RISKS FOR USERS OF THE SILENCIO NETWORK - “IMPORTANT INFORMATION”
SUMMARY (For transparency purposes only)
Risks and Considerations for Silencio Network
Introduction
Silencio Network, alongside its partnering entities, such as the Silencio Foundation, was created to develop and oversee the Silencio Network protocol. This protocol integrates a combination of software applications, blockchain-based smart contracts, digital assets, and various governing rules and procedures. Our mission is to implement the world's largest decentralized mobile-based data measurement and commercialization platform.
Project and Components
The Silencio Network protocol is anchored by a privacy-focused mobile app, referred to as the Silencio Network App, and a new crypto asset called the Silencio Network token (SLC) provided by the Silencio Foundation, a Cayman Island Business limited by guarantee. SLC token holders are empowered to participate in governing the protocol and contributing to the project's success, working alongside a global community of developers, users, and technologists.
Experimental Nature and Uncertainty
Both the protocol and the SLC token are experimental technologies. The project's goal is to transition to a decentralized model as swiftly as possible, meaning that key governance decisions will be made by the SLC token community. However, there are significant uncertainties regarding how these technologies will function at scale and their utility to users worldwide.
User Engagement and Risks
While Silencio aims to attract global participation, it is crucial that potential users thoroughly understand the project's objectives and the associated risks before engaging with it. The project and the SLC token are intended for informed users who are of legal age and capable of assessing both the potential benefits and risks involved.
No Guarantees and Continuous Development
The protocol is under continuous development and may not achieve widespread adoption or the necessary scale for sustained operation. Current features might not perform as expected, or they could cease functioning altogether. The technologies involved are new and, in some cases, untested, which introduces additional risks.
Ownership and Value of SLC Tokens
SLC tokens are tools for interacting with the protocol and may eventually be used for in-app payments. They do not represent ownership rights in Silencio or any other entity, nor should they be considered investment products. The value of SLC tokens is highly volatile and may fluctuate based on various factors, including market demand, geopolitical events, and overall interest in the project. Users should only hold as much value in SLC tokens as they are prepared to lose.
Security and Loss Risks
SLC tokens are stored in digital wallets that require a private key for access. If the private key is lost or compromised, the tokens may become permanently inaccessible. Additionally, errors in the software or other issues with the digital wallet could result in the loss of tokens. Users are responsible for securing their private keys and following the correct procedures for storing and using their SLC tokens.
Regulatory and Legal Considerations
The regulatory landscape for blockchain networks, cryptographic tokens, and digital assets is highly uncertain. Governmental authorities may introduce new regulations or enforce existing ones in ways that could negatively impact the project and the use of SLC tokens. Changes in regulations could lead to the termination of SLC distribution or the project itself. Participation in the SLC token airdrop is not guaranteed solely by engaging in measuring activities. Eligibility to receive tokens is subject to the regulatory requirements of your country. If your country’s regulations do not permit participation in token airdrops, you will not be eligible to receive the SLC tokens. Please ensure compliance with your local laws before participating.
Conclusion
The Silencio Network project is an ambitious and experimental endeavor. Users should carefully consider the associated risks and uncertainties before engaging with the project or acquiring SLC tokens. It is crucial to be well-informed and to only participate if you fully understand and accept these risks.
FULL VERSION RISKS FOR USERS:
Silencio Network, together with our partnering entities such as the Silencio Foundation (collectively, “Silencio” or “we”, “us” or “our”), was established to build and steward the Silencio Network protocol, a combination of software applications, blockchain-network based “smart contracts”, digital assets, and various rules and procedures (together, the “Protocol”). Our objective is to use the Protocol to implement the world’s largest decentralized mobile-based data measurement and commercialization platform (the “Project”). The Protocol is centered around a unique privacy-preserving mobile app, known as Silencio Network App (“The App”), and a new crypto asset, known as the Silencio Network token (“SLC”), provided by the Silencio Foundation. Owners of SLC tokens will be able to participate in guiding the governance of the Protocol and decisions by the Foundation, and will contribute to the Project alongside a global community of developers, users, technologists, and other interested individuals.
The Protocol and its component elements, including the SLC token, are experimental technologies. The objective of the Project is to become “decentralized” as quickly as practicable, meaning that all important governance decisions about the Project will be made by the community of SLC owners. As a result, there are significant uncertainties as to how these technologies function at scale and the extent to which users around the world will find the project and the SLC token useful.
Although Silencio hopes many people around the world will want to become involved with the Project, before engaging with the Project, including through accepting grants of SLC from Silencio or through acquiring SLC in transactions from within the App, you should read the information below and ensure that you understand both the objectives of the Project and the various risks that may arise from engaging with it. The Project and the SLC token are intended only for informed users above the age of majority or legal age in any jurisdiction applicable to them who can understand and accept both the anticipated benefits and related risks of engaging with the Protocol. The Project is being made available to you by us without charge on an “as is” basis and neither Silencio nor any other entity makes any warranties to users about the Project or its components. More information about the Project and your use of the Protocol, including important disclaimers of legal liability can be found in our Terms of Service.
