Risk Disclosure Statement

 

This Risk Disclosure Statement (this “Statement”) applies to the electronic trading platform (including any applicable mobile applications and websites used to access the same) (collectively the “Platform”) provided by Spark Fintech Limited (the “Company”, “we”, “us” or “our”), and shall constitute part of the terms of use of the Platform to be accepted by the User (the “Terms”).  All capitalized terms that are used but are not otherwise defined herein shall have the meanings ascribed to them in the Terms.

 

Virtual Assets are highly risky and can result in the total loss of your investment in Virtual Assets.  Under certain market conditions, you may find it difficult or impossible to liquidate a position in Virtual Assets. You should fully inform and educate yourself about the risks associated with transactions and investments involving Virtual Assets. You should appraise the risks involved in investing in Virtual Assets, including the risks mentioned below and any other applicable risks concerning Virtual Asset transactions.  You should consider whether transactions or investments in Virtual Assets transactions are suitable for you, taking into account your investment objectives, financial circumstances, investment experience as well as your general tolerance to risk.  If in doubt, you should seek appropriate professional advice from your legal, tax or financial advisors.  This Statement should not be regarded as any professional advice.

 

By using the Platform, you represent and warrant that you are fully aware of the risks associated with the transactions involving Virtual Assets, including the use of the Platform. You agree and understand that you are solely responsible for determining the nature, suitability, and appropriateness of these risks for yourself, and that the Company does not give advice or recommendations regarding any Virtual Asset, including the suitability and appropriateness of, or any investment strategies for, any Virtual Asset. You agree and understand that you access and use the Platform at your own risk.  This Statement does not disclose all of the risks associated with the Virtual Assets and your use of the Platform.

 

1. Risks Relating to Virtual Assets

 

Nature of Virtual Assets

• The price and value of any investment in Virtual Asset products and any return, if any, from the Virtual Asset, can fluctuate and may move against your interest. An individual Virtual Asset may experience downward price movements and may under some circumstances even become valueless. An inherent risk of trading/investing in Virtual Assets is that you may incur a loss rather than make a profit.
• Virtual Assets many be complex products as a result of its complex terms, features and/or the relevant risks are not easily understood by the investor due to its complex nature and reliance on technological features.

 

Not a property under law

• Virtual Assets may or may not be considered “property” under the law, and such uncertainty may affect the enforceability of your interest in such a Virtual Asset.

 

Not a Legal Tender 

• Virtual Assets are not legal tender and are not backed by the government or by the authorities, or by commodities such as gold or silver.
• There is no central bank that can implement corrective measures to protect the value of Bitcoin; Ether; and/or any other Virtual Assets in a financial crisis, or otherwise issue more Virtual Assets to stabilize their value. Instead, Bitcoin; Ether; and/or any other Virtual Assets are autonomous and largely unregulated on worldwide networks. Traders put their trust in a digital, decentralized and partially anonymous financial system that relies on peer-to-peer networking and cryptography to maintain the system’s integrity.

 

Not a Deposit

• Any fiat currencies or Virtual Assets in your Account are not considered as deposits within the meaning of the Banking Ordinance in Hong Kong and are not protected by the Deposit Protection Scheme.

 

Not Under the Protection of the Hong Kong Investor Compensation Fund

• The protection offered by the Hong Kong Investor Compensation Fund established under the Securities and Futures Ordinance and does not apply to transactions involving Virtual Assets (irrespective of the nature of the Virtual Assets) and any transactions in respect of Virtual Assets is not subject to a right to claim under the Investment Compensation Fund. Any Virtual Assets or fiat currency held in the Account are also not protected.

 

Assets held outside of Hong Kong

• Virtual Assets or fiat currency received or held by us and/or our associated entity outside Hong Kong are subject to applicable laws of the relevant foreign jurisdictions, which may differ from the Securities and Futures Ordinance and its subsidiary legislations. Such Virtual Assets may not enjoy the same protection as that conferred on some of the assets received or held in Hong Kong.

 

Other Risks

 

