WTIC Risk Disclosures

Last updated: April 29, 2026

The following discloses material risks associated with purchasing, holding, transferring, and redeeming WTIC, a WTI-linked digital commodity token issued by Energy Substantiation Partners, LLC (“ESP,” “we,” or “us”). You should read this document in full and consult your own legal, tax, and financial advisors before purchasing WTIC. Purchasing WTIC is speculative, involves significant risk, and is not suitable for all purchasers. You may lose some or all of the value of your purchase.

1. Commodity Price Risk

The reference value of WTIC is designed to track the spot price of West Texas Intermediate (“WTI”) crude oil. Crude oil prices are highly volatile and have historically moved sharply, including intraday and over multi-day periods, in response to factors outside ESP’s control, including:

• Geopolitical events, armed conflicts, sanctions, and shipping disruptions;
• Decisions by OPEC, OPEC+, and other producer cartels regarding production quotas;
• Supply disruptions arising from weather, infrastructure failures, accidents, or strikes;
• Macroeconomic conditions, interest rates, currency movements, and changes in global demand;
• Inventory levels, refining margins, and seasonal consumption patterns;
• Energy transition policies, tariffs, taxes, and environmental regulation.

WTI has historically traded at negative prices (April 2020) and has experienced single-day moves in excess of 20%. The value of WTIC may decline rapidly and without warning. WTIC is not a hedge against inflation, currency debasement, or any other macroeconomic condition.

2. Liquidity Risk

Secondary markets for WTIC may be limited, illiquid, or non-existent. There is no guarantee that any exchange, market maker, over-the-counter desk, or counterparty will provide quotes, accept orders, or execute trades in WTIC at any particular price, in any particular size, or at all. Liquidity may deteriorate or disappear during periods of market stress — precisely when you may most want to exit a position.

Bid-ask spreads, slippage, and price impact may be material, particularly for larger transactions. You should not assume you will be able to sell WTIC promptly or at a price reasonably related to the underlying WTI reference price.

3. Custody & Reserve Risk

The economic backing supporting WTIC may consist of one or more of physical crude oil allocations, supplier receivables, cash, cash equivalents, short-dated U.S. Treasury securities, or commodity-derivative positions, in proportions that change over time and may not be disclosed in real time. The specific composition, custodians, audit and attestation cadence, and segregation arrangements applicable to the reserve are described in the reserve and custody documentation made available to eligible holders, and are subject to change.

Whatever specific arrangements apply at a given time, custodial and reserve structures expose holders to risks including:

• Insolvency, operational failure, fraud, theft, or sanctions designation of a custodian, bank, or counterparty holding reserve assets;
• Regulatory seizure, freezing, or restriction of reserve assets, including by U.S. or foreign authorities;
• Disputes over title to physical commodities, including challenges from suppliers, transporters, storage operators, or other claimants;
• Storage, transportation, contamination, and quality-grade risks specific to physical crude;
• Differences between the market value of reserve assets and the reference price of WTI, including basis risk on derivative positions, hedging slippage, and timing mismatches.

In the event of custodian failure or any of the above events, recovery of value may be delayed, partial, or unavailable, and may depend on bankruptcy or receivership processes outside ESP’s control. Any attestations or audits provided are point-in-time, are limited in scope to what the engaging firm has agreed to test, and do not guarantee future solvency, completeness, or accuracy.

4. Blockchain & Technology Risk

WTIC is implemented as a smart-contract token on a public blockchain. Risks include:

• Smart-contract vulnerabilities: Bugs, logic errors, or exploit vectors in the WTIC contract or its dependencies could result in permanent loss, freezing, or theft of tokens.
• Network risk: The underlying blockchain may experience congestion, fee spikes, forks, reorganizations, validator collusion, or extended downtime, any of which could prevent or delay transfers, mints, or redemptions.
• Key management: If you lose access to the private keys or recovery credentials controlling your wallet, your WTIC may be permanently inaccessible. ESP cannot recover lost keys or reverse unauthorized transactions.
• Cyber attacks: Wallets, exchanges, custodians, oracles, and infrastructure providers are targets for phishing, malware, social engineering, supply-chain attacks, and other intrusions. Compromise of any link in the chain may result in loss.
• Oracle and price-feed risk: Pricing, indexing, or settlement may rely on third-party data feeds whose failure or manipulation could affect WTIC’s reference value or contract behavior.

5. Regulatory Risk

The legal and regulatory framework governing commodity-linked digital tokens is unsettled and evolving in the United States and globally. Federal agencies (including the CFTC, SEC, FinCEN, OFAC, and the IRS), state regulators (including state money transmission and securities regulators), and foreign authorities have asserted, and may in the future assert, jurisdiction over digital commodity products in ways that affect WTIC’s legality, value, transferability, tax treatment, or availability in particular jurisdictions.

New legislation, rulemaking, enforcement actions, no-action positions, or judicial decisions could:

• Reclassify WTIC or impose new registration, licensing, or disclosure obligations;
• Restrict who may purchase, hold, or transfer WTIC;
• Impose transfer, custody, reserve, capital, or operational requirements that materially change product economics;
• Require ESP to delist, redeem, suspend, freeze, or wind down WTIC entirely.

WTIC is not a “payment stablecoin” as defined under the GENIUS Act and is not eligible for any safe harbor or framework specific to payment stablecoins.

6. Redemption Risk

Redemption of WTIC — the process by which an eligible holder burns tokens in exchange for USDC, fiat, or, where offered, physical delivery — is subject to mechanics, eligibility, timing, fees, and operational limits set out in the applicable redemption documentation. Material considerations include:

• Eligibility: Redemption may be restricted to verified, KYC’d holders meeting minimum size, jurisdiction, and accreditation criteria. Retail secondary-market purchasers may not be eligible.
• Timing: Redemption is not instantaneous and is subject to cut-offs, settlement windows, market hours, holidays, and operational delays. The applicable timing for any given redemption is set out in the redemption documentation in effect at the time the request is submitted and may be longer than holders expect, particularly during periods of market stress, custodial issues, or banking-system disruption.
• Fees and spreads: Redemption may carry fees, spreads, or floors that differ from prevailing spot prices.
• Suspension: ESP may suspend, limit, or modify redemption in response to market disruption, custodial issues, regulatory direction, or operational events. In such circumstances you may not be able to exit your position when desired.
• Physical delivery: Where offered, physical delivery is subject to minimum sizes, delivery-point and logistics requirements, taxes, and additional documentation. Most holders will not take physical delivery.

7. Counterparty Risk

ESP relies on third parties to operate the WTIC product, including oil suppliers, custodians, banks, market makers, exchanges, oracle providers, smart-contract developers, auditors, and software vendors. Failure, insolvency, fraud, breach, sanctions designation, or termination by any of these counterparties could materially impair the value, redeemability, or availability of WTIC. ESP itself is a privately held company and is exposed to operational, business, financial, and key-personnel risk; ESP’s insolvency could result in significant or total loss to holders.

8. No Guaranteed Value

Unlike a USD-pegged stablecoin, WTIC is not pegged to any fiat currency and offers no fixed or guaranteed value. Its reference value moves with the price of crude oil and may decline to zero. WTIC is not insured by the FDIC, SIPC, or any other government or private insurance scheme. No party guarantees any minimum redemption value, return, yield, or liquidity.