This Risk Disclosure Statement provides you with information about some of the risks associated with Virtual Assets trading and other services offered by BEQUANT (the “Services”) but it cannot disclose all of the risks associated with Virtual Assets. These risks, and other risks arising either now or in the future, could result in the loss or destruction of your assets. Please consider carefully whether the risks set out below, as well as all other applicable risks, are acceptable to you considering your investment objectives, risk tolerance, financial circumstances and investment experience prior to accessing and using the Services of BEQUANT.

It is important that you make your own independent decision whether to access and use the Services and should seek any advice that you consider necessary or desirable (including financial and/or legal advice) from independent advisers before trading in Virtual Assets.

YOU SHOULD ENSURE TO HAVE ADEQUATE FINANCIAL RESOURCES TO BEAR ANY RISKS ASSOCIATED WITH VIRTUAL ASSETS AND THAT YOU MONITOR YOUR POSITIONS CAREFULLY. TRADING INVOLVES RISK TO YOUR CAPITAL. YOU SHOULD NOT INVEST MONEY THAT YOU CANNOT AFFORD TO LOSE. THE RISK OF LOSS IN TRANSACTIONS INVOLVING VIRTUAL ASSETS CAN BE SUBSTANTIAL. BY USING THE SERVICES OF BEQUANT, YOU MAY NOT HAVE ACCESS TO THE INVESTOR COMPENSATION PROTECTION. VIRTUAL ASSETS SHOULD BE SEEN AS AN EXTREMELY HIGH-RISK ASSET AND YOU SHOULD NEVER INVEST FUNDS THAT YOU CANNOT AFFORD TO LOSE.

For the avoidance of doubt, BEQUANT does not provide investment, financial, tax, or legal advice. No communication or information provided to you by BEQUANT is intended as, or shall be considered or construed as investment advice, financial advice, trading advice, or any other sort of advice.

The following risks may arise in connection with Virtual Assets (a non-exhaustive list):

PRICE VOLATILITY AND LACK OF CONTROL OVER VIRTUAL ASSET

Virtual Assets are a relatively new asset class and there is little history as to the digital asset market. The price of Virtual Assets can be highly unpredictable, not transparent and volatile when compared to other assets such as stocks, bonds and other tradable instruments. This means that if you purchase Virtual Assets, you may lose some or all of your assets value. Unlike other asset classes, certain Virtual Assets’ value may be difficult to assess due to a lack of information. You should not deal with Virtual Assets unless you understand the extent of your exposure to risk.

Cryptocurrency trading is prone to being misused for illegal activities due to the anonymity of transactions and investors would be adversely affected if law enforcement agencies were to investigate any alleged illicit activities.

Newly issued cryptocurrencies might carry additional risks you need to consider. Limited liquidity or difficulties to trade the asset after you’ve bought it. This means prices could be volatile, going up and down quickly, and liquidity may be limited, all depending on supply and demand. BEQUANT cannot control these external factors.

LIQUIDITY RISK

Because Virtual Assets are relatively new, they have only recently become accepted as a means of payment for goods and services, or as an asset class, and therefore, the use and liquidity of Virtual Assets is limited. Markets for Virtual Assets can at times become what is known as “illiquid,” which means there can be a scarcity of persons who are willing to trade at any one time. Thinly traded or illiquid markets have potential increased risk of loss because they can experience high volatility of prices and in such market participants may find it impossible to liquidate market positions except at very unfavourable prices. There is no guarantee that the markets for any Virtual Asset will be active and liquid or permit you to establish or liquidate positions in the Virtual Asset when desired or at favourable prices.

BLOCKCHAIN RISKS

Since blockchain is an independent public peer-to peer network and is not controlled in any way or manner by BEQUANT, BEQUANT shall not be responsible for any failure and/or mistake and/or error and/or breach which shall occur in blockchain or in any other networks in which the Virtual Assets are being issued and/or traded. You will be bound and subject to any change and/or amendments in the blockchain system and subject to any applicable law which may apply to the blockchain. We make no representation or warranty of any kind, express or implied, statutory or otherwise, regarding the blockchain functionality nor for any breach of security in the blockchain.

LEVERAGE

When trading on margin you only have to deposit a small percentage of the overall value of your position. This is known as “Leverage”, and even small market movements may have a great impact, negative or positive, on your trading account. If the market moves against you, you may sustain a total loss greater than the funds invested in a specific position. Leveraged trading is a high-risk activity that can result in losses that exceed deposits. Taking on such risks may not be suitable for everyone, which is something you’ll have to decide for yourself.

Before deciding to trade on margin, you should carefully consider your investment objectives, level of experience, and risk appetite. Margin trading in crypto currencies involves a high risk as market liquidity cannot be guaranteed and it may be more difficult to liquidate a position.

