Risk Disclosure Statement

ARCBDS

RISK DISCLOSURE STATEMENT

Document Version: 0.1 — Working Draft for Legal Review

Effective Date: [●]

Last Updated: [●]

IMPORTANT RISK WARNING

Participation in ARCBDS involves substantial risk.

ARCBDS is a digital asset operating within an evolving blockchain, regulatory, commercial and market environment. Its value may fluctuate significantly.

You may lose some or all of the economic value associated with your participation.

You may be unable to sell, transfer or liquidate ARCBDS when you want to do so.

There is no guarantee that:

ARCBDS will increase in value;

ARCBDS will maintain any particular value;

a secondary market will develop;

sufficient liquidity will exist;

any exchange will list ARCBDS;

any exchange listing will continue;

the ARCBDS ecosystem will achieve its intended commercial objectives;

participating businesses will perform successfully;

future ecosystem features will be launched;

Alignment Rewards will produce any financial gain;

the Protection Reserve will satisfy a particular claim;

the Protection Reserve will contain sufficient assets for all eligible claims; or

you will recover your original Contribution.

Do not participate using funds that you cannot afford to place at risk.

You should read this Risk Disclosure Statement completely before participating in the ARCBDS Founding Circle or acquiring ARCBDS.

1. PURPOSE OF THIS RISK DISCLOSURE

1.1 This Risk Disclosure Statement explains material risks that may arise in connection with:

a. ARCBDS;

b. the ARCBDS Founding Circle;

c. the ARCBDS ecosystem;

d. Contributions;

e. ARCBDS allocations;

f. Alignment Rewards;

g. release schedules;

h. blockchain transactions;

i. wallets;

j. secondary-market activity;

k. participating businesses;

l. the Participant Protection Reserve; and

m. related ecosystem activities.

1.2 This document supplements but remains separate from the:

ARCBDS Founding Circle Participation Agreement;

ARCBDS Founding Circle Terms & Conditions;

ARCBDS Protection Reserve Terms;

ARCBDS Whitepaper; and

other applicable ARCBDS legal documentation.

1.3 This document does not describe every possible risk.

Unexpected risks may arise that are not currently known, identifiable or reasonably foreseeable.

2. WHO SHOULD NOT PARTICIPATE

ARCBDS may not be appropriate for you if:

a. you do not understand digital assets;

b. you require guaranteed capital preservation;

c. you require guaranteed liquidity;

d. you require a fixed return;

e. you cannot tolerate significant market-price fluctuations;

f. you may need immediate access to your Contribution;

g. you do not understand blockchain transactions;

h. you are unable to protect digital-wallet credentials;

i. participation would breach laws applicable to you; or

j. you cannot financially tolerate a partial or total loss.

3. NO GUARANTEED RETURN

3.1 ARCBDS does not provide a guaranteed return.

3.2 No part of the Founding Circle should be interpreted as guaranteeing:

a. profit;

b. interest;

c. yield;

d. dividend;

e. income;

f. capital growth;

g. minimum market value;

h. repayment;

i. appreciation;

j. exchange listing; or

k. liquidity.

3.3 Any future increase in ARCBDS value depends on factors that may be outside the Company's control.

4. RISK OF TOTAL OR PARTIAL LOSS

4.1 The market value of ARCBDS may fall significantly.

4.2 It is possible that ARCBDS could lose most or all of its market value.

4.3 The Participant must therefore be prepared for an economic outcome in which:

the market value of the Participant's ARCBDS becomes substantially lower than the original Contribution.

4.4 Neither the fixed Founding Circle allocation price nor any reference price creates a minimum future value.

5. ALLOCATION PRICE IS NOT A VALUATION GUARANTEE

5.1 Founding Circle Stage 1 currently applies fixed allocation prices according to the selected participation category.

5.2 These prices are used to calculate ARCBDS entitlement.

They are not guarantees of fair market value or future market price.

5.3 A fixed allocation price should not be interpreted as:

a. an independent valuation;

b. a guaranteed floor price;

c. a redemption value;

d. a guaranteed listing price;

e. a guaranteed future market price; or

f. a commitment by the Company to purchase ARCBDS at that price.

5.4 If secondary-market trading develops, ARCBDS may trade above or below the Founding Circle allocation price.

6. MARKET VOLATILITY RISK

6.1 Digital-asset markets can experience substantial volatility.

6.2 ARCBDS may experience sharp or rapid price movements resulting from factors including:

a. buying and selling activity;

b. changes in market sentiment;

c. liquidity conditions;

d. macroeconomic events;

e. interest-rate changes;

f. digital-asset market conditions;

g. regulatory announcements;

h. exchange actions;

i. rumours or misinformation;

j. cyber incidents;

k. changes in ecosystem development;

l. large-holder transactions;

m. changes in token supply available to the market; or

n. events affecting businesses connected with the ecosystem.

