Risks of Trading Virtual Assets

Any kind of trading of crypto assets involves significant risk. By using our services, you confirm that you are aware of the risks associated with using our services and that you fully understand and accept our non-liability for the risks related to crypto assets and your investment. More information is also available in our Terms of Use, and special warning notifications you receive while using our services. All such risk disclosures are not mutually exclusive but complement each other. 

The risks mentioned are merely examples and by no means exhaustive. Numerous other risks associated with crypto assets, as well as new emerging risks, continue to develop. Therefore, it is crucial for you to continuously educate yourself and regularly update your knowledge and awareness of crypto-related risks. In all cases, we disclaim any liability towards you for any realized risk, to the fullest extent possible.

This special note represents an appendix to our Terms of Service of fulfillment and an essential part thereof.

High-Risk Investment 

1. The value of crypto assets has high volatility (value can increase and decrease significantly in a very short period of time and at any given moment; furthermore, daily price volatility is particularly characteristic of crypto assets). Such price fluctuations bring uncertainty, and your entire amount invested may be lost at any given moment. 
2. The value of a crypto asset and collapse in demand may be influenced by many factors, including rational or irrational bubbles, loss of confidence in the crypto asset, changes in software development, regulatory changes, creation of a competitive crypto asset, technical problems, political or non-political statements, and events, statements of influencers, news, market and liquidity risks, market manipulation, information security risks, phishing, social engineering, other hacker-attacks, and many more.  All of these factors and those not specifically mentioned may lead the crypto asset to become worthless. 
3. Crypto assets have special risks that are not generally shared with official currencies, other commodities, or goods that are tangible or registered in the official registry, or otherwise available on the market. Crypto assets are intangible, decentralized, digital assets, backed by technology, community, and trust.
4. Any reference to past returns is not a reliable indicator of future returns, and the risk of significant loss remains. 
5. Crypto assets are not issued, nor backed by any government, central bank, or other similar institution. They do not fall under mandatory deposit insurance regimes, as is the case with deposits in FIAT money. In that sense, there is no legal safety net as there is with FIAT money.  There are also other potential risks that may not be foreseen in this disclaimer.  
6. The prices of crypto assets are established without any mechanisms that ensure their correct formation, such as those used in regulated securities markets. There is no established regulated system to provide corrective measures to protect the value of crypto assets in a crisis. 
7. Many crypto assets may lack the liquidity necessary to allow an investment to be unwound without significant losses, since their distribution among investors, both retail and professional, can be very limited.
8. You and you alone carry the liability and responsibility for any damage you might suffer as a result of trading in crypto assets. Any decision to purchase or sell crypto assets is solely your decision and Kriptomat shall not be liable for any loss suffered. Please note that after you transfer the crypto assets to a certain crypto wallet account such transfer cannot be revoked (blockchain transactions are irreversible) and we do not accept any responsibility for your actions. 

Risk of delisting crypto assets 

9. We may at any time delist any of the crypto assets. Delisting of the crypto asset may result in a loss, either due to the client’s inability to provide liquidity for the crypto asset or due to the inability to transfer the token. In each case, Kriptomat cannot be held responsible for any loss incurred by the delisting of the crypto asset, regardless of the reason for delisting. 

10. Delisting of the crypto asset can also negatively impact its price and its further adoption on the market. 

Financial tolerance and your risk attitude

11.  There is an inherent risk that losses will occur due to buying, selling, holding, or trading crypto assets. You should therefore carefully consider whether trading in crypto assets is suitable for you in light of your financial condition. 

12.  Prior to any investment in crypto assets, you should carefully consider whether your financial situation, personal circumstances, and personal risk attitude are suitable for investing in crypto assets. It is immensely important you fully understand the potential risks, and that trading with crypto assets inherently means you are exposing yourself to potentially high risks, including the complete loss of your crypto assets. When accepting the risks and using our services, you guarantee us that you have sufficient knowledge, experience, and expertise in your financial risk management and crypto asset market. You must never invest assets you cannot afford to lose. 

Technology risks

13. Distributed ledger technologies are still in an early stage of development as many of these networks have been created very recently, so they may not be sufficiently tested and there may be significant failures in their operation and security. 

