Risk Disclosure

Effective Date: 24 September 2025

1. Overview

1.1 Purpose and Objectives

This Risk Disclosure explains the material risks of using Baltex ("Baltex," "we," "us," "our") and its Services (website, widgets, APIs, swap flows, Private Swaps, DEX Layer, and optional fiat on/off-ramp). By using the Services, you acknowledge that you understand and accept these risks. This document is informational only and not investment, legal, tax, or accounting advice.

1.2 Key Definitions

• Digital Assets: Cryptographic tokens/coins supported by the Services.
• Non-custodial: You control your wallets/keys; Baltex does not maintain user balances or safekeep private keys.
• Transit Address: A unique, system-controlled address used solely to receive input assets and perform settlement for a swap; it does not create an ongoing custody relationship.
• High-Risk Country: Jurisdictions identified by competent authorities (e.g., FATF, UN, OFAC, EU) as presenting elevated AML/CFT risk.
• PEP: Politically Exposed Person, including close associates and family members.

2. Service Model and Scope

2.1 Swap-Like Exchange

You select input and output assets and provide a destination wallet. You fund a unique deposit address; after required confirmations and checks, the exchanged asset is sent to your designated wallet. Blockchain transactions are irreversible and may be delayed or fail due to network conditions.

2.2 Custody Implications

Baltex operates on a non-custodial basis and does not maintain user balances. Use of transit addresses during settlement does not constitute ongoing custody but may require temporary holds to complete compliance checks and prevent fraud.

3. Customer Interaction and Identification

3.1 Minimal Registration

No traditional account is required to initiate a swap. You typically provide only transaction details and wallet addresses.

3.2 When Additional Information Is Required

If risk thresholds are exceeded or red flags appear (see §4.1), we may request KYC/EDD information such as government ID, selfie/liveness, proof of address, payment-method ownership, and source-of-funds documentation. Refusal may result in delay, cancellation, or return (where lawful and technically feasible).

3.3 Sanctions Screening

We may screen IP data, wallet addresses, and other inputs for exposure to sanctioned persons, entities, or regions and may block or restrict access accordingly.

4. Risk-Based Approach

4.1 Triggers for Additional Due Diligence

Examples include:

• large or unusual transaction values;
• structuring intended to evade detection;
• wallets linked to illicit activity (e.g., hacks, darknet, ransomware);
• involvement of high-risk geographies, PEPs, or adverse media.

4.2 Enhanced Due Diligence (EDD)

We may delay/hold a transaction, request more information, perform manual review, or decline service where risk remains unacceptable.

4.3 High-Risk Countries

Transactions tied to comprehensively sanctioned or otherwise high-risk jurisdictions may be blocked or subject to heightened controls.

5. Transaction Monitoring

5.1 Automated Systems

Automated systems (including blockchain analytics and sanctions screening) may assess wallet risk, behavioral patterns, velocity, and known-bad clusters.

5.2 Manual Review

Compliance personnel review flagged cases and may approve, request additional information, cancel, or return funds when lawful and technically feasible.

6. Holding and Freezing Funds

6.1 Authority to Freeze

We may pause or freeze a transaction if: (i) there are indicators of illicit activity; (ii) we receive a lawful request from competent authorities; or (iii) additional checks are necessary to complete our review.

6.2 Outcome of Investigations

Outcomes may include execution, cancellation, or returning assets to the origin address net of applicable network/processing fees, or retaining funds as required by law/regulators.

7. Reporting Suspicious Activities

7.1 Suspicious Transaction Reports (STR/SAR)

Where required, we file reports with the appropriate Financial Intelligence Unit (FIU) or other competent authority. We do not "tip off" users about such filings.

7.2 Indicators Warranting STR/SAR

Examples include unexplained rapid flows, repeated large transfers to/from flagged addresses, clear sanctions exposure, falsified documents, or inconsistent source-of-funds explanations.

8. Record-Keeping and Data Retention

8.1 Transaction Records

We may retain origin/destination addresses, amounts, hashes, timestamps, device/network identifiers, and related communications as part of our compliance logs.

8.2 Retention Duration

Records are retained for at least five (5) years (or longer if required by law or ongoing investigations). Public blockchains may retain on-chain data indefinitely.

9. Prohibited and Restricted Jurisdictions

9.1 Prohibited Jurisdictions

We do not process transactions for comprehensively sanctioned jurisdictions (illustratively: DPRK, Iran, Syria, Russia and others designated from time to time).

9.2 Restricted Jurisdictions

Certain locations (e.g., subject to sectoral sanctions, special measures, or local licensing) may face additional verification, limits, or unavailability. Lists change and are applied at our discretion in line with law.

10. Compliance with Regulatory Requests

10.1 Cooperation

We cooperate with lawful requests (e.g., subpoenas, court orders) and may preserve, disclose, or restrict access to information or assets as required.

10.2 Data Protection

Any disclosure is limited to what is necessary and handled consistent with our Privacy Policy and applicable data-protection laws.

11. Accountability and Oversight

11.1 AML Compliance Officer (AMLCO)

An AMLCO oversees policy implementation, monitoring, regulatory communications, and remediation of identified issues.

11.2 Audits and Reviews

Periodic internal audits and, where appropriate, independent testing assess program effectiveness. Findings inform updates to controls and training.

12. Staff Training

Relevant personnel receive onboarding and periodic training on AML/CFT obligations, sanctions, PEP handling, red-flag typologies, blockchain analytics, data privacy, and incident reporting.

13. Policy Updates

We review and update this Risk Disclosure and related procedures to reflect regulatory, market, and technological changes. Updates take effect upon posting unless a later date is stated.