6.3 Price volatility can occur without warning.

7. LIQUIDITY RISK

7.1 Liquidity means the practical ability to sell an asset without excessive delay or substantial price impact.

7.2 ARCBDS may have limited liquidity.

7.3 There may be periods when:

a. few buyers are available;

b. trading volume is low;

c. bid and ask prices differ substantially;

d. large transactions materially affect market price;

e. certain exchanges suspend trading;

f. withdrawals are restricted;

g. transfers are delayed; or

h. no practical secondary market exists.

7.4 Even if ARCBDS is technically transferable, this does not mean that a Participant will be able to find a buyer.

7.5 A Participant may therefore be required to hold ARCBDS longer than originally expected.

8. EXCHANGE-LISTING RISK

8.1 No exchange listing should be treated as guaranteed until an exchange has formally completed the listing.

8.2 Discussions, applications, intentions or proposed listing plans do not guarantee listing.

8.3 An exchange may independently:

a. reject an application;

b. delay a listing;

c. impose additional requirements;

d. restrict jurisdictions;

e. restrict particular Participants;

f. suspend deposits or withdrawals;

g. suspend trading; or

h. permanently delist ARCBDS.

8.4 Even if ARCBDS is listed, listing does not guarantee sufficient liquidity or price stability.

9. MARKET-MAKING AND PRICE-DISCOVERY RISK

9.1 If market-making or liquidity-support arrangements are used, such arrangements may depend on independent third parties.

9.2 Market makers may:

a. reduce activity;

b. terminate services;

c. experience financial difficulties;

d. experience technical problems;

e. become subject to regulation; or

f. fail to maintain expected liquidity.

9.3 Market price may differ between trading venues.

9.4 There may be no single universally accepted ARCBDS market price at a particular time.

10. LARGE HOLDER AND CONCENTRATION RISK

10.1 Where significant amounts of ARCBDS are controlled by a relatively small number of holders, wallets, ecosystem participants or related entities, market behaviour may be affected by their actions.

10.2 A large holder selling substantial quantities may:

a. increase market supply;

b. reduce market price;

c. increase volatility; or

d. reduce market confidence.

10.3 Release schedules are intended partly to structure distribution over time, but they cannot eliminate concentration or market-impact risk.

11. RELEASE AND CLIFF RISK

11.1 Founding Circle ARCBDS allocations are subject to applicable release conditions.

11.2 Depending on the selected category, the Participant may be subject to:

a. a Cliff;

b. a Release Period; and

c. restrictions on Unreleased ARCBDS.

11.3 During these periods, the Participant may not be able to:

a. sell;

b. transfer;

c. withdraw;

d. assign;

e. pledge; or

f. otherwise dispose of

the relevant Unreleased ARCBDS.

11.4 Market conditions may deteriorate during the Cliff or Release Period.

11.5 A Participant therefore bears the risk that ARCBDS market value may change significantly before their ARCBDS becomes available.

12. ALIGNMENT REWARD RISK

12.1 Founding Circle participants may receive additional ARCBDS through an Alignment Reward.

12.2 The Alignment Reward represents an additional token allocation, not a financial return.

12.3 For example, receiving an additional percentage of ARCBDS does not mean that the Participant has earned the same percentage in:

a. US dollars;

b. USDT;

c. profit;

d. investment return; or

e. economic gain.

12.4 The market value of the additional ARCBDS may:

a. rise;

b. fall;

c. remain illiquid; or

d. become negligible.

12.5 An Alignment Reward should therefore not be used as a substitute for assessing the underlying risks of participation.

13. FOUNDING CIRCLE ALLOCATION RISK

13.1 The overall Founding Circle allocation is currently structured around up to:

200,000,000 ARCBDS

with up to:

50,000,000 ARCBDS

of total entitlement capacity intended for the initial Stage 1.

13.2 Future release of later Founding Circle stages may increase the circulating supply of ARCBDS.

13.3 Increases in available supply may affect:

a. market price;

b. liquidity;

c. volatility;

d. demand-and-supply balance; and

e. holder expectations.

13.4 Stage 1 participation provides no guarantee regarding the pricing or structure of later stages.

14. TOKEN SUPPLY AND DILUTION-RELATED RISK

14.1 Even where total ARCBDS supply is fixed under the final approved token structure, changes in the quantity of ARCBDS actually circulating in the market may affect price.

14.2 Scheduled releases, ecosystem allocations, rewards, partner allocations or other approved distribution mechanisms may increase circulating supply.