14. Crypto assets and blockchain industry and technology are still largely unregulated, often not disclosing the entity or individual behind it, or are without centralized governance as is the case with decentralized system technology. Technology risks may also lead to losses or unavailability of the crypto assets, so you should only engage in investing in crypto assets if you fully understand, acknowledge, and accept the risks that the underlying technology, protocols, and systems may change, or indicate technical and/or protocol issues or malfunctions,  affecting the transaction with such crypto assets, including the underlying technology and software protocols on the Kriptomat platform.  Kriptomat shall in no case be held liable or responsible for any malfunction or limited function of the underlying technology and protocols. Furthermore, Kriptomat does not guarantee and makes no representations or warranties of any kind, express or implied, statutory or otherwise, regarding the functionality or security of the network operation, its platform, and services provided through the platform.  

15. The registration of transactions in networks based on distributed ledger technologies is carried out through consensus protocols that may be susceptible to attacks that attempt to modify the register. If they were to be successful there would be no alternative register that backs up the transactions, hence the balances corresponding to the public keys, and, therefore, all the crypto-assets could be lost.

16. The anonymity of crypto assets can make them a target for cybercriminals, since if credentials or private keys are stolen the crypto-assets may be transferred to an addressee which makes their recovery difficult or impossible.

17. The custody of crypto assets is a large responsibility since they can be lost in their entirety in the event of theft or loss of private keys.  

18. You acknowledge you understand and accept the technical risks related to the blockchain technology, and risks related to the use of the internet services and systems, including, but not limited to: technical errors, technology development issues, technical constraints and malfunctions, network and communication errors or failures, fraud, cyber attack, crypto asset non-functionality, and similar.  Kriptomat cannot be held liable for any such risk and consequences, including the loss or unavailability of your crypto assets, and you hereby fully acknowledge Kriptomat’s excluded liability in its entirety. 

Limitation of our liability in case of cyber attacks

19.  Crypto assets are inherently associated with the risks of theft as a result of various cyber-attacks, and there have been many cases of such attacks in the past where users have permanently lost their crypto assets. 

20. Information security is an extremely important business area to which we devote considerable attention and resources. We use international best practices, are ISO 27001 certified, and are continuously improving our information security system – however, the risk of cyber incidents can never be completely eliminated. In case of hacking, cyber attack, exploited system vulnerability, theft of crypto assets, or any other attack resulting in the loss, unavailability, or destruction of crypto assets (hereinafter: “cyber attacks”), we cannot be held responsible, and we shall not be responsible for any loss. Albeit we protect the crypto assets entrusted to us with the best market practice and we are continuously testing and improving our security systems, we cannot exclude the possibility of cyber attacks. Any occurrence of a cyber attack shall be considered as force majeure, a circumstance we could not predict nor prevent, and Kriptomat assumes no responsibility, and cannot be held responsible for any loss or damage that may result on your behalf from such a cyber attack. By using our services you specifically confirm and accept this limitation of liability. 

Crypto asset withdrawal unavailability and limitation of liability in case of loss of crypto assets due to reasons on the side of third parties 

21. A portion of crypto assets is kept with our liquidity providers, to assure the operation of the business. For certain crypto assets, for which withdrawal of the crypto assets is not available due to technical infrastructure limitations of our system, you are specifically informed about this prior to the purchase of such crypto assets, and you are required to provide opt-it consensus. In all such cases, the crypto assets are kept with third parties, our liquidity providers, and even though they are subject to our supplier audit, such crypto assets are subject to their security system, meaning we cannot guarantee the same level of security as for the crypto assets we keep with our custody service provider. 

22. Furthermore, in all cases where your assets are kept for the reasons stated under the previous clause, with third parties – liquidity providers, we cannot in any way be responsible for any loss of your crypto assets, kept with our liquidity providers, either as a result of a cyber attack, other technical issues, or liquidity issues or bankruptcy proceedings of such liquidity provider. By using our service, and by selecting a crypto asset with withdrawal limitation, you confirm you are fully aware of this fact, you agree to the risks, and you shall not hold us liable for any such (or similar) occurrence resulting in loss or unavailability of your crypto assets held with our liquidity providers. 

Legal Risks 

23. The acceptance of crypto-assets as a means of exchange is still very limited and there is no obligation to accept them.

