You must evaluate your particular financial circumstances to determine whether or not trading cryptocurrencies is appropriate for you. You should not invest funds in cryptocurrencies that you cannot afford to lose. The trading of cryptocurrencies can result in substantial losses, including most if not all of your investment. For that reason, you should not use funds that are earmarked for special purposes, such as retirement funds, debt repayment funds, amounts needed for emergency expenses, tuition or household expenses or funds otherwise required by your lifestyle, to trade cryptocurrencies.
Patricia is committed to consumer protection and combating fraud. Cryptocurrencies and digital assets are commonly targeted by hackers and criminals who commit fraud, especially through social media platforms. Patricia and its employees will never contact you through social media platforms. If you believe you are a victim of fraud, please contact us at [email protected]
Unique Features of cryptocurrencies.
Cryptocurrencies are digital instruments that are intended to function as a store of value or a medium of exchange. Although cryptocurrencies are often exchangeable for various fiat currencies, unlike fiat currencies, cryptocurrencies are not backed by any government or central bank and do not constitute legal tender. Cryptocurrencies have no intrinsic value and there is no investment underlying cryptocurrencies. The price of cryptocurrencies is based on the agreement of the parties to a transaction, which may or may not be based on the market value of the cryptocurrency at the time of the transaction.
Accounts holding cryptocurrencies are not protected by SIPC coverage. Cryptocurrencies are also not covered by the FDIC, which covers fiat currency held in member banks. Existing insurance products are inadequate to cover potential losses if an exchange fails and/or digital wallets are hacked.
Cryptocurrencies derive their value from the markets in which they trade, and the markets for cryptocurrencies are global. The price of cryptocurrencies is based on the perceived value of the cryptocurrency and subject to changes in sentiment, which make these products highly volatile and unpredictable. The fluctuations of cryptocurrency prices are much greater than the price fluctuations of fiat currencies, which are also risky to trade. Certain cryptocurrencies have experienced daily price volatility of more than 20%, including sudden drops in price. If participants in a given cryptocurrency market change their view about the value of a given cryptocurrency versus fiat currency, the price of the cryptocurrency can decline precipitously. It may be difficult to liquidate a position in cryptocurrencies at all or, if possible, such liquidation may occur at a significant loss. It is possible that the market for a given cryptocurrency can collapse altogether.
Market manipulation, Valuation and Liquidity.
Cryptocurrencies can be traded through privately negotiated transactions and through numerous cryptocurrency exchanges and intermediaries around the world, each with its own pricing mechanism and/or order book. Generally accepted auditing methods for cryptocurrencies do not exist and cryptocurrency platforms do not have consistent methods for auditing their holdings and some do not have audits at all. The lack of generally accepted auditing methods and a centralized pricing source pose a variety of valuation challenges. In addition, the dispersed liquidity may pose challenges for market participants trying to exit a position, particularly during periods of stress. Cases of market manipulation have been reported on multiple occasions.
The cybersecurity risks of cryptocurrencies and related “wallets” or spot exchanges include hacking vulnerabilities, cybersecurity attacks and a risk that publicly distributed ledgers may not be immutable. A cybersecurity event could result in a substantial, immediate and irreversible loss for market participants that trade cryptocurrencies. Cryptocurrency transactions may be irreversible, and, accordingly, losses due to a cybersecurity event may not be recoverable. Even a minor cybersecurity event in a cryptocurrency is likely to result in downward price pressure on that product and potentially other cryptocurrencies. In addition, the trading of cryptocurrencies may be adversely affected by network connectivity issues and dissemination of inaccurate data. You may incur losses due to software or hardware failures and system failures.
Opaque Spot Market.
Not only are the cryptocurrency markets volatile, but they are subject to fraud and other trading aberrations. Cryptocurrency balances are generally maintained as an address on the blockchain and are accessed through private keys, which may be held by a market participant or a custodian. Although cryptocurrency transactions are typically publicly available on a blockchain or distributed ledger, the public address does not identify the controller, owner or holder of the private key. Unlike bank and brokerage accounts, cryptocurrency exchanges and custodians that hold cryptocurrencies do not always identify the owner.
The opaque underlying or spot market poses asset verification challenges for market participants, regulators and auditors and gives rise to an increased risk of manipulation and fraud, including the potential for Ponzi schemes, bucket shops and pump and dump schemes, which may undermine market confidence in a cryptocurrencies and negatively impact its price.
Cryptocurrency Exchanges, Intermediaries and Custodians.
Cryptocurrency exchanges, as well as other intermediaries, custodians and vendors used to facilitate cryptocurrencies transactions, are relatively new and largely unregulated in most jurisdictions. The opaque underlying spot market and lack of regulatory oversight creates a risk that a cryptocurrency exchange may not hold sufficient cryptocurrencies or other funds to satisfy its obligations and that such deficiency may not be easily identified or discovered.
In addition to a higher level of operational risk than regulated futures or securities exchanges, cryptocurrency exchanges can experience volatile market movements, flash crashes, fraud, various forms of market manipulation, theft, transaction processing delays and other cybersecurity risks. Trading in cryptocurrencies may be halted by the various trading venues due to unusual trading activity, outages or other problems with a cryptocurrency platform. If Patricia experiences such technical difficulties, those difficulties could prevent you from accessing the cryptocurrency in your Patricia Crypto account. Patricia may not have sufficient financial coverage through bonds, insurance or other products to repay your losses.
