JAPAN AI CENTER RISK DISCLOSURE STATEMENT
Last updated 27 January 2025
This JAPAN AI CENTER Risk Disclosure Statement (“Statement”) provides you with a summary of certain risks you should consider when deciding whether to purchase, hold or dispose of Gold Tokens or use the Site Services offered by JAPAN AI CENTER (each, as defined in the JAPAN AI CENTER Terms of Service (the “Terms”)). By purchasing, holding and disposing Gold Tokens or using the Site Services offered by JAPAN AI CENTER, you acknowledge that you have read and understand this Statement. You should not purchase, hold or dispose of Gold Tokens or use the Site Services offered by JAPAN AI CENTER unless you understand the related risks.
This Statement discusses some of the principal risks of Gold Tokens and the Site Services, but it does not and cannot describe every risk or consideration associated with Gold Tokens and the Site Services. This Statement utilizes certain terms that are defined in the Terms. Please consult the Terms for further information regarding those terms.
Risks of purchasing, holding and disposing of Gold Tokens and using the Site Services include, but are not limited to, the following:
1. Market Risk: Secondary Market prices for Gold Tokens can fluctuate and be unpredictable due to a variety of factors outside of JAPAN AI CENTER’s control. Whether the future market price for a Gold Token will move up or down, or even sustain a market value, is unknowable. As each Gold Token represents one fine troy ounce of gold, fluctuations in the price of gold may impact the market value of Gold Tokens. Factors that impact the price of gold include, but are not limited to, global supply and demand for gold, interest rates, market expectations regarding future inflation rates, political, economic, and other international events, war, and national economic and monetary policies. For purposes of this Statement, the term “Primary Market” refers to users purchasing or redeeming Gold Tokens directly through the Site and “Secondary Market” refers to any transaction in Gold Tokens other than with users and transactions taking place in the Primary Market.
A Gold Token may trade at, above or below the market price of one fine troy ounce of gold. The market price of Gold Tokens in the Secondary Market could fluctuate in response to changes in the supply and demand for the Gold Tokens in those markets rather than solely in response to the market price of gold itself. The amount of the discount or premium, if any, in the market price for Gold Tokens relative to the one fine troy ounce of physical gold it represents may be affected by the trading activity in Gold Tokens, the relative liquidity of Gold Tokens and gold, the ease and costs of redemption, and other factors. JAPAN AI CENTER cannot control how third parties value Gold Tokens.
2. Settlement Risk: JAPAN AI CENTER may from time to time make Gold Tokens available for purchase at prices quoted by JAPAN AI CENTER subject to minimum purchase and other requirements and to transaction and settlement conditions imposed by JAPAN AI CENTER which are not set forth on the Site at the time of transaction. The prices offered by JAPAN AI CENTER will be based upon the market price of gold, including market brokerage fee or dealer mark-up, available from time to time to JAPAN AI CENTER, but the markets from which gold is priced may vary depending upon the time of purchase. Market prices fluctuate and the basis for pricing can be affected by transaction execution efficiency or other factors specific to JAPAN AI CENTER and the Gold Tokens. Furthermore, the period for the settlement of any purchase of Gold Tokens may depend upon market availability of gold at the time of purchase or other conditions specific to JAPAN AI CENTER or the Custodian. Redemptions of Gold Tokens may also be subject to requirements imposed by JAPAN AI CENTER which are not set forth on the Site, and JAPAN AI CENTER may amend the Terms at any time, without notice. JAPAN AI CENTER makes no representations or warranties that it will sell or exchange new Gold Tokens on comparable terms or on any terms in the future.
3. Liquidity and Listing Risk:
a. Markets for Digital Tokens can have varying degrees of liquidity. Some markets may be quite liquid while others may be thinner or possibly even illiquid. Thin and illiquid Secondary Markets can experience greater volatility in market prices. Gold Tokens may be issued by JAPAN AI CENTER on multiple blockchains in its sole discretion. Gold Tokens trading on one blockchain may not be readily exchangeable for Gold Tokens trading on a different blockchain. There is never a guarantee that there will be an active Primary Market or Secondary Market for you to purchase or dispose Gold Tokens.
b. Trading exchanges or markets may list Gold Tokens for trading and may delist them from trading without prior notice or consent by JAPAN AI CENTER or anyone else. Furthermore, it is possible that any Secondary Market for Gold Tokens could abruptly appear and then vanish. The use of Gold Tokens in any trading exchange, market or commercial transaction does not require permission from JAPAN AI CENTER and does not constitute an endorsement by JAPAN AI CENTER.
