High Risk Warning. Digital asset trading involves a substantial risk of loss. The value of Digital Assets can fall to zero. You should only trade with capital you can afford to lose entirely. Past performance is not a reliable indicator of future results. This disclosure does not cover all risks — you should seek independent professional advice before trading.
Purpose of this Disclosure
This Risk Disclosure Statement is provided by Exchange Capital to inform institutional counterparties of the principal risks associated with OTC digital asset trading. It does not purport to be a comprehensive description of all risks involved. Counterparties are responsible for making their own independent assessment of the risks applicable to their specific circumstances and for obtaining appropriate professional advice.
By accessing Exchange Capital's services, you confirm that you have read, understood, and accept the risks described in this document.
Market Risk
Digital assets are highly volatile instruments. Prices can change dramatically in very short time periods, driven by factors including but not limited to:
- Supply and demand dynamics and changes in market sentiment.
- Regulatory announcements or enforcement actions in any jurisdiction.
- Macroeconomic events, interest rate changes, and broader financial market movements.
- Network upgrades, hard forks, or technical changes to underlying blockchain protocols.
- Actions by large holders ("whales") capable of materially influencing prices.
- Media coverage, social media activity, and public perception.
There is no assurance that any Digital Asset will retain value or that markets will remain liquid. Digital Assets have no intrinsic value guaranteed by any government or central bank.
Liquidity Risk
Digital asset markets may experience periods of reduced liquidity, during which it may be difficult or impossible to execute trades at desired prices or sizes. Market conditions can deteriorate rapidly. Exchange Capital provides OTC liquidity on a best-efforts basis and does not guarantee availability of quotes or execution at any particular price or size.
OTC transactions are bespoke and bilateral — there is no centralised exchange order book, and quotes obtained from Exchange Capital may not reflect the best available market price at any given time.
Counterparty Risk
OTC transactions involve bilateral counterparty risk. As Exchange Capital acts as principal, there is a risk that Exchange Capital may be unable to fulfil its settlement obligations due to financial difficulty or insolvency. Similarly, Exchange Capital bears counterparty risk to you. Failed settlement may result in financial loss and may require legal action to recover.
Counterparties should conduct their own due diligence on Exchange Capital's financial standing and should not commit capital in excess of what they are comfortable having at risk with a single counterparty.
Technology & Cybersecurity Risk
Digital asset transactions are irreversible once confirmed on the blockchain. Errors in wallet addresses, transaction amounts, or asset selection cannot be reversed and may result in permanent loss of assets. Counterparties must verify all settlement details with extreme care before authorising any transaction.
The broader digital asset ecosystem is subject to cybersecurity risks including hacking, phishing, malware, and social engineering attacks. Exchange Capital implements security measures but cannot guarantee complete protection against sophisticated attacks. Counterparties should maintain their own cybersecurity protocols and independently verify communication from Exchange Capital via established out-of-band channels.
Blockchain networks may experience congestion, downtime, or technical failures that delay or prevent settlement. Exchange Capital accepts no liability for network failures outside of its control.
Regulatory & Legal Risk
The regulatory treatment of Digital Assets varies significantly between jurisdictions and continues to evolve rapidly. Changes in law or regulation in any relevant jurisdiction may adversely affect the value, transferability, or legality of Digital Assets and may impact Exchange Capital's ability to continue providing services.
Counterparties are solely responsible for ensuring that their participation in Digital Asset trading is lawful in their jurisdiction of incorporation and operation. Exchange Capital does not provide legal or regulatory advice and makes no representation regarding the regulatory treatment of any Digital Asset in any jurisdiction.
Regulatory authorities may require Exchange Capital to freeze assets, terminate relationships, or report transactions in ways that may adversely affect counterparties. Compliance with applicable law takes precedence over contractual obligations in all circumstances.
Operational Risk
Exchange Capital's operations depend on technology systems, personnel, and third-party service providers. Operational failures, human error, system outages, or third-party failures may result in delayed execution, failed settlement, or loss of data. Exchange Capital maintains business continuity plans and redundant systems but cannot guarantee uninterrupted service.
Communication errors, including misunderstood verbal instructions or email interception, may result in incorrect transaction execution. All trade terms must be confirmed in writing before settlement is initiated.
Custody Risk
Exchange Capital does not provide custodial services. Counterparties are responsible for the security of their own wallets and private keys. Loss of private keys results in permanent and irrecoverable loss of associated Digital Assets. Exchange Capital accepts no liability for assets held in counterparty custody.
Where third-party custodians are involved in settlement, counterparties should conduct independent due diligence on those custodians. The insolvency of a third-party custodian may result in loss of assets.
Concentration & Portfolio Risk
Concentration of exposure in a single Digital Asset, or in Digital Assets generally, increases the potential for significant losses. Counterparties should consider their overall portfolio composition and ensure Digital Asset exposure is appropriate relative to their total assets, liabilities, and risk tolerance.
Exchange Capital does not provide portfolio management services and accepts no responsibility for the overall composition of counterparty portfolios.
Tax Risk
The tax treatment of Digital Asset transactions is complex, uncertain, and jurisdiction-dependent. Tax laws applicable to Digital Assets are evolving and