14.3 Increased circulating supply may create selling pressure if demand does not increase correspondingly.

14.4 A fixed maximum supply does not by itself guarantee scarcity, demand or price appreciation.

15. ARCBDS LEGAL-NATURE RISK

15.1 The name “ARCB Digital Share” does not by itself determine the legal classification of ARCBDS.

15.2 Unless expressly established through legally approved documentation, holding ARCBDS should not be assumed to provide:

a. company shares;

b. company equity;

c. voting rights;

d. dividends;

e. ownership of ARCB Investment LLC;

f. ownership of an ARCB-related company;

g. ownership of participating businesses;

h. debt claims;

i. guaranteed revenue-sharing rights; or

j. direct ownership of underlying commercial assets.

15.3 The legal classification of a digital asset may differ between jurisdictions.

15.4 A regulator, court or authority may classify ARCBDS differently from its treatment in another country.

15.5 A change or clarification in legal classification could materially affect ARCBDS.

16. REGULATORY RISK

16.1 Digital-asset regulation continues to evolve.

16.2 Laws affecting ARCBDS may change after a Participant joins.

16.3 Regulatory developments may affect:

a. issuance;

b. distribution;

c. marketing;

d. trading;

e. custody;

f. transfers;

g. exchanges;

h. stablecoins;

i. KYC;

j. AML requirements;

k. taxation;

l. business participation;

m. access to the Platform; or

n. availability in particular countries.

16.4 Regulators may require the Company to:

a. restrict certain jurisdictions;

b. introduce additional verification;

c. suspend certain activities;

d. change distribution mechanics;

e. alter technical functionality;

f. prevent transfers;

g. discontinue particular ecosystem features; or

h. obtain additional licences or approvals.

16.5 Such actions could negatively affect ARCBDS availability, liquidity, utility or market value.

17. JURISDICTION RISK

17.1 ARCBDS may not be legally available in every country.

17.2 A Participant's country may:

a. prohibit particular digital assets;

b. restrict digital-asset trading;

c. impose licensing requirements;

d. impose investment restrictions;

e. impose foreign-exchange controls;

f. impose tax reporting;

g. restrict stablecoins; or

h. change its legal treatment of digital assets.

17.3 Eligibility at one point in time does not guarantee permanent eligibility.

17.4 Participants remain responsible for understanding laws applicable to them.

18. KYC, AML AND SANCTIONS RISK

18.1 Participation may require identity and compliance verification.

18.2 The Company may be required to:

a. request additional documents;

b. verify source of funds;

c. verify source of wealth;

d. conduct blockchain analysis;

e. screen sanctions lists;

f. investigate unusual transactions;

g. delay transactions;

h. restrict Account access;

i. reject participation; or

j. make legally required disclosures to authorities.

18.3 A transaction that appears suspicious may be delayed even if the Participant believes it is legitimate.

18.4 Changes in AML or sanctions rules may affect future access.

19. BUSINESS-ECOSYSTEM RISK

19.1 ARCBDS is intended to connect digital capital participation with qualified real-world businesses and economic activity through the wider ARCBDS ecosystem.

19.2 This commercial strategy carries execution risk.

19.3 Participating businesses may experience:

a. declining revenue;

b. increasing costs;

c. competition;

d. loss of customers;

e. supply-chain problems;

f. regulatory changes;

g. litigation;

h. management failure;

i. economic downturn;

j. operational failures;

k. financing difficulties;

l. insolvency; or

m. other business problems.

19.4 The addition of real-world businesses to the ecosystem does not eliminate digital-asset risk.

19.5 Unless expressly established under legally binding documentation:

ARCBDS is not automatically backed dollar-for-dollar by the assets, revenue, profits or equity of participating businesses.

19.6 A participating business's presence in the ecosystem does not constitute a guarantee of ARCBDS value.

20. ECOSYSTEM DEVELOPMENT RISK

20.1 ARCBDS and The Bridge represent an evolving ecosystem.

20.2 Some planned features may still require development, integration, commercial agreements or regulatory approvals.

20.3 Planned features may:

a. launch later than expected;

b. be modified;

c. operate differently from initial concepts;

d. experience reduced adoption;

e. become commercially impractical;

f. become legally restricted; or

g. never launch.

20.4 The success of ARCBDS may depend materially on the Company's ability to:

a. attract businesses;

b. attract Participants;

c. build useful infrastructure;

d. maintain technology;

e. establish partnerships;

f. maintain regulatory compliance;

g. maintain market confidence; and

h. deliver meaningful ecosystem utility.

20.5 Failure in any of these areas could negatively affect ARCBDS.

21. ADOPTION AND NETWORK-EFFECT RISK

21.1 The usefulness and potential demand for ARCBDS may depend on ecosystem adoption.

21.2 There is no guarantee that sufficient numbers of:

a. businesses;

b. consumers;

c. institutions;

d. digital-asset users;

e. partners; or

f. service providers

will adopt the ecosystem.