CRYPTOCURRENCIES SHOULD BE SEEN AS AN EXTREMELY HIGH-RISK ASSET AND YOU SHOULD NEVER INVEST FUNDS THAT YOU CANNOT AFFORD TO LOSE. THE RISK OF LOSING INCREASES DUE TO LEVERAGE.

You should consider whether you understand how margin trading works, and whether you can afford to take the high risk of losing your money.

At all times during which you have open positions, you must ensure that your account meets our margin requirements, which may change from time to time. Therefore, if our price moves against you, or if our margin requirements have changed, you may need to provide us with significant additional funds to meet your margin requirement at short notice, to maintain your open positions. If you do not do this, we will be entitled to close one or more or all of your positions automatically and you alone will be responsible for any losses incurred as a result.

OPERATION OF SOFTWARE PROTOCOLS AND SMART CONTRACTS

BEQUANT does not own or control the underlying software protocols and smart contracts which govern the operation of some of the Virtual Assets available for trading on our platform. In general, the underlying protocols are open source and anyone can use, copy, modify, and distribute them which means that (i) the development and control of such Virtual Assets is outside of BEQUANT’s control and (ii) such software protocols are subject to sudden and dramatic changes that might have a significant impact on the availability, usability or value of a given Virtual Asset. As a result, customers may have limited, if any, ability to influence the actions of the issuer of the Virtual Asset and may lack material information which could impact the value of any particular investment.

Smart contracts are what determine a Virtual Asset’s technological features and any vulnerability or bug in the smart contract code that controls or engages with a Virtual Asset, if it surfaces or is exploited, could adversely impact any Virtual Asset issued, tracked or held by the smart contract, and could permanently impair the Virtual Asset’s function and value.

BEQUANT is not responsible for the operation of the underlying protocols and smart contracts and BEQUANT makes no guarantee of their functionality, security, or availability. The underlying protocols and smart contracts are subject to sudden changes in operating rules (“Forks”), and such Forks may materially affect the value, function, and/or even the name of the Virtual Asset BEQUANT holds for your benefit. In the event of a Fork, BEQUANT may temporarily suspend BEQUANT’s Services (with or without advance notice) and BEQUANT may (a) configure or reconfigure its systems or (b) decide not to support (or cease supporting) the Forked protocol or smart contract entirely. BEQUANT may, but is not obligated to do so, adjust your account in respect of a Fork, depending on the circumstances of each event attributable to any specific Virtual Asset which you hold.

ORACLES

Oracles – and the off-chain information that they supply to smart contracts – are a crucial aspect to the operation of many protocols, including those that rely on oracles to supply the current value of assets held as collateral. Risks can arise from the use of oracles. Centralized oracles, for example, are vulnerable to malicious behavior of the oracle provider, as well as to coding errors, attack or manipulation by others. More decentralized oracles may still be open to these vulnerabilities. Bad actors have employed oracle attacks to profit, for example by triggering liquidations based on faulty information. Even absent error or misconduct, the provision of certain information by an oracle can be delayed, which can cause stale information to be delivered to a smart contract and, in turn, create adverse consequences for those using the smart contract if market conditions have moved against them during the time delay. BEQUANT is not responsible for the operation of the oracles and BEQUANT makes no guarantee of their functionality, security, or integrity.

TRADING RISK

Virtual Asset involves high risks and as a result, losses of capital may occur. You use the Services at your own risk. There can be no assurance that use of the Services will provide a positive return or profit, that significant losses will not be incurred, or that your objectives will be achieved. We advise that you should not invest more than you can afford to lose. It is important to have sufficient relevant, prior experience when entering into Virtual Asset transactions.

RISK OF ACCOUNT FREEZE

BEQUANT may freeze your Account, including any Virtual Asset wallet and any subaccount, in the event that you are believed to be engaged in suspicious activity or to be in breach of any of the Terms of Service. If your Account is frozen, you will not be able to trade or to make transfers to or from your Account. This may result in the closure of your open orders.

LENDING RISK

When you borrow using leverage, the Virtual Assets in your Bequant Account become BEQUANT’s collateral for the leveraged loan. A decline in the value of these Digital Assets is therefore a decline in the value of the collateral. It is important that you fully understands the risks involved which include, but are not limited to:

- You may lose more Virtual Assets than originally deposited in your Bequant Account. If the Virtual Assets purchased go down in price, you may face a margin call, which may require you to deposit more Virtual Assets that BEQUANT considers as acceptable collateral.

