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Relevant Information Manual for the User of the Tokn1 Platform

Relevant Information Manual for the User of the Tokn1 Platform

Version 1. January 10th 2023.

1. Communication Guidelines.

The Tokn1 Platform recognizes the importance of communication with its Users, being as clear and educational as possible. 

At Tokn1, certain guidelines are established in advertising and advertising material that is presented to the public, as well as the information we provide so that our Users can make the best decisions according to their particular conditions.

Firstly, the Platform is strictly limited to presenting true and objective information, so that the User can access it when using the Platform, carry out transactions, acquire and/or sell Digital Assets, among other actions.

Secondly, Tokn1 will never provide financial, legal, tax, accounting or any other type of advice of any kind and in any form. Tokn1 recommends that all Users seek advice from a professional to make the best decisions regarding their particular financial situation and assets.

Thirdly, Tokn1 has a Risk Notice with the objective of informing the User regarding the business in which they are involved, the possible dangers and risks they face and they must take special care, especially when carrying out any type of transfer, purchase/sale or actions related to the Services.

All communication from Tokn1 in the mass media, whether through social networks or through official channels or the Platform, is carefully reviewed by our teams to provide the clearest and most accurate information possible.

Regarding the rules applicable to the services provided on the Tokn1 Platform, they are available in the Terms and Conditions. Likewise, Tokn1 makes the Privacy Policy available to Users, which establishes the bases of how the information collected through the Platform and means of communication with the company is handled.

2. Educational Material on the Tokn1 Platform.

To reach the User as quickly and accurately as possible, Tokn1 will establish an educational center on its Platform, with the aim of helping and assisting its Users in making decisions and in their experience within the Platform.

The Tokn1 Platform will have an educational sector, in which various articles, documents, videos, blogs, among others, will be listed with educational material for User consultation.

Tokn1 will have an explanatory blog where concepts such as: Digital Assets, Blockchain, networks, crypto assets, capital markets (primary and secondary markets), investments, among others, will be developed.

The Platform will have a FAQ section, where the «Frequently Asked Questions» will be developed so that Users can respect the operation of the Platform and the Services provided. They will be directed there if they want to know more about the mentioned functionalities in the case of making specific queries. They can be found here.

Likewise, the Platform will have explanatory videos, not only regarding the operation of the Platform, the development of the Services, but also regarding the operation of the technology applicable to the Platform and the market in general.

Tokn1 will make an E-book available to its Users with the aim of familiarizing themselves with the Platform, the market and its operation. It is downloadable and is available to the User for consultation.

3. Intellectual Property

“Intellectual Property (IP)” hereby means any and all intellectual property rights, whether registered or unregistered, including, but not limited to, pending applications for registration of such rights and the right to apply for registration or the extent of such rights, including patents, utility models, industrial designs, copyrights, database rights, rights in know-how, the right to use and/or alter any of the foregoing, and any rights thereof or similar effect or nature as any of the above anywhere in the world.

Tokn1 retains all right, title and interest in and to the trademarks registered or to be registered in its name and/or that it commercially exploits under any legal title, including, but not limited to the Marks, patent rights, scientific and technical information related to the products and Brands owned by Tokn1 and/or those that it legally exploits commercially and all other intellectual and industrial property rights related to the products it markets. All clientele and commercial reputation that correspond to them will be for the benefit of Tokn1. No User and/or third party will have the right to any benefit derived from the use of any such trademarks, patents, information, registrations, certificates and/or intellectual and industrial property rights related to Tokn1 products and/or that Tokn1 legally exploits.

4. Tokn1 Account Opening.

To open your Tokn1 account, the User must complete the KYC or Know Your Customer process, which is intended to identify Tokn1 Users.

The information required by Tokn1 aims to know its own clients and maintain a high standard of protection Against Money Laundering (AML) and financial crimes, helping to combat the financing of terrorism and money laundering activities. Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.

As a regulated Digital Asset Services company, operating in El Salvador, we must identify users on our platform. This ensures that we comply with anti-AML laws in El Salvador and those other jurisdictions in which we operate, which is necessary for us to continue offering digital asset trading services to our clients.

The information required when performing the KYC can be consulted in our Privacy Policy. Tokn1 will require the User to verify his identity, not only from the information provided and requested, but also through photographs of his ID and facial recognition. The place of residence will also be verified through the request for supporting documentation.

