;
e. the Participant changes their mind concerning participation; or
f. the Participant experiences ordinary digital-asset market losses.
3. RELATIONSHIP WITH OTHER ARCBDS DOCUMENTS
These Terms form part of the ARCBDS legal documentation framework.
They should be read together with:
ARCBDS Founding Circle Participation Agreement;
ARCBDS Founding Circle Terms & Conditions;
ARCBDS Risk Disclosure Statement;
these Participant Protection Reserve Terms;
ARCBDS Payment, Allocation & Blockchain Transaction Policy;
ARCBDS Cancellation & Refund Policy;
ARCBDS Eligibility & Restricted Jurisdiction Policy;
ARCBDS KYC, AML & Sanctions Policy; and
other documents expressly incorporated into the Founding Circle framework.
In the event of inconsistency, the document hierarchy stated in the Founding Circle Participation Agreement shall apply.
4. DEFINITIONS
For purposes of these Terms:
4.1 “Approved Claim”
means a Claim that has been reviewed and determined to satisfy all applicable requirements under these Terms.
4.2 “Available Reserve Balance”
means the amount of Protection Reserve Property determined by the Company to be legally and operationally available for settlement of Approved Claims at the relevant time.
4.3 “Bona Fide Liquidation Attempt”
means a genuine attempt by an Eligible Participant to sell Qualifying ARCBDS through one or more Designated Markets in accordance with Section 14.
4.4 “Claim”
means a formal application submitted by a Participant requesting protection under these Terms.
4.5 “Claim Date”
means the date on which a substantially complete Claim is received by the Company.
4.6 “Claimant”
means a Participant submitting a Claim.
4.7 “Claim Coverage Percentage”
means the percentage applicable to an Approved Claim under Schedule 1.
4.8 “Claim Limit”
means the maximum amount payable in respect of a Claim or Participant under Schedule 1.
4.9 “Claim Verification Time”
means the time at which the Company determines the applicable market and liquidity conditions for purposes of a Claim.
4.10 “Designated Market”
means an exchange, trading venue, liquidity facility or other recognised market approved by the Company for purposes of assessing whether ARCBDS can reasonably be liquidated.
4.11 “Eligible Participant”
means a Participant satisfying Section 10.
4.12 “Eligible Tokens”
means the quantity of Qualifying ARCBDS accepted for consideration under an Approved Claim.
4.13 “Founding Circle”
means the initial structured participation programme of the ARCBDS ecosystem.
4.14 “Last Observed Market Price”
means the most recent valid market price determined in accordance with Section 17.
4.15 “Liquidity Failure Event”
means a circumstance satisfying the requirements of Sections 13 and 14.
4.16 “Protection Reserve”
means the Participant Protection Reserve established pursuant to these Terms.
4.17 “Protection Reserve Property”
means the assets allocated to and held for purposes of the Protection Reserve.
4.18 “Qualifying ARCBDS”
means ARCBDS originally obtained by an Eligible Participant through a qualifying Founding Circle allocation and satisfying Section 11.
4.19 “Qualifying Founding Circle Purchase Funding”
means a Contribution accepted by the Company for a qualifying Founding Circle participation and designated as eligible for the Protection Reserve framework.
4.20 “Reference Market Price”
means the price calculated under Section 17 for purposes of determining an Approved Claim.
4.21 “Released ARCBDS”
means ARCBDS that has completed all applicable Cliff and release restrictions and is eligible for transfer or disposal.
4.22 “Reserve Operator”
means the legal entity appointed to administer the Protection Reserve.
4.23 “Reserve Settlement”
means the payment or other settlement made following an Approved Claim.
4.24 “Waiting Period”
means the minimum period specified in Schedule 1 that must expire before a Claim may qualify.
5. ESTABLISHMENT OF THE PROTECTION RESERVE
5.1 The ARCBDS Founding Circle framework provides for the establishment of a Protection Reserve.
5.2 The current economic framework provides for an amount equivalent to:
20%
of Qualifying Founding Circle Purchase Funding to be allocated to the Protection Reserve.
5.3 For clarity, the 20% allocation refers to the amount allocated to the Protection Reserve.
It does not mean that:
a. every Participant automatically receives 20% protection;
b. every Claim will be settled at 20%;
c. Participants are guaranteed recovery of 20% of their Contribution;
d. ARCBDS is 20% asset-backed;
e. ARCBDS maintains a guaranteed 20% redemption value; or
f. Participants possess direct ownership of 20% of reserve assets.
5.4 Claim Coverage Percentage is determined separately under Schedule 1.
6. NATURE OF THE PROTECTION RESERVE
6.1 The Protection Reserve is an ecosystem protection mechanism.
6.2 Unless expressly established otherwise under a legally effective insurance policy, the Protection Reserve is not insurance.
6.3 The Protection Reserve does not create an unconditional debt obligation requiring the Company to redeem ARCBDS.
6.4 The Protection Reserve does not create a permanent redemption right.
6.5 The Protection Reserve does not establish a fixed exchange rate between ARCBDS and:
a. USDT;
b. US dollars;
c. another virtual asset; or
d. fiat currency.
6.6 The existence of the Protection Reserve does not mean ARCBDS is a stablecoin or otherwise designed to maintain a fixed value.
7. SEPARATION FROM ARC INSURANCE
7.1 The Protection Reserve is separate from ARC Insurance and from any other insurance-related entity, policy or arrangement.
7.2 Participation in the Founding Circle does not automatically provide an insurance policy.
7.3 A Participant shall have insurance rights only where:
a. a valid insurance policy exists;
b. the Participant or relevant asset falls within that policy;
c. all applicable policy conditions have been satisfied; and
d. the insurer accepts liability under that policy.
7.4 The Protection Reserve shall not be marketed as insurance unless legally authorised to be described as such.
8. FUNDING OF THE PROTECTION RESERVE
8.1 Subject to Applicable Law, the Company shall calculate an amount equivalent to 20% of Qualifying Founding Circle Purchase Funding.