The Protocol is experimental and is under continuous development. The Protocol may never achieve significant user interest or the scale or usability necessary to attract the participation of third-party developers and users. Current features of the Protocol may not function as anticipated or may temporarily or permanently cease functionality.
The Protocol and many of its components are under continuous development and thus are subject to change. We cannot assure you that the Protocol will function as intended at any given time or that it will be able to sustain long-term operation. Some of the technological solutions that comprise the Protocol are new and/or relatively untested. As a result, some or all of these technologies may not operate as intended. In addition, if functional at any time, this functionality may be impaired by subsequent changes made through the Project’s governance process.
Individuals may be hesitant to provide their data to a new and unknown project or may not trust or understand the potential value of SLC tokens and the Protocol.
Additionally, acceptance of the SLC tokens distributed by us requires that there be outlets to transfer SLC tokens to others, which may not develop or grow with sufficient scale to support successful growth and adoption of the Protocol.
If over time the numbers of individuals that chose to utilize SLC is limited, we may be forced to cease operations that support the Project. Should this occur, those SLC that have already been distributed will continue to exist on the relevant blockchain network and it will be up to the community of users to continue the Project. In this case, it is possible that owners of SLC may no longer be able to utilize their tokens or realize any value from SLC they purchased or hold.
SLC tokens are technological tools that allow you to interact with the Protocol and may in the future be useable to make in-app payments. SLC tokens do not convey any ownership rights to you, whether in Silencio or any other legal entity.
The SLC tokens are expected to be used as an App internet currency and, as the decentralization process occurs, as a means of providing direction in Protocol governance. SLC tokens are not investment products. There should be no expectation of future profit or gain from the purchase or sale of the SLC tokens. The SLC tokens do not represent any equity or other ownership interest in Silencio or any other entity, or any right to dividends or other distribution rights from Silencio or any other entity.
When initially distributed to users, SLC tokens will have no immediate monetary value. Although trading markets for SLC tokens may develop, any monetary value of SLC tokens may be highly changeable based on factors relating to the Project, the overall market for cryptocurrencies such as bitcoin and ether, or geopolitical or macroeconomic events. Users should only hold as much value in SLC tokens as they are prepared to lose.
When initially distributed to users, SLC tokens will simply be numerical ledger entries and will have no inherent monetary value whatsoever. Any subsequent monetary value SLC tokens have will likely be based primarily on the current, or anticipated future, demand for SLC tokens as a means of payment or for use of other functionalities of the Protocol. The prices of cryptocurrencies have historically been subject to dramatic fluctuations and are highly volatile, which has deterred widespread adoption of cryptocurrency networks for day-to-day transactions or reliable means of exchange. To the extent that trading markets for SLC tokens develop, any market price for SLC tokens may be highly volatile based on factors relating to the Project, the overall market for cryptocurrencies such as bitcoin and ether, and/or geopolitical or macroeconomic events.
In addition, “market” prices for SLC tokens published on the Internet may not be available from a marketplace available in your jurisdiction. Purported market prices may also be subject to distortion based on the manipulative activities of others, including self-deal or wash-trading transactions, making it difficult to accurately assess the value of SLC for use in commercial transactions at any given time. Also, as discussed above, regulatory issues applicable to digital asset marketplaces may impact the venues on which you may be able to dispose of SLC token you or other users have received.
Further, digital assets have only recently become accepted as a means of payment for goods and services by certain major retail and commercial outlets, and use of digital assets by consumers to pay such retail and commercial outlets remains limited, particularly in the countries where SLC has gained relatively higher levels of adoption. Conversely, to date a significant portion of digital asset demand has been generated by speculators and investors seeking to profit from the short- or long-term holding of digital assets. For the Project to be successful, users across many jurisdictions would need to engage with the Protocol and adopt SLC as a means of in-App payment. If this does not occur, it is possible that your SLC tokens may have little or no monetary value.
SLC tokens are ledger entries at a particular “public address” on a blockchain network, and ownership of SLC tokens refers to the ability to control transfers of the SLC tokens through knowledge of a “private key” associated with that public address. If you have not properly secured the relevant private key for your SLC tokens in a software or hardware wallet to which you have access, you may permanently lose access to your SLC tokens.