Important aspects in the KYC process:

  • A valid ID must be up-to-date, valid, unexpired, and in color;
  • Unclear scans or low-resolution images, low light or excessive glare will be rejected;
  • Expired documents and past their validity dates will be rejected;
  • Documents that do not have the same name provided during registration will be rejected;
  • If you do not provide the requested information or your identity cannot be verified, Tokn1 may not be able to open an account or conduct transactions for you. If we have already opened an account for you, we may need to close it;
  • We do not accept PO Box addresses.

5. Tokn1 Social Media Policy.

5.1 Tokn1 Social Networks.

Tokn1 and its affiliates maintain a presence on third-party social media sites, including Twitter, LinkedIn, and YouTube, among others. Please note that Tokn1 and its affiliates (collectively, «Tokn1») are not affiliated with Twitter, LinkedIn or YouTube and other social networks and have no control over how these and other third-party sites use the information you share with them.

If you participate in these or other social media sites, you should be familiar with their respective privacy/security policies, understand how your account settings work, and know how user information may be displayed and used on such sites.

The material appearing therein is for informational purposes only and is not intended to provide any type of advice or solicitation. Although reasonable efforts are made to ensure that the material appearing herein is correct and reasonably timely, its accuracy or timeliness is not guaranteed. Tokn1 makes no representation or warranty as to the accuracy and timeliness of the material and assumes no responsibility for the consequences of its use.

Use of this information is at your own risk. Tokn1 shall not be liable for any direct, indirect, incidental, consequential or other damages, or losses of any kind, which may arise from the access or use of any information, image or sound that appears therein or is derived from it. Tokn1 social media channels may follow another user, share or provide hyperlinks to third party content and sites, and/or like/favorite third party content. Doing so is intended to provide additional perspective and should not be construed as an approval or endorsement of any service, product, guidance, individual, or point of view outside of those offered by Tokn1. Tokn1 makes no representations regarding the quality, accuracy, suitability or safety of the content of such sites.

5.2 Social Network within the Tokn1 Platform.

The Tokn1 platform has its own social network (“Tokn1 Social Network”) in which both companies issuing digital assets and retail users will be able to interact there. It should be noted that Tokn1 will have control over what is published, ensuring the safety of all its Users equally. This is with the aim of protecting them when making decisions and ensuring that they are not influenced by third parties when carrying out any type of operation. Posts and publications must be objective, providing clear, precise and accurate information, which is not unrealistic or irrelevant. They will be reviewed by Tokn1 before and after each publication.

Whenever a third party posts content to our Tokn1 Social Network channels, this information remains the responsibility of the party submitting the content and does not represent the views of Tokn1 nor serve as an indication or guarantee of future results. The content published on the Tokn1 Social Network channels should not be considered a recommendation or personalized advice. Where specific advice is necessary or appropriate, individuals should consult with a qualified tax advisor, legal advisor, certified public accountant, financial planner or investment manager regarding their individual situations.

Postings by others describing opinions, views or experiences may not be representative or indicative of another person’s personal experience.

Tokn1 carries out exhaustive control over publications, posts, comments and any other type of activity on its Social Network, with the aim of protecting all its Users and avoiding any type of influence. This is why Tokn1 will avoid all activity on its Social Network that could:

  • Contain any type of commercial communication or brand;
  • Contain information or images that infringe copyright, related rights, licenses and any other rights of third parties or violate the law in any way;
  • Contain viruses or malicious code of any kind;
  • Include content that bothers, intimidates or harasses other Users and/or any other third party both inside and outside of Tokn1;
  • Include content that is hurtful, offensive, intimidating or pornographic, that incites violence or contains nudity or graphic or unjustified violence, or that is contrary to morality and good customs;
  • Include content that advertises, promotes or in any way incites the consumption of alcohol or drugs;
  • Include content that allows its use to commit illegal, deceptive, malicious or discriminatory acts;
  • Include content that implies financial, legal, tax, fiscal or any other advice or advice that may influence the performance of certain operations;
  • Include any content that goes against these Terms and/or the General Terms and Conditions and/or the Privacy Policy;

Tokn1 reserves the right to block those names, descriptions and/or images in User profiles that are combinations of letters and/or numbers and/or images that imply inappropriate, offensive, sexually explicit or obscene information, created with the intention to impersonate Tokn1 or our staff, or any other business, trade and/or company, which are discriminatory in nature, which may infringe the trademark or copyright of Tokn1 or a third party, which are sensitive or cause offense for any reason not mentioned above.

Finally, Tokn1 reserves the right to delete comments received from third parties based on our established criteria. Please note that due to our regulatory requirements for communication guidelines on social media platforms, you may not receive responses to comments or questions posted on such forums.