8.2 Amounts allocated to the Protection Reserve shall be recorded through appropriate internal accounting and reserve records.
8.3 The Company shall maintain records showing:
a. qualifying funding received;
b. reserve allocations;
c. transfers into the Protection Reserve;
d. Reserve Settlements;
e. reserve expenses if expressly permitted;
f. reserve adjustments;
g. closing reserve balances; and
h. material reconciliation differences.
8.4 The Company may establish one or more dedicated:
a. wallets;
b. custody accounts;
c. bank accounts;
d. trust or segregated arrangements; or
e. other legally permitted structures
for holding Protection Reserve Property.
9. PROTECTION RESERVE PROPERTY
9.1 Protection Reserve Property may include assets approved under the Company's reserve management policy.
9.2 The principal objectives in holding Protection Reserve Property shall be:
a. capital preservation;
b. liquidity;
c. accessibility;
d. security;
e. regulatory compliance; and
f. ability to settle qualifying claims.
9.3 Subject to final legal and treasury approval, Protection Reserve Property may consist principally of:
a. USDT;
b. other approved stable-value digital assets;
c. cash or cash-equivalent assets; and/or
d. other highly liquid assets considered suitable for the purpose of the Protection Reserve.
9.4 Protection Reserve Property should not be managed primarily for speculative return.
9.5 The Reserve Operator shall avoid unreasonable exposure to highly speculative or illiquid assets.
10. ELIGIBLE PARTICIPANTS
A Participant may qualify for Protection Reserve consideration only if:
a. the Participant was accepted into the qualifying Founding Circle programme;
b. the relevant Contribution was successfully completed and accepted;
c. the relevant ARCBDS constitutes Qualifying ARCBDS;
d. the Participant successfully completed applicable KYC/KYB;
e. the Participant remains legally eligible;
f. the Participant is not sanctioned or prohibited;
g. the Participant is not subject to a material unresolved AML investigation;
h. the Participant has complied with the Participation Agreement;
i. the Participant has complied with these Terms;
j. the applicable Waiting Period has expired;
k. the ARCBDS subject to the Claim is Released ARCBDS;
l. the Participant still lawfully owns and controls the relevant ARCBDS;
m. the Participant has made a Bona Fide Liquidation Attempt where required;
n. a qualifying Liquidity Failure Event exists; and
o. all Claim documentation has been supplied.
11. QUALIFYING ARCBDS
11.1 Protection Reserve eligibility applies only to ARCBDS expressly designated as qualifying under the Founding Circle programme.
11.2 Unless otherwise announced, Qualifying ARCBDS must:
a. originate from the Participant's accepted Founding Circle allocation;
b. be traceable to the Participant's Participation Confirmation;
c. remain lawfully owned by the Participant;
d. have completed all applicable release restrictions;
e. not previously have been settled through the Protection Reserve;
f. not have been disposed of and subsequently reacquired from a secondary market; and
g. not be subject to a lien, pledge, security interest or third-party ownership claim.
11.3 ARCBDS acquired from:
a. an exchange;
b. another Participant;
c. an OTC transaction;
d. a third-party wallet;
e. an airdrop outside the qualifying allocation; or
f. another secondary-market source
does not automatically qualify.
12. RELEASE REQUIREMENT
12.1 Unreleased ARCBDS is not eligible for a Protection Reserve Claim solely because it cannot yet be transferred.
12.2 Contractual restrictions caused by:
a. a Cliff;
b. vesting;
c. linear release;
d. allocation lock;
e. platform restriction required by the Participation Agreement
do not themselves constitute a Liquidity Failure Event.
12.3 A Claim may relate only to ARCBDS that has become Released ARCBDS unless expressly approved otherwise under Applicable Law.
13. QUALIFYING LIQUIDITY FAILURE EVENT
13.1 The central purpose of the Protection Reserve is to address a genuine inability to liquidate Qualifying ARCBDS.
13.2 A Liquidity Failure Event may exist where:
a. Qualifying ARCBDS is Released ARCBDS;
b. one or more Designated Markets ordinarily provide an opportunity to trade ARCBDS;
c. the Participant has made reasonable Bona Fide Liquidation Attempts;
d. the Participant remains unable to execute a reasonable disposal of the relevant ARCBDS because of insufficient executable market liquidity; and
e. the circumstances satisfy these Terms.
13.3 A Liquidity Failure Event may include circumstances such as:
a. absence of executable bids across Designated Markets;
b. material market-wide suspension of ARCBDS trading;
c. prolonged inability to execute ARCBDS sell transactions through recognised available markets;
d. withdrawal or trading failure materially affecting available ARCBDS liquidity; or
e. another verified liquidity event accepted under these Terms.
14. BONA FIDE LIQUIDATION ATTEMPT
14.1 Unless waived because trading is demonstrably unavailable, a Participant must make reasonable attempts to liquidate the relevant ARCBDS before submitting a Claim.
14.2 The Participant may be required to provide evidence including:
a. attempted sell orders;
b. order-book information;
c. exchange transaction records;
d. failed-order notices;
e. screenshots supported by account records;
f. API or platform records;
g. transaction history;
h. correspondence from a Designated Market; or
i. other objective evidence.
14.3 A Bona Fide Liquidation Attempt does not require the Participant to accept an obviously erroneous, manipulated or non-genuine price.
14.4 However, a Participant cannot create a qualifying Claim merely because the Participant refuses to accept the prevailing genuine market price.
15. EVENTS THAT DO NOT AUTOMATICALLY QUALIFY
The following circumstances do not, by themselves, constitute a Liquidity Failure Event:
a. ARCBDS trades below its Founding Circle allocation price;
b. ARCBDS trades below the Participant's preferred price;
c. the Participant has made an unrealised loss;
d. the Participant expected a higher return;
e. market volatility increases;
f. trading volume declines but transactions remain reasonably executable;
g. the Participant wishes to exit before release;
h. the Participant needs cash urgently;
i. the Participant changes their financial strategy;
j. another Participant receives a Reserve Settlement;
k. the Participant expects ARCBDS to decline in the future;
l. an unofficial exchange lacks liquidity where other Designated Markets remain functional; or
m. the Participant voluntarily declines available genuine liquidity.
