Risk Disclosure Statement

Effective Date: December 20, 2024

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Important Notice

Welcome to PayArmorX. Before you use our services, it is crucial that you understand the risks involved in cryptocurrency transactions and using a non-custodial crypto payment gateway. Cryptocurrencies involve a high level of risk and are not suitable for all individuals or entities. By using PayArmorX, you acknowledge and agree to assume these risks.

This risk disclosure does not contain all of the risks associated with cryptocurrencies. Please carefully consider whether using crypto payment services is appropriate for your circumstances.

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1. Market Risk

Cryptocurrencies are extremely volatile. Prices can fluctuate widely within very short periods—sometimes within minutes or even seconds. This volatility can be influenced by various factors including:

• Economic events and macroeconomic conditions
• Market sentiment and speculation
• Regulatory news and government actions
• Technology developments and security incidents
• Market manipulation and trading activity
• Adoption rates and merchant acceptance
• Competition from other cryptocurrencies

Key Considerations:

• You could lose the entire value of your transaction due to price fluctuations
• The value of cryptocurrencies received may be significantly different from the time of payment initiation to confirmation
• There is no guarantee that cryptocurrencies can be converted back to fiat currency at any specific rate
• Historical performance is not indicative of future results

2. Regulatory Risk

The regulatory status of cryptocurrencies is uncertain and rapidly evolving across different jurisdictions. Regulatory changes can have significant impacts:

Potential Regulatory Actions:

• Government bans or restrictions on cryptocurrency use
• Changes in tax treatment of crypto transactions
• New licensing or compliance requirements
• Restrictions on cross-border crypto transfers
• Classification changes (e.g., as securities, commodities, or currencies)

Impact on PayArmorX Services:

• Changes in regulations could affect the legality and usability of our services
• We may need to restrict services in certain jurisdictions
• Compliance requirements may increase costs or change service features
• Regulatory actions could lead to reduced functionality or service termination in some regions

Your Responsibilities:

• Ensure your use of cryptocurrencies complies with all applicable laws in your jurisdiction
• Stay informed about regulatory changes that may affect you
• Consult legal advisors regarding the legality of crypto transactions in your region

3. Technological Risk

While PayArmorX employs advanced security protocols and best practices, inherent technological risks remain:

3.1 Smart Contract Risk

• Smart contracts may contain bugs or vulnerabilities
• Once deployed, smart contracts generally cannot be modified or reversed
• Exploits or attacks on smart contracts could result in loss of funds
• We conduct security audits, but cannot guarantee complete security

3.2 Blockchain Network Risk

• Network congestion can cause transaction delays or failures
• High gas fees during network congestion may make transactions uneconomical
• Blockchain reorganizations could affect transaction finality
• Network upgrades or forks could impact service functionality

3.3 Cybersecurity Risk

• Risk of hacking, phishing attacks, and social engineering
• Potential for unauthorized access to accounts or wallets
• Malware or viruses could compromise your security
• Third-party service breaches could affect integrated services

3.4 Software Risk

• Software bugs or errors may occur despite testing
• System downtime or maintenance may interrupt services
• Integration issues with third-party services
• Data loss or corruption (though we maintain backups)

Best Practices:

• Enable two-factor authentication on all accounts
• Use hardware wallets for significant cryptocurrency holdings
• Keep software and devices updated
• Be vigilant against phishing attempts
• Never share private keys or seed phrases

4. Operational Risk

PayArmorX relies on complex software, hardware, and infrastructure systems which can malfunction or fail:

Potential Operational Issues:

• Server outages or network disruptions
• Database errors or data inconsistencies
• API failures or integration problems
• Third-party service dependencies (Coinbase, blockchain nodes, etc.)
• Payment processor downtime
• Human error in operations or support

Mitigation Efforts:

• We maintain redundant systems and backups
• 24/7 monitoring and incident response
• Regular testing and quality assurance
• However, despite our rigorous operational controls, disruptions can still occur

5. Liquidity Risk

Cryptocurrencies may face liquidity issues in various markets and circumstances:

Liquidity Concerns:

• You may not be able to convert cryptocurrencies to fiat currency quickly
• Large transactions may impact market prices (slippage)
• Low trading volume in certain cryptocurrency pairs
• During market stress, liquidity can disappear rapidly
• Exchange outages or restrictions can prevent trading

For Merchants:

• You may need to hold cryptocurrencies longer than anticipated
• Converting large amounts may require multiple transactions over time
• Consider the timing and method of converting crypto to fiat

6. Counterparty Risk

As a non-custodial service, PayArmorX does not hold your cryptocurrencies. However, counterparty risks still exist:

Transaction Risks:

• Customers may send incorrect amounts or to wrong addresses
• Dispute resolution is more complex with cryptocurrencies
• Refunds require cooperation from the receiving party
• Payment failures may not be automatically recoverable

Third-Party Risks:

• Payment processors or on-ramp providers may fail or become insolvent
• Wallet providers could discontinue services
• Blockchain node providers could experience outages
• Integration partners may change terms or cease operations

Merchant-Customer Risks:

• Merchants may not deliver goods or services as promised
• Customers may dispute legitimate transactions
• Fraudulent activity by either party

7. Irreversibility Risk

Blockchain transactions are generally irreversible. Once a transaction is confirmed on the blockchain:

• It cannot be reversed, canceled, or charged back
• Incorrect transaction details (wrong address, amount, etc.) cannot be corrected
• Lost or stolen funds typically cannot be recovered
• Disputes must be resolved directly between parties

