Introduction
Please consider the information in this Risk Disclosure Statement (“Statement”) as a general overview of the risks associated with the services offered by Tori (BVI) Limited and Tori Foundation (collectively, “Tori” or “we”). This Statement is designed to help you understand the material risks associated with trUSD and strUSD and the Tori Protocol. This Statement does not constitute investment, legal, tax, or financial advice. We make no representation that the services described herein are suitable for you or that information contained herein is reliable, accurate, or complete. We do not guarantee or make any representations or assume any liability regarding financial results based on the use of the information in this Statement. The risks outlined in this Statement are not exhaustive. This Statement only outlines the general nature of certain risks and does not discuss in detail all risks associated with holding or transacting in trUSD and strUSD. Users should undertake their own assessment as to the suitability of using trUSD and strUSD based on their own investigations, research, experience, financial resources, and goals. You should not deal with trUSD and strUSD unless you understand their nature and the extent of your exposure to risk. For the purpose of this Statement, “you”, “your”, and “User” mean a user of our services and “we”, “us”, “our”, or “Tori” means Tori (BVI) Limited and its affiliates. Users are strongly advised to read this Risk Disclosure Statement carefully before deciding to use trUSD and strUSD or the Tori Protocol.Important Warning
Risk of loss can be substantial. You should carefully consider whether holding or transacting in trUSD or strUSD is appropriate for you in light of your circumstances and financial resources. strUSD is a yield-bearing token that carries additional risks beyond those applicable to trUSD. Yield is not guaranteed and may be negative in certain market conditions.1. GENERAL RISKS
1.1 Digital Tokens Are Not Legal Tender
trUSD and strUSD (trUSD and strUSD) are not backed by any central government or legal tender. Each country has different standards regarding digital assets. There is no assurance that a person who accepts trUSD and strUSD as payment today will continue to do so in the future. Holders of trUSD and strUSD put their trust in a digital, decentralized system that relies on peer-to-peer networks and cryptography to maintain its integrity.1.2 No Deposit Insurance
trUSD and strUSD held in your wallet are not subject to deposit insurance protection, including but not limited to:- United States: Federal Deposit Insurance Corporation (FDIC) insurance or Securities Investor Protection Corporation (SIPC) protections
- United Kingdom: Financial Services Compensation Scheme (FSCS)
- European Union: Deposit Guarantee Schemes
- Other jurisdictions: Any equivalent scheme in your country of residence
1.4 Token Sale, Not Deposit
When you acquire trUSD, you are purchasing a digital token. This is a final sale transaction, not a deposit, investment, or loan. You should understand that:- Tori becomes the owner of any assets you transfer in exchange for trUSD;
- You receive trUSD tokens in exchange;
- The transaction is final and cannot be reversed;
- You have no continuing claim on the assets you transferred;
- Tori has no obligation to repurchase your trUSD;
- Any repurchase is entirely at Tori’s discretion;
- You may lose the entire value of your purchase.