21.3 Low adoption may negatively affect utility, liquidity and market value.

22. COMPETITION RISK

22.1 ARCBDS may compete with:

a. other blockchain ecosystems;

b. tokenisation platforms;

c. RWA platforms;

d. digital-payment systems;

e. digital capital platforms;

f. traditional financial infrastructure;

g. competing tokens; and

h. technologies not yet developed.

22.2 Competitors may have:

a. greater funding;

b. stronger regulatory positions;

c. larger communities;

d. greater liquidity;

e. superior technology;

f. stronger brands; or

g. more established commercial relationships.

22.3 Competitive pressure may affect adoption and value.

23. MANAGEMENT AND KEY-PERSON RISK

23.1 Development of the ARCBDS ecosystem may depend on key executives, technical personnel, advisers, partners and other specialists.

23.2 Loss of important personnel may delay or impair development.

23.3 Management decisions may prove incorrect.

23.4 Internal disagreements, changes in strategy or organisational restructuring may also affect execution.

24. THIRD-PARTY DEPENDENCY RISK

24.1 ARCBDS may depend on third parties including:

a. blockchain networks;

b. wallet providers;

c. custody providers;

d. KYC providers;

e. cloud infrastructure;

f. cybersecurity providers;

g. exchanges;

h. market makers;

i. payment providers;

j. stablecoin issuers;

k. business partners;

l. data providers; and

m. smart-contract technology providers.

24.2 The Company may not control these third parties.

24.3 Their failure, insolvency, misconduct, security breach or service interruption may affect ARCBDS or Participants.

25. BLOCKCHAIN RISK

25.1 ARCBDS is expected to depend in whole or in part on blockchain infrastructure.

25.2 Blockchain systems may experience:

a. network congestion;

b. delayed confirmation;

c. transaction failure;

d. software bugs;

e. consensus failures;

f. network attacks;

g. validator disruption;

h. forks;

i. unexpected protocol changes;

j. high transaction fees; or

k. temporary or permanent outages.

25.3 A blockchain network may change in ways outside the Company's control.

25.4 These events could affect transferability, accessibility or functionality of ARCBDS.

26. SMART-CONTRACT RISK

Where smart contracts are used in connection with ARCBDS:

26.1 smart-contract code may contain errors, vulnerabilities or unintended behaviour;

26.2 an audit may reduce but cannot eliminate smart-contract risk;

26.3 vulnerabilities may be discovered after deployment;

26.4 malicious actors may attempt to exploit code;

26.5 emergency actions may be required to protect users or ecosystem integrity; and

26.6 smart-contract failures could result in:

a. delayed transactions;

b. inaccessible ARCBDS;

c. incorrect calculations;

d. unauthorised transfers; or

e. economic loss.

27. CYBERSECURITY RISK

27.1 Digital-asset platforms are potential targets for cyberattacks.

27.2 Attacks may include:

a. phishing;

b. malware;

c. ransomware;

d. credential theft;

e. SIM swapping;

f. social engineering;

g. API attacks;

h. denial-of-service attacks;

i. smart-contract exploitation;

j. database compromise; or

k. insider misconduct.

27.3 A successful attack could result in:

a. unauthorised Account access;

b. data exposure;

c. loss of digital assets;

d. Platform interruption;

e. reputational damage; or

f. financial loss.

28. WALLET AND PRIVATE-KEY RISK

28.1 Where a Participant controls a non-custodial wallet, the Participant is responsible for securing:

a. private keys;

b. recovery phrases;

c. passwords;

d. devices; and

e. authentication methods.

28.2 Loss of a private key or recovery phrase may permanently prevent access to digital assets.

28.3 Transactions made after a Participant's credentials are compromised may be irreversible.

28.4 The Company cannot recover a private key that it does not possess.

28.5 Participants should never provide their private key or recovery phrase to anyone claiming to represent ARCBDS.

29. CUSTODY RISK

Where ARCBDS or other digital assets are held by a custodian, Platform provider or other third party:

29.1 the Participant may depend on that party's:

a. security;

b. solvency;

c. operational controls;

d. wallet management;

e. regulatory status; and

f. internal governance.

29.2 Custodied assets may be affected by:

a. cyberattack;

b. insolvency;

c. fraud;

d. operational error;

e. regulatory seizure;

f. legal proceedings; or

g. withdrawal suspension.