- BEQUANT can set stricter or modified collateral requirements in its full discretion by providing an advance notice. An increase or change in eligibility in collateral requirements may take effect immediately after expiry of the notice period and may trigger a margin call as per conditions specified in the Master Digital Asset Loan Agreement.

- If you cannot meet a margin call, BEQUANT can initiate the sale of Virtual Assets in the Bequant Account in an order as determined solely by BEQUANT. If these assets are insufficient, you will be responsible for making up any shortfall, and potentially reimbursing your Bequant Account. BEQUANT has the right to set off your obligations against your Virtual Assets in your Bequant Account(s) or in your account with any Bequant Group Companies.

- You are not entitled to a time extension on a margin call. While BEQUANT may grant an extension, it is not required to do so. Granting an extension on a margin call does not waive BEQUANT’s right to decline to grant an extension in the future.

CUSTODY RISK

Customers may choose, at the sole discretion of the customer, to have BEQUANT or a third-party entity that is integrated into the BEQUANT platform to perform custody of its Virtual Assets. Having Virtual Assets on deposit with any third party Custodian or Exchange has attendant risks.

Virtual Assets are controllable only by the possessor of unique private keys relating to the addresses in which the Virtual Assets are held. The theft, loss or destruction of a private key required to access a Virtual Asset is irreversible, and any such private key would not be capable of being restored. Any loss of private keys relating to digital wallets used to store Virtual Assets could result in the loss of such Virtual Asset. Losing this private key is equivalent to losing access to those Virtual Assets forever. There is no central authority to contact to regenerate that private key. Having this private key stolen is equivalent to giving full access to the Virtual Assets to a malicious person/entity.

Custody involves storage of Virtual Assets in one or more “cold wallets,” “warm wallets” and/or “hot wallets.” This will require the Custodian the right to control private keys. BEQUANT or the third party Custodian, as applicable, will take reasonable steps as it determines are necessary protect the private keys and to prevent their exposure to hacking, malware and general security threats, but there can be no assurance that such steps will be adequate to protect such keys or the Virtual Assets from such threats or that there will be no failure or penetration of the applicable security systems. This is an evolving space, therefore it will be difficult to judge best practice among custodians.

CREDIT AND COUNTERPARTY RISKS

Furthermore, your Virtual Assets, when held on third party Exchanges or Custodians, may be subject to the counterparty risk or any specified or unforeseen risks of that relevant third party. Such third parties are often not regulated nor supervised like traditional banks and broker-dealers. It is difficult (and often impossible) to assess their financial situation, because audited financial statements are often not available. Moreover, those third parties are not subject to any regulatory capital or liquidity requirements and investor protection. Hence, the credit and counterparty risk faced when executing and settling trades and holding assets with those third parties is high. If any such third party loses any of your Virtual Assets, defaults, is in financial distress, becomes insolvent or goes out of business, there may be no specific legal protection that covers you for losses arising from any funds you may have held with such a third party, even when such a party is registered with or regulated by a local regulator. In the event of a failure of such a third party, you may become a general unsecured creditor against that third party. Depending on the structure and security of the third party crypto wallets, some third parties may be vulnerable to hacks, resulting in the theft of Virtual Assets/Fiat. BEQUANT will not be responsible in the event of losses caused by those third parties.

RISKS RELATING TO DEPOSITS, WITHDRAWALS, TRANSFERS

It is your responsibility to ensure that you use the correct address for any deposit, withdrawal, or transfer, and that the address you use is a valid address for the Virtual Assets that you intend to transfer and such assets are accepted by BEQUANT as a deposit. Any inaccuracy in a specified address, or in the Virtual Asset that you attempt to transfer between addresses, may result in total loss of the Virtual Assets concerned.

ACCURACY OF INFORMATION

While BEQUANT endeavours to keep information displayed on the Services as accurate as possible, there is a risk that this may not be correct, complete or updated.

CONFLICT OF INTEREST

BEQUANT charges fees for trading and therefore benefits from trading activity regardless of whether the trading is profitable to you. BEQUANT and its Associates have certain actual or potential conflicts of interest related to the decision to support or not support a Virtual Asset or increase or decrease the scope of the Services made available for such Virtual Asset.

LEGAL RISK

The legal characterization of certain Virtual Assets is uncertain. This can mean that the legality of holding or trading them is not always clear, and may vary under the laws of different jurisdictions throughout the world. Whether and how one or more Virtual Assets constitute property, or assets, or rights of any kind may also be unclear. You are responsible for knowing and understanding how the laws apply to you, your assets, rights and tax. We reserve the right to delist or remove any Virtual Asset from the Services for any reason at our sole discretion.

