MATRIX OF RISKS

RISKS ASSOCIATED WITH THE RNTB TOKEN AND PRE-SALE

Last updated January 15, 2018

The RNTB Token is a new and innovative product. This memorandum is intended to apprise you of some of the risks involved with purchasing, buying, owning, and using the RNTB Token. It does not purport to advise you of all of the risks and other significant aspects of the sale (the “RNTB Sale”) by Bitrent LP (“Bitrent” or the “Company”) of RNTB Network Tokens (the “Tokens” or “RNTB Tokens”). You should also consider any additional risks and considerations relating to the Token Sale and consult your own legal, tax, financial, and other advisers before entering into any transaction.

There are a number of risks involved in this Token Sale, as well as the future development, maintenance, and running of the RNTB Network and Tokens. Some of these risks are beyond the control of the Company. Each person participating in the Token Sale (“Purchaser”) should comprehend, consider, and evaluate carefully the risks described below in addition to any other available information before participating in the Token Sale.

Each Purchaser should pay particular attention to the fact that, although the Company is established in London, Great Britain, neither the Company nor the RNTB Network has any specific physical presence. In addition, the legal and regulatory position of the Company and the RNTB Network may vary depending on the facts and circumstances. They, therefore, fall within the purview of one or more jurisdictions, at least to some extent, and the legal and regulatory implications may, therefore, be unexpected.

Participation in the Token Sale shall be taken as an action based upon careful and prudent analysis and evaluation, and will be deemed as the relevant Purchaser having been fully informed, advised, and willing to bear all of the risks associated with it, including as set out in this memorandum.

A purchase of the Tokens is not an investment. Rather, RNTB Tokens serve a specific function within the RNTB Network, which is the means to access the RNTB Network. Without RNTB Token, the general public may not access the RNTB Network. There is no guarantee – indeed there is no reason to believe – that the Tokens you purchase will increase in value. They may – and probably will, at some point – decrease in value. For a more complete description of the RNTB Network and the Tokens, please see RNTB Network: A global platform for verifiable data, available at https://bitrent.io/wp_bitrent.pdf, the contents of which are incorporated into this document by reference. For these and other reasons, we believe the sale of RNTB Tokens does not constitute a public offering of securities subject to prospectus registration requirements. However, public policy towards token sales is changing, and it is conceivable that regulators may in the future seek to broaden the scope of regulation of token sales. This could make token sales subject to registration requirements in the United States and similar jurisdictions. If the RNTB Token Sale becomes subject to registration requirements, this would delay or potentially postpone the proposed RNTB Token Sale indefinitely.

  1. Risks Associated with Purchaser Credentials

Any third party that gains access to the Purchaser’s login credentials or private keys may be able to dispose of the Purchaser’s Tokens. To minimize this risk, the Purchaser should guard against unauthorized access to their electronic devices.

  1. Risk of Unfavorable Regulatory Action in One or More Jurisdictions

Crypto-currencies as a form of settlement in trade have been the subject of scrutiny by various regulatory authorities and may be overseen by the legal and regulatory authorities of a number of jurisdictions globally. Governments that are adverse to the proliferation of the use of crypto - currencies in local commerce could issue laws and regulations deeming the use of crypto- currencies a regulated activity. In recent weeks, some countries, such as China and Korea, have issued regulations or statements prohibiting token sales, while other countries have sought to bring the sale of tokens within the regulator control of securities offerings. The functioning of the RNTB Network and the Tokens could be impacted by one or more regulatory inquiries or actions, including, but not limited to, restrictions on the use or possession of digital tokens like the Tokens, which could impede or limit the development of the RNTB Network. The Company may receive notices, queries, warnings, requests, or rulings from one or more authorities upon short notice, or may even be ordered to suspend or terminate any action in connection with the Token Sale or the RNTB Network as a whole without prior notice. Furthermore, many aspects of RNTB also involve untested areas of law and regulation, and could be subject to new laws or regulation, so their legal and regulatory outcome in all relevant jurisdictions is not possible to predict. The planning, development, marketing, promotion, execution or otherwise of the Company or the Token Sale may be seriously affected, hindered, postponed, or terminated as a result. Since regulatory policies can change with or without prior notice, any existing regulatory permissions for or tolerance of the Company, the RNTB Network, and the Token Sale in any jurisdiction may be withdrawn without warning. The Tokens could be deemed from time to time as a virtual commodity, a digital asset, or even as money, securities, or currency in various jurisdictions and therefore could be prohibited from being sold, purchased, traded, distributed, or held in certain jurisdictions pursuant to local regulations. In turn, the RNTB Network could be deemed to be a regulated or restricted product. There is no guarantee that the Company can maintain any particular legal or regulatory status in any particular jurisdiction at any time.

  1. CTF and Anti-Money Laundering Regulations

The United States has issued a series of regulations to combat terrorist financing (Counter Terrorist Financing) and money-laundering activities. Many other countries have enacted similar legislation to control the flow of capital for such illicit activities. The use of crypto-currencies by bad actors would breach such regulations. Any illicit use of the RNTB Tokens could seriously impact the global reputation of the RNTB Network. In such event, it is not inconceivable that this could trigger scrutiny by CTF and anti-money laundering regulators and potentially cause significant disruption to the distribution and circulation of RNTB Tokens in the RNTB ecosystem.