6. Assets offered on the Platform.

Tokn1, is authorized by the National Digital Asset Commission as a Digital Asset Service Provider. This allows it, according to the Law on the Issuance of Digital Assets and its corresponding Regulations, to exchange, operate, place and promote digital assets, in addition to evaluating the risk and price of the same, listed on its Platform.

The Digital Assets offered (the “Digital Assets” or “Tokenized Financial Instruments”) involve different types of tokenized assets. It is essential to highlight that the focus of the Tokn1 platform is to allow the general public to invest in traditional tokenized financial instruments that they currently cannot access due to various barriers and obstacles present in the traditional financial market and that Blockchain technology makes it possible to overcome.

Ultimately, the general public will have the opportunity to invest in tokenized tradable securities, which can range from basic instruments (stocks, bonds, etc.), traditionally illiquid products (such as real estate) and more complex structured products.

We follow the definition provided by Alex Nascimento, professor at UCLA in the United States of North America, expert in Digital Assets and author of the book “The STO Financial Revolution: How Security Tokens Change Businesses Forever” in that Digital Assets are a representation in a DLT/Blockchain network of an investment contract in financial instruments. On the Tokn1 Platform, you can find: 

  • Tokens that represent debt, equity or shares: As in their traditional format, these tokens represent ownership in a company, outstanding debt, a value based on a predetermined interest rate or the credit strength of the issuer. They can be bonds, mortgages, loans or capital convertible to equity. 
  • Tokens that represent financial products: These tokens can be a representation of the success of underlying assets, such as Funds or ETFs. 
  • Tokens representing other real-world assets (RWA): Tokens that represent ownership in asset classes in tangible goods, such as art or real estate. These tokens indicate ownership of a specific portion of an asset, such as a percentage of gold or a fraction of a building. 

However, this list should not be interpreted exhaustively, as Tokn1 plans to explore new types of financial instruments in the future. We are convinced that as the volume of real-world asset tokens increases, we will see new asset classes appear within the Digital Asset ecosystems, providing a broader range of exposure for investors. It should be noted that Tokn1 cannot specifically indicate which token or type of token will be listed first, as that will be defined when closing deals with the first companies interested in tokenizing with Tokn1.

The assets will be present in the “Assets” section, where the User will be able to consult the Digital Assets available on the market, the company to which they belong and pertinent information regarding the token in question.

The Digital Assets will be issued by those companies and companies that pass the tests and Due Diligence carried out both internally by Tokn1, as well as externally by external auditors. This assures the User that they will be acquiring a safe asset, properly controlled and registered, in a fully regulated environment.

6.1 Relevant Information for the User of the Digital Assets issued. 

  The User will have permanent access to the relevant information document that the issuing company implements in relation to the Digital Asset issued. This document, among other things, will contain the following: 

  • It will be specified under which law the token is issued.
  • It will be clarified if the token is native or if it is a representation of a position in a «base record» (which needs to be explained).
  • It will be indicated on which blockchain network the tokens will be issued («Reference Blockchain»).
  • It will be confirmed that in the event of a “fork”, and although existing tokens are replicated in this fork, only tokens issued on the Reference Blockchain will be recognized as valid as a valid representation of security by the issuer.
  • It will be confirmed that the issuer reserves the right to change the Reference Blockchain during the life of the tokens, but that this will be treated as a corporate event and will be duly communicated to token holders in terms of timing and procedure.
  • It is confirmed that the token’s smart contracts will be issued under the open source ERC3643 protocol for permissioned tokens.
  • Only duly “authorized” investors will be allowed to own and transact the token. «Authorized» means an investor who has been «qualified» by the issuer, i.e. verified by the issuer or its authorized agent against the applicable KYC and AML regulations, as well as confirmed as compliant with any rules and/or legislation additional (to be detailed by the issuer, if any) imposed for reasons other than regulations by the issuer.
  • The investor agrees to provide all data and documents requested by the issuer and/or its authorized agent as necessary to qualify it.
  • The investor acknowledges that the data and documents provided during the qualification process for the token will be associated with his or her on-chain identity in a pseudonymous manner.
  • The investor agrees to update his or her on-chain identity during the entire period of holding the tokens, any changes in the data provided during the qualification process occurring during said period. The investor further acknowledges that any changes will be communicated to any «authorized third party».
  • Investor acknowledges that any party («Agent») designated by the issuer to manage the Tokens (e.g. KYC agent, payment agent, settlement agent, corporate action agent, etc.) will be an «authorized third party» and will have access to investor data linked to their on-chain identity. The investor further acknowledges that he may revoke access to his data to an authorized third party through his on-chain identity as long as he no longer has any position in the tokens.
  • Reference currency of the token and other currencies and/or cryptocurrencies accepted to subscribe to the token.
  • Payment methods allowed to subscribe to the token, with details of the process by payment method (order validation time, refund policy, fees).
  • The investor acknowledges that during the subscription process he will be asked to provide the address of a wallet held on the reference blockchain and/or will be provided with a wallet by the issuer (depending on the options selected by the issuer).
  • The investor is informed that in the event that he loses the private key of his non-custodial wallet (as the case may be), he must validly identify himself to the issuer or its authorized agent in order to execute a «token recovery process.»
  • The investor acknowledges that, in the event that he wishes to transfer part or all of his position in the tokens, such transfer (by selecting one of the two options below) will only be possible to a third party who has been qualified by the issuer or its authorized agent / will only be possible to a third party who has been qualified by the issuer or its authorized agent and is subject to the approval of the transfer by the issuer or its authorized agent (conditional transfer)