1.3 No Investment or Legal Advice
Communications or information provided by Tori shall not be considered or construed as investment advice, financial advice, trading advice, or any other type of advice. The User is the only party who can determine whether an investment, investment strategy, or related transaction is appropriate based on their personal investment objectives, financial situation, and risk tolerance, and shall be solely responsible for any losses or liabilities that may result.2. PRICE AND VALUATION RISKS
2.1 No Guarantee of Price Stability
**Tori does not guarantee that the value of one (1) trUSD will always or ever equal 1 USD (1). Factors that may cause trUSD to trade at prices different from $1 include:- Market supply and demand dynamics
- Liquidity conditions on trading venues
- Market sentiment and speculation
- Perceived credit risk of the Tori Protocol
- Regulatory announcements or enforcement actions
- Technical issues with the Protocol or underlying blockchains
- Counterparty defaults or failures
- Extreme market volatility in underlying assets
2.2 strUSD Valuation
strUSD is a yield-bearing token and is not designed to maintain a stable 1:1 peg with the US Dollar. The value of strUSD relative to trUSD and USD will fluctuate based on accumulated yield, which may be positive, zero, or negative depending on market conditions and strategy performance.2.3 Volatility and Uncertainty
Crypto assets have historically exhibited higher price volatility than fiat currencies. This volatility can be extreme and unpredictable. While Tori employs strategies designed to minimize directional exposure, extreme market conditions can still result in significant value fluctuations for trUSD and strUSD.2.4 Liquidity Risk
trUSD and strUSD can have limited liquidity that may make it difficult or impossible to sell or exit a position when desired. Liquidity conditions can change rapidly, especially during periods of market stress or high volatility. You may not be able to convert trUSD and strUSD to other assets at favorable prices or at all during certain periods.3. YIELD-SPECIFIC RISKS (strUSD)
3.1 Variable and Unpredictable Yield
strUSD yield is not guaranteed. The yield generated by strUSD depends on:- Market conditions affecting the performance of underlying strategies
- The performance of trading strategies
- Trading execution quality and costs
- Counterparty reliability and performance
- Protocol fees and expenses
- Market volatility and liquidity conditions
- Availability and pricing of financial instruments used in strategies
- Regulatory changes affecting counterparties, strategies, or markets
3.2 Negative Yield Scenarios
In certain market conditions, the yield on strUSD may be negative, meaning the value of strUSD relative to trUSD may decrease. Scenarios that could result in negative yields include:- Adverse market conditions: When market environments cause underlying strategies to underperform or generate losses
- Counterparty losses: If counterparties experience defaults, insolvency, or losses that affect the Protocol’s reserves
- Strategy underperformance: If trading strategies fail to generate returns sufficient to cover costs and fees
- Execution failures: If transactions cannot be executed at expected prices or within expected timeframes
- Regulatory disruption: If regulatory changes affect the availability or viability of underlying strategies
3.3 No Guarantee of Past Performance
Past performance of the Tori Protocol or any yield-bearing strategy is not indicative of future results. Historical yield rates should not be relied upon as a prediction or guarantee of future returns.3.4 Yield Distribution Mechanics
Yield distribution is subject to the mechanics of the Protocol and the applicable Terms. There may be delays in yield accrual or distribution. The Protocol may modify yield distribution mechanisms from time to time.4. STRATEGY AND RESERVE MANAGEMENT RISKS
4.1 Overview of Strategy Risks
The Tori Protocol manages the trUSD Reserves, directly and through professional counterparties and institutional infrastructure, deploying a range of strategies designed to generate yield while seeking to maintain the backing of trUSD and strUSD. These strategies may include, without limitation, derivatives positions, fixed income instruments, structured products, and other financial instruments. The composition, allocation, and execution of strategies is subject to change at Tori’s sole discretion. This approach carries specific risks that Users should understand.4.2 Market and Strategy Performance Risk
The strategies employed by the Protocol are subject to market risk and may underperform or generate losses:- Adverse Market Conditions: Strategies may generate losses during periods of market stress, volatility, or dislocation, even if designed to limit directional exposure. Adverse movements in interest rates, exchange rates, or other market variables may also negatively affect strategy performance
