Cryptocurrency fund (hereinafter referred to as “crypto fund”) is an alternative investment fund. As an emerging asset concept, cryptocurrency presents a myriad of potential regulatory considerations, technological complexities, and market uncertainties with few analogous instruments.
It is different from bank deposits or government bonds. There is no guarantee that participants will profit from their investments.
Risks of trading crypto funds include, but are not limited to, the following:
- Market risk: Market prices for crypto can be volatile and highly unpredictable. It could be influenced by the macroeconomy, global and national regulations, market sentiment and other factors, which would affect the performance of crypto funds and incur losses.
- Liquidity risk: Investors may be unable to liquidate market positions at their preferred time.
- Technological risks: Various hardware, software and cybersecurity vulnerabilities pose critical risks to fund managers and their investors. Such technological risks are borne by investors.
- Investment risks of different types of funds: According to investment risks, crypto funds can be divided into three levels as Aggressive, Moderate, and Conservative. Generally speaking, the higher the fund's expected return, the greater the risk investors will take.
- Fund management risk: The fund performance will depend on the fund manager's investment strategy and philosophy. Investors shall bear the losses caused by the fund manager's investment decisions.
- Force Majeure risks: Force majeure factors such as earthquakes, fires, floods, wars, etc. may cause the trading system to collapse. In addition, operating system or equipment failures, power failures, telecommunication failures, etc. may also affect the fund operations. Participants shall bear the losses caused by these risks.
This Risk Disclosure Statement discusses some of the principal risks, but it does not and cannot describe every risk or consideration involved due to the nascent and evolving nature of the crypto market. Participants shall know all of the terms of any contracts they enter, and other market and risk factors can affect their assets; then invest selectively according to their investment goals and risk tolerance.
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