7. Process of Buying/Selling Digital Assets in Tokn1.

The User may acquire and/or sell their positions in digital assets on the Tokn1 Platform. Only those tokens accepted and approved by Tokn1, listed on the Platform, may be traded. This is because Tokn1 carries out exhaustive research and analysis of each company that tokenizes its financial assets, to offer our users the safest product possible.

The Buy/Sell option will be available in the “Fast Trade” section, as well as in “Market”, in the case of the Secondary Market and in “Assets” in the case of the Primary Market, where the User will be able to see all the tokens listed. and available on the Platform with their specific quotes and prices. It should be noted that Tokn1 is not the one who imposes the price, but rather it is a result of market analysis, in addition to current supply and demand, commission percentages, fees, among others.

The purchase and sale can only be carried out against stablecoins received on the Platform. In the initial phase of this company, USDT (Tether) will be accepted, a stable currency which is tied to the price of the dollar. This implies that, in order to purchase digital assets, the User must have USDT in their Tokn1 account to be able to access the secondary and/or primary market for digital assets on the Tokn1 Platform, since they must pay the price of those digital assets that you want to acquire.

To proceed with the purchase of the selected digital asset, the User may indicate the amount to be purchased, or indicate the amount of USDT to pay (or percentage of their positions in USDT), which will automatically translate into the amount of the selected digital asset. by the User. The User will be able to observe the price in real time, in addition to all the information regarding the digital asset they wish to acquire.

You must then pay the price indicated on the Platform. Once you select “confirm”, the USDT necessary to pay for the acquisition of the selected digital assets will be withdrawn from your Tokn1 account.

Once payment is made, your Tokn1 account will be credited with the digital assets purchased, which will become part of your Portfolio.

It should be noted that there is no possibility of regret, since once the purchase is confirmed, it is irreversible. This to avoid speculation or possible scams. Therefore, the User declares that he or she fully agrees and is certain of the characteristics, price and quantities of the digital asset that he or she selects to acquire. 

7.1 Purchase in Primary Market

First of all, Users will be able to access the primary market for digital assets, that is, the first placement of digital assets, once issued by the issuing company on the Tokn1 Platform.

Once a digital asset is registered and placed on the Tokn1 Platform, that primary issuance is where the first purchase occurs. This can be done by accessing the “Assets” section where you can see those digital assets that are placed on the market for the first time.

The User will be able to consult all the information about the token issued in that same section, by clicking on each token. 

7.2 Purchase in Secondary Market

You must enter the “Fast Trade” section and then “Buy”, selecting the Security Token you wish to acquire.

Likewise, the User will have the possibility, by accessing the “Market” section, to buy and/or sell digital assets with “limit orders”. This means that the User will be able to configure a maximum price at which, once reached, the indicated amount of a certain digital asset will be sold or bought, as appropriate.

7.3 Sale.

Regarding the sale, the User may sell their positions in Digital Assets available in their Tokn1 account, against stablecoins (precisely, USDT). To proceed with this, you must go to “Fast Trade” or “Market” and then to “Sell”. Once there, the User must select, from the Digital Assets available in their wallet, which one and in what portion (or percentage) of it they decide to sell.

This will generate a sales request visible to other Users who wish to acquire the same Security Token. Once the sale is made, the selling User will receive the USDT in the Tokn1 Account, where he can dispose of them.