- Strategy Correlation: Multiple strategies may be adversely affected by the same market conditions simultaneously, reducing the benefit of diversification
- Yield Compression: Returns available from underlying strategies may decline over time due to increased competition, changing market dynamics, or shifts in the macroeconomic environment
- Model Risk: Strategies are based on models and assumptions that may prove incorrect, particularly during unprecedented market conditions
4.3 Counterparty Risk
The Protocol relies on professional counterparties (including financial institutions, exchanges, custodians, and prime brokers) for strategy execution and reserve management:- Default Risk: Counterparties may default on their obligations, become insolvent, or be unable to return assets
- Operational Failures: Counterparties may experience technical issues, security breaches, or operational failures that affect their ability to perform
- Regulatory Risk: Counterparties may face regulatory actions that affect their ability to operate or honour obligations
- Concentration Risk: Reliance on a limited number of counterparties creates concentration risk
- Settlement Risk: Counterparties may fail to settle transactions as expected, resulting in losses or delayed access to assets
4.4 Execution Risk
Trading strategies involve execution risk:- Slippage: Trades may not be executed at expected prices, especially during volatile periods
- Latency: Delays in executing transactions can result in temporary exposure to adverse market movements
- Order Failures: Orders may fail to execute or be partially filled
- Market Impact: Large transactions may move markets unfavourably
- Cross-Market Risk: Strategies that span multiple markets or asset classes may face execution challenges when markets move asynchronously
4.5 Leverage and Margin Risk
Certain strategies employed by the Protocol may involve leveraged or margined positions:- Margin Requirements: Positions may be liquidated or closed if margin requirements are not met
- Extreme Volatility: Sudden, extreme price movements may trigger margin calls or forced liquidations before positions can be adjusted
- Cascade Effects: Forced liquidations across markets can create cascade effects that exacerbate losses
- Financing Costs: The cost of maintaining leveraged positions may increase unexpectedly, eroding returns
4.6 Instrument and Pricing Risk
The financial instruments used in the Protocol’s strategies carry their own risks:- Valuation Uncertainty: Certain instruments may be difficult to value accurately, particularly during periods of market stress or illiquidity
- Instrument-Specific Risks: Different financial instruments (such as derivatives, fixed income securities, or structured products) carry their own unique risk characteristics that may not be fully captured by the Protocol’s risk management
- Correlation Breakdown: Historical correlations between instruments or asset classes may break down during stress periods, causing strategies to behave unexpectedly
- Currency and Cross-Market Exposure: Strategies involving positions denominated in or exposed to different currencies or markets may be affected by adverse movements in exchange rates or cross-market dynamics
- Liquidity Risk: Certain positions may become illiquid, making it difficult or costly to exit
5. TECHNOLOGY AND SMART CONTRACT RISKS
5.1 Smart Contract Risk
trUSD and strUSD are issued through smart contracts on blockchain networks. Smart contracts carry inherent risks:- Bugs and Vulnerabilities: Smart contracts may contain bugs, vulnerabilities, or errors that could be exploited
- Immutability: Once deployed, smart contracts may be difficult or impossible to modify, even if issues are discovered
- Unexpected Behavior: Smart contracts may behave unexpectedly under certain conditions
- Audit Limitations: Security audits cannot guarantee the absence of vulnerabilities
5.2 Blockchain Network Risks
trUSD and strUSD operate on blockchain networks that have their own risks:- Network Congestion: High network usage can delay transactions or make them prohibitively expensive
- Protocol Changes: Changes to underlying blockchain protocols (including hard forks) may affect trUSD and strUSD
- Network Attacks: Blockchain networks may be subject to 51% attacks, eclipse attacks, or other forms of manipulation
- Validator/Miner Behavior: Validators or miners may engage in behavior that affects transaction processing
5.3 Oracle Risk
The Protocol may rely on price oracles or other external data sources:- Oracle Manipulation: Oracles may be manipulated to provide incorrect price data
- Oracle Failure: Oracles may fail, become unavailable, or provide stale data
- Flash Loan Attacks: Sophisticated attacks using flash loans may manipulate oracle prices
5.4 Interoperability Risks
trUSD and strUSD may be used across multiple blockchains and protocols:- Bridge Risks: Cross-chain bridges carry significant security risks and have historically been targets of major exploits