4. Risk Related to Gold Reserves: Each Gold Token reflects ownership of one undivided fine troy ounce of gold contained within a specific bar of gold within the Gold Reserves. The Gold Reserve may be subject to loss, damage, theft, fraud, or restriction on access in the event of, for example, natural disasters or bankruptcy of the Custodian. Any such events may adversely impact Gold Tokens. JAPAN AI CENTER does not insure gold held by the Custodian or anyone else for the benefit of a holder of Gold Tokens, gold delivered by any precious metals dealer or gold received by a holder of Gold Tokens upon the exercise of its redemption rights. The Custodian is only contractually obligated to maintain insurance against loss with regard to its business, including loss with respect to transportation of the Gold Reserves as the custodian determines in its sole discretion. There is no assurance that the Custodian will maintain adequate insurance, or any insurance, with respect to the Gold Reserves in which your Gold Tokens reflect an ownership interest.
The Gold Reserves are not actively managed by any party, meaning that no effort is made to take any action that would preserve or enhance the value of the Gold Reserves (e.g., no action is taken to try to use the Gold Reserves to profit from short-term market fluctuations in the price of gold). Accordingly, JAPAN AI CENTER and its Affiliates will not take any action to sell gold when the market price of gold is high or buy gold at a low price with the expectation of future price increases for the purpose of trying to increase the value of Gold Reserves.
5. Adverse Events May Affect Holders of Gold Tokens Differently: Each Gold Token reflects ownership of one undivided fine troy ounce of gold contained within a specific bar of gold within the Gold Reserves. There is a risk that some or all of the Gold Reserves held by the Custodian could be lost, damaged, stolen or destroyed. Access to the Gold Reserves could also be restricted by natural events (such as an earthquake) or human actions (such as a terrorist attack). Any of these events may adversely affect one or more of the gold bars that comprise the Gold Reserves. The loss or damage borne from any of these events would be borne by you as a holder of the Gold Tokens reflecting ownership of an undivided specific interest in the lost, damaged or stolen bullion bars.
6. Requirement to Expend Additional Resources to Recover Damages from a Custodian and Limited Recovery Rights: If you have a claim against the Custodian for the loss, damage theft or destruction of Gold Reserves assigned to the Gold Tokens, you will be required to expend your own resources to pursue such a claim against the Custodian or any other person or entity. JAPAN AI CENTER will not indemnify you or assume any responsibility for any harm to the Gold Reserves and JAPAN AI CENTER will not be obligated to and will not assert claims on your behalf.
If the Gold Reserves are lost, damaged, stolen or destroyed under circumstances rendering a party liable to you, the party responsible may not have the financial resources sufficient to satisfy your claim. For example, as to a particular event of loss, the only source of recovery for you might be limited to the Custodian or, to the extent identifiable, other responsible third parties (e.g., a thief or terrorist), and their financial resources (including liability insurance coverage) may be insufficient to satisfy a claim.
7. No Obligation to Oversee or Monitor the Custodian: The failure by the Custodian to exercise due care in the safekeeping of the Gold Reserves could result in a loss to you. JAPAN AI CENTER does not undertake to and has no legal obligation to monitor the performance of and safe keeping of Gold Reserves by the Custodian. The Custodian may not cooperate in any review that either JAPAN AI CENTER or you may wish to conduct of the Custodian’s facilities, procedures, records or creditworthiness.
8. The Custodian May Become Insolvent: In the event of the insolvency of the Custodian, a liquidator may seek to freeze access to the gold held by the Custodian, including the Gold Reserves held for the benefit of holders of Gold Tokens. Even though you could retain legal title to your undivided specific interest in the Gold Reserves reflected by your Gold Tokens, you could incur expenses in connection with obtaining control of the allocated gold bars. Further, the assertion of a claim by a liquidator for unpaid fees due to the Custodian could delay and reduce redemptions or transfers.
9. Risk Related to Redemption of Gold Tokens: Redemption requests must comply with the Terms. The execution of such redemption requests could be subject to postponement or to rejection by JAPAN AI CENTER or the Custodian under certain circumstances. In addition, JAPAN AI CENTER will reject a redemption request if it is not in proper form or if the fulfillment of the request might be unlawful. Any such postponement or rejection could adversely affect you as a redeeming holder because the market price for gold could decline during the period of suspension or postponement.
