The
trading of goods and products, real or virtual, as well as virtual currencies,
involves significant risk.
Prices
can and do fluctuate on any given day. Due to such price fluctuations, you may
increase or decrease the value of your assets at any given moment. Any currency
– virtual or not – may be subject to large swings in value and may even become
worthless. There is an inherent risk that losses will occur as a result of
buying, selling or trading anything on a market.
Cryptocurrency
trading also has special risks not shared with other currencies or goods, or
commodities in a market. Unlike most currencies, which are backed by
governments or other legal entities, or by commodities such as gold or silver,
Bitcoin or Ethereum (or any other cryptocurrency) is unique and backed by
technology and trust. There is no central bank that can take corrective
measures to protect the value of Bitcoin in a crisis or issue more currency.
Instead, Bitcoin is an as-yet autonomous and largely unregulated worldwide
network. Traders put their trust in a digital, decentralized and partially
anonymous system that relies on peer-to-peer networking and cryptography to
maintain its integrity.
Bitcoin
trading is susceptible to irrational bubbles or loss of confidence, which could
cause a collapse in demand relative to supply. For example, confidence might
collapse in Bitcoin due to unexpected changes imposed by the software developers
or others, a government crackdown, the creation of superior competing
alternative currencies, or a deflationary or inflationary spiral. Confidence
might also collapse because of technical problems: 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.
On
this platform traders trade derivatives contracts, therefore, there is
additional counterparty risk. Under extreme market circumstances, TradeDigital
could decide to partially or entirely close winning positions in order to be
able to close losing positions. Derivatives settle every day in 24-hour
sessions. If bankruptcies in a session deplete the insurance fund, any further
losses will be covered by profits made by traders on the platform on a pro-rata
basis. In such a case all winning traders of a session would get taxed a
percentage of their earnings to cover for other traders ‘bankruptcies. However,
TradeDigital is only allowed to take such steps after the TradeDigital insurance
fund is depleted. The fund will be used to cover losses caused by bankruptcies.
Due
to the nature of cryptocurrencies, there can be situations where TradeDigital
would decide close contracts prematurely to maintain the integrity of the
platform. Users of the platform are assumed to understand those risks. An
example of an extreme situation could happen during forks and splits of the
bitcoin network. Additionally, there might be other risks that have not been
foreseen or identified in our Terms of Service. You should carefully assess
whether your financial situation and tolerance of risk are suitable for buying,
selling or trading cryptocurrencies or associated derivatives.
