There are several risks associated with virtual digital asset (VDA)/crypto-assets and transacting in VDA or VDA derivatives, some of which are illustrated below. By accessing and using the services of Pi42.com, I hereby acknowledge and affirm that I have thoroughly reviewed the following VDA risk disclosures.
DISCLAIMER
CRYPTO PRODUCTS AND NFTS ARE UNREGULATED AND CAN BE HIGHLY RISKY. THERE MAY BE NO REGULATORY RECOURSE FOR ANY LOSS FROM SUCH TRANSACTIONS.
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1) Unique Features of VDAs
VDAs are not recognized as legal tender in most jurisdictions, including India. The pricing of VDAs is determined by the agreement between parties involved in a transaction, which may or may not align with the market value (which itself is determined by demand and supply) of the VDAs at the time of the transaction.
2) Price Volatility; Risk of Partial or Total Loss of the Invested Amount
The price of a VDA is based on its perceived value and is susceptible to fluctuations based on external factors beyond the control of any individual entity. By proceeding, I understand that these products are characterised by high volatility and complex payoff structures, including on occasion due to market manipulation, with certain VDAs experiencing daily price swings exceeding 20%. Consequently, holding VDAs or transacting in VDA derivatives (such as options and perpetual futures) entails significant volatility risk, potentially resulting in substantial losses for holders/traders, including the total loss of the premium paid. With respect to VDA options:
With respect to perpetual futures contracts, my losses may exceed the funds I pay or deposit and may, in certain cases, be unlimited.
3) Valuation and Liquidity
VDAs and VDA derivatives can be traded through privately negotiated transactions and numerous VDA exchanges and intermediaries worldwide, each with its own pricing mechanism and order book. The lack of a centralised pricing source poses challenges for valuation. Additionally, certain VDAs may have concentrated holdings, affecting their prices and liquidity. As a result, buyers and sellers of VDAs or VDA derivatives may not receive their expected treatment or prices, and liquidity dispersion can create challenges for existing positions, particularly during stressful periods.
4) Liquidity risk
I acknowledge that VDAs may have limited liquidity which may make it difficult or impossible for me to sell or exit a position when I wish to do so. This may occur at any time, including at times of rapid price movements.
5) No Guaranteed Returns
I acknowledge that Pi42.com does not guarantee any returns. Profit or loss in VDA derivatives trading is solely dependent on market movements and contract structure.
6) Auto-Exercise Terms
I understand that all options will be automatically exercised at expiry if “In-the-Money”. No manual exercise is permitted.
7) Margin & Liquidation Risk (For Qualifying Users Only)
If I am granted access to write/sell options, I understand I must maintain sufficient margin in my account. Failure to do so may lead to liquidation of my positions without prior notice.
8) Regulatory Clarity
I understand that VDA derivative are currently unregulated in India. Such products are subject to legal ambiguity and I should obtain appropriate legal advice. Future laws, regulations, or directives may also impact the price of VDAs and associated VDA derivative contracts.
Pi42.com operates as a VDA service provider (VDA SP) registered with the Financial Intelligence Unit - India (FIU-IND). All transactions on the platform are conducted in compliance with applicable Indian laws, including anti-money laundering (AML) regulations.
9) VDA/Crypto-asset Exchanges, Intermediaries and Custodians
VDA exchanges, intermediaries, custodians, and vendors facilitating VDA transactions are relatively new and largely unregulated in most jurisdictions. The lack of regulatory oversight raises the risk that a VDA exchange may not hold sufficient VDAs and funds to meet its obligations, and identifying such deficiencies may prove challenging. Moreover, these exchanges are susceptible to significant outages, downtime, transaction processing delays, and flash crashes, resulting in higher operational risk compared to regulated derivatives or securities exchanges. Determining the issuer of a VDA, the trading platform, wallet provider, or intermediary, especially in cross-border situations, can be difficult, making it challenging to ascertain applicable laws or enforce claims against them. I understand that my ability to avail services on Pi42.com’s platforms may be subject to this.