Volatility, Uncertainty and Irreversibility of Virtual Asset Transactions

• Investing in Virtual Assets carries a high level of risk and, as such, may not be suitable for all investors. You should not transact in Virtual Assets if you are seeking a regular or low risk return on your invested capital. Unlike traditional investment products, Virtual Assets do not generally have any underlying or intrinsic asset value or any assets supporting their price.
• Trading in Virtual Assets is highly speculative and involves significant risk. There is limited or no fundamental reasoning behind the pricing of Virtual Assets which may be subject to irrational and uncontrollable market forces. For example, confidence might collapse in Bitcoin because of unexpected changes imposed by the software developers or others; a government crackdown; the creation of superior competing alternative cryptocurrencies; or a deflationary or inflationary spiral. Confidence might also collapse if the anonymity of the system is compromised; if money is lost or stolen; or if hackers or governments can prevent any transactions from settling.
• Whether the future price for a Virtual Asset will increase or decrease is unpredictable and purely speculative. Likewise, there is a risk that a Virtual Asset may not have any value whatsoever.  Any data on the past performance of a Digital Asset does not guarantee, and may not be a reliable indicator of, future performance. Virtual Assets are therefore traded at your own risk.
• Virtual Asset values are highly volatile and can fluctuate substantially in comparison to Fiat or traditional investment products. As a result, market conditions can change significantly in a very short period of time. Furthermore, the value of a Virtual Asset may never recover if there is no interest or development in the Virtual Asset. You are therefore at risk of losing all or a substantial portion of the value of its Virtual Assets. Such losses can occur in a very short period of time.
• The use of instructions in relation to orders may not necessarily limit losses to the expressed amount and market conditions may make it impossible to fill an order or to obtain the limit price.
• You understand that you should be able to bear the risk of potential losses up to the full amount of your invested capital and you should only invest capital that you can afford to lose without impacting your standard of living and that is proportionate to your income. You should cease trading in Virtual Assets if your personal situation no longer permits it.
• Trading in Virtual Assets is not appropriate for persons with:

1. 1. limited resources;
   2. limited investment experience; and/or
   3. a low risk appetite to investment or trading losses.

• You should ensure that you have an understanding of the economic and other types of risks involved in trading Virtual Assets. You should seek professional advice where appropriate taking into account your investment objectives, level of experience and risk appetite.
• By opening an account, you are deemed to have evaluated and accepted the risk of trading in Virtual Assets. By entering into any trade, you have conducted your own independent appraisal and investigation into the risks of each trade and the underlying Virtual Assets.
• Transactions in Virtual Assets are irreversible, and, accordingly, losses due to fraudulent or accidental transactions may not be recoverable and are irreversible. 
• Some Virtual Asset transactions shall be deemed to be executed when recorded on a public ledger (they are deemed to be executed when recorded and confirmed by us), which is not necessarily the date or time that you initiated the transaction.
• If a Virtual Asset transaction is denominated in a particular Virtual Asset or fiat currency other than your primary reference asset, or where you convert Virtual Assets during a Virtual Asset transaction, there may be a risk that if the exchange markets move against you, the net proceeds from such transaction may be significantly less than the initial amount invested and/or entirely negate any income or gains.

 

Volatility and Uncertainty of Virtual Asset Market

• There is no assurance that a market for a particular Virtual Asset will be stable and will never disappear. This may be caused by the decrease in willingness of market participants to exchange that Virtual Asset, the absence of buyers, limited buy/sell activity or underdeveloped secondary markets. There is a possibility for you to experience losses due to the inability to sell or convert assets into a preferred alternative asset immediately or in instances where conversion is possible but at a loss. This is outside of the Company’s control. The Company makes no guarantee as to the timing or availability of the ability to purchase or sell Virtual Assets via the Platform.

• The value of Virtual Assets may be derived from the continued willingness of market participants to exchange fiat currency for Virtual Assets or Virtual Assets for another Virtual Assets, which may result in the potential for permanent and total loss of value of a particular Virtual Asset should the market for that Virtual Asset disappear. There is no assurance that a person who accepts a Virtual Asset as payment today will continue to do so in the future. Thinly traded or illiquid markets have an increased potential risk of loss as a result of the enhanced volatility and a User may not be able to establish or liquidate positions in a Digital Asset when desired, at favourable prices or at all.

 

No advice or recommendation

• The Company provides an execution-only service and does not advise on the merits of any particular trade, trading risk or associated tax consequences, and the Company does not provide any other financial, investment or legal advice.
• Any information provided on the Platform is for information purposes only and is not, nor intended to be, financial advice, investment advice, a trading recommendation or any other advice. The Company does not warrant the accuracy, completeness or usefulness of such information and such information should not be considered as an offer to buy or sell a Virtual Asset. You are solely responsible for determining whether any trade is appropriate.

 