- Protocol Integration Risks: Integration with third-party protocols (such as lending platforms or decentralized exchanges) introduces additional smart contract risk
- Compatibility Issues: Protocol upgrades or changes may create compatibility issues
6. CYBER SECURITY RISKS
6.1 Hacking and Exploits
The cryptocurrency ecosystem is subject to sophisticated cyber attacks:- Protocol Exploits: The Tori Protocol or its dependencies may be exploited by malicious actors
- Phishing Attacks: Users may be targeted by phishing attacks designed to steal credentials or assets
- Malware: Malicious software may compromise user devices or wallets
- Social Engineering: Sophisticated social engineering attacks may target protocol participants
6.2 Private Key Security
You are responsible for the security of your private keys and wallet:- Lost Keys: If you lose your private keys, you will permanently lose access to your trUSD and strUSD
- Stolen Keys: If your private keys are stolen, your trUSD and strUSD may be irreversibly transferred
- Key Management: Improper key management practices can result in loss of assets
6.3 Custodial Risks
To the extent assets are held with custodians, MPC wallet providers, or other key management service providers as part of trading operations:- Service Provider Security: Custodians and key management providers may be subject to security breaches
- Internal Fraud: Service provider employees may engage in fraudulent activity
- Operational Failures: Service providers may experience operational failures affecting asset access
- Key Management Failures: MPC or other key management solutions may fail due to software bugs, key shard loss, or coordination failures among key holders
7. REGULATORY AND LEGAL RISKS
7.1 Regulatory Uncertainty
The regulatory status of the Tori Protocol and blockchain technology is unclear or unsettled in many jurisdictions:- Classification Uncertainty: It is unclear how regulators may classify trUSD and strUSD (as currency, commodity, security, or otherwise)
- Regulatory Actions: Regulators may take enforcement actions that affect the Protocol’s ability to operate
- Licensing Requirements: New licensing requirements may be imposed that affect Protocol operations
7.2 Legislative Changes
Legislative and regulatory changes may adversely affect trUSD and strUSD:- New Laws: New laws may restrict or prohibit the issuance, holding, or trading of trUSD and strUSD
- Tax Treatment: Tax treatment of trUSD and strUSD may change unfavorably
- Reporting Requirements: New reporting requirements may impose compliance burdens
7.3 Cross-Border Issues
Operating across multiple jurisdictions creates additional legal complexity:- Conflicting Regulations: Different jurisdictions may have conflicting regulatory requirements
- Enforcement Uncertainty: It may be unclear which jurisdiction’s laws apply in any given situation
- Access Restrictions: Your access to Tori Services may be restricted based on your location
7.4 Legal Treatment of Transfers
It is not possible to determine with certainty whether transfers of trUSD and strUSD would be recognized under applicable law by courts or regulators in various jurisdictions.8. THIRD-PARTY RISKS
8.1 Third-Party Platforms
Tori does not control or endorse any products, services, or platforms offered by third parties:- Platform Risks: Third-party platforms may have their own risks, terms, and conditions
- No Endorsement: The availability of trUSD and strUSD on third-party platforms does not imply endorsement
- Platform Failures: Third-party platforms may fail, be hacked, or cease operations
8.2 DeFi Integration Risks
Use of trUSD and strUSD in decentralized finance (DeFi) protocols carries additional risks:- Smart Contract Risk: Each DeFi protocol has its own smart contract risks
- Impermanent Loss: Providing liquidity may result in impermanent loss
- Protocol Exploits: DeFi protocols are frequent targets of exploits
- Governance Attacks: Protocol governance may be manipulated
8.3 Service Provider Risks
The Protocol relies on various service providers:- Proof of Reserves Providers: Attestation providers may fail or provide inaccurate information
- Infrastructure Providers: Cloud services, API providers, and other infrastructure may fail
- Communication Channels: Official communication channels may be compromised
9. OPERATIONAL RISKS
9.1 Service Availability
We do not guarantee that the Tori Services will be available at any given time:- Unplanned Outages: Services may experience unplanned interruptions
- Maintenance: Scheduled maintenance may temporarily restrict access
- External Dependencies: Service availability depends on third-party infrastructure
9.2 Transaction Processing
Transaction processing may be subject to delays:- Network Delays: Blockchain network congestion may delay transactions
- Processing Delays: High volumes may delay Protocol processing
- Redemption Delays: Redemptions may be delayed during periods of market stress
9.3 Human Error