16. WAITING PERIOD
16.1 No Claim may be submitted until the applicable Waiting Period has expired.
16.2 The Waiting Period shall be:
[●] calendar days
from the later of:
a. the date the relevant ARCBDS becomes Released ARCBDS; or
b. such other date specified in Schedule 1.
16.3 The Waiting Period exists to allow ordinary market liquidity mechanisms an opportunity to function before Protection Reserve resources are used.
16.4 The Waiting Period may be waived or modified where:
a. required by Applicable Law;
b. a material market-wide liquidity event has occurred;
c. all Designated Markets have ceased ARCBDS trading for a prolonged period; or
d. the Reserve Governance Committee determines that applying the normal Waiting Period would be unreasonable.
17. REFERENCE MARKET PRICE
17.1 General Principle
Where an Approved Claim is valued by reference to ARCBDS market price, the primary basis shall be the Last Observed Market Price.
17.2 Primary Method
The Last Observed Market Price shall ordinarily mean the most recent valid executed ARCBDS market price on the Primary Designated Market immediately before the relevant Claim Verification Time.
17.3 Valid Price
A price may be disregarded where reasonably determined to be:
a. manifestly erroneous;
b. generated through wash trading;
c. subject to manipulation;
d. the result of an abnormal isolated transaction;
e. unsupported by genuine market activity;
f. produced by a malfunctioning market; or
g. otherwise unreliable.
17.4 Secondary Reference Markets
If the Primary Designated Market does not provide a reliable price, the Company may use:
a. the most recent valid price from another Designated Market;
b. an average of valid prices from multiple Designated Markets;
c. a volume-weighted market price;
d. a time-weighted market price; or
e. another reasonable and independently verifiable pricing methodology.
17.5 Market Disruption
Where no reliable current price exists, the Company may use the most recent reliable market price preceding the disruption, subject to:
a. market conditions;
b. elapsed time;
c. available trading evidence;
d. manipulation risk; and
e. the objective of achieving a fair and reasonable valuation.
17.6 Not Founding Circle Price
The Reference Market Price is not automatically:
a. US$0.095;
b. US$0.090;
c. US$0.080;
d. the Participant's original purchase price;
e. the highest previous market price; or
f. any preferred exit price.
18. CLAIM VALUE CALCULATION
Subject to all applicable limits, an Approved Claim shall generally be calculated as follows:
Step 1 — Eligible Token Quantity
Eligible Tokens = Number of Qualifying ARCBDS approved under the Claim
Step 2 — Market Value
Eligible Market Value = Eligible Tokens × Reference Market Price
Step 3 — Coverage
Indicative Covered Amount = Eligible Market Value × Claim Coverage Percentage
Step 4 — Apply Claim Limit
The Indicative Covered Amount is then subject to:
a. per-Claim limits;
b. per-Participant limits;
c. aggregate limits;
d. available Protection Reserve balance; and
e. other conditions under these Terms.
19. CLAIM COVERAGE PERCENTAGE
19.1 The Claim Coverage Percentage shall be specified in Schedule 1.
19.2 Current approved Claim Coverage Percentage:
[●]%
19.3 The Claim Coverage Percentage is independent of the 20% reserve funding allocation.
19.4 For example, a 20% allocation of qualifying funding to the Protection Reserve does not necessarily mean each eligible Claim receives 20%.
19.5 No Claim Coverage Percentage represents a guaranteed financial return.
20. CLAIM LIMITS
Protection Reserve Claims shall be subject to the following limits:
Maximum Per Claim
[●] USDT equivalent
Maximum Per Participant
[●] USDT equivalent / [●]% of eligible amount
Maximum Number of Claims
[●] claim(s) per [●]
Minimum Claim Size
[●] USDT equivalent
20.1 Claim limits may be applied to protect equitable access to finite Protection Reserve resources.
20.2 Multiple related Claims may be aggregated where they appear to have been divided artificially to avoid applicable limits.
21. AVAILABLE RESERVE LIMITATION
21.1 Every Claim remains subject to the Available Reserve Balance.
21.2 The existence of an Approved Claim does not create an entitlement to amounts exceeding Protection Reserve Property legally available for settlement.
21.3 If aggregate Approved Claims exceed the Available Reserve Balance, the Company may apply:
a. proportionate settlement;
b. staged settlement;
c. temporary deferral;
d. maximum-claim reductions;
e. claim prioritisation under Section 31; or
f. another fair allocation mechanism.
21.4 Participants acknowledge that the Protection Reserve is finite.
22. NO RECOURSE TO GENERAL COMPANY ASSETS
Except where Applicable Law or another binding contractual obligation provides otherwise:
22.1 Protection Reserve Claims are claims against the Protection Reserve mechanism only.
22.2 Insufficiency of the Protection Reserve does not automatically create an obligation for the Company to use:
a. general operating capital;
b. shareholder assets;
c. unrelated ecosystem funds;
d. participating business assets;
e. ARC Insurance assets; or
f. other unrelated reserves
to satisfy a Claim.
23. CLAIM SUBMISSION PROCEDURE
A Participant seeking Protection Reserve consideration must submit a Claim through the official ARCBDS Claim Portal or another officially approved channel.
The Claim must include, where requested:
a. Participant name;
b. Participant ID;
c. KYC reference;
d. Participation Confirmation;
e. original Contribution details;
f. relevant blockchain transaction hashes;
g. wallet ownership evidence;
h. number of ARCBDS subject to the Claim;
i. evidence that the ARCBDS is Released ARCBDS;
j. proof of continuing ownership;
k. evidence of Bona Fide Liquidation Attempts;
l. exchange account statements;
m. failed order evidence;
n. Designated Market information;
o. requested Claim amount;
p. declarations required under these Terms; and
q. additional information reasonably required for verification.