10) Transaction Fees
The amounts of blockchain fees associated with VDAs are subject to market forces, and during periods of stress, they may increase substantially. VDA exchanges, wallet providers, custodians and other intermediaries may charge high fees relative to custodians in other markets.
11) Taxation
I understand and agree that any profits I derive from VDA derivatives trading may be subject to various taxes and tax compliance/reporting obligations under applicable law in India. I further understand and agree to the following:
I understand and agree that Pi42.com reserves the right, at its discretion, to levy Goods and Services Tax (GST) in respect of transactions undertaken on Pi42.com, in accordance with the applicable law. I further acknowledge that Pi42.com reserves the right where applicable, to collect tax at source (TCS) in accordance with the GST laws.
12) Cybersecurity
Pi42.com follows applicable industry standards and best practices to reasonably secure information collected from you. That said, the use of VDAs or VDA derivatives and related "wallets" exposes market participants to cybersecurity risks, including vulnerabilities to hacking and the possibility that publicly distributed ledgers may not be immutable. I understand that a cybersecurity event could lead to significant and irreversible losses for individuals trading VDAs or VDA derivatives. Even a minor cybersecurity incident within the VDA sphere could exert downward price pressure on the affected product and potentially impact other VDAs as well as VDA derivatives.
13) Technology
The relatively new and rapidly evolving technology underlying VDAs introduces unique risks. Accessing, using, or transferring a VDA on a blockchain or distributed ledger requires a unique private key. The loss, theft, or destruction of this private key may result in an irreversible loss of the associated VDA. Additionally, the ability to participate in blockchain forks could have implications for users.
14) Insufficient Information
I understand that publicly available information about specific VDAs may be inaccurate, incomplete, and unclear regarding the project and its risks. Documentation may be highly technical and may require diligence on my part to comprehend the characteristics of the VDAs and/or the VDA derivatives.
15) Misleading Information
Certain VDAs and related products, including VDA derivatives, are aggressively advertised to the public through marketing materials and information that may be unclear, incomplete, inaccurate, or intentionally misleading. For instance, advertisements on social media platforms may focus on potential gains without adequately highlighting the high risks involved. I understand that I should exercise caution concerning social media "influencers" who may have a financial incentive to promote specific VDAs and related products and services, potentially leading to biased communications.
16) Fraud and Malicious Activities
I understand that numerous fake virtual/crypto-assets and scams exist, aiming to deceive individuals and deprive them of their funds using various techniques, including phishing or fake identification.
17) No Personal Advice
Pi42.com does not provide personal advice in relation to its products or services. Pi42.com sometimes provides factual information, information about transaction procedures, and information about potential risks. However, any decision to use Pi42.com’s products or services is made by me. No communication or information provided to me by Pi42.com is intended as or shall be considered or construed as, investment advice, financial advice, trading advice, or any other sort of advice. I am solely responsible for determining whether any investment, investment strategy, or related transaction is appropriate for me according to my personal investment objectives, financial circumstances, and risk tolerance.
18) No Monitoring
I understand that Pi42.com does not monitor whether my use of Pi42.com’s services is consistent with my financial goals and objectives. It is up to me to assess whether my financial resources are adequate for my activity with Pi42.com, and to my risk appetite in the products and services I use.
RISK WARNING
VDA and VDA derivative prices are subject to high market risks and price volatility. The value of my investments/contracts can go up or down and I may not get back the amount invested/transacted. I am solely responsible for my transaction decisions, and despite any risk management tools that Pi42.com may provide, Pi42.com is not liable for any losses I may incur. All of my margin balance may be liquidated in the event of adverse price movement, and past performance is not a reliable predictor of future performance. I will carefully consider my experience, financial situation and objectives and risk tolerance and consult an independent advisor prior to making any investment. No risk management tools or services on Pi42.com may neutralise the risks outlined in this document or that otherwise exist in relation to VDAs or VDA derivatives.