29.3 The exact custody structure should be reviewed before participation where custody services are offered.

30. STABLECOIN RISK

30.1 Founding Circle Contributions may be accepted using USDT or another supported stablecoin.

30.2 Stablecoins carry their own risks.

30.3 A stablecoin may:

a. lose its intended peg;

b. experience redemption problems;

c. be restricted by regulators;

d. be frozen by its issuer;

e. experience blockchain problems;

f. suffer market dislocation;

g. become temporarily illiquid; or

h. experience issuer or reserve-related concerns.

30.4 A stablecoin should not automatically be treated as identical to cash held in a bank account.

30.5 The Company does not control the issuer of USDT.

31. BLOCKCHAIN TRANSACTION IRREVERSIBILITY

31.1 Blockchain transactions may be irreversible.

31.2 If a Participant sends assets:

a. to the wrong wallet;

b. using the wrong network;

c. using an unsupported token;

d. to a fraudulent address; or

e. without required transaction information,

the assets may be permanently lost.

31.3 Recovery may be technically impossible.

32. PROTECTION RESERVE RISK

32.1 Nature of the Protection Reserve

The ARCBDS Founding Circle framework currently contemplates a Participant Protection Reserve funded through an amount equivalent to 20% of qualifying Founding Circle purchase funding, subject to the final legally approved structure.

32.2 Not Insurance

The Protection Reserve is separate from ARC Insurance or any other insurance programme unless an expressly documented regulated insurance arrangement states otherwise.

The Protection Reserve itself should not be interpreted as an insurance policy.

32.3 Not Guaranteed Capital Protection

The Protection Reserve does not guarantee:

a. return of the Participant's Contribution;

b. 100% capital protection;

c. a minimum ARCBDS price;

d. automatic redemption;

e. guaranteed buyback;

f. immediate liquidity; or

g. settlement of every claim.

32.4 Eligibility Risk

A Participant must satisfy applicable eligibility conditions before a claim may be considered.

A reduction in market price alone may not qualify.

32.5 Liquidity Condition

A genuine inability to liquidate qualifying ARCBDS through recognised available market mechanisms may potentially qualify under the final Protection Reserve Terms.

The detailed definition of inability to liquidate will be governed by the Protection Reserve Terms.

32.6 Finite Reserve Risk

The Protection Reserve is finite.

If valid claims exceed available reserve assets:

a. claims may not be paid in full;

b. claims may be subject to limits;

c. claims may be prioritised;

d. pro-rata treatment may apply;

e. settlement may be delayed; or

f. some claims may not receive settlement,

according to the final Protection Reserve Terms and Applicable Law.

32.7 Market Price Reference Risk

Where the Protection Reserve uses the last observed market price, that reference may not equal:

a. the Founding Circle allocation price;

b. the Participant's preferred selling price;

c. the Participant's original Contribution value; or

d. the highest historical ARCBDS market price.

32.8 Market Price Dislocation

During abnormal market conditions:

a. trading prices may vary significantly across exchanges;

b. quoted prices may not represent executable prices;

c. manipulation may occur;

d. a market may temporarily cease functioning; or

e. a reliable reference price may be unavailable.

The Protection Reserve Terms may therefore require specific price-source rules or abnormal-market procedures.

32.9 Claim Delay

Claims may require:

a. verification;

b. KYC review;

c. wallet verification;

d. proof of ownership;

e. proof of attempted liquidation;

f. sanctions screening;

g. transaction analysis; and

h. other documentation.

This may delay settlement.

32.10 Protection Reserve Terms Control

Participants should not join on the assumption that the Protection Reserve eliminates investment or digital-asset risk.

The final ARCBDS Protection Reserve Terms must be reviewed separately.

33. NO AUTOMATIC INSURANCE COVERAGE

33.1 The existence of ARC Insurance within the wider ARCB ecosystem does not automatically mean that a Participant or ARCBDS holding is insured.

33.2 Insurance coverage exists only where:

a. a valid policy has been issued;

b. the Participant or relevant asset is within the policy scope;

c. all policy conditions are satisfied; and

d. the insurer accepts the applicable claim.

33.3 Marketing references to insurance must not be interpreted as creating insurance rights not contained in an actual policy.

34. TAX RISK

34.1 Digital-asset tax treatment varies between jurisdictions.

34.2 A Participant may incur tax obligations when:

a. receiving ARCBDS;

b. receiving Alignment Reward ARCBDS;

c. selling ARCBDS;

d. exchanging ARCBDS;

e. transferring ARCBDS;

f. receiving ecosystem benefits;

g. receiving a Protection Reserve settlement; or

h. engaging in other ARCBDS transactions.

