1. Market Risk
A significant change in the number of Users of a specific cryptocurrency may result in loss of principal or large fluctuation in the price. Factors that may influence market risk are market sentiment on the cryptocurrency market, investor demand and trust in the overall blockchain-based system.
Higher volatility results in higher risk. Different cryptocurrencies have different level of volatility. Returns may vary greatly on a daily basis.
The risk of loss in trading or holding cryptocurrencies can be substantial. Users should therefore carefully consider whether the Services are suitable in light of personal own circumstances condition. Due to price fluctuations, Users may gain or lose value in their assets at any given moment. Any position may be subject to large swings in value and may even become worthless.
The liquidity or the volume of trades can be low, making it difficult to acquire the desired value and volume. Trading a cryptocurrency with low market liquidity could delay settlement time. The price of a cryptocurrency may fluctuate greatly before settlement.
If the User trade in a market denominated in a currency other than his/her domestic currency, currency exchange fluctuations will impact the profits and losses.
An act of theft by a programmer who obtains cryptocurrencies by detecting a significant flaw in a system. This may result in loss of faith and loss of coin leading to a significant decline in market value of a specific cryptocurrency.
6. Change of law
Changes in laws or their interpretation on some, or all, cryptocurrencies, may result in a negative impact on their price.
7. Contentious Hardfork
A hardfork occurs when a new version of the original coin is generated. Through a consensus vote or a decision by the core development team, a cryptocurrency can branch out to a new blockchain. This ultimately creates two separate coins and it is up to the user to decide which branch to hold onto. A hardfork may cause the value of cryptocurrencies to decline.
8. Difficulty Risk
Increases in the number of transactions on the network that are verified can lead to a rise in mining or consensus difficulty (i.e. the amount of effort required to verify transactions on the network). This may cause the value of the cryptocurrency to fluctuate.
9. Change of Algorithm
All blockchains use a consensus algorithm in order to validate transactions. Most cryptocurrency blockchains are verified via the consensus algorithm known as Proof of Work. This involves the verification of transactions by miners, who had transactions to the blockchain. The core development team or the miners can vote to change this algorithm to, for example, proof-of-stake. This may lead to a change in price of the underlying cryptocurrency.
10. Cryptocurrency transactions
There’s credit risk every time cryptocurrencies are purchased or sold, and the contractual rights with respect to such transactions may be limited. Although the transfers of cryptocurrencies or cash will be made to or from a counterparty which is believed to be trustworthy, it is possible that, through computer or human error, or through theft or criminal action, the cryptocurrencies or cash could be transferred in incorrect amounts or to unauthorized third parties. To the extent that it is unable to seek a corrective transaction with such third party or is incapable of identifying the third party which has received the cryptocurrencies or cash (through error or theft), it will be unable to recover incorrectly transferred cryptocurrencies or cash, and be negatively impacted by such losses.
Transactions that have been verified, and thus recorded as a block on the blockchain, generally cannot be undone. Even if the transaction turns out to have been in error, or due to theft of a user's cryptocurrency, the transaction is not reversible.
We may elect to store the cryptocurrency we received in relation to the provision of the Services in wallet types / storage methods at our sole and full discretion. That would potentially involve the arrangement where the cryptocurrencies are held by a third-party custodian with which We maintain business relationship). Notwithstanding the said arrangement(s), we shall record the User’s ownership of cryptocurrency in our internal records.
Having cryptocurrencies deposited with any third party in a custodial relationship has attendant risks. These risks include security breaches, risk of contractual breach, and risk of loss. Third party wallet providers may be used to hold the cryptocurrencies. Having a high concentration of cryptocurrencies in one location or with one third party wallet provider may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware, or cyber-attacks. There may not be detailed information technology diligence on such third-party wallet providers and, as a result, may not be aware of all security vulnerabilities and risks. Certain third-party wallet providers may not indemnify against any losses of cryptocurrencies. Cryptocurrencies held by third parties could be transferred into "cold storage" or "deep storage," in which case there could be a delay in retrieving such cryptocurrencies. It may also incur costs related to third party storage. Any security breach, incurred cost or loss of cryptocurrencies associated with the use of a third-party wallet provider, may adversely affect the investment.
Insurance may not be possible either because of a lack of available policies or because of prohibitive cost. If an uninsured loss occurs or a loss exceeds policy limits, the investment could lose a portion or all of its assets.
Cryptocurrencies in the Users’ accounts are not eligible for any public or private deposit insurance protection.
Valuation of the cryptocurrencies may involve uncertainties and judgmental determinations. If a valuation is incorrect, the value of the investment can be adversely affected. In extreme circumstances, independent pricing information about some of the cryptocurrencies invested in may become unavailable.
Note: This Risk Disclosure forms an integral part of the Terms and Conditions of Services. Capitalized terms prescribed in this document carry the same meaning as those in the Terms and Conditions of Services, unless otherwise indicated.