Some cryptocurrency transactions shall be deemed to be made when recorded on a public ledger, which is not necessarily the date or time that the customer initiates the transaction. Before you engage in trading cryptocurrencies, you must become familiar with the platform on which the relevant cryptocurrency trades. Generally, there is limited information about the various cryptocurrency platforms and because these platforms are complex and technically difficult for the average person to understand, you will need to put forth substantial effort to obtain the information necessary to understand the risks you are undertaking. You should understand the functions, operations and uses as well as the history for the platforms on which you invest. As described above, some platforms are subject to a variety of serious attacks, which may result in the loss of your cryptocurrency.
It may be difficult or even impossible to identify and/or locate the issuer of cryptocurrencies, the trading platform, wallet provider or intermediary, especially in a cross-border situation where it may also be difficult to determine which laws may be applicable. Thus, if a holder has a claim it might be difficult to sue the issuer or the wallet provider and enforce a title.
The majority of cryptocurrencies and the selling of products or services in relation to cryptocurrencies are unregulated. In these cases you will not benefit from the rights and protections available to consumers for regulated financial services, such as complaints or recourse mechanisms.
Cryptocurrencies currently face an uncertain regulatory landscape in many jurisdictions. In addition, many cryptocurrencies derivatives are regulated by the provisions of national and supra-national (i.e. EU) securities legislation; moreover, some state securities regulators have cautioned that many initial coin offerings are likely to fall within the definition of a security and subject to their respective securities laws. One or more jurisdictions may, in the future, adopt laws, regulations or directives that affect cryptocurrencies networks and their users. Such laws, regulations or directives may impact the price of cryptocurrencies and their acceptance by users, merchants and service providers.
The relatively new and rapidly evolving technology underlying cryptocurrencies introduces unique risks. For example, a unique private key is required to access, use or transfer a cryptocurrency on a blockchain or distributed ledger. The loss, theft or destruction of a private key may result in an irreversible loss.
Similarly, transactions in virtual currency may be irreversible, and, accordingly, losses due to fraudulent or accidental transactions may not be recoverable.
Changes in the technology of a given cryptocurrency platform or changes resulting from cybersecurity attacks include but are not limited to a “fork,” which can have a negative impact on the value of a particular cryptocurrency and can result in the loss or cancellation of a cryptocurrency position or a sudden loss of value. The ability to participate in forks could also have implications for investors. For example, a market participant holding a cryptocurrency position through a cryptocurrency exchange may be adversely impacted if the exchange does not allow its customers to participate in a fork that creates a new product.
Many cryptocurrencies allow market participants to offer miners (i.e., parties that process transactions and record them on a blockchain or distributed ledger) the ability to earn a fee. While not mandatory, a fee is generally necessary to ensure that a transaction is promptly recorded on a blockchain or distributed ledger. The amounts of these fees are subject to market forces, and it is possible that the fees could increase substantially during a period of stress. In addition, cryptocurrency exchanges, wallet providers and other custodians may charge relatively high fees as compared to custodians in many other financial markets.
Risk of partial or total loss of the invested amount.
Investments in cryptocurrencies are not regulated in most countries and therefore you are unlikely to be protected if something goes wrong. Also, the risks associated with the investment may not be clearly stated in the documentation published by the issuer of the cryptocurrencies.
Risk of insufficient information disclosure.
Information regarding any specific сrypto-asset may be missing, inaccurate, incomplete and unclear with respect to the project and its risks. Documents may be highly technical and require sophisticated knowledge to understand the characteristics of the сrypto-asset and/or the project.
In many projects, the value and stability of the сrypto-asset largely depends on the skill and diligence of the project team behind the сrypto-asset or the ICO. The project underlying an ICO might not be realised, which would ultimately make the сrypto-asset worthless.
Some cryptocurrencies and related products are aggressively advertised to the public, using marketing material and other information that may be unclear, incomplete, inaccurate or even purposefully misleading. For instance, advertisements via social media may be very short, with a focus on the potential gains but not the high risks involved. You should also beware of social media ‘influencers’ who typically have a financial incentive to market certain cryptocurrencies and related products and services and therefore may be biased in the communications they issue.
Fraud and malicious activities.
Numerous fake cryptocurrencies and scams exist and you should be aware that their sole purpose is to deprive you of your money using different techniques, for example phishing.
Patricia makes no warranties or representations, express or implied, on products and services offered through the platform. It accepts no liability for any damages or losses, however, caused in connection with the use of related services.
As a business, we do not give tips, recommendations, or provide any advisory services. We have not authorized anyone to trade on behalf of others. If you find anyone claiming to be part of Patricia and offering such services, please inform us here: [email protected].
Third-party information provided for product features, communications, and communications emanating from social media communities, market prices, data, and other information available through any of our are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information provided is not warranted as to completeness or accuracy and is subject to change without notice.
All logos and trademarks belong to their respective legal owners.