34.3 Tax laws may change.

34.4 Participants should obtain independent tax advice.

35. ACCOUNTING AND REPORTING RISK

35.1 Businesses and institutional Participants may be required to determine appropriate accounting treatment for ARCBDS.

35.2 Accounting standards concerning digital assets continue to evolve.

35.3 Different jurisdictions may require different:

a. valuation;

b. classification;

c. disclosure; or

d. reporting treatment.

36. DATA PRIVACY RISK

36.1 Participation may require collection of personal and compliance information.

36.2 Information may include:

a. identification;

b. photographs;

c. identity documents;

d. addresses;

e. nationality;

f. beneficial ownership;

g. wallet addresses;

h. blockchain transactions;

i. source-of-funds information;

j. source-of-wealth information;

k. IP/device information; and

l. other compliance data.

36.3 Despite reasonable security measures, no information system can be guaranteed to be completely secure.

36.4 Participants should review the ARCBDS Privacy Policy.

37. FRAUD, IMPERSONATION AND SCAM RISK

37.1 Digital-asset projects may attract impersonators and scammers.

37.2 Fraudulent actors may pretend to be:

a. ARCBDS staff;

b. community administrators;

c. Founding Circle representatives;

d. exchange representatives;

e. wallet-support personnel; or

f. Company executives.

37.3 Participants should never send Contributions based solely on:

a. private messages;

b. unofficial social-media posts;

c. verbal instructions;

d. unverified wallet addresses; or

e. pressure from a third party.

37.4 Official information should be independently verified through official ARCBDS channels.

38. MISINFORMATION AND SOCIAL-MEDIA RISK

38.1 Information relating to ARCBDS may circulate through social media, messaging groups, influencers or online communities.

38.2 Such information may be:

a. inaccurate;

b. incomplete;

c. outdated;

d. exaggerated;

e. speculative; or

f. deliberately misleading.

38.3 Community statements do not replace official ARCBDS legal documentation.

38.4 Participants should not make decisions based solely on social-media commentary.

39. REFERRAL AND PROMOTER RISK

39.1 Referral partners, community leaders or promoters may have economic incentives relating to participant acquisition.

39.2 This may create conflicts of interest.

39.3 Participants should independently assess ARCBDS rather than relying solely on a referring person's recommendation.

39.4 No referrer or community representative is authorised to guarantee:

a. profit;

b. market value;

c. liquidity;

d. exchange listing;

e. Protection Reserve settlement; or

f. capital preservation.

40. CONFLICT-OF-INTEREST RISK

40.1 The Company, related entities, founders, ecosystem partners, advisers, service providers or other stakeholders may hold ARCBDS or have commercial interests connected with ARCBDS.

40.2 Their interests may not always be identical to those of individual Participants.

40.3 Potential conflicts may arise concerning:

a. token allocation;

b. partnerships;

c. exchange arrangements;

d. market-making;

e. ecosystem transactions;

f. business acquisitions;

g. service-provider appointments; or

h. future financing.

40.4 Material conflicts should be managed and disclosed in accordance with Applicable Law and applicable internal policies.

41. FORWARD-LOOKING STATEMENT RISK

41.1 ARCBDS materials may contain statements regarding:

a. future growth;

b. ecosystem expansion;

c. business participation;

d. exchange plans;

e. product development;

f. partnerships;

g. market adoption;

h. technological development; or

i. future opportunities.

41.2 Such statements concern future events and involve uncertainty.

41.3 Actual results may differ materially.

41.4 Forward-looking statements should not be interpreted as guarantees.

42. WHITEPAPER AND MARKETING MATERIAL RISK

42.1 A whitepaper explains a project's intended structure but does not eliminate execution risk.

42.2 Marketing materials are designed to communicate concepts efficiently and may not describe every limitation or risk.

42.3 Participants should rely on the complete legal documentation rather than isolated:

a. slides;

b. graphics;

c. videos;

d. promotional statements;

e. event presentations;

f. FAQs; or

g. social-media posts.

42.4 Where promotional material conflicts with the legally effective participation documents, the legally effective documents shall control according to their stated hierarchy.

43. INTELLECTUAL PROPERTY AND TECHNOLOGY RISK

43.1 The ecosystem may depend on proprietary software, trademarks, data, infrastructure and other intellectual property.

43.2 Disputes involving intellectual property could:

a. increase costs;

b. restrict technology use;

c. delay development;

d. require redesign; or

e. affect business operations.

44. FORCE MAJEURE AND EXTERNAL-EVENT RISK

ARCBDS may be affected by events beyond the reasonable control of the Company, including:

a. war;

b. terrorism;

c. civil unrest;

d. natural disaster;

e. pandemic;

f. government action;

g. sanctions;

h. internet outage;

i. power failure;

j. exchange collapse;

k. blockchain disruption;

l. cyberattack;

m. banking disruption;

n. stablecoin disruption; or

o. major global financial instability.