Redemption is subject to fees and conditions that may make the exercise of your right to redemption impractical or reduce the profit from the exercise of such rights. You should consult your own tax advisors as to the tax consequences of redemption.
10. Risks of Third Parties: Once you send Gold Tokens to an address of a third party, you are subject to a risk that access to, and any claim on, those Gold Tokens may be lost permanently if the Gold Tokens are transferred to an address or wallet that the intended recipient does not control, including as a result of: (i) sending Gold Tokens to an incorrect address; or (ii) the intended recipient no longer holding the private keys to that address. Transferring Gold Tokens to any other person or depositing Gold Tokens with any third party in a custodial relationship has attendant risks. These risks include security breaches, risk of contractual breach, and risk of loss. You should carefully consider the risks of allowing third parties to hold your property for any reason.
11. Risks of Immutable Transactions: Blockchain transactions are immutable. Once a transaction is completed on the blockchain underlying the Gold Tokens, the transaction is irreversible, and JAPAN AI CENTER does not have the ability to reverse or recall any transaction. You bear all responsibility for any loss that might be incurred as a result of sending Gold Tokens to an incorrect or unintended blockchain address. None of JAPAN AI CENTER or its Affiliates have any obligation to track or verify any Gold Token transactions.
12. Conflicts of Interest Risk: From time to time, JAPAN AI CENTER and its Affiliates may enter into contracts with related parties. In addition, the Custodian is a related party to JAPAN AI CENTER. There is a risk that the proximity of the counterparties in related-party transactions may compromise the objectivity and impartiality of decisions relating to the terms of those transactions.
13. Regulatory Risk in Issuance and Transfer: The legality of Gold Tokens and the trading of Gold Tokens may not be clear and may vary under the laws of different jurisdictions. For example, whether and on what basis a Gold Token may constitute property, an asset, a financial instrument or a right of any kind might vary from one jurisdiction to another. Prospective purchasers or holders of Gold Tokens are responsible for knowing and understanding how the laws apply to them or their property, rights or assets in their jurisdiction.
14. Risks of Regulatory Change and Enforcement Actions: Regulators continue to assess how Digital Tokens, such as Gold Tokens, should be regulated. Any new regulation could potentially affect or impair JAPAN AI CENTER’s ability to operate and may raise transaction costs, potentially offsetting and/or eliminating many of the key benefits of the Gold Tokens and JAPAN AI CENTER’s ability to operate. Changes in the regulatory environment may impact the ability of, or process for, users to acquire and redeem Gold Tokens, and the availability of Secondary Markets. In addition, if JAPAN AI CENTER fails to comply with changing regulatory regimes, JAPAN AI CENTER and its Affiliates may be subject to regulatory actions, which may adversely affect JAPAN AI CENTER and its ability to operate. JAPAN AI CENTER and its Affiliates have been, are, and may continue to be subject to regulatory and other investigations in various jurisdictions. The outcome of any pending or future regulatory or other investigation could have a materially adverse impact on JAPAN AI CENTER and its Affiliates and their ability to operate.
15. Commingling and Redemption Risks: Any Gold Tokens transferred to JAPAN AI CENTER to enable redemptions may be commingled with the Gold Tokens of other users of the Site and with the Gold Tokens of JAPAN AI CENTER and its Affiliates and service providers. Transferring Gold Tokens to JAPAN AI CENTER exposes you to risks of loss from, among other things, security breaches from cyber attacks that hack and steal Gold Tokens, electronic or technological failures that impede or prevent access or recordkeeping errors.