24. The crypto assets are kept in the digital wallets managed by FintechX OÜ, along with their private keys. In this sense, and as indicated on the main page, Kriptomat safeguards crypto assets safely through both cold (offline) and hot (online) storage. Therefore, the client is not in possession of the crypto assets and does not have access to its private keys. Kriptomat clients own the crypto assets they keep in their Kritpomat digital wallet. The client is responsible for all profits and losses related to the price fluctuation of the crypto assets they own. The client has full discretion to hold, buy, or sell their crypto assets. Since Kriptomat additionally offers a custody service, Kriptomat keeps crypto assets in secure storage on behalf of the client, subject to all risks indicated, however, the risks are not provided exclusively but informative, as many other risks may apply as well.

25. The risk of loss in trading, buying, selling, or holding crypto assets is substantial. You should therefore carefully consider whether trading in crypto assets is suitable for you and your financial condition. Be careful to keep your private keys, passwords, security codes, and words to yourself, and change them on a regular basis.

26. Payment providers, banking partners, and other third-party service providers may be involved in the provision of our services. In such cases, you may be subject to third-party terms & conditions, whereas Kriptomat shall not be responsible for any loss that such third parties may cause to you. 

27. No information provided to you by Kriptomat through notifications, articles, or by any other means, is intended as or shall be considered or construed as, investment advice, financial advice, trading advice, legal advice, or any other sort of advice.  You are solely and fully responsible for your actions on our platform. 

Regulation-related risks 

28.  The crypto asset regulatory framework is still unstable as the regulation is either still forming in some countries, or is changing. The regulatory changes may significantly impact crypto assets, and they may adversely affect the use, value, availability, and transactions of crypto assets. The profitability of trading with crypto assets may also be heavily impaired by the tax regime. 

29. You are solely responsible for assuring you are fully compliant with the applicable laws and regulations of your country and your applicable jurisdiction. We are an Estonian-based company, thus subjected to Estonian regulation. Our regulations may differ from yours, so make sure you have a thorough understanding of the regulatory requirements and that you follow them prudently. We shall not be responsible for your actions violating the law of your jurisdiction.

Warning against fraud 

30. Kriptomat shall not ask users to transmit any funds, BTC, ETH, or other crypto assets to our bank account, BTC address, Ethereum address, or other addresses, which are not listed on the trading platform. 

31. Kriptomat shall not be responsible for any losses caused by transmitting funds from/to bank accounts, or crypto funds to any addresses that are not listed or given to you on the trading platform. 

32.  Take care of always accessing the Kriptomat website through the link https://kriptomat.io/ and Kriptomat exchange platform through the link: https://app.kriptomat.io/login. In case of uncertainty or a suspicious link is given on forums or received by a suspicious account, user, or website, please contact our support immediately and do not transfer any fiat or virtual money to such suspicious links or accounts. In case of uncertainty, always type the website https://kriptomat.io or https://app.kriptomat.io/login into the browser yourself.

33.  For the avoidance of doubt, we do not provide and will never provide any investment advice in connection with our services. 

34. Please be very careful when considering entering into cooperation with entities claiming to be brokers and/or financial advisors and make sure you inspect the alleged financial service provider most diligently. It is very often the case that such entities are fraudulent. When being asked about your cooperation with brokers and/or investment advisors, please provide an exact and honest answer (IDCP check).  Providing false information on your cooperation with brokers and/or financial investment may lead to our platform being misused, and importantly, our security measures being heavily impaired. It is your responsibility to provide us with truthful information and you shall bear all the consequences should you not provide accurate information and follow our safety procedures, instructions, and warnings. 

35. Please also be aware that Kriptomat will never contact you via telephone. Please be aware that we do not have nor cooperate with any brokers or agents. If anyone contacts you outside of the Kriptomat platform or without using our official email addresses ending with @kriptomat.io, especially when claiming to be an agent or partner of Kriptomat, be very careful! These are fraudulent agents. For more detailed info please make sure to read our Fraud Awareness Note. You shall assume all risk for any adverse outcomes.