Increase in Fraud, Cyberattack and other Malicious Activities

• The nature of Virtual Assets may lead to an increased risk of fraud or cyber-attack, and may mean that technological difficulties experienced by the Platform may prevent or hinder  your access to or use of your Virtual Assets (e.g. by way of phishing; hacking; smurfing; malware; double spending; majority-mining; mining attacks; misinformation campaigns; forks; spoofing; distributed denial of service; sybil attacks, attacks by malicious persons, exploitation of vulnerabilities in smart contracts etc. The attacks may undermine the security and integrity of the networks, which may affect the features, functions, operations, use or the properties of any Virtual Assets, network or platform. These events may also impact the price, value and functions of the Virtual Assets, or even the shutdown of the network or platform associated with the Virtual Asset.
• Virtual Assets may experience decrease in value or lose all of its value in the event of market misconduct, market manipulation, change to the Virtual Asset’s nature or properties, suspension or cessation of the Virtual Asset from trading, cessation of practice by a service provider, technological development, financial crisis, foreign exchange control or other factors. Public opinion, broader economic and political factors may also result in or contribute to a significant change in the value of Virtual Assets over a short period of time.
• A "fork" refers to an upgrade in the code of a blockchain network, which may, for example, occur as a result of disagreements between stakeholders as to an update to a Virtual Asset's protocol or from a deliberate effort to revert the blockchain history to a point prior to a cyber-attack. A hard fork may result in a permanent split from a previous version of the blockchain and will effectively create a new Virtual Asset. The occurrence of a fork is outside of the Company’s control. The supply of Virtual Assets as a result of a fork or similar changes to a Virtual Asset's protocols and the Company’s ability to provide services for the new Virtual Asset which arises as a result may depend on third party providers which are outside of the Company’s control. The Company does not own or control any of the protocols that are used in connection with Virtual Assets and their related networks. Accordingly, the Company is not liable in respect of such protocols or any change in the value of any Virtual Asset (whether as a result of a fork or any similar change to a Virtual Asset's Protocol or otherwise), and the Company makes no guarantees regarding the security, functionality, or availability of such protocols.
• You are deemed to accept all risks associated with the use of the services, including, but not limited to, the failure of hardware, software, and internet connections.
• There is limited, or in some cases no, mechanism for the recovery of lost or stolen Virtual Assets.

 

Reliance on Internet and other technologies

• Advancement of artificial intelligence poses security risks to all cryptography-based systems including Virtual Assets, your account and our APIs, website or Services etc., which may result in theft, loss, disappearance, destruction or devaluation of Virtual Assets.
• Heavy reliance on the Internet and other technologies may cause interruption, delay, loss of data or the loss of confidentiality in data. The transmission of malware may occur when transmitting data via the Internet and/or other technologies. The Internet’s public nature may also be unreliable or unavailable at given times. As a result, transactions in Virtual Assets may not be executed in accordance with your instructions.
• The Company’s trading facilities are supported by computer-based component systems for order-routing, execution, matching, registration or clearing of trades. As with all facilities and computer systems, customers will be exposed to risks associated with the systems including the failure of hardware and software supporting the Platform. The result of any system failure may be that your order is either not executed according to instructions or is not executed at all. You should also be aware that the Internet is not a completely reliable transmission medium and there may be delays in service provisions of the Platform. 
• Understanding Virtual Assets requires advanced technical knowledge. Virtual Assets are often described in exceedingly technical language that requires a comprehensive understanding of applied cryptography and computer science in order to appreciate inherent risks. The listing of a Virtual Asset on the Platform does not indicate approval or disapproval by the Company of the underlying technology regarding that Virtual Asset and should not be used as a substitute for each User's understanding of the risks associated to that Virtual Asset.
• A Virtual Asset may also be suspended or delisted from trading at any time, and may suffer losses if you hold any such Virtual Asset.
• The software protocols that underly Virtual Assets are typically open source projects, which means that:

1. 1. the development and control of such Virtual Assets is outside of the Company’s control; and
   2. such software protocols are subject to sudden and dramatic changes that might have a significant impact on the availability, usability or value of a specific Digital Asset.

• The nature of Virtual Assets means that technological difficulties experienced by the Company may prevent a User's access to, or use of, its Virtual Assets. The Company may experience sophisticated cyber-attacks, unexpected surges in activity or other operational or technical difficulties that may cause interruptions or outages to the services, or may result in Virtual Assets being lost and/or stolen. A User should understand that the Platform may experience operational issues that lead to delays. By using the services, a User agrees to accept the risk of transaction failure resulting from unanticipated or heightened technical difficulties, including those resulting from sophisticated attacks.
• Virtual Assets are dependent upon new technologies, including distributed ledger technologies for the purposes of, amongst other things, anonymity, irreversibility of transactions, accidental transactions, transaction recording and settlement.
• Virtual Asset transactions cannot be reversible. Once a User sends a Virtual Asset to a wallet address, there is a risk that it may lose access to the Virtual Asset indefinitely. For example, an address may have been entered incorrectly and the true owner of the wallet address may never be discovered, or a wallet address may belong to an entity that will not return the User's Virtual Assets or which will only do so following action on the part of the User, such as verification of their identity.
• A User may lose its private key in certain circumstances, including but not limited to the following:

1. 1. if the private key has been backed up on paper and subsequently lost or stolen; or
   2. if the private key has been hacked or stolen.

• The person in possession of a private key will own the Virtual Assets.

