The BR2EX coin is classified as a ‘Virtual Financial Asset’ in terms of the ‘Virtual Financial
Assets Act’ (Chapter 590 of the Laws of Malta) (the ‘VFA Act’).
BR2EX does not constitute securities or any other form of capital investment product in any jurisdiction. The BR2EX do not grant any rights in any company, dividends, payment of any interest, profit participation or any other remuneration for the provision of capital.
Similarly, one BR2EX does not qualify as a derivative, a virtual currency/electronic money, or virtual token. The BR2EX coins does not represent or confer any ownership right or stake, share or security or equivalent rights, intellectual property rights or any other form of participation regarding the Issuer.
The BR2EX coins only represent a medium of exchange, as they can only be used for trading on DLT exchanges partners as a medium of exchange inside their platforms. The DLT exchange receive the BR2EX from the BRX LTD via contract, alongside other products also part of the POD project, such as the FortKnox software.
The DLT exchanges must agree to use the BR2EX as the platforms main medium of exchange and should purchase and sell it from the holder by the price predefined by the BRX LTD. The standard price is not mandatory, but it is the guarantee limit for the DLT exchange, as the BRX LTD assure the indemnification for exchange partner in case of the partnership’s discontinuity, among other situations, calculated on the basis of the predefined price of BR2EX.
The acquisition, holding and/or use of BR2EX is associated with significant risks factors. The
following is a non-exhaustive disclosure of the main risk factors which are considered to be
relevant, and can impact the Issuer, the partner, the user/holder of the virtual coin, as well as
the whole ecosystem created by the BR2EX coin.
Participants (partner and users) should consider these risk factors alongside all other information provided in this white paper and are advised to consult with their own professional advisers (including their financial, accounting, legal, tax, technical or other advisers and experts) before deciding to obtain BR2EX, as DLT Exchange or as a client of the DLT Exchanges partners.
The Issuer believes that the following risk factors may even affect its own business, as well as the external evaluation of BR2EX. Most of these risk factors are contingencies which may or may not occur and the Issuer is not in a position to predict the likelihood of such contingency occurring.
By acquiring, holding and using BR2EX, the user expressly acknowledges and assumes the following risks:
The target audience of the POD are the DLT exchanges companies in need of a medium of
exchange other than fiat money. Nonetheless it’s necessary to perform a general suitability
of the client that will use the BR2EX on the platforms of the DLT exchanges partners.
The acquisition/use of BR2EX is only suitable for financially sophisticated persons who are capable of evaluating the merits and risks of such an acquisition, or other persons who have been professionally advised with regard to VFA and cryptocurrency acquisition and who have sufficient financial resources to be able to bear any losses that may arise therefrom (which may be equal to the whole amount spent in connection with the VFA acquisition). Such an acquisition should not be seen as an investment in security or financial asset.
The market price and the value of cryptocurrencies and digital tokens can be extremely
volatile. Although, BR2EX is a soft stablecoin, there can be no assurance that BR2EX
holders will be able to sell it for purchasing price.
Holders of BR2EX should assume the possibility of a significant loss of BR2EX coins value,
besides the possibility of losing capital.
There is also a medium risk that the market price of BR2EX can be extremely volatile within a very short period of time, and a small chance that the coins will vary substantially on different exchanges.
Several factors may affect price, including, but not limited to:
Hackers or other groups or organisations may attempt to interfere with BR2EX in a number of ways which could have an impact on BR2EX, the POD, and the services that the Issuer may offer.
There is a risk that the CLO Blockchain or the BR2EX may unintentionally include
weaknesses or bugs in the source code interfering with the use or causing the loss of
On the other hand, the Issuer is unable to foresee or guarantee the precise result of an update, amendment, alteration or modification of the BR2EX’s infrastructure. As a result, any update, amendment, alteration or modification could lead to an unexpected or unintended outcome that adversely affects BR2EX and/or the CLO Blockchain. Lastly, BR2EX may be lost.
A private key, or a combination of private keys, is necessary to control and dispose of BR2EX
coins stored in a holder’s digital wallet. Consequently, loss of requisite private key(s)
associated with the digital wallet storing BR2EX coins will result in loss of such virtual coins.