24. CLAIM DEADLINE
24.1 A Claim must be submitted within:
[●] calendar days
after the relevant qualifying Liquidity Failure Event or such other period stated in Schedule 1.
24.2 Late Claims may be rejected unless:
a. the delay was caused by circumstances beyond the Participant's reasonable control;
b. Applicable Law requires consideration; or
c. the Reserve Operator approves the late submission.
25. KYC AND COMPLIANCE REVIEW
25.1 Every Claim may be subject to renewed:
a. KYC;
b. KYB;
c. sanctions screening;
d. AML review;
e. wallet screening;
f. blockchain analytics;
g. source-of-funds review; and
h. fraud screening.
25.2 Settlement may be delayed while legally required verification is completed.
25.3 No settlement shall be made where prohibited by sanctions or Applicable Law.
26. OWNERSHIP VERIFICATION
26.1 The Participant must prove continuing ownership and control of the ARCBDS subject to the Claim.
26.2 Verification may include:
a. wallet-signature verification;
b. micro-transactions;
c. exchange statements;
d. platform Account records;
e. blockchain records; or
f. other appropriate methods.
26.3 ARCBDS subject to competing ownership claims will not be settled until the ownership issue has been reasonably resolved.
27. TOKEN SURRENDER AS CONDITION OF SETTLEMENT
27.1 Unless otherwise provided in an approved claim arrangement, settlement of an Approved Claim requires the Participant to transfer the Eligible Tokens to:
a. a designated Protection Reserve wallet;
b. an ARCBDS treasury wallet;
c. a designated smart contract; or
d. another officially approved address.
27.2 A Reserve Settlement shall not ordinarily be paid while the Participant simultaneously retains the ARCBDS for which compensation is being received.
27.3 Once Eligible Tokens have been validly transferred as part of settlement, the Participant relinquishes their economic ownership of those tokens.
28. TREATMENT OF ARCBDS ACQUIRED THROUGH CLAIMS
ARCBDS transferred following an Approved Claim may, subject to Applicable Law and approved token-management policy:
a. be held by the Protection Reserve;
b. be transferred to treasury;
c. be removed from active circulation;
d. be burned where technically and legally permitted;
e. be reserved for future ecosystem purposes; or
f. otherwise be managed under an approved policy.
28.1 The Company should avoid disposing of significant quantities in a manner reasonably expected to create unnecessary market disruption.
28.2 The treatment of acquired ARCBDS should be recorded.
29. CLAIM REVIEW
29.1 Claims shall be reviewed by authorised personnel and/or a designated Protection Reserve Claims Committee.
29.2 Review may include:
a. identity verification;
b. token provenance;
c. release status;
d. ownership verification;
e. market-liquidity review;
f. Bona Fide Liquidation Attempt review;
g. Reference Market Price determination;
h. fraud analysis;
i. sanctions screening;
j. Available Reserve Balance review; and
k. claim-limit calculation.
29.3 The Claims Committee may request additional information.
29.4 Failure to provide requested information within a reasonable period may result in the Claim being suspended or rejected.
30. CLAIM REVIEW PERIOD
30.1 The Company shall aim to determine a substantially complete Claim within:
[●] Business Days
after receipt of all required information.
30.2 This is a target processing period and may be extended where reasonably necessary because of:
a. complex ownership verification;
b. suspected fraud;
c. market disruption;
d. sanctions review;
e. regulatory requirements;
f. exceptional claim volume;
g. blockchain investigation;
h. third-party information delays; or
i. other circumstances beyond reasonable operational control.
30.3 Any mandatory processing deadline imposed by Applicable Law shall prevail.
31. CLAIM PRIORITY
31.1 Under ordinary circumstances, complete Claims may be processed substantially in order of completion.
31.2 The Company may apply alternative prioritisation where necessary to ensure fair treatment.
31.3 Factors may include:
a. date of complete Claim;
b. Participant hardship where legally appropriate;
c. Claim size;
d. systemic liquidity event;
e. reserve capacity;
f. fraud risk;
g. regulatory requirements; and
h. equitable treatment of multiple eligible Participants.
31.4 During a systemic event, the Company may apply pro-rata settlement rather than permitting earlier large Claims to exhaust the entire Protection Reserve.
32. SYSTEMIC LIQUIDITY EVENT
32.1 A Systemic Liquidity Event may exist where a significant number of Participants simultaneously become unable to liquidate ARCBDS.
32.2 During such an event, the Company may temporarily:
a. aggregate Claims;
b. establish a common valuation time;
c. apply pro-rata settlement;
d. reduce per-Claim limits;
e. establish settlement windows;
f. delay settlements reasonably;
g. appoint independent verification; or
h. implement another fair reserve-preservation mechanism.
32.3 Measures under this section must not be used arbitrarily.
33. CLAIM SETTLEMENT
33.1 Approved Claims may be settled using:
a. USDT;
b. another approved stable-value digital asset;
c. fiat currency where available and lawful; or
d. another settlement asset accepted by the Participant.
33.2 The settlement asset shall be stated in the Claim approval.
33.3 Settlement may require:
a. a verified wallet;
b. a verified bank account;
c. sanctions screening;
d. successful token surrender; and
e. completion of required documentation.
34. NETWORK AND SETTLEMENT FEES
34.1 The treatment of blockchain network fees shall be disclosed before settlement.
34.2 Unless stated otherwise:
[Company / Participant] shall bear ordinary settlement network fees.
34.3 Extraordinary third-party charges shall not be deducted without disclosure where disclosure is reasonably possible.
35. PARTIAL SETTLEMENT
35.1 A Claim may be approved in full or in part.
35.2 Partial approval may occur because:
a. only part of the ARCBDS qualifies;
b. Claim limits apply;
c. the Available Reserve Balance is insufficient;
d. evidence supports only part of the Claim;
e. part of the ARCBDS was previously transferred;
f. part remains unreleased; or
g. another restriction applies.