 

Third Party Risks

• Virtual Assets are issued by third parties and not by us. You need to familiarize yourself with the applicable terms, information and risk disclosures provided by the applicable issuers carefully before entering into a Virtual Asset transaction.
• If you engage another person to trade or operate the Account, it is possible that the instructions given by you are not properly authorized. You are fully responsible for the risks of such operation. There may be unauthorized third-party access or use of the Account which may effect the Virtual Assets transactions without your knowledge or authorization.

 

Legislative and Regulatory Risks

• The terms and conditions of the offering documents or product information of the Virtual Assets provided by the applicable issuer has not been subject to the scrutiny of any regulatory body.
• Legislative and regulatory changes or actions at the state, federal, or international level may adversely affect the use, transfer, exchange, and value of Virtual Assets. 
• All Virtual Asset transactions are potentially exposed to legal and/or regulatory risks, which varies from jurisdiction to jurisdiction. Regulation of Virtual Assets is largely unsettled and changing rapidly. The effect of regulatory and legal change is that any Virtual Asset may decrease or lose all its value.
• Due to the relatively recent development of Virtual Assets, banks and other competent authorities have different views as to the risks associated with funds generated from the buying and selling of Virtual Assets or may have a very low tolerance to risk. Accordingly, a User's bank may freeze its account or reject any incoming funds if the User’s bank concludes that such funds are the result of buying or selling Virtual Assets. 
• The Platform may become unavailable due to changes in applicable laws, and you may suffer loss or incur liabilities due to the termination or suspension of the Platform or the Account.
• The Company may suspend a User's access to the account. In such circumstances, the User will not be able to make deposits or withdrawals or trade. The Company may also suspend a User's ability to transact on the Platform, in which case it will not be able to undertake the sale or purchase of a Virtual Asset but it will be permitted to make deposits or withdrawals from its account.
• You bear the responsibility for ensuring that any Virtual Asset transaction is and shall remain lawful despite changes to applicable laws, residence and circumstances. Before you conduct any Virtual Asset transaction you should satisfy yourself about any rules or laws relevant to those particular Virtual Asset transactions.

 

Foreign Exchange Restrictions

• You may also suffer loss due to a depreciation in the value of the currency paid as a result of foreign exchange controls or other actions by imposed by governmental or regulatory bodies in the country issuing the foreign currency, which may delay or prevent the payments owed to you.

 

Taxation Risks

• Some Virtual Asset transactions may be subject to the tax laws and regulations in an applicable jurisdiction. Given that the tax treatment and accounting of Virtual Assets is subject to changes and tax treatment of Virtual Assets may differ amongst jurisdictions, if you have any queries about the tax implications of your investments or transactions in a Virtual Asset, please seek independent professional advice before carrying out such investment or transaction.
• You should note in particular that the proceeds from the sale of Virtual Assets and other income may be or may become subject to tax, levies, duties or other fees or charges imposed by the relevant authorities in that market, including taxation levied by withholding at the source. Tax law and practice regarding Virtual Assets in certain countries may not be clearly established. It is therefore possible that the current interpretation of the law or understanding of practice may change, or that the law may be changed with retrospective effect.

 

Stop Loss

• A Stop Order is an offer to deal if our quote becomes less favourable to you. A Stop Order is generally placed to provide some risk protection, for example in the event of your trade moving into loss, and can be used to either open or close a trade. Each Stop Order has a specific stop level, set by you. Your Stop Order will be triggered if our bid price (in the case of an order to sell) or our offer price (in the case of an order to buy) moves against you to a point that is at or beyond the level specified by you. Notwithstanding the specific stop level set by you, we may be required by applicable laws and regulations to close or part close a trade prior to your Stop Order being triggered.
• You agree and understand that Stop Orders will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such Orders at a price close to your intended stop price or at all. In extremely volatile markets, the price of a Virtual Asset may fall rapidly through your Stop Order price and you may suffer losses well in excess of the amount realised had your Stop Order been executed at the Stop Order price.

 

Jailbreak risk

• Services may be blocked or interrupted if the security features devised by the operating system or manufacturer of such device on which the Platform is installed have been modified at any time (for example, a device that has been “jailbroken”). The Company does not guarantee the functioning and operation of the API on end devices which have been modified in this way or on older end devices that no longer meet the technical requirements for the use of or access to the Platform.

 

Stablecoin trading risk

As a client trading stablecoins (including but not limited to USDT and USDC) on the Company's platform, you should be aware of the following risks:

• stablecoins may not maintain a stable value against their pegged currency;
• the lack of regulation and oversight of stablecoin issuers;
• the potential for fraud, mismanagement, or failure of the stablecoin issuer;
• the increased risk of cyber threats and hacking attempts targeting stablecoin wallets and smart contracts; and
• the limited recourse available in the event of disputes or issues with the stablecoin issuer or the trading platform. “