At this time, all SLC tokens distributed by us will be made through the Silencio App, operated by Silencio Network LLC, a U.S.-based company involved in the development of the Project. The Silencio App is what is known as a “self-hosted” wallet, meaning that none of us, Silencio Network LLC, or any other party will have access to your private key for any SLC tokens you own. Accordingly, the loss of the private key(s) associated with SLC Tokens, whether such key(s) are stored in the Silencio App, in another digital wallet you control, at a crypto asset marketplace, or by another means you have adopted for storing your private key(s), will result in the permanent and irretrievable loss of your SLC tokens. In addition, if a third party gains access to your private key(s), including by gaining unauthorized access to your self-hosted wallet or to the login credentials of a hosted wallet or vault service you use, that third party may be able to irretrievably misappropriate your SLC tokens. Neither we nor any other party will be able to recover your SLC tokens for you.
In addition, any errors or malfunctions caused by, or otherwise related, to the digital wallet or vault at which you choose to receive and store tokens, including your own failure to properly maintain or use such digital wallet or vault, may also result in the loss of your SLC tokens.
Additionally, your failure to follow precisely the procedures set forth for buying and receiving tokens may also result in the loss of your SLC tokens.
The tax characterization and treatment of the SLC tokens and their use is uncertain in many jurisdictions and may adversely affect the value of SLC tokens to you.
The tax characterization of the SLC tokens is uncertain, and you should seek your own tax advice in all jurisdictions relevant to you in connection with your ownership and use of the SLC tokens. A purchase of SLC tokens from a third-party marketplace or a disposal by you of SLC tokens you received from us may result in adverse tax consequences to you in your jurisdiction, including withholding taxes, income taxes and tax reporting requirements. Further, the use of the SLC tokens as a form of in-App currency may or may not be subject to income taxes, capital gains taxes, value added, sales or use taxes or other forms of taxes. The uncertainty in the tax treatment of the SLC tokens and transactions in the SLC tokens may discourage others from seeking to accept SLC tokens from you in commercial transactions or purchase SLC tokens from you in a digital asset marketplace or other setting, potentially decreasing or eliminating any monetary value the SLC tokens may have.
The regulatory framework applicable to the Protocol and the SLC token is highly uncertain in many jurisdictions.
The regulatory status of blockchain networks, cryptographic tokens such as SLC, digital assets and blockchain technology is unclear or unsettled in many jurisdictions. It is difficult to predict how or whether governmental authorities will ultimately regulate such technologies. It is likewise difficult to predict how or whether any governmental authority may make changes to existing laws, regulations and/or rules that will affect cryptographic tokens, digital assets, data controlling and processing, blockchain technology and its applications or how they may choose to enforce compliance with regulatory regimes that may be applicable to the Protocol or the SLC token.
Developments or changes in regulatory treatment or unanticipated enforcement activity could negatively affect the SLC tokens in various ways, including, for example, through a determination that the data collection mechanism is unlawful under data protection regulations, that the SLC tokens are regulated financial instruments that require registration or licensing of those instruments or some or all of the parties involved in the sale, purchase and delivery thereof, or that owners of tokens who are involved in the governance of a protocol may have responsibility for losses to third parties interacting with that Protocol. Any such determination may result in a termination of SLC distribution or of the Project itself.
Public policy towards token distributions and cryptocurrency is evolving, and it is conceivable that regulators may in the future seek to broaden the scope of regulation of token distributions or cryptocurrency or interpret existing regulations in a way that adversely impacts the Project. If the offer, distribution and/or sale of the tokens becomes subject to registration, prospectus, or licensing requirements in a particular jurisdiction, the utility of the SLC tokens in that jurisdiction may be adversely affected. Developments such as these may also impact the practicability of our continuing to support the Project.
Certain jurisdictions, including the European Union, China, Russia, and Turkey have already adopted laws, regulations or directives that may affect blockchain networks, in general, and the Project, in particular. For instance, the European Union has ratified the Markets in Crypto-Assets (MiCA) framework governing the licensing of crypto businesses. China has adopted certain regulations prohibiting certain distributions of certain digital assets as well as their ownership, while other countries, like India, are reportedly seriously considering such bans. Legislation impacting the distribution, trading and use of crypto assets has also been proposed in both houses of the U.S. Congress. These laws, regulations or directives may directly and negatively impact the functionalities of the Protocol or the utility of any SLC tokens you may own.
Participation in the SLC token airdrop is not guaranteed solely by engaging in measuring activities. Eligibility to receive tokens is subject to the regulatory requirements of your country. If your country’s regulations do not permit participation in token airdrops, you will not be eligible to receive the SLC tokens. Please ensure compliance with your local laws before participating.
The technology underlying the Protocol may have flaws or errors or may otherwise fail to function as intended, which could negatively impact the Protocol’s usefulness to you or the willingness of new users to engage with the Protocol.