REGULATORY RISK

All Virtual Assets are potentially exposed to regulatory risks. The regulatory treatment of some of the Virtual Assets may change. The effect of any future regulatory change on the BEQUANT or on you could be substantial and adverse. You should understand that the Virtual Asset industry is dynamic and is expected to significantly change over time. Therefore, BEQUANT or you may be subject to new or additional regulatory constraints in the future. BEQUANT may, in its sole discretion, interpret and apply regulations even if it has an adverse impact on its customers including but not limited to cancelling or modifying your order, restricting or suspending your use of the Services, disclosing your identity, positions or your Account to the local regulators and national competent authorities to comply with Applicable Law.

Furthermore, you should understand that ultimately it is your responsibility to make sure that you comply with any and all local regulations, directives, restrictions and laws in your place(s) of residence before using our Services. We strictly state that we do not permit the use of our Services by users from a jurisdiction in which the use of our Services is not permitted (including, without limitation, Restricted Jurisdictions). We are not offering or soliciting the use of our Services to any person located in any Restricted Jurisdiction or any other jurisdiction in which the specific use of our Services is not authorised or is otherwise prohibited by local laws.

We recommend you to continue to monitor the legal and regulatory position in respect of the Virtual Assets.

TAX RISK

The tax treatment and accounting of Virtual Assets (and any ancillary benefits) is a largely untested area of law and practice that is subject to changes. Tax treatment of Virtual Assets may vary amongst jurisdictions. Moreover, there are no agreed standards and practices for how an auditor can perform assurance procedures to obtain sufficient audit evidence for the existence and ownership of the Virtual Assets, and ascertain the reasonableness of the valuations. If you are unsure about the tax implications of your transactions, you should seek independent professional advice before entering into a Virtual Assets transaction.

CYBER/FRAUD RISK

The nature of Virtual Assets may lead to an increased risk of cyber attack, account compromise or fraud. While BEQUANT believes it has developed an appropriate security system reasonably designed to safeguard Virtual Assets from theft, loss, destruction and other issues relating to hackers and technological attack, such assessment is based upon known technology and threats. As technology develops, the security threats to Virtual Assets will likely adapt and previously unknown threats may emerge. To the extent that BEQUANT is unable to identify and mitigate or stop new security threats, Virtual Assets may be subject to theft, loss, destruction, malware attacks, denial of service attacks, coordinated attacks, account takeovers and other attacks which could result in loss of assets. BEQUANT’s service providers may also be vulnerable to targeted attacks, unauthorized access, fraud, computer viruses, denial of service attacks, terrorism, firewall or encryption failures and other security problems. Cyber-attacks resulting in the hacking of Virtual Asset trading platforms and thefts of Virtual Assets are common. Victims may have difficulty recovering losses from hackers or trading platforms.

Attackers may also seek to steal information about the BEQUANT trading platform, financial data or user information or take other actions that would be damaging to you. In addition, transactions in Virtual Assets may be irreversible, and, accordingly, losses due to accidental or fraudulent transactions may not be recoverable.

It is your responsibility to ensure that your access to credentials are kept secure and confidential, including your email, address, private keys, username and password, as well as access to or use of any two factor authentication hardware, software and the security and integrity of any systems (both hardware and software) or services that you use to access the Services.

TECHNOLOGY AND INTERNET RISKS

Access to the Services may become degraded or unavailable at any time, including during times of significant volatility or volume. This could result in the inability to use or access to the Services and may also lead to support response time delays. Although BEQUANT strives to provide you with excellent service, we do not represent that the BEQUANT Site or the Services will be available without interruption and we do not guarantee that any order will be executed, accepted, recorded, or remain open. BEQUANT shall not be liable for any losses resulting from or arising out of transaction delays.

You acknowledge that there are risks associated with utilising an internet-based trading system including, but not limited to, the failure of hardware, software, and internet connections, the risk of malicious software introduction, the risk that third parties may obtain unauthorized access to information and/or assets (including your Virtual Assets) stored on your behalf, cyber attack, Virtual Asset network failure (such as blockchain), computer viruses, communication failures, disruptions, errors, distortions or delays you may experience when trading via the Services, howsoever caused, spyware, scareware, Trojan horses, worms or other malware that may affect your computer or other equipment, or any phishing, spoofing or other attack. You should also be aware that SMS and email services are vulnerable to spoofing and phishing attacks and should use care in reviewing messages purporting to originate from BEQUANT.

RISK RELATED TO PLATFORM DOWNTIME AND IT MAINTENANCE

BEQUANT may, from time to time, perform maintenance on the Trading Platform, routine or otherwise. This may lead to platform downtime and lack of access to the Trading Platform, potentially resulting in a delay or cancellation of a submitted Order yet to be processed and Orders placed during maintenance or downtime, and the inability for you to submit new or change existing Orders.