35.3 The Participant shall receive an explanation of material reasons for partial approval where permitted by law.
36. CLAIM REJECTION
A Claim may be rejected where:
a. the Participant is ineligible;
b. the ARCBDS is not Qualifying ARCBDS;
c. the ARCBDS remains unreleased;
d. the Waiting Period has not expired;
e. no qualifying Liquidity Failure Event exists;
f. genuine market liquidity remains reasonably available;
g. the Participant merely refuses the prevailing market price;
h. ownership cannot be established;
i. Claim information is materially inaccurate;
j. fraud is suspected or established;
k. the ARCBDS was already sold;
l. the ARCBDS was previously settled;
m. the Participant is sanctioned or prohibited;
n. the Claim is submitted outside the applicable period without acceptable reason;
o. required information is not provided; or
p. settlement would violate Applicable Law.
37. FRAUD AND ABUSE
The following constitute prohibited conduct:
a. submitting fabricated failed orders;
b. manipulating market activity to create apparent illiquidity;
c. coordinating wash trading;
d. submitting Claims for ARCBDS not owned by the Claimant;
e. double claiming;
f. hiding previous sales;
g. altering exchange records;
h. creating artificial liquidity failures;
i. colluding with third parties;
j. misleading the Claims Committee;
k. circumventing Claim Limits through multiple Accounts; or
l. any other fraudulent conduct.
37.1 Fraudulent Claims may result in:
a. immediate rejection;
b. Account suspension;
c. termination of participation;
d. recovery proceedings;
e. reporting to authorities; and
f. legal action.
38. RELATED-PARTY AND COLLUSION CONTROLS
38.1 Claims involving related parties may receive enhanced review.
38.2 Related parties may include:
a. family members;
b. common beneficial owners;
c. controlled companies;
d. common wallet controllers;
e. referral-network entities; or
f. persons acting in concert.
38.3 Related-party status does not automatically disqualify a Claim but may require additional verification.
39. APPEAL OF CLAIM DECISION
39.1 A Participant may request review of a rejected or partially approved Claim within:
[●] calendar days
after receiving the decision.
39.2 The appeal must identify:
a. the disputed decision;
b. reasons for disagreement; and
c. any additional supporting evidence.
39.3 Where reasonably possible, the appeal should be reviewed by a person or committee not solely responsible for the original decision.
39.4 The appeal decision shall constitute the Company's final internal determination, without prejudice to rights under the Participation Agreement or Applicable Law.
40. RESERVE GOVERNANCE
40.1 The Company shall establish appropriate governance over the Protection Reserve.
40.2 Governance responsibilities should include:
a. reserve funding;
b. custody;
c. reconciliation;
d. liquidity monitoring;
e. Claim approvals;
f. conflict management;
g. reporting;
h. security;
i. risk management;
j. fraud controls; and
k. regulatory compliance.
40.3 Material reserve decisions should be appropriately documented.
41. RESERVE GOVERNANCE COMMITTEE
41.1 The Company may establish a Protection Reserve Governance Committee.
41.2 The Committee may include representatives from:
a. management;
b. finance;
c. compliance;
d. risk;
e. legal;
f. treasury; and/or
g. independent professional advisers.
41.3 The Committee shall be responsible for oversight rather than participant marketing.
42. CONFLICTS OF INTEREST
42.1 Persons administering the Protection Reserve must identify and appropriately manage conflicts of interest.
42.2 Potential conflicts may arise where:
a. a Claim involves a related party;
b. the Company holds ARCBDS;
c. a market maker is related to the Company;
d. reserve assets are held with a related entity;
e. a Claim decision could materially affect treasury interests; or
f. another commercial relationship could influence decision-making.
42.3 A materially conflicted decision-maker should not solely determine the affected Claim.
43. SEGREGATION AND CUSTODY
43.1 Subject to the final legal structure, Protection Reserve Property should be operationally identified and maintained separately from ordinary day-to-day operating funds.
43.2 The Company should use custody arrangements appropriate to:
a. the asset type;
b. security requirements;
c. liquidity requirements;
d. jurisdiction;
e. regulatory requirements; and
f. Claim settlement needs.
43.3 Protection Reserve Property should not ordinarily be pledged, rehypothecated or used as collateral in a manner that materially prevents its use for eligible Claims.
44. PROHIBITED USES OF PROTECTION RESERVE PROPERTY
Unless specifically permitted under the approved Reserve Policy and Applicable Law, Protection Reserve Property shall not be used for:
a. ordinary payroll;
b. marketing expenditure;
c. executive bonuses;
d. shareholder dividends;
e. unrelated acquisitions;
f. unsecured related-party lending;
g. speculative leveraged trading;
h. personal expenses;
i. unrelated ecosystem funding; or
j. any purpose materially inconsistent with the Protection Reserve.
45. RESERVE OPERATING EXPENSES
45.1 Ordinary Company operating expenses should not be charged to the Protection Reserve.
45.2 Reasonable direct expenses of operating or safeguarding the Protection Reserve may be paid from Reserve Property only where:
a. legally permitted;
b. approved under the Reserve Policy;
c. appropriately documented; and
d. not materially inconsistent with Participant protection.
45.3 Such costs may include, where appropriate:
a. custody fees;
b. audit fees;
c. blockchain transaction costs;
d. independent verification; or
e. legally required professional costs.
46. RECONCILIATION
46.1 The Company shall maintain appropriate reconciliation of:
a. reserve funding obligations;
b. actual Protection Reserve Property;
c. pending Claims;
d. Approved Claims;
e. completed settlements; and
f. Reserve balances.
46.2 Material reconciliation discrepancies shall be investigated.
47. RESERVE MONITORING
The Company should periodically monitor:
a. reserve size;
b. reserve liquidity;
c. asset concentration;
d. counterparty exposure;
e. stablecoin risk;
f. custody risk;
g. expected Claim demand;
h. market liquidity;
i. ARCBDS trading conditions; and
j. systemic stress indicators.