The Protocol may have coding errors or otherwise not function as intended, which may negatively affect your use of the Protocol and/or the functionality of the SLC tokens. Changes to the Protocol may have unintended adverse effects on the SLC tokens. It will be up to Project governance as to whether any coding errors or unintended functionalities in the Protocol that may be discovered remain unresolved or are addressed in some manner.
The Protocol may be the target of malicious cyberattacks or may contain exploitable flaws in its underlying code, or may be the target of other attacks to its integrity, any of which may result in security breaches. This may result in the security of the Protocol being compromised or the Protocol being subjected to attacks that frustrate or thwart its use.
The Protocol’s open-source structural Silencio and the various software applications and other interfaces built on the Protocol are still in an early development stage and are unproven. We are not able to provide you with assurances that the Protocol and the means of creating, transferring, or storing SLC tokens will be uninterrupted or fully secure. This may reduce the interest in, or use of, the Protocol and the SLC tokens. The Protocol or the SLC tokens could be subject to security attacks, including but not limited to double-spend attacks, 51% attacks, or other malicious attacks, which could materially and adversely affect any SLC tokens you own or the Protocol itself.
The Protocol may also be the target of malicious social or presentation attacks, or the hardware associated with user adoption may possess vulnerabilities, which may result in unauthorized access to the Protocol or applications built on the Protocol or other security breaches. If the Protocol’s integrity is perceived to be in question or compromised, the reputation of the Project may suffer and users may decline to adopt, cut back on, or stop using the Protocol.
The success of the Project depends significantly on our ability to produce, distribute, and service the App, and its related software, which is used to enable the measurement and sharing of user-generated data, for each user.
The success of the Project depends in large part on our ability to continue to develop and market the App and its related software in an economically and practicable way. The Silencio Network currently relies on Silencio Network LLC (or other third parties such as QK Innovations) to develop and market under license from us. It is unclear whether Silencio Network LLC will be able to continue to obtain reliable sources of software development and provide sufficient and satisfactory development capacity that will enable us to meet our quality, engineering, design and software standards to successfully meet our user onboarding objectives. Failure of Silencio Network LLC to deliver appropriate software development could slow the process of onboarding new users and potentially reduce global interest or confidence in the Project, which could adversely impact any monetary value there may be in SLC tokens.
We rely on third-party service providers for certain aspects of our operations, including developing software and marketing, and any interruptions in services provided by these third parties may impair our ability to support our network.
In addition to the development of software, we currently or may in the future rely on third parties, including Silencio Network LLC, and the Silencio Foundation in connection with other aspects of the Project. This includes identifying and vetting developers and certain software development projects.
If security or data privacy breaches occur or if there are incidents of other unauthorized or improper access to, use of, or destruction of user data, the ability of the Project to continue functioning could be disrupted or terminated.
As part of the Project, the Silencio Network, may collect certain categories of personal data, including sensitive personal data, for permissible purposes such as to comply with any applicable legal KYC/AML requirements. Any failure to prevent or mitigate security breaches or improper access to, use of, or disclosure of any such data could adversely affect the Project, including through a diminished ability to retain or attract new users, and disruption to our operations. We rely on third-party service providers to host or otherwise process some of the data we collect and any failure by such third parties to prevent or mitigate security breaches or improper access to, or disclosure of, such information could have similar adverse consequences on the Project. This risk is enhanced in certain jurisdictions with stringent data privacy laws.
The global benefits of the Protocol depend on the successful ongoing operation of the App to onboard new users. Operating the App may be unfamiliar to users in various jurisdictions.
There can be no assurance that App users or other third parties will be able to operate the App properly. Any accidents, injuries or damages resulting from such failure to operate the App properly could harm the Project’s reputation, result in adverse publicity and claims against us, and have a negative effect on the ongoing adoption and use of the Protocol.
We are not able to control or predict the actions of App users or third parties, and we may be unable to protect or provide a safe environment for these Protocol users, or third parties seeking to interact with the Protocol or accept SLC tokens for reward as a result of certain actions by users, or other third parties. Such actions may result in injuries, property damage, or loss of life for users and third parties, reputational damage to the Project, or significant liabilities for us.
Although we currently oversee a third party vendor, Silencio Network LLC, that administers certain qualification processes for users, these qualification processes may not expose all potentially relevant information and are limited in certain jurisdictions according to national and local laws. Any third-party service providers we use may fail to provide the necessary services adequately or may disclose information that could be relevant to a determination of eligibility. Consequently, there could be complaints, as well as actual or threatened legal action against us related to user conduct which could adversely affect our ability to continue to support the Project.
If users, or individuals impersonating user, engage in criminal activity, misconduct, or inappropriate conduct or use the Protocol as a conduit for criminal activity, consumers may not consider the Protocol or applications built on the Protocol safe, and the Project may receive negative press coverage as a result of our use of such operators, which would adversely impact the adoption or even the viability of the Project.