Risk Disclosures

Effective Date: 01 September 2026

This Risk Disclosure describes material risks associated with the products and services that may be offered by ARCLIGHT PAY LTD. ("Arclight Pay", "Arclight", "we", "us", or "our").

It is not exhaustive. You should use the Services only if you understand and can bear the relevant risks.

Arclight does not provide investment, legal or tax advice unless expressly agreed in writing and lawfully permitted.

Pre-launch notice

Arclight Pay is currently in pre-launch and is not currently providing customer financial services. This document describes risks that may apply to services contemplated for future phases of the Arclight product.

Not every risk described below applies to the planned initial service, and inclusion of a product or service in this disclosure does not mean that it is currently offered or will necessarily be offered.

The planned initial service focuses on OTC conversion between supported virtual currencies and fiat currencies, with eligible fiat proceeds settled to a verified bank account held in the customer's own name.

1. Virtual assets can lose all or substantially all of their value

Virtual assets are speculative and can be extremely volatile.

Prices may move significantly within seconds because of:

• market sentiment;
• liquidity;
• leverage in the broader market;
• regulatory developments;
• security events;
• token-specific events;
• network congestion;
• macroeconomic conditions;
• exchange or stablecoin failures.

You should not transact in virtual assets with funds you cannot afford to lose.

2. Stablecoins are not risk-free

Stablecoins such as fiat-referenced tokens may lose their intended peg.

Risks may include:

• reserve quality or insufficiency;
• issuer insolvency;
• banking-partner failure;
• redemption restrictions;
• regulatory action;
• smart-contract failure;
• blacklist or freeze functionality;
• loss of market confidence.

A token described as "USD", "EUR" or another currency equivalent is not necessarily a bank deposit or legal tender.

3. No deposit or investment insurance unless expressly stated

Arclight is not a bank.

Unless we expressly tell you otherwise for a specific product, fiat balances, virtual assets, wallet balances and transaction proceeds are not insured by the Canada Deposit Insurance Corporation (CDIC), a provincial deposit-insurance scheme, investor-protection fund or equivalent scheme.

Where funds are held through a regulated partner, the safeguarding, trust, segregation, insurance or guarantee arrangements applicable to that partner or Service will be disclosed where required.

4. Blockchain transactions may be irreversible

Most public-blockchain transfers cannot be cancelled after valid broadcast and confirmation.

If you provide:

• an incorrect wallet address;
• an incorrect network;
• an unsupported token;
• an incorrect memo/tag;
• a compromised destination;

your assets may be permanently lost.

Arclight may be unable to recover assets sent incorrectly.

5. Network and protocol risk

Blockchain networks may experience:

• congestion;
• high fees;
• validator or miner disruption;
• forks;
• reorganizations;
• protocol bugs;
• governance changes;
• denial-of-service attacks;
• delayed or failed transactions.

Arclight may increase confirmation requirements, suspend a network or decline transactions where we consider it necessary.

6. Smart-contract risk

Tokens, bridges, decentralized applications and wallet infrastructure may depend on smart contracts.

Smart contracts may contain:

• coding errors;
• design flaws;
• administrative-key risks;
• upgrade risks;
• oracle vulnerabilities;
• exploitable economic assumptions.

A smart contract may behave differently from what users expect even when it operates exactly as coded.

7. Custody and wallet risk

Where Arclight or a service provider controls wallet signing or custody infrastructure, risks may include:

• compromise of signing credentials;
• insider misconduct;
• provider failure;
• infrastructure outage;
• insolvency;
• operational error;
• asset freezes;
• legal or regulatory restrictions.

Future Services may use hot, warm, cold, omnibus, segregated, exchange or other wallet arrangements depending on the applicable custody and operating model.

Where you use a self-hosted or user-controlled wallet, you bear the risk of lost keys, recovery credentials, signing devices and unauthorized transfers.

8. Exchange and OTC counterparty risk

If the relevant Service becomes available, Arclight may execute or hedge transactions through third-party exchanges, OTC counterparties, market makers or liquidity providers.

Those providers may experience:

• insolvency;
• withdrawal restrictions;
• cyber incidents;
• market disruption;
• compliance holds;
• operational outages;
• settlement failure.

Where such providers are used, Arclight may seek to limit balances maintained with them, but counterparty risk cannot be eliminated.

9. Liquidity, slippage and execution risk

A displayed price may not be available for the amount you wish to transact.

Large, illiquid or fast-moving transactions may experience:

• slippage;
• wider spreads;
• partial execution;
• delayed execution;
• quote expiry;
• rejection.

An indicative price is not a guaranteed execution price.

10. FX risk

Foreign-exchange rates fluctuate continuously.

Between instruction, funding and settlement, the value of one fiat currency against another may change materially.

Correspondent-bank and payment-provider fees can also affect the amount ultimately received.

11. Banking and EMI counterparty risk

Fiat payment and account functionality may depend on banks, EMIs, payment institutions and correspondent institutions.

These institutions may:

• delay, reject or return payments;
• impose limits;
• close or restrict accounts;
• change supported countries or industries;
• experience insolvency or operational failure;
• require additional compliance information.

Arclight cannot guarantee continuous access to any particular payment rail, bank or EMI.

12. Virtual-account and IBAN risk

An individual or named IBAN may be a virtual or sub-account identifier provided through a partner institution.

It may not have the same legal or operational characteristics as a traditional current account opened directly in your name at a bank.

Payment types, counterparties, currencies, jurisdictions and usage may be restricted.

13. Third-party payment risk

Payments to beneficiaries other than the account holder carry increased fraud, sanctions, documentation and recovery risk.