DEX tokens-related and web3 wallet-related risks 

In addition to all the risks covered under the other parts of this risk disclaimer, the following risks especially apply in connection with DEX tokens and Web3 Wallet: 

36. Smart Contract Vulnerabilities: DEX platforms are built on smart contracts, which are self-executing contracts with the terms directly written into code. If these contracts contain bugs or vulnerabilities, hackers can exploit them to steal funds or manipulate transactions, and you may lose all your assets. Unlike centralized systems where administrators can intervene, the decentralized nature of DEXs makes it difficult to correct such errors post-deployment.
37. Liquidity Risks: Liquidity refers to the ease with which an asset can be bought or sold without causing a significant impact on its price. Many DEX tokens suffer from low liquidity, making it challenging to execute large trades. This can result in higher price volatility and slippage, where the trade is executed at a less favorable price than expected.
38. Market Manipulation: Due to the relatively low regulatory oversight and liquidity in DEXs, they are more susceptible to market manipulation tactics such as pump-and-dump schemes. These involve artificially inflating the price of a token to attract investors, only to sell off large volumes quickly, causing the price to crash.
39. Slippage: This risk arises when there is a significant difference between the expected price of a trade and the price at which it is executed. Slippage is common during periods of high market volatility or low liquidity, leading to less favorable trading outcomes.
40. Regulatory Risks: The regulatory landscape for DEXs is uncertain and constantly evolving. Changes in laws and regulations can impact the operation, legality, and accessibility of DEX tokens. Regulatory crackdowns can lead to delisting of tokens, restrictions on certain activities, or complete shutdowns of platforms.
41. Scams and Fraud: The decentralized and relatively anonymous nature of DEXs can attract fraudulent projects and scams. Malicious actors can create fake tokens or deceptive projects to lure investors, leading to financial losses. It is crucial to perform thorough due diligence before investing.
42. Technological Risks: DEX platforms rely heavily on their underlying blockchain technology. Issues such as network congestion, downtime, or technological failures can disrupt trading activities. Additionally, reliance on external oracles for price feeds can introduce vulnerabilities if these oracles are compromised.
43. Custodial Risks: Unlike centralized exchanges, DEXs do not hold users’ funds. Users are responsible for managing their own private keys and wallets. If users lose their private keys or fall victim to phishing attacks, they can lose access to their funds permanently.  
44.  We maintain your private keys for the Kriptomat Web3 Wallet. However, you must understand that these assets are not kept in cold storage, and the custodial security measures applicable to the primary Kriptomat wallet do not apply to the Web3 Wallet. If someone gains access to your Kriptomat Web3 Wallet by any means, or if the wallet is subject to a cyber attack or exploitation, your assets may be stolen or otherwise permanently compromised, resulting even in a total loss of your assets. Kriptomat cannot be held responsible for any damage arising from any action related to your Kriptomat Web3 Wallet.
45. Security Risks: DEX platforms can be prime targets for cyber-attacks, including phishing, hacking, and Distributed Denial of Service (DDoS) attacks. These attacks can lead to loss of funds, unauthorized transactions, or disruptions in the platform’s operation.
46. Token Volatility: Many DEX tokens are highly volatile, meaning their prices can fluctuate dramatically in short periods. This volatility can result in substantial financial losses, especially for those who do not carefully manage their investment risk.
47. Integration Risks: DEX tokens often rely on integration with other DeFi protocols and services, such as lending platforms, yield farming, and insurance protocols. Issues or failures in these integrations can negatively affect the performance and security of the tokens, leading to potential losses.
48. Understanding these risks is essential for anyone participating in DEX platforms, enabling them to take informed precautions and make better investment decisions.

Other 

49. Kriptomat does not guarantee full and unlimited availability of the services at all given times or that our services shall not be subject to downtime (such as service outages or network congestions). Therefore, it is possible that you will at times experience not being able to buy, sell, store, send or receive crypto assets. In all such cases, you shall not hold Kriptomat responsible or liable.

50. There might be additional risks related to crypto assets that are not mentioned in this document, our Terms of Use, or our other risk warnings (Risk Disclosure documentation). We do not represent that the information in the Risk Disclosure Documentation is exhaustive, accurate, or comprehensive. There is always a chance some other risks are related to crypto assets and you should seek third-party professional advice should you have any doubts or questions related to your crypto asset investment and/or trading, eg. the advice of specialized legal counsel, financial advisor, etc.