48. STRESS TESTING
48.1 The Company may conduct periodic stress tests of the Protection Reserve.
48.2 Stress scenarios may include:
a. significant decline in ARCBDS liquidity;
b. exchange delisting;
c. simultaneous Participant Claims;
d. stablecoin de-pegging;
e. custodian failure;
f. cyberattack;
g. major market disruption; and
h. regulatory intervention.
48.3 Stress testing does not guarantee that the Reserve will withstand every possible event.
49. RESERVE REPORTING
Subject to Applicable Law, confidentiality and security considerations, the Company may publish periodic information concerning:
a. aggregate Protection Reserve size;
b. reserve composition categories;
c. aggregate funding;
d. aggregate settled Claims;
e. number of Claims processed;
f. material changes to reserve policy; and
g. independent assurance where available.
49.1 Publication of specific wallet addresses may be considered where appropriate but is not mandatory if doing so would create security or privacy concerns.
50. AUDIT AND INDEPENDENT REVIEW
50.1 The Company may appoint an independent auditor, accountant, compliance professional or other qualified person to review aspects of the Protection Reserve.
50.2 Review may include:
a. reserve balance;
b. funding calculation;
c. reconciliation;
d. custody;
e. claims administration;
f. internal controls; and
g. compliance.
50.3 Any specific mandatory audit frequency required by Applicable Law shall apply.
51. STABLECOIN RISK WITHIN THE RESERVE
51.1 Where Protection Reserve Property includes USDT or another stable-value digital asset, the Reserve is exposed to risks including:
a. de-pegging;
b. issuer failure;
c. freezing;
d. regulatory restrictions;
e. liquidity disruption;
f. blockchain failure;
g. redemption restrictions; and
h. counterparty risk.
51.2 Such events may temporarily or permanently reduce the Available Reserve Balance.
52. CUSTODIAN AND COUNTERPARTY RISK
52.1 Reserve Property may depend on custodians, banks, exchanges, wallet providers and other counterparties.
52.2 A counterparty may experience:
a. insolvency;
b. cyberattack;
c. withdrawal suspension;
d. regulatory action;
e. operational failure; or
f. fraud.
52.3 The Company shall use reasonable care in selecting reserve counterparties but cannot eliminate counterparty risk.
53. REGULATORY ACTION
53.1 A regulator, court or other competent authority may:
a. freeze assets;
b. restrict transfers;
c. impose sanctions;
d. change regulatory requirements;
e. prohibit particular settlement methods;
f. require additional reserve controls; or
g. otherwise affect Protection Reserve operations.
53.2 The Company shall comply with legally binding requirements.
54. TEMPORARY SUSPENSION OF CLAIMS
The Company may temporarily suspend Claim processing where reasonably necessary because of:
a. material cyberattack;
b. blockchain failure;
c. custodian failure;
d. widespread market manipulation;
e. inability to determine a reliable Reference Market Price;
f. sanctions;
g. court or regulatory order;
h. systemic fraud investigation;
i. material reserve-security risk;
j. force majeure; or
k. another exceptional event.
54.1 Suspension shall not automatically mean cancellation of valid Claims.
54.2 Processing should resume when reasonably practicable and lawful.
55. PROTECTION RESERVE EXHAUSTION
55.1 The Protection Reserve may become partially or completely exhausted.
55.2 If this occurs:
a. Claims may be settled proportionately;
b. Claims may be deferred;
c. Claim Limits may apply;
d. new Claims may be temporarily suspended; or
e. settlement may not be available.
55.3 The Company does not guarantee that the Reserve will automatically be replenished after exhaustion.
55.4 Future reserve funding may restore reserve capacity subject to the programme's continuing operation.
56. NO PERSONAL OWNERSHIP OF RESERVE PROPERTY
56.1 A Participant does not own an individually allocated percentage of the Protection Reserve merely by participating in the Founding Circle.
56.2 Protection Reserve Property is administered collectively for the purposes described in these Terms.
56.3 Participants may not demand withdrawal of “their” 20% reserve allocation.
57. NO INTEREST ON RESERVE ALLOCATIONS OR CLAIMS
Participants do not receive:
a. interest on Protection Reserve Property;
b. yield generated by reserve assets;
c. interest on pending Claims; or
d. ownership rights in profits arising from reserve management
unless expressly stated under a separate legally binding arrangement.
58. NO GUARANTEED REPURCHASE
58.1 The Protection Reserve shall not be represented as a standing unconditional offer by the Company to purchase ARCBDS.
58.2 A Participant cannot automatically require the Company to purchase ARCBDS merely because the Participant wishes to sell.
58.3 Any acquisition of ARCBDS through an Approved Claim arises only under the conditions of these Terms.
59. NO PRICE FLOOR
59.1 The Protection Reserve does not establish a minimum ARCBDS market price.
59.2 The existence of the Reserve should not be interpreted as meaning that ARCBDS cannot fall below:
a. the Founding Circle allocation price;
b. a previous market price;
c. a specific support level; or
d. any other price.
60. NO MARKET INTERVENTION OBLIGATION
The Company is not required under these Terms to:
a. place buy orders on exchanges;
b. maintain a particular order-book depth;
c. manipulate or support market price;
d. prevent ARCBDS price declines;
e. guarantee trading volume; or
f. act as a continuous market maker.
61. AMENDMENT OF THESE TERMS
61.1 These Terms may be updated where reasonably required because of:
a. regulatory changes;
b. improved Participant protection;
c. security;
d. operational improvements;
e. market developments;
f. changes to Designated Markets;
g. changes in settlement infrastructure; or
h. changes to the legal structure.
61.2 Material amendments shall not retroactively eliminate an Approved Claim.
61.3 Material adverse changes affecting existing Participants should be communicated in advance where reasonably possible and legally permitted.
