9. Risk Management and Compliance Strategy

PADO operates a comprehensive risk management and compliance strategy to minimize legal and security risks and ensure regulatory stability during its global expansion. Through this framework, PADO provides a secure and reliable platform for both investors and users.

9.1 Legal and Regulatory Risk Management

1) Global Regulatory Framework Analysis

• PADO closely analyzes cryptocurrency regulatory trends in major regions, including the United States, the European Union (EU), and Asia.

• In the United States, multiple regulatory bodies, including the SEC, CFTC, and FinCEN, claim jurisdiction over cryptocurrency assets, creating a complex regulatory landscape.

• The European Union, through the 2023 MiCA regulations, has established a unified framework for crypto asset classification, consumer protection, and business registration and supervision.

• In Asia, regulations vary by country: - Singapore maintains a crypto-friendly regulatory approach, while China has enforced a comprehensive ban on crypto trading and mining since 2021 to maintain financial stability. - Japan, in response to the 2014 Mt. Gox hack, has mandated strict FSA (Financial Services Agency) registration for all cryptocurrency exchanges and requires rigorous KYC/AML compliance to protect investors.

2) Key Regulatory Compliance Standards

• PADO adheres to essential regulatory requirements in all operational jurisdictions.

• Alongside general financial regulations, PADO obtains and maintains necessary licenses for cryptocurrency operations. - For example, New York’s BitLicense imposes stringent licensing requirements, making market entry difficult without full compliance.

• In South Korea, the Special Financial Information Act mandates that crypto service providers register as virtual asset businesses, effectively requiring a license.

• PADO also complies with international AML/CFT standards as recommended by the Financial Action Task Force (FATF), ensuring full KYC compliance for all transactions.

3) Anti-Money Laundering (AML) & Know Your Customer (KYC) Measures

• PADO implements AML and KYC procedures in accordance with global standards.

• New users must verify their identity using government-issued identification, and transaction monitoring systems are deployed to detect and report suspicious financial activities.

• PADO adopts a risk-based approach to AML/KYC compliance, ensuring tailored security levels for different jurisdictions.

• For cross-border transactions, PADO complies with FATF’s Travel Rule, securely sharing sender and recipient information between exchanges.

4) Market-Specific Regulatory Adjustments & Response Strategies

• PADO adjusts its operational scope according to local legal frameworks and develops strategies to address regulatory restrictions.

• In regions where compliance is challenging, PADO may limit services or implement geo-fencing to restrict access from certain countries.

• Some global platforms proactively block U.S. users due to strict financial regulations; PADO considers similar measures in high-risk regions.

• Additionally, PADO engages legal experts in each jurisdiction to continuously assess regulatory changes and proactively adjust policies to mitigate legal risks and prevent regulatory sanctions.

9.2 Security Risk Management

1) Smart Contract & Data Security

• Before deploying any smart contract functionality, PADO conducts thorough security audits to identify and mitigate vulnerabilities.

• These audits include independent reviews by specialized cybersecurity firms and the use of automated vulnerability scanning tools.

• Given the immutable nature of smart contracts, PADO implements rigorous multi-layer testing and validation to prevent catastrophic failures.

• PADO applications are secured using digital signatures and smart contract-based protection mechanisms, ensuring data integrity post-deployment.

• To prevent hacking, phishing, and token theft, PADO integrates Web3 security technologies.

2) Data Protection & User Asset Security

• PADO employs industry-leading security measures to safeguard customer assets.

• The majority of user funds are stored in cold wallets that are completely offline, minimizing exposure to cyber threats.

• Multi-signature wallets (Multi-Sig) are used to eliminate single points of failure, reducing the risk of unauthorized access.

• Asset transfers require multiple approvals from different team members, enforcing strong internal security controls.

• Hardware security modules (HSMs) and hardware wallets protect private keys.

• All systems are secured through end-to-end encryption and strict access controls.

• 24/7 security monitoring is in place to detect and respond to potential hacking attempts.

• An Incident Response Plan (IRP) ensures rapid reaction to security breaches, limiting potential damage.

3) Digital Asset Insurance & Disaster Recovery Planning

• PADO is evaluating digital asset insurance options to protect against unforeseen security incidents.

• Many available insurance policies cover institutional exchanges but PADO seeks tailored coverage for its specific operational risks.

• By securing hacking insurance, PADO establishes a financial safety net against cyberattacks.

• PADO also maintains emergency response funds and has backup and recovery plans for private key restoration, ensuring business continuity and user fund protection.

4) Web3 Security & Phishing Prevention

• PADO integrates cutting-edge Web3 security technologies to prevent phishing attacks and fraud.

• A real-time database of known phishing sites and malicious wallet addresses automatically flags suspicious activity.

• If a transaction request appears risky, PADO’s system immediately alerts the user and blocks potential threats.

• Anti-phishing authentication codes are issued for emails and account-related communications.

• Mandatory Two-Factor Authentication (2FA) is enforced to prevent unauthorized access.

• Regular security awareness training and user education materials are provided to help users recognize and avoid scams.

9.3 Compliance Strategy

1) Region-Specific Compliance Strategy

• PADO customizes its operational strategy to comply with local regulations.

• In the U.S., PADO carefully evaluates whether its token falls under securities law and will register with the SEC if necessary or limit services accordingly.

• In the EU, PADO classifies assets according to MiCA regulations and ensures proper licensing and reporting compliance.

• PADO also monitors FATF regulations, ensuring consistent application of compliance frameworks across all operational regions.

2) Regulatory Change Monitoring System

• PADO operates a legal monitoring system to track global regulatory changes in real time.

• A dedicated compliance team continuously analyzes new laws and regulatory updates, promptly advising management on necessary adjustments.

• In the fast-evolving cryptocurrency space, real-time legal tracking and internal adaptation are critical for reducing regulatory risks.

• This enables PADO to swiftly implement necessary policy adjustments and ensure full compliance with new legal frameworks.

3) Engagement with Regulatory Authorities & Transparency

• PADO actively engages with regulators to build collaborative relationships.

• Before launching new services or listing tokens, PADO consults with supervisory bodies and obtains approvals when necessary.

• To enhance transparency, PADO publishes periodic reports on financial health, security posture, and regulatory compliance.

• External audits and third-party security verifications reinforce public trust.

• Many leading platforms already work with governments to shape regulatory policies, and PADO follows best practices in industry compliance.

4) Continuous Internal Compliance Updates

• PADO regularly reviews and updates its internal compliance policies.

• As new laws or regulations take effect, policy adjustments are immediately reflected in internal procedures, ensuring staff are fully trained on updated compliance requirements.

• Special focus is placed on customer asset management, data protection, and transaction monitoring.

• By maintaining rigorous internal oversight, PADO fosters a strong compliance culture and proactively prepares for external audits and regulatory reviews.

PADO’s risk management and compliance strategy ensures legal, operational, and financial security, allowing sustainable global expansion. Through a proactive approach to regulation, cutting-edge security protocols, and industry-leading compliance practices, PADO protects investors, secures user assets, and upholds its reputation as a trustworthy blockchain platform.