In addition, any third party who gains access to such private key(s), including by gaining access to login credentials of a hosted wallet service that any holder of BR2EX uses, may be able to misappropriate such holder’s BR2EX coins.
Any errors or malfunctions caused by or otherwise related to the digital wallet in which holders choose to receive and store BR2EX, including the purchaser’s own failure to properly maintain or use such digital wallet, may also result in the loss of holders BR2EX coins.
Additionally, holders failure to precisely follow the procedures set forth for transferring and receiving BR2EX coins, may result in the loss of those coins. It is important for holders of BR2EX coins to acknowledge that in the event of loss of private key(s), neither the BRX LTD or any other person will be able to retrieve such private key(s), nor will they be able to recover the lost BR2EX coins.
It is possible that BR2EX and the POD will no longer be used by a large number of individuals, DLT exchanges and other entities or that there will be limited interest in the use of BR2EX. Such a lack of use or interest could negatively impact the development of the BR2EX as a popular medium of exchange and, therefore the potential utility of BR2EX.
The tax characterization of BR2EX is uncertain and changeable, depending on the jurisdiction. The holder must seek his own tax advice in connection with purchasing BR2EX, which may result in adverse tax consequences to him, including withholding taxes, income taxes and tax reporting requirements.
Despite the fact that certain jurisdictions are progressive in the legislation of digital tokens, cryptocurrencies, blockchain technologies and cryptocurrency exchanges, laws and regulations in these aspects are relatively undeveloped and likely to rapidly evolve. Also, such laws and regulations are likely to vary significantly among various jurisdictions and are subject to significant uncertainty. New or changing laws and regulations or interpretations of existing laws and regulations may adversely impact the liquidity and market price of BR2EX coin. The ability of a holder to access, use, transfer and exchange BR2EX coins may be affected by changes to legislation, regulatory guidance or actions, and judicial decisions in Malta and in other jurisdictions. Therefore, there can be no assurance that any new or continuing regulatory scrutiny or initiatives will not have an adverse impact on the utility or value of BR2EX or otherwise prevent the Issuer’s to continue with the POD project.
There is a risk that DLT exchanges could become insolvent or otherwise become insecure. There may be practical or timing problems associated with enforcing the rights to assets in the case of an insolvency or security disruption of the DLT exchange companies.
The solvency of the Issuer may prevent the viability of the POD and the utility and value of
the BR2EX may be impaired.
Moreover, it is possible that, due to any number of reasons, including, but not limited to, a decrease in BR2Es utility, the failure of commercial relationships with DLT exchanges, or intellectual property ownership challenges, unfavourable market conditions and added compliance and regulatory obligations, the POD may no longer be viable, the BR2EX may no longer be offered by the Issuer or the Company may need to cease trading and be dissolved and liquidated.
Cryptographic coins such as BR2EX as well as blockchain are a new and untested
technology. In addition to the risks listed in this white paper, there are other risks associated
with the joining of DLT exchanges to POD, to use the BR2EX as the main medium of
exchange, the holding and the use of BR2EX, including some that the Issuer cannot or
may not anticipate. Such risks may further materialise as unanticipated variations or
combinations of the risks discussed at this white paper.
The partners and users of the BR2EX coin hereby represents and warrants that they will take sole responsibility for any restrictions and risks associated with the holding or use of BR2EX. If any of the risks, mentioned are unacceptable or the partner is not in the position to understand, the partner should not acquire, hold or use BR2EX.
As the BR2EX are not directly offered by the Issuer at the retail market, once the BRX LTD
only negotiate with DLT exchanges, to comply with worldwide Anti-Money-Laundering (AML) rules,
the Company need to know who their partners are. Therefore, a “Know-Your-Partner”
(KYP) procedure will be executed before any partnership contract is made.
In addition, the partner will have a contractual obligation to apply Know-Your-Customer rules to clients. The primary objective of the the KYC is to prevent money laundering, terrorist financing, financial fraud and identity theft, in line with national, Maltese, and international AML/FT policy standards.
The Compliance Program selects clients and partners based on public and private national and international lists of sanctioned, terrorist, politically exposed persons and people with adverse reputations, as well as best practice standards and client risk selection. Risk assessment and onboarding outcome will be performed by experienced experts in the field11.