Risk Warning
Please read the following risk warnings carefully before using the FINTRUST Service.
This document provides you with information about the risks associated with using trading in cryptocurrencies and with using the FINTRUST Service, which allows you to buy or sell interests in cryptocurrency via our partner cryptocurrency exchange(s) (each a “Cryptocurrency Exchange”).
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 lose value in 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. If you are in any doubt about whether the Cryptocurrency Service is right for you, you may wish to seek guidance from a professional adviser.
You should carefully assess whether your financial situation and tolerance for risk is suitable for any form of exposure to cryptocurrencies. You should never invest in cryptocurrencies unless you can afford to lose 100% of your investment.
Trading in Cryptocurrencies is unregulated
Trading cryptocurrencies such as Bitcoin has special risks not generally shared with official 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, cryptocurrencies are a unique kind of Internet digital currency, backed by technology and trust. There is no central bank that can take corrective measures to protect the value of any cryptocurrency in a crisis or issue more currency.
Instead, cryptocurrencies are an as-yet autonomous and largely unregulated global system of currency firms and individuals. Traders put their trust in a digital, decentralised, and partially anonymous system that relies on peer-to-peer networking and cryptography to maintain its integrity. As such, cryptocurrencies are not governed by any specific European or other regulatory framework. This means that, when you use the SWM Service to purchase cryptocurrencies, you will not benefit from the protections available to customers receiving e-money/payment services provided by our third party service providers. SWM is not subject to FINMA supervision.
We use our banking providers in order to receive client money and make payments. Our banking providers DO NOT transfer cryptocurrencies, exchange cryptocurrencies, or provide any services in connection with cryptocurrencies.
The value of Cryptocurrencies is highly volatile
The trading of cryptocurrencies is often susceptible to irrational bubbles or loss of confidence, which could collapse demand relative to supply. For example, confidence might collapse in cryptocurrencies because of unexpected changes imposed by 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 are able to prevent any transactions from settling.
There may be additional risks that we have not foreseen or identified in our Terms of Use.
You should carefully assess whether your financial situation and tolerance for risk is suitable for buying, selling or trading cryptocurrencies. You should never trade in cryptocurrencies unless you can afford to lose 100% of your investment.
There may be additional risks that we have not foreseen or identified in our Terms of Use. You should carefully assess whether your financial situation and tolerance for risk are suitable for buying, selling, or trading cryptocurrencies.
Cryptocurrency exchanges are vulnerable to cyber attacks
Cryptocurrency exchanges are entirely digital and, as with any virtual system, are at risk from hackers, malware and operational glitches. Even though Cryptocurrency Exchanges take various steps to preserve the security of their platforms, cryptocurrency which is held in wallets provided by such exchanges remain vulnerable to hacking.
If a thief gains access to one or more Supported Cryptocurrencies (i.e. by stealing the private encryption key to the Cryptocurrency Exchange wallets), he/she could transfer the stolen assets to another account. This is particularly problematic since all cryptocurrency transactions are permanent and irreversible.
Accordingly, a hack is likely to lead to substantial depletion of the Supported Cryptocurrency held on your behalf (see below). Whilst the Cryptocurrency Exchange may be willing to compensate users for any such loss, they are not obliged to do so. A serious hack could also have the effect of putting a Cryptocurrency Exchange into insolvency.
The supported cryptocurrencies are held in non-custodial wallets by a third party.
When you use the FINTRUST Service to buy interests in one or more of the Supported Cryptocurrencies, they will be held on your behalf by a third party (usually the Exchange) who will act as custodian (the “Custodian”). Records will be held by the Cryptocurrency Exchange and us to show that the Supported Cryptocurrencies are held on your behalf and do not belong to any third party.
Fiat currencies are held in IBAN accounts with third party service providers.
Fiat currencies to purchase cryptocurrencies are held in a transit account operated by Bank Frick & Co. AG, Landstrasse 14, 9496 Balzers, Liechtenstein or another sufficiently licensed third pary service providers. Fintrust AG never has control over client’s assets.
The Cryptocurrency Exchange may terminate their service at any time
To provide the FINTRUST Service to you, we partner with one or more Cryptocurrency Exchanges to (a) facilitate the buying and selling of interests in Supported Cryptocurrencies; and (b) in some cases, hold the Supported Cryptocurrencies as Custodian.
Given the various risks attached to cryptocurrency exchanges (including the uncertain legal environment), it is possible that a Cryptocurrency Exchange could suspend or terminate its relationship with us and may not tell us why. In these circumstances, we may have to suspend the FINTRUST Service ourselves but we will try to transfer the underlying Supported Cryptocurrency to another Cryptocurrency Exchange as soon as possible.
The legal status of cryptocurrency is uncertain and evolving
Given that the market for cryptocurrencies is relatively new, the legal nature of cryptocurrency is, in most jurisdictions, yet to be determined by statute, regulation or case law. In the absence of such authority, it is not clear how a regulator or court may treat interests or rights arising from cryptocurrency trading. In particular, the law applicable to firms who hold cryptocurrencies in custody (particularly in the event of such firms’ insolvency) is far from clear.
It is possible that a national or supranational regulator may take unilateral action to legislate the cryptocurrency market in a manner which prevents or encumbers the proper operation of the market in your jurisdiction. This may impact whether we can offer the Cryptocurrency Service to you
The functioning of the cryptocurrency network is outside our control
Since the Blockchain is an independent public peer-to peer network and is not subject to regulation or control by any governmental or other authority or firm, we are not responsible for any failure, mistake, error and/or breach which shall occur on the Blockchain or on any other networks in which the Supported Cryptocurrencies are being issued and/or traded.
We do not own or control the underlying software protocols which govern the operation of the Supported Cryptocurrencies. In general, the underlying protocols are open source and anyone can use, copy, modify, and distribute them.
The underlying protocols of the Supported Cryptocurrencies 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 Supported Cryptocurrency.
Changes and additions to this Risk Warning
Please check back often to review this Risk Warning as we may amend it from time to time. If you have any questions regarding this Risk Statement, via the contact form on the Contact Us page of our website.