61.4 Amendments required by law may take effect when legally required.
62. PROTECTION RESERVE VERSION CONTROL
The Company should retain records showing:
a. current Terms version;
b. previous Terms versions;
c. effective dates;
d. Participants subject to each version;
e. material amendments; and
f. acceptance records where required.
63. TERMINATION OF THE PROTECTION RESERVE PROGRAMME
63.1 The Protection Reserve programme may be terminated only subject to:
a. existing contractual obligations;
b. Applicable Law;
c. regulatory requirements;
d. treatment of existing Eligible Participants; and
e. treatment of pending Approved Claims.
63.2 Termination shall not automatically permit the Company to appropriate Protection Reserve Property contrary to existing legal obligations.
63.3 The treatment of remaining Reserve Property following lawful termination shall be determined under the approved legal structure, applicable agreements and Applicable Law.
64. TAX
64.1 Reserve Settlements may create tax consequences.
64.2 Participants are responsible for obtaining independent tax advice.
64.3 The Company may make legally required:
a. tax reporting;
b. withholding;
c. disclosures; or
d. deductions.
65. DATA PROCESSING
The Company may process Participant information for purposes including:
a. Claim administration;
b. identity verification;
c. blockchain analysis;
d. fraud prevention;
e. sanctions screening;
f. payment processing;
g. regulatory compliance; and
h. dispute management.
Such processing is subject to the ARCBDS Privacy Policy and Applicable Law.
66. CONFIDENTIALITY OF CLAIM INFORMATION
66.1 Claim information may contain commercially and personally sensitive information.
66.2 The Company shall handle such information in accordance with its Privacy Policy and legal obligations.
66.3 Information may be disclosed where necessary to:
a. service providers;
b. auditors;
c. legal advisers;
d. compliance providers;
e. regulators;
f. courts;
g. law-enforcement agencies; or
h. other authorised recipients.
67. LIMITATION OF LIABILITY
To the maximum extent permitted by Applicable Law, the Company shall not be liable for losses arising solely from:
a. ordinary market-price movements;
b. lack of market liquidity outside its reasonable control;
c. exchange failure;
d. blockchain failure;
e. stablecoin failure;
f. Participant wallet compromise;
g. incorrect Participant information;
h. Participant refusal to accept genuine prevailing market prices; or
i. other risks expressly assumed under the Founding Circle documentation.
Nothing in these Terms excludes liability that cannot legally be excluded.
68. NO WAIVER OF MANDATORY RIGHTS
Nothing in these Terms:
a. excludes mandatory statutory rights;
b. excludes legally non-excludable liability;
c. prevents a Participant from making a regulatory complaint where legally permitted; or
d. overrides a legally binding court or regulatory order.
69. GOVERNING LAW
These Terms shall be governed by the same governing law specified in the ARCBDS Founding Circle Participation Agreement.
Final governing law and jurisdiction shall be confirmed in the execution version following legal review.
70. DISPUTE RESOLUTION
Any dispute relating to:
a. Claim eligibility;
b. Claim amount;
c. Reserve Settlement;
d. interpretation of these Terms; or
e. operation of the Protection Reserve
shall be handled according to the dispute-resolution mechanism contained in the ARCBDS Founding Circle Participation Agreement after completion of the internal appeal process where applicable.
71. SEVERABILITY
If any provision of these Terms is found invalid or unenforceable, that provision shall be modified or severed to the minimum extent required, and the remaining provisions shall continue in effect.
72. NO WAIVER
Failure by the Company to enforce a provision immediately shall not constitute permanent waiver of that provision.
73. LANGUAGE
The English version shall be the controlling version to the extent permitted by Applicable Law.
Translations may be provided for convenience.
74. PARTICIPANT PROTECTION RESERVE ACKNOWLEDGEMENT
Before participating in the Founding Circle, the Participant should expressly confirm:
☐ I understand that an amount equivalent to 20% of Qualifying Founding Circle Purchase Funding is intended to be allocated to the Participant Protection Reserve.
☐ I understand that this does not mean 20% of my Contribution is automatically refundable to me.
☐ I understand that I do not personally own 20% of my Contribution held within the Reserve.
☐ I understand that the Protection Reserve is not automatically an insurance policy.
☐ I understand that ARC Insurance does not automatically cover my ARCBDS.
☐ I understand that the Protection Reserve does not guarantee repayment of my Contribution.
☐ I understand that the Protection Reserve does not guarantee ARCBDS market value.
☐ I understand that the Protection Reserve does not guarantee exchange liquidity.
☐ I understand that the Protection Reserve does not create a guaranteed buyback right.
☐ I understand that the Protection Reserve does not create a permanent redemption right.
☐ I understand that only qualifying Released ARCBDS may be eligible.
☐ I understand that ordinary Cliff or release restrictions do not constitute liquidity failure.
☐ I understand that a decline in ARCBDS market price does not automatically create a Claim.
☐ I understand that I may need to demonstrate genuine unsuccessful attempts to liquidate ARCBDS.
☐ I understand that Reserve Settlements may use the Last Observed Market Price rather than my original allocation price.
☐ I understand that Claim Coverage Percentage and Claim Limits may apply.
☐ I understand that the Protection Reserve is finite.
☐ I understand that if qualifying Claims exceed available reserve assets, full settlement may not be possible.
☐ I understand that an Approved Claim may require me to surrender the ARCBDS covered by the Claim.
☐ I understand that Claims are subject to KYC, AML, sanctions and fraud verification.
☐ I have read and agree to these Participant Protection Reserve Terms.
SCHEDULE 1
PROTECTION RESERVE COMMERCIAL PARAMETERS
A. Reserve Funding
Protection Reserve Allocation:
20% of Qualifying Founding Circle Purchase Funding
B. Waiting Period
Waiting Period:
[●] calendar days
C. Claim Coverage Percentage
Coverage:
[●]%
D. Maximum Per Claim
Maximum Claim:
[●] USDT equivalent
E. Maximum Per Participant
Participant Lifetime / Period Limit:
[●]
F. Minimum Claim
Minimum Claim:
[●] USDT equivalent
G. Claim Submission Deadline
Claim must normally be submitted within:
[●] calendar days following the qualifying Liquidity Failure Event.