A payment may be delayed or rejected if:

• beneficiary information is incomplete;
• the purpose is unclear;
• supporting documents are insufficient;
• a party or jurisdiction presents elevated risk;
• a bank or regulator requires review.

You are responsible for verifying beneficiary information before submitting an instruction.

14. Batch and payroll risk

Batch and payroll files may contain many beneficiary instructions.

Errors can be replicated across multiple payments.

You should independently verify:

• file integrity;
• amounts;
• currencies;
• beneficiaries;
• wallet addresses;
• account details;
• payroll authorization.

Some payments in a batch may succeed while others fail.

15. Card risk

If card functionality is introduced, cards may be issued by a third-party regulated issuer.

Risks include:

• authorization declines;
• card-network outages;
• merchant disputes;
• ATM limits;
• foreign-exchange fees;
• card compromise;
• geographic or merchant-category restrictions;
• issuer or BIN-sponsor changes.

Card terms and protections will depend on the applicable issuer and jurisdiction.

16. AML, sanctions and compliance holds

Financial-services providers are required to maintain AML/ATF, sanctions and fraud controls.

We may be required to:

• request additional information;
• delay processing;
• reject a transaction;
• restrict access;
• freeze or hold assets where legally authorized or required;
• report activity to authorities.

A compliance review can occur before, during or after a transaction.

We may be prohibited by law from explaining certain actions or reports.

17. Regulatory risk

Virtual assets, payments, custody, cards and cross-border financial services are subject to rapidly changing laws.

A legal or regulatory change may cause us or a partner to:

• cease supporting a country;
• stop supporting an asset or network;
• impose new limits;
• require additional verification;
• restructure a Service;
• suspend or terminate functionality.

Availability of a Service, asset, network or jurisdiction at any particular time does not guarantee its continued availability.

18. Cross-border risk

Cross-border transactions can involve multiple legal systems, institutions and payment rails.

This may create:

• delays;
• additional fees;
• foreign-exchange losses;
• enhanced sanctions screening;
• correspondent-bank rejection;
• tax or reporting obligations;
• restrictions on recovery or dispute resolution.

19. Cybersecurity risk

Financial and virtual-asset platforms are targets for cybercrime.

Threats include:

• phishing;
• malware;
• credential theft;
• SIM swapping;
• API-key compromise;
• social engineering;
• ransomware;
• supply-chain attacks.

You must protect your devices and credentials and independently verify sensitive payment instructions.

20. Operational and technology risk

Services can be interrupted by:

• software defects;
• cloud outages;
• provider failures;
• telecommunications failures;
• database corruption;
• maintenance;
• human error;
• cyber incidents;
• natural disasters.

Business-continuity measures reduce but do not eliminate these risks.

21. API risk

If you use an API, automated instructions can execute rapidly and at scale.

A coding error, compromised API credential or incorrect integration may generate many unintended transactions before detection.

You are responsible for appropriate testing, permissions, limits, monitoring and credential security.

22. Fraud and impersonation risk

Fraudsters may impersonate:

• Arclight employees;
• counterparties;
• beneficiaries;
• suppliers;
• executives;
• banks or regulators.

Arclight will never ask you to bypass security controls or send funds solely because of an unsolicited urgent message.

You should independently verify any unusual change to payment instructions.

23. Tax risk

Transactions may create tax consequences, including gains, losses, income, reporting duties, VAT/GST/HST or withholding obligations.

Tax treatment varies by jurisdiction and may change.

You are responsible for obtaining appropriate tax advice.

24. Legal documentation risk

A transaction may depend on the accuracy or enforceability of invoices, contracts, payroll records, corporate approvals or other documents provided by you.

Arclight does not independently verify the legal validity of every underlying commercial arrangement.

25. No guaranteed settlement time

Estimated settlement times are not guarantees.

Settlement may be affected by:

• banking cut-offs;
• weekends and holidays;
• blockchain confirmations;
• compliance review;
• liquidity;
• partner processing;
• beneficiary-bank procedures.

Do not rely on a transaction completing by a particular deadline unless we expressly guarantee it in writing.

26. Force majeure and external events

Events outside our reasonable control may disrupt the Services, including:

• war;
• civil unrest;
• sanctions;
• government action;
• natural disasters;
• telecommunications failures;
• systemic banking disruption;
• blockchain failures;
• major cyber incidents.

27. Information and market-data risk

Rates, balances, status information and market data may be delayed, incomplete or temporarily incorrect due to external systems.

You should not rely on displayed information as the sole basis for an investment decision.

28. Changes to supported assets and services

We may add or remove:

• assets;
• networks;
• currencies;
• jurisdictions;
• banks;
• payment corridors;
• exchanges;
• liquidity providers.

If we discontinue support, we may require you to withdraw, convert or settle a balance within a specified period, subject to law and operational capability.

29. Insolvency risk

The insolvency of Arclight or a third-party provider could affect access to fiat or virtual assets.

The legal treatment of customer assets in an insolvency can depend on:

• how assets are held;
• contractual rights;
• segregation;
• trust arrangements;
• custody structure;
• applicable law.

You should not assume that all balances will receive the same legal treatment.

30. Your responsibility

Before using a Service, you should:

• understand how it works;
• review applicable fees and limits;
• verify all recipient and wallet details;
• assess your financial ability to bear loss;
• understand tax and legal consequences;
• maintain adequate security controls;
• keep independent transaction records where appropriate.

If you do not understand a transaction or its risks, you should not proceed.

31. Changes to this Risk Disclosure

We may update these Risk Disclosures as our Services, partners, regulatory environment and technology evolve.

The latest version will be published with an updated effective date.

32. Contact

ARCLIGHT PAY LTD.
112 - 970 Burrard Street
Office 1311
Vancouver, BC V6Z 2R4
Canada

Email: support@arclightpay.io