16. Blockchain Network and Protocol Risks: Gold Tokens may be issued by JAPAN AI CENTER on multiple blockchains in its sole discretion, but JAPAN AI CENTER does not own or control the blockchain protocols which govern the operation of the Gold Tokens. In general, the underlying protocols are open source and anyone can use, copy, modify, and distribute them. These blockchain networks and protocols may not have the functionality, security, or availability desired by a user of Gold Tokens. Some of the protocols are subject to consensus-based proof of stake validation methods which may allow, by virtue of their governance systems, changes to the associated blockchain or digital ledger, and the operation of the Gold Tokens on such blockchains may be affected accordingly. Protocols are subject to the possibility that miners and users could use different versions of the protocol, resulting in a fork. Forks of protocols can create security concerns due to reduced network distribution and questions as to protocol operability. These could impact the operation of Gold Tokens on a forked network. In addition, the growth and development of Gold Tokens and their underlying networks and other cryptographic and algorithmic protocols governing the creation, transfer, and usage of Gold Tokens are subject to a variety of factors that are difficult to evaluate, including that JAPAN AI CENTER maintains and secures crucial administrative cryptographic keys for the operation of Gold Tokens protocols on public blockchains. Breaches in the custody, control and operations associated with these keys could lead to failures in the operation of Gold Tokens. Protocols are subject to the possibility that miners and users begin using different versions of the protocol, resulting in a fork. Forks of protocols can create security concerns due to reduced network distribution and questions as to protocol operability. Where a blockchain or protocol on which Gold Tokens are issued is forked, JAPAN AI CENTER may elect to suspend Site Services temporarily or for an extended period of time on little or no notice.
17. Risk of Technical Failure: JAPAN AI CENTER utilizes software to allocate a specific gold bar, or part thereof, to an address holding Gold Tokens. In the event that this software fails, JAPAN AI CENTER may be unable to identify the gold bar allocated to a particular deposit address, and, in the event that you are unable to redeem your Gold Tokens, you may be designated as an unsecured creditor of the Custodian, without a specific right to a particular gold bar.
18. Risk of Account or Transfer Freeze: JAPAN AI CENTER may suspend or terminate your access to the Site or any of the Site Services, freeze any Gold Tokens held by you, or terminate your Gold Token Wallet, as required by applicable Law or where JAPAN AI CENTER, in its sole discretion, determines it is prudent to do so or where you have violated, breached, or acted in a manner inconsistent with any provision of these Terms or applicable Law. If Gold Tokens are frozen or destroyed, you will not be able to make transfers of those Gold Tokens to or from your wallet. In the event that you attempt to send Gold Tokens to a sanctioned or suspicious blockchain address, JAPAN AI CENTER may freeze the Gold Tokens. In certain circumstances, JAPAN AI CENTER may be required to report suspected illegal activity to applicable law enforcement agencies and you may forfeit any rights associated with your Gold Tokens.
19. No Advice from JAPAN AI CENTER: JAPAN AI CENTER does not provide investment, portfolio management, legal, accounting, tax or other advice, or advice on trading techniques, models, algorithms, or any other schemes. All information provided in connection with your access and use of the Site Services is for informational purposes only and should not be construed as professional advice. You should not take, or refrain from taking any action based on any information contained on the Site or any other information that we make available at any time. You should not take, or refrain from taking any action based on any information contained on the Site or any other information that we make available at any time. Before you make any financial, legal, or other decisions involving the Site Services, you should seek independent professional advice from an individual who is licensed and qualified in the area for which such advice would be appropriate.
20. Cyber Security Threats and Operational Challenges: The nature of Digital Tokens may lead to an increased risk of fraud or cyberattack. JAPAN AI CENTER may experience sophisticated cyberattacks, unexpected surges in activity or other operational or technical difficulties that may cause interruptions in the Site Services. You are aware of and accept the risk of cyberattacks and operational challenges. You understand that cyberattacks and operational challenges may lead to delays, including delays in the ability to redeem your Gold tokens. JAPAN AI CENTER is not responsible for any loss that might arise from any cyberattacks or operational challenges.
21. Litigation Risk: As of the date set forth above in this Statement, JAPAN AI CENTER’s Affiliates are defendants in ongoing civil litigation proceedings, and may be subject to further litigation (including civil and administrative proceedings). There can be no assurance that JAPAN AI CENTER will not be added as defendants to further litigation, or that the outcome of any such proceedings will be favourable to JAPAN AI CENTER and its Affiliates. Any such unfavourable outcome or any other legal proceeding in the future could have a material adverse effect on JAPAN AI CENTER, its Affiliates and the Gold Reserves.
22. Publicity Risk: Unfavourable media coverage can negatively affect the value of the Gold Tokens on the Secondary Market. JAPAN AI CENTER, its Affiliates and Gold Tokens receive a high degree of media and social media coverage around the world. Unfavourable publicity regarding, for example, liquidity, litigation or regulatory activity, the Gold Reserves, privacy practices, terms of service, the use of Gold Tokens for illicit or objectionable ends, has in the past, and could in the future, adversely affect the Secondary Market price of Gold Tokens.