8. Custody Service

 The Custody Service (both for Digital Financial Assets and Stable Cryptocurrency -USDT, for example-) implies that Users will deposit their Digital Assets or Stable Cryptocurrency in the virtual wallet addresses provided by Tokn1, who will be in charge of the custody of these assets, whatever their nature.

The specific details of the escrow service model will be described in the IT Manual. Likewise, the risks associated with this service will be detailed in the Risk Manual and the actions to mitigate it.

 

  8.1 Self-custody

Users have the option to self-custody their Digital Assets by sending them to a personal wallet address, which must be previously reported to Tokn1. Verification of the User’s identity by Tokn1 is a prerequisite for the acceptance and registration of said personal wallet, and the address will be whitened to receive the Digital Asset or Stable Cryptocurrency.

There are risks inherent to self-custody that the User must be aware of, which are described in the Risk Manual. It is important to highlight that the responsibility for damages, damages or any other detriment to the User’s assets, as a result of self-custody, falls exclusively on the User and is the responsibility of the latter, since of their own free will they choose this method of self-custody. custody of Digital Assets or Stable Cryptocurrencies, and said self-custody methods are beyond the control of Tokn1.

In the case of Digital Assets, and due to the nature of the permitted token, in the event that the investor loses the private key of his non-custodial wallet, he will be able to access the «token recovery process» as long as he validly identifies himself with Tokn1. This recovery process is not possible to be executed with tokens that do not follow the permitted token standard, such as the USDT stablecoin.

9. Fees.

Tokn1 applies certain fees or commissions for the use of its services, both for the primary market and the secondary market. They will consist of:

Primary Market: Tokn1 will charge for all primary issues, 4% (four percent) of the proceeds raised in the issue, to the issuing company.

Secondary market: Tokn1 will charge a fee of 0.8% (zero point eighty percent) per purchase and sale transaction to the issuing company. Of that 0.80% (zero point eighty percent), Tokn1 will reimburse the issuing company an amount equivalent to 25% (twenty-five percent), which may be modified in each case.

Any other fee, rate or commission that Tokn1 may charge to Users and/or issuing companies, will be duly informed on the Platform, in a visible and clear manner, so that the User and/or issuing company can consult them before making any type of transaction. operation and/or use the Services.

10. Benefits

Article 36 of the Digital Asset Issuance Law lists the benefits that users who acquire digital assets can access.

Art. 36.- Issuers of digital assets, duly registered digital asset service providers, certifiers, and acquirers of digital assets, as well as public offers of digital assets, will be governed by the following rules and will enjoy the benefits detailed below: 

  1. The performance of digital assets will be determined at the time of transaction, in accordance with digital asset market conditions. Digital assets may have a discount or premium, according to the practice of the digital asset market in which they are issued. 
  2. The nominal value and the returns or income from digital assets will be exempt from all types of liens, tributes, taxes, rates and contributions, of any kind and nature, present or future, whether ordinary or extraordinary or even special. The capital gain or ordinary income obtained from the sale or any other mode of transfer of digital assets, including debt forgiveness, will be exempt from any type of taxation. 
  3. The issuers, certifiers, and service providers of registered digital assets will enjoy all the tax benefits established in literal b) of this article with respect to the activity related to digital assets that they develop, being exempt from the Tax on the Transfer of Goods. Furniture and Provision of Services, Income Tax, Municipal Tax or any other tax regardless of its nature; For the purposes of the provisions of this paragraph, you will also be exonerated from the obligation to withhold said taxes in the event that this obligation exists; 
  4. In the case of legal entities, the tax benefits of paragraphs b) and c) will apply to both the entity and the partners or shareholders individually considered, with respect to the profits or dividends from the activities detailed in the previous paragraphs;
  5. The tax benefits established in the previous paragraphs will not apply when operations are carried out to exchange digital assets for goods or services that are not detailed in article 19 of this Law. 

It is established that each User will be responsible for the fulfillment of their fiscal and tax duties personally, according to the regulations of their country of residence.

By accepting these Terms and using the Services, You agree that You will defend, indemnify and hold harmless Tokn1, its licensors and the parent organizations, subsidiaries, affiliates, officers, directors, members, employees, attorneys and agents of each such party from and against any and all claims, costs, damages, losses, liabilities and expenses (including attorneys’ fees and costs) arising out of or in connection with your violation or breach of any part of these Terms or any applicable law or regulation , whether or not referenced here. This indemnification obligation will survive termination of these Terms.