Such events may affect ARCBDS operations, accessibility or value.

45. MACROECONOMIC RISK

Broader economic conditions may affect ARCBDS, including:

a. recession;

b. inflation;

c. interest-rate movements;

d. currency instability;

e. banking crises;

f. geopolitical conflict;

g. capital-market stress;

h. reduced investor confidence; or

i. widespread digital-asset market declines.

46. NO GOVERNMENT DEPOSIT PROTECTION

Unless expressly confirmed under Applicable Law:

46.1 ARCBDS is not a bank deposit.

46.2 A Founding Circle Contribution should not be treated as a bank deposit.

46.3 ARCBDS should not be assumed to be covered by:

a. deposit insurance;

b. government deposit protection;

c. conventional bank guarantees; or

d. similar statutory schemes.

47. NO GUARANTEE BY PARTICIPATING BUSINESSES

No business joining or interacting with the ARCBDS ecosystem should be assumed to guarantee:

a. ARCBDS;

b. ARCBDS price;

c. Participant Contributions;

d. ARCBDS liquidity;

e. the Protection Reserve; or

f. the Company's obligations,

unless a legally binding agreement expressly states otherwise.

48. NO GUARANTEE FROM PARTNERS

The existence of a commercial relationship, partnership, service provider, adviser, exchange discussion, custodian, insurer or other third-party relationship does not mean that such party:

a. endorses ARCBDS as an investment;

b. guarantees ARCBDS;

c. guarantees returns;

d. guarantees liquidity;

e. guarantees compliance; or

f. assumes responsibility for Participant losses,

unless expressly stated in legally binding documentation.

49. CHANGE-OF-STRUCTURE RISK

49.1 The ARCBDS ecosystem may evolve.

49.2 Regulatory, technical or commercial requirements may require changes to:

a. Platform architecture;

b. blockchain infrastructure;

c. wallet infrastructure;

d. token functionality;

e. service providers;

f. participating jurisdictions;

g. distribution arrangements;

h. corporate structure; or

i. ecosystem features.

49.3 Material changes may affect Participants.

49.4 Existing contractual rights will remain subject to the Participation Agreement and Applicable Law.

50. CORPORATE AND INSOLVENCY RISK

50.1 Companies involved in the ARCBDS ecosystem may face ordinary corporate risks.

50.2 A relevant company could experience:

a. financial distress;

b. creditor claims;

c. restructuring;

d. litigation;

e. inability to raise capital;

f. insolvency; or

g. liquidation.

50.3 The treatment of ARCBDS and Participant claims in such circumstances would depend on:

a. the legal structure;

b. custody arrangements;

c. contractual rights;

d. asset segregation;

e. Applicable Law; and

f. insolvency law.

50.4 Participants should not assume that they will rank ahead of other creditors unless legally documented.

51. DOCUMENT-CHANGE RISK

51.1 ARCBDS legal and regulatory documentation may require updating as:

a. the ecosystem develops;

b. laws change;

c. technology changes;

d. new risks emerge; or

e. regulatory requirements evolve.

51.2 Updated versions should identify their effective date.

51.3 Participants should review notices concerning material changes.

51.4 The Company should maintain records of previous document versions as required by Applicable Law.

52. RISK CANNOT BE ELIMINATED

Risk controls may reduce certain risks.

They cannot eliminate all risks.

In particular:

KYC does not eliminate fraud;

audits do not eliminate smart-contract risk;

cybersecurity does not eliminate hacking risk;

fixed supply does not guarantee price;

real-world businesses do not guarantee token value;

release schedules do not guarantee market stability;

exchange listings do not guarantee liquidity;

Alignment Rewards do not guarantee profit;

a Protection Reserve does not guarantee capital preservation; and

regulation does not eliminate commercial risk.

53. INDEPENDENT ASSESSMENT

Before participating, you should independently consider:

a. your financial circumstances;

b. your tolerance for loss;

c. your liquidity needs;

d. your understanding of digital assets;

e. applicable taxation;

f. Applicable Law in your jurisdiction;

g. your ability to securely manage digital assets; and

h. whether professional advice is appropriate.

The Company does not determine whether ARCBDS is suitable for your individual financial circumstances unless expressly required and authorised to provide such an assessment.

54. PARTICIPANT RESPONSIBILITY

The decision to participate remains the Participant's own decision.

The Participant should not participate because of:

a. pressure from another person;

b. fear of missing out;

c. guaranteed-profit claims;

d. promises from community leaders;

e. social-media hype;

f. expected exchange listing;

g. assumptions about future price;

h. assumptions that real-world businesses guarantee ARCBDS;

i. assumptions that ARC Insurance automatically covers ARCBDS; or

j. assumptions that the Protection Reserve removes all risk.

55. MATERIAL RISKS AT A GLANCE

Before participating, you should be able to answer YES to each of the following:

VALUE RISK

☐ I understand that ARCBDS may decrease substantially in value.

TOTAL LOSS RISK

☐ I understand that I may lose some or all of the economic value associated with my participation.

LIQUIDITY RISK

☐ I understand that I may be unable to sell ARCBDS when I want to.

RELEASE RISK

☐ I understand that some ARCBDS may remain unavailable during the applicable Cliff and Release Period.

LISTING RISK

☐ I understand that exchange listing is not guaranteed.

ALIGNMENT REWARD

☐ I understand that additional ARCBDS does not mean a guaranteed percentage financial return.

BUSINESS RISK

☐ I understand that the involvement of real-world businesses does not automatically mean those businesses' assets or profits directly guarantee ARCBDS.

REGULATORY RISK

☐ I understand that regulation may change and may affect my ability to acquire, hold, transfer or trade ARCBDS.

BLOCKCHAIN RISK

☐ I understand that blockchain technology carries technical and cybersecurity risks.

WALLET RISK

☐ I understand that loss or compromise of wallet credentials may result in permanent loss.

STABLECOIN RISK

☐ I understand that USDT and other stablecoins carry separate issuer, market and regulatory risks.

PROTECTION RESERVE

☐ I understand that the Protection Reserve is finite and subject to separate eligibility, claim, coverage and availability conditions.

NO CAPITAL GUARANTEE

☐ I understand that the Protection Reserve does not create unconditional capital protection.

NO AUTOMATIC INSURANCE

☐ I understand that ARC Insurance or any other insurance relationship does not automatically insure my ARCBDS.

56. PARTICIPANT RISK ACKNOWLEDGEMENT

By accepting this Risk Disclosure Statement, I confirm that:

☐ I have read this document in full.

☐ I have had an opportunity to ask questions before participating.

☐ I understand that ARCBDS is a digital asset involving substantial risk.

☐ I understand that ARCBDS market value may fluctuate significantly.

☐ I understand that ARCBDS may lose substantial or all market value.

☐ I understand that liquidity is not guaranteed.

☐ I understand that I may be unable to liquidate ARCBDS.

☐ I understand that exchange listing is not guaranteed.

☐ I understand that the Founding Circle allocation price does not guarantee future market value.

☐ I understand that Alignment Rewards are additional ARCBDS allocations and are not guaranteed investment returns.

☐ I understand the applicable Cliff and Release Period associated with my selected Founding Circle category.

☐ I understand that real-world business participation does not automatically make ARCBDS a direct ownership interest in those businesses.

☐ I understand that digital-asset regulations may change.

☐ I understand blockchain, wallet and cybersecurity risks.

☐ I understand that USDT and other stablecoins carry separate risks.

☐ I understand that blockchain transactions may be irreversible.

☐ I understand that the Participant Protection Reserve is separate from insurance unless expressly documented otherwise.

☐ I understand that the Protection Reserve is subject to eligibility requirements, claim conditions, limits and available reserve assets.

☐ I understand that the Protection Reserve does not guarantee repayment of my Contribution.

☐ I understand that I should not participate with funds that I cannot afford to place at risk.

☐ I confirm that I am making my participation decision independently and voluntarily.

☐ I understand that I may obtain independent legal, financial, tax or other professional advice before participating.

57. ELECTRONIC ACKNOWLEDGEMENT

The Participant's acceptance of this Risk Disclosure Statement may be recorded electronically.

The Company may record:

Participant Name: [●]

Participant ID: [●]

KYC/KYB Reference: [●]

Risk Disclosure Version: [●]

Participation Agreement Version: [●]

Selected Participation Category: [●]

Acceptance Date: [●]

Acceptance Time: [●]

IP / Device Record: [●]

Electronic Signature / OTP / Acceptance Record: [●]

58. CONTACT

Questions concerning this Risk Disclosure Statement should be directed to:

ARCBDS

Official Website: www.arcbds.com

Legal Entity: [●]

Registered Address: [●]

Risk / Compliance Email: [●]

Participant Support: [●]

59. FINAL WARNING

ARCBDS participation involves risk.

The value of ARCBDS can rise or fall.

Liquidity may not be available.

Exchange listing is not guaranteed.

Real-world business participation does not automatically guarantee ARCBDS value.

Alignment Rewards do not represent guaranteed financial returns.

The Protection Reserve does not eliminate risk and does not constitute unconditional capital protection.

You may lose some or all of the economic value associated with your participation.

Only proceed if you understand and accept these risks.

END OF ARCBDS RISK DISCLOSURE STATEMENT