Operational activities involve risk of human error:- Configuration Errors: Incorrect configurations may affect Protocol operations
- Execution Errors: Manual processes may be executed incorrectly
- Communication Errors: Important information may be communicated incorrectly
10. IRREVERSIBILITY OF TRANSACTIONS
10.1 Transaction Finality
Transactions in trUSD and strUSD on blockchain networks are generally irreversible:- No Reversal: Once confirmed, transactions cannot be reversed by Tori or any other party
- Wrong Address: Sending tokens to an incorrect address may result in permanent loss
- Lost Access: If you lose access to your wallet, there is no recovery mechanism
10.2 Consequences of Errors
You accept all consequences of errors in transactions:- Address Errors: An address may have been entered incorrectly
- Private Key Loss: You may lose the private key associated with your address
- Recipient Non-cooperation: A recipient may not return mistakenly sent tokens
11. PROOF OF RESERVES AND TRANSPARENCY
11.1 Attestation Limitations
The Tori Protocol employs third-party proof of reserves verification. Users should understand the limitations:- Point-in-Time: Attestations are point-in-time verifications and do not guarantee continuous backing
- Scope Limitations: Attestations may not cover all aspects of the Protocol’s operations
- Methodology Limitations: Attestation methodologies may have limitations
- No Guarantee: Attestations do not guarantee the Protocol will honor repurchase requests
11.2 User Responsibility
Users are encouraged to:- Review attestation reports regularly
- Conduct their own due diligence
- Understand the limitations of proof of reserves systems
- Monitor Protocol communications for important updates
12. TAXATION
12.1 Tax Responsibility
You are responsible for determining and paying any taxes arising from your use of trUSD and strUSD:- Tax Obligations: Holding, trading, or earning yield on trUSD and strUSD may create tax obligations
- Reporting Requirements: You may have reporting obligations in your jurisdiction
- Professional Advice: You should consult a qualified tax professional
12.2 Information Disclosure
Where required by applicable law, Tori will disclose available information relating to transactions, transfers, distributions, or payments to appropriate regulatory and tax authorities.13. CONFLICT OF INTEREST RISKS
13.1 Affiliate Activities
Individuals or entities affiliated with Tori may hold, purchase, sell, or otherwise engage in transactions involving trUSD and strUSD. Such activities may create potential conflicts of interest.13.2 Incentive Alignment
The interests of the Protocol operators, service providers, and token holders may not always be perfectly aligned.14. Catastrophic Loss Scenarios
14.1 Total Loss Possibility
You could lose all or substantially all of the value of your trUSD and strUSD. Such scenarios could include:- Major counterparty defaults affecting a significant portion of reserves
- Catastrophic smart contract exploits or bugs
- Coordinated cyber attacks on multiple systems
- Extreme and prolonged adverse market conditions
- Regulatory actions that prevent Protocol operations
- Multiple simultaneous failures of critical systems
- Malicious actions by insiders or third parties
- Oracle manipulation or failures
- Blockchain network failures or attacks
- Unexpected interactions between smart contracts
- Unknown vulnerabilities in code
- Black swan events
14.2 No Recourse or Recovery
In the event of catastrophic losses, there may be no recourse or recovery mechanism. Specifically:- There is no insurance fund or bailout mechanism;
- There is no guarantee of any recovery of lost assets;
- Legal recourse may be impractical, unavailable, or ineffective;
- The Company’s liability is strictly limited as set forth in the applicable Terms;
- Blockchain transactions are irreversible;
- Lost private keys cannot be recovered;
- Stolen assets generally cannot be recovered;
- The Company has no obligation to make users whole for any losses.
15. Acknowledgment
By holding or using trUSD or strUSD, you acknowledge that:- You have read and understood this Risk Disclosure Statement;
- You understand that the risks described herein are not exhaustive;
- You accept all risks associated with trUSD and strUSD, including the risk of total loss;
- You have conducted your own independent due diligence;
- You are making an independent decision to use trUSD and strUSD;
- You have the financial resources and risk tolerance appropriate for the risks involved;
- You will not hold Tori liable for any losses except as expressly provided in the applicable Terms;
- You are not a Restricted Person and are not accessing the Services from a Prohibited Jurisdiction;
- You have obtained independent legal, financial, and tax advice to the extent you deem necessary.
16. Contact Information
If you have questions about the risks described in this Statement, please contact us at: Email: [email protected] Website: tori.financeThis Risk Disclosure Statement was last updated in February 2026.