H. Claim Review Target
Target review period after complete documentation:
[●] Business Days
I. Appeal Period
Appeal must be submitted within:
[●] calendar days after decision.
J. Settlement Asset
Primary settlement asset:
[USDT / confirmed settlement asset]
K. Settlement Network
[TRC20 / ERC20 / BEP20 / other supported network]
These parameters must be formally approved before the Protection Reserve becomes operational.
SCHEDULE 2
DESIGNATED MARKET AND PRICE POLICY
The Company shall maintain an official list of Designated Markets.
Primary Designated Market
[●]
Secondary Designated Markets
[●]
[●]
[●]
The list may be updated where:
a. an exchange delists ARCBDS;
b. an exchange ceases operations;
c. market liquidity materially changes;
d. a venue becomes unreliable;
e. regulatory requirements change; or
f. additional recognised markets become available.
The Company shall use objective and reasonably verifiable market data when calculating Reference Market Price.
SCHEDULE 3
CLAIM FORM
PARTICIPANT INFORMATION
Full Legal Name: [●]
Participant ID: [●]
KYC/KYB Reference: [●]
Email: [●]
Country of Residence / Incorporation: [●]
FOUNDING CIRCLE INFORMATION
Participation Category:
☐ Access
☐ Growth
☐ Legacy
Original Contribution: [●]
Participation Confirmation No.: [●]
Original ARCBDS Allocation: [●]
Alignment Reward Allocation: [●]
CLAIM INFORMATION
ARCBDS Quantity Subject to Claim: [●]
Wallet Address: [●]
Release Date: [●]
Date Liquidity Problem Began: [●]
Designated Market(s) Used: [●]
Liquidation Attempts: [●]
Evidence Attached: [●]
Requested Settlement Amount: [●]
CLAIMANT DECLARATION
I declare that:
☐ I lawfully own the ARCBDS subject to this Claim.
☐ The ARCBDS has not already been sold.
☐ The ARCBDS has not previously been subject to a completed Protection Reserve Claim.
☐ The information supplied is complete and accurate.
☐ I have not manipulated trading or liquidity to create this Claim.
☐ I authorise appropriate KYC, AML, wallet and blockchain verification.
☐ I understand that submitting a Claim does not guarantee settlement.
☐ I agree to transfer approved Eligible Tokens to the designated wallet as a condition of settlement.
Electronic Signature: [●]
Date: [●]
SCHEDULE 4
CLAIM DECISION RECORD
Claim ID: [●]
Participant ID: [●]
Eligible Tokens: [●]
Reference Market Price: [●]
Eligible Market Value: [●]
Coverage Percentage: [●]
Calculated Covered Amount: [●]
Applicable Claim Limit: [●]
Available Reserve Adjustment: [●]
Final Approved Amount: [●]
Settlement Asset: [●]
Settlement Wallet: [●]
Token Surrender Transaction: [●]
Settlement Transaction: [●]
Decision
☐ Approved
☐ Partially Approved
☐ Rejected
Reason
[●]
Authorised Reviewer: [●]
Approval Date: [●]
SCHEDULE 5
PROTECTION RESERVE GOVERNANCE PRINCIPLES
The Protection Reserve shall operate according to the following core principles:
1. Participant Protection
Reserve resources should be administered consistently with their stated protection purpose.
2. Liquidity
Reserve Property should be managed with sufficient regard to potential Claim obligations.
3. Security
Reserve Property should be protected using appropriate custody and cybersecurity controls.
4. Segregation
Reserve Property should be operationally identifiable separately from ordinary operating funds.
5. Transparency
Material rules governing eligibility, valuation and Claims should be disclosed to Participants.
6. Fairness
Similarly situated Participants should receive materially consistent treatment.
7. Verification
Claims must be objectively verified.
8. Anti-Fraud Controls
The Protection Reserve must be protected against false or manipulated Claims.
9. Conflict Management
Material conflicts should be identified and appropriately managed.
10. Compliance
The Reserve shall operate subject to Applicable Law, regulatory requirements, sanctions and AML obligations.
SCHEDULE 6
PROTECTION RESERVE — KEY FACTS
Purpose:
Potential liquidity assistance in qualifying circumstances.
Reserve Funding Framework:
Equivalent to 20% of Qualifying Founding Circle Purchase Funding.
Is it insurance?
No, unless a separate valid insurance arrangement expressly states otherwise.
Does it guarantee capital?
No.
Does it guarantee the Founding Circle price?
No.
Does it guarantee ARCBDS liquidity?
No.
Can a Participant claim merely because price falls?
No.
Primary Claim Trigger:
Verified genuine inability to liquidate qualifying Released ARCBDS, subject to these Terms.
Pricing Principle:
Last Observed Market Price under the approved valuation methodology.
Are Claims unlimited?
No.
Is the Reserve unlimited?
No.
Can Reserve assets become exhausted?
Yes.
Must ARCBDS normally be surrendered after settlement?
Yes.
Are Claims subject to KYC/AML?
Yes.
CONTACT INFORMATION
ARCBDS
Official Website: www.arcbds.com
Reserve Operator: [●]
Legal Entity: [●]
Registered Address: [●]
Participant Support: [●]
Protection Reserve Claims: [●]
Compliance: [●]
FINAL PARTICIPANT WARNING
The Participant Protection Reserve is intended to provide an additional layer of ecosystem protection under defined circumstances.
It does not eliminate the risks of holding ARCBDS.
It does not guarantee liquidity.
It does not guarantee the original Contribution.
It does not guarantee any market price.
It does not guarantee that every Claim will be approved or fully settled.
Participants remain exposed to partial or total loss of the economic value associated with ARCBDS.
END OF ARCBDS PARTICIPANT PROTECTION RESERVE TERMS