Important:

• Always verify transaction details before confirming
• Use test transactions for new addresses when dealing with large amounts
• Understand that there is no customer protection similar to credit card chargebacks
• PayArmorX cannot reverse transactions once they are on the blockchain

8. Legal Risk

Engaging in cryptocurrency transactions may expose you to various legal risks:

Potential Legal Issues:

• Cryptocurrency laws vary significantly by jurisdiction
• You may inadvertently violate local laws or regulations
• Cross-border transactions may have complex legal implications
• Engaging with parties in sanctioned countries could violate laws
• Failure to comply with KYC/AML requirements could result in penalties

Criminal Liability:

• Using cryptocurrencies for illegal activities is a crime
• Money laundering using cryptocurrencies carries severe penalties
• Sanctions violations can result in significant fines and imprisonment
• Tax evasion is a criminal offense

Your Obligations:

• Ensure compliance with all applicable laws in your jurisdiction
• Do not use PayArmorX for any illegal purposes
• Report suspicious activity to authorities as required
• Seek legal counsel if you have questions about legality

9. Tax Compliance Risk

Cryptocurrency taxation is complex and varies significantly by jurisdiction:

9.1 Tax Reporting Obligations

• Cryptocurrency transactions may be taxable events
• You must report gains, losses, income, and transactions as required
• Failure to report can result in penalties, interest, and criminal charges
• Tax authorities are increasingly enforcing crypto tax compliance

9.2 Tax Complexity

• Capital gains tax may apply to cryptocurrency appreciation
• Income tax may apply to payments received in cryptocurrency
• Sales tax or VAT may apply to goods and services
• Each transaction may have different tax implications
• Tax treatment can change over time

9.3 Your Responsibilities

• Maintain accurate records of all cryptocurrency transactions
• Consult with qualified tax professionals
• File all required tax returns and pay taxes owed
• Stay informed about changing tax regulations

PayArmorX provides transaction history for your records, but we do not provide tax advice.

10. Wallet and Private Key Risk

You are solely responsible for securing your cryptocurrency wallets and private keys:

Key Risks:

• Loss of private keys means permanent loss of access to funds
• No one, including PayArmorX, can recover lost private keys
• Theft of private keys results in irreversible loss of funds
• Sharing private keys or seed phrases with anyone is dangerous

Best Practices:

• Store private keys securely offline (e.g., hardware wallet)
• Use multiple backups in secure locations
• Never share private keys, seed phrases, or wallet passwords
• Use strong, unique passwords for all accounts
• Enable all available security features

11. Integration and Third-Party Risk

PayArmorX integrates with various third-party services:

Third-Party Dependencies:

• Coinbase Commerce for fiat on-ramp services
• Blockchain node providers for transaction processing
• Cloud infrastructure providers
• Analytics and monitoring services

Risks:

• Third-party service outages affect PayArmorX functionality
• Third-party data breaches could compromise your information
• Changes to third-party terms or pricing
• Third-party services may be discontinued

We carefully select partners, but cannot control third-party operations.

12. No Insurance or Protection

Important Differences from Traditional Banking:

• Cryptocurrency deposits are not insured by FDIC or similar deposit insurance
• There is no investor protection scheme for cryptocurrency losses
• You cannot dispute transactions like credit card chargebacks
• Lost or stolen cryptocurrencies are generally not recoverable
• No government or central authority backs cryptocurrencies

13. User Error Risk

User mistakes can result in permanent loss:

• Sending funds to wrong addresses
• Using wrong blockchain networks
• Incorrect transaction amounts or fees
• Losing access credentials
• Falling victim to phishing or scams
• Misunderstanding how the platform works

Recommendations:

• Start with small transactions to familiarize yourself
• Double-check all transaction details
• Keep detailed records
• Read documentation carefully
• Contact support if you're unsure about anything

14. Market Manipulation Risk

Cryptocurrency markets can be subject to manipulation:

• "Pump and dump" schemes
• Wash trading and fake volume
• Whale manipulation (large holders)
• Market maker manipulation
• Coordinated buying or selling campaigns

Due to lower market regulation compared to traditional securities, cryptocurrency markets may be more susceptible to manipulation.

15. Project and Token Risk

For specific cryptocurrencies you may receive or hold:

• Development teams may abandon projects
• Technological obsolescence
• Competition from superior technologies
• Security vulnerabilities in specific tokens
• Governance disputes or community splits (forks)
• Delisting from exchanges reducing liquidity

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Disclaimer and Recommendations

PayArmorX Does Not:

• Provide investment, financial, legal, or tax advice
• Recommend any specific cryptocurrency or investment strategy
• Guarantee any returns or outcomes
• Insure or protect against losses
• Act as a financial institution or broker

We Strongly Recommend:

1. Only risk funds you can afford to lose
2. Consult qualified professionals (financial advisors, lawyers, accountants)
3. Educate yourself thoroughly about cryptocurrencies and blockchain technology
4. Start small until you understand the systems and risks
5. Diversify your holdings and not rely solely on cryptocurrencies
6. Stay informed about developments in the crypto space
7. Use security best practices at all times

Questions or Concerns?

If you have any questions about these risks or need clarification, please contact our support team:

PayArmorX Support

• Email: support@payarmorx.com
• Website: https://payarmorx.com

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By using PayArmorX, you acknowledge that you have read, understood, and accept all risks described in this Risk Disclosure Statement. You agree that you are using the services at your own risk and that PayArmorX shall not be liable for any losses you may incur.

Last updated: December 20, 2024