  1. Blockchain Risks

On the Ethereum blockchain, timing of block production is determined by proof of work so block production can occur at random times. For example, ETH contributed to the RNTB Token Distribution Contract in the final seconds of a distribution period may not get included for that period. Purchaser acknowledges and understands that the Ethereum blockchain may not include the Purchaser’s transaction at the time Purchaser expects and Purchaser may not receive RNTB Tokens the same day Purchaser sends ETH. The Ethereum blockchain is prone to periodic congestion during which transactions can be delayed or lost. Individuals may also intentionally spam the Ethereum network in an attempt to gain an advantage in purchasing cryptographic tokens. Purchaser acknowledges and understands that Ethereum block producers may not include Purchaser’s transaction when Purchaser wants or Purchaser’s transaction may not be included at all.

  1. Risk of Insufficient Interest in the RNTB Network

It is possible that the RNTB Network and related Bitrent Network will not be used by a large number of businesses, individuals, and other organizations and that there will be limited public interest in Bitrent services. Such a lack of interest could impact the development of the RNTB Network and, therefore, the potential uses or value of the Tokens.

  1. Risk that the RNTB Network, As Developed, Will Not Meet the Expectations of Purchaser

The RNTB Network is presently under development and its governance structure, fees, purpose, consensus mechanism, algorithm, code, infrastructure design, and other technical specifications and parameters may undergo significant changes without notice. Any expectations regarding the form and functionality of Tokens or the RNTB Network held by the Purchaser may not be met, for any number of reasons, including a change in the design and implementation plans and execution of the RNTB Network.

  1. Risk of Theft and Hacking

Hackers or other groups or organizations may attempt to interfere with the RNTB Network or the availability of the Tokens in any number of ways, including, without limitation, denial of service attacks, Sybil attacks, spoofing, smurfing, malware attacks, or consensus-based attacks. Additionally, there may be attempts to steal the Token Sale proceeds. Such theft or attempted theft may impact the ability of the Company to fund the development or maintenance of the RNTB Network. While the Company will endeavor to adopt industry best practices to keep the RNTB Network and Token Sale proceeds safe (including, but not limited to, the use of cold storage and multi-signature authentications), successful cyber thefts may still occur.

  1. Risk of Unpermissioned, Decentralized, and Autonomous Ledger

The RNTB Network is being developed in connection with various distributed ledger systems including, but not limited to, Ethereum, which are unpermissioned protocols that could be accessed and used by anyone. The utility and integrity of the RNTB Network relies on the

stability, security and popularity of these decentralized ledgers. The RNTB Network is envisaged to be an open, decentralized community and its composition can include users, supporters, developers, Token holders and other participants worldwide who may or may not be connected with the Company in any manner. Given the diversity of the underlying technologies, the RNTB Network is intended to be decentralized and autonomous in nature as far as its maintenance, governance and evolution are concerned.

  1. Risk of Weaknesses or Exploitable Breakthroughs in the Field of Cryptography

Cryptography is evolving and there can be no guarantee of security at all times. Advancement in cryptography technologies and techniques, including, but not limited to, code cracking, the development of artificial intelligence and/or quantum computers, could be identified as risks to all cryptography-based systems, including RNTB Network. When such technologies and/or techniques are applied to RNTB Network, adverse outcomes such as theft, loss, disappearance, destruction, devaluation, or other compromises result. The security of the Company and the RNTB Network cannot be guaranteed as the future of cryptography or security innovations is unpredictable.

  1. Risk of Abandonment or Failure

Due to the technically complex nature of the RNTB Network, the Company or those contributing to the RNTB software development effort could face difficulties from time to time that may be unforeseeable and/or unresolvable. Accordingly, the development of the RNTB Network could fail, terminate or be delayed at any time for any reason, including due to lack of funds. Development failure or termination may render the Tokens untransferable, of reduced or no utility, and/or obsolete.

  1. Risk of Lack of Adoption or Use of the RNTB Network

The utility of the RNTB Tokens is dependent on the popularity of the RNTB Network. While the RNTB Tokens should not be viewed as an investment, they may have value over time. An absence of active users or low level of utilization may negatively affect the long-term development and future of the RNTB Network, and reduce or obviate the utility of the RNTB Tokens.

  1. Risk of an Illiquid Market

After the RNTB Token Launch, the Company is not responsible for and has limited control over the subsequent circulation and trading of the RNTB Tokens. The RNTB Token is not money, legal tender or currency, fiat or otherwise, issued by any individual, entity, central bank or national, supra-national or quasi-national organization, nor is it backed by any type or quantity of assets, property, or credits, nor does it represent any entitlement to any distributions of profits, dividends, or any other returns or payments of any kind. There is no obligation of the Company, nor anyone else, to redeem, repurchase, or acquire any RNTB Tokens from any RNTB Token holder. There is no guarantee or assurance that there will be a market or marketplace where holders may readily trade Tokens.

  1. Risk of Price Volatility

Many cryptographic tokens have volatile prices. Large fluctuations in price over short timeframes occur frequently. Such fluctuations could result from market dynamics (including, but not limited to, speculation), regulatory changes, technical advancements, exchange availabilities, and other factors that impact the equilibrium between token supply and demand.

  1. Risk of Exposure to Cryptographic Tokens

After the completion of this RNTB Token Sale, the Company expects that a certain portion of the proceeds will be held in cryptographic tokens. The Company expects to convert an appropriate proportion of cryptographic tokens received into fiat currencies at the sole discretion of the directors of the Company. For the avoidance of doubt, no RNTB Token holder has any right, title or interest in any such cryptographic tokens.

  1. Risk of Potential Concentrated Ownership of Tokens

Immediately after the completion of the RNTB Token Sale, a number of individuals may directly or indirectly hold significant portions of the total available RNTB Tokens. These significant RNTB Token holders may, acting alone or in concert, not necessarily make decisions that are in the best interests of the other Token holders or of the Bitrent community as a whole.

  1. Risk of Uninsured Losses

Unlike bank accounts or accounts at some other financial institutions, funds held using a blockchain network are generally uninsured. In the event of loss or loss of value, there is no public insurer, such as the FDIC or private insurer, to offer recourse to the Purchaser.

  1. Risk of Privacy and Data Retention Issues

As part of the RNTB Token Sale and the subsequent verification processes, the Company may collect personal information from Purchasers. The collection of such information is subject to applicable laws and regulations. All information collected will be used for purposes of RNTB Token Sale and RNTB community management for the RNTB Network and may be transferred to contractors, service providers and consultants worldwide as appointed by the Company. Apart from external compromises, the Company and its appointed entities may also suffer from internal security breach whereby their employees may misappropriate, misplace, or lose personal information of Purchasers. The Company may be required to expend significant financial resources to alleviate problems caused by any breaches or losses, settle fines, and resolve inquiries from regulatory or government authorities. Any information breaches or losses will also damage the Company reputation and thereby may harm its long term prospects.

  1. Risk of Malfunction in the RNTB Network

It is possible that the RNTB Network malfunctions in an unfavorable way, including, but not limited to, one that results in the loss of RNTB Tokens.

  1. Risk Relating to Use of the Internet or Other Electronic Medium

Without limiting the foregoing risks, any communication or transaction via or information (including document) transmitted via the internet or other electronic medium involves risks and, by participating in the RNTB Token Sale or utilizing the RNTB Network, you acknowledge that you understand and accept the following risks:

  • We and/or third parties may use such authentication technologies as we deem appropriate. No authentication, verification, or computer security technology is completely secure or safe. You agree to bear all risks of unauthorized access/use, hacking, or identity theft.

  • The internet or other electronic media (including, without limitation, electronic devices, services of third party telecom service providers, such as mobile phones or other handheld trading devices or interactive voice response systems) are an inherently unreliable form of communication.

  • Any information (including any document) transmitted, or communication, or transactions made, over the internet or through other electronic media (including electronic devices, services of third party telecom service providers, such as mobile phones or other handheld trading devices or interactive voice response systems) may be subject to interruption, transmission blackout, delayed transmission due to data volume, internet traffic, market volatility, or incorrect data transmission (including incorrect price quotation) or stoppage of price data feed due to the public nature of the internet or other electronic media.

  • As a result of such unreliability:

  • there may be time-lags, delays, failures, or loss of data, or loss of confidentiality in the transmission of data and receipt of communications; and

  • while the Company may believe certain data to be reliable, there may be no independent basis for it to verify or contradict the accuracy or completeness of data.

This is not an exhaustive list of all of the consequences arising from such unreliability.

  • Purchasers are solely responsible for preventing anything which may be harmful to any equipment that they use in connection with the Tokens or the RNTB Network (including any computer virus, malicious program, or harmful component) from affecting any such equipment, regardless of whether it originated in connection with the RNTB Tokens or the RNTB Network.

  1. Tax Risk Relating to Participation in the Token Sale

The use of RNTB Tokens as a form of settlement currency may or may not be subject to local income tax, capital gain taxes, VAT, or other forms of taxes. The taxability of cryptographic tokens is an evolving area of law, is subject to change, and may vary amongst jurisdictions. This uncertainty in tax legislation may expose merchants and customers alike to unforeseen future tax consequences associated with the use of RNTB Tokens. In some instances, there may be little or no formal regulatory guidance. Participation in the RNTB Token Sale may have tax reporting implications and liabilities for Purchasers and such liabilities and obligations shall be borne by the Purchasers alone. Purchasers are advised to consult their tax advisors prior to participating in the RNTB Token Sale.

  1. Unanticipated Risks

Applied cryptography and blockchain technology are new and untested. In addition to the risks set forth here, there are risks that the Bitrent team cannot anticipate. Risks may further materialize as unanticipated combinations or variations of the risks set forth here.