OEX

Risk Disclosure Statement

WEB3EXCHANGE FZCO

(“Company”)

WEB3EXCHANGE FZCO

UT-12-PO-16, DMCC Business Centre, Level 12, Uptown Tower,

Dubai, United Arab Emirates

1. PURPOSE

1.1 The statement shall be updated and amended from time to time by the CEO and the Compliance Officer.

2. RISK DISCLOSURE STATEMENT

  • WEB3EXCHANGE FZCO (“Company” or “WEB3EXCHANGE”) has received In-Principle Approval (“IPA”) from the Dubai Virtual Assets Regulatory Authority (“VARA”) in connection with its application for a Virtual Asset Service Provider (“VASP”) Licence. The proposed activities are Exchange and Broker-Dealer services in relation to virtual assets in and from Dubai, subject to the final licence and applicable conditions.
  • The IPA is not a final VASP Licence. The Company is not permitted to commence operations or conduct any Virtual Asset activity at this stage.
  • This Risk Disclosure Statement (“RDS”) is intended to provide a detailed description of material risks associated with virtual assets relevant to the Company's proposed services.
  • The RDS is intended to apply to users and prospective clients of WEB3EXCHANGE, subject to the Company obtaining its final VASP Licence and commencing authorised operations.
  • The RDS may be updated, modified or supplemented from time to time. Users should review the current version published on the Company's website before undertaking any virtual asset transaction.
  • Notwithstanding the Company's best efforts and intentions, the Company may not fully identify and address all risks associated with trading in virtual assets under this RDS.

General Risk Warning

  • Accessing virtual asset services through online platforms or mobile applications involves technological risks. These may include system outages, software defects, hardware malfunctions and disruptions to internet connectivity.
  • Virtual asset trading requires an understanding of the relevant markets, pricing information and associated risks. Users should ensure they have sufficient knowledge and experience to evaluate these factors before undertaking any transaction.
  • Each user, including Retail Investors, should independently assess whether virtual asset transactions are appropriate for their financial position, investment objectives and ability to withstand potential losses, including the possibility of losing the full amount committed.
  • Virtual asset transactions can expose users to significant financial risks. Users are responsible for evaluating their decisions and the potential consequences of using a trading platform or related services.
  • Users should consider obtaining independent legal, financial, tax or other professional guidance before entering into transactions, executing contractual documents or accepting legally binding obligations relating to virtual assets.

Virtual Asset Risk Warning

  • Potential for substantial loss: Virtual asset transactions carry significant risk, and users may lose some or all of the capital involved.
  • Price volatility: Virtual asset values can change rapidly and unpredictably. Market movements may cause considerable losses or eliminate the value of an asset entirely.
  • Legal tender and government backing: Virtual assets are generally not legal tender in the UAE or many other jurisdictions and are not guaranteed or backed by the UAE government or other governments.
  • Transfer restrictions: Certain virtual assets may be subject to transfer limitations. Once a blockchain transaction is confirmed, it may be impossible to reverse or cancel.
  • Loss or theft of assets: Recovery options for lost, misdirected or stolen virtual assets may be limited or unavailable.
  • Blockchain and distributed ledger risks: Virtual assets rely on technologies such as distributed ledger technology (“DLT”) and blockchain networks, which may present risks including:
    • Difficulties identifying transaction participants due to the degree of anonymity associated with certain networks.
    • Limited ability to correct or reverse transactions submitted in error.
  • Liquidity risk: Trading markets may experience reduced liquidity or periods in which buyers or sellers are unavailable, making it difficult to execute transactions at a desired price or time.
  • Fraud and cybercrime: Virtual asset markets and infrastructure may be exposed to scams, fraudulent schemes, market manipulation, financial crime, hacking, theft and other cybersecurity threats. Losses may not be recoverable, and available legal remedies may be limited.
  • Asset and protocol failure: A virtual asset may lose its utility or become worthless. Changes to the underlying protocol, including network forks or other technical developments, may affect an asset's functionality, transferability, characteristics or market value.
  • Technical complexity: The technology supporting virtual assets, including their software, networks, protocols and transaction mechanisms, may be complex and difficult for users to understand or independently assess.
  • Service interruption and access risk: Technical failures affecting a service provider, digital wallet or blockchain network may delay transactions or prevent users from accessing or transferring their virtual assets.
  • Regulatory change: Amendments to laws, regulatory requirements or government policies in the UAE or elsewhere may affect the use, transferability, exchange, availability or value of virtual assets.

Conflict of Interest

The Company will maintain appropriate arrangements to identify, evaluate, manage and disclose conflicts of interest in accordance with applicable regulatory requirements and its internal policies.

Where relevant, the Company will provide information about its order handling and execution arrangements, dealing activities, commercial relationships and any other circumstances that may give rise to an actual or potential conflict of interest. Relevant disclosures will reflect the Company's actual business model, operating arrangements and applicable regulatory obligations.

3. REVIEW AND AMENDMENT

The Board shall conduct periodic reviews of this Risk Disclosure Statement and update it as necessary to ensure it remains accurate, relevant, and effective, taking into account the Company’s activities, risk profile, and applicable regulatory requirements.

WEB3EXCHANGE FZCO

UT-12-PO-16, DMCC Business Centre, Level 12, Uptown Tower,

Dubai, United Arab Emirates

VARA IPA Reference: IPA/26/07/001

Regulatory status: In-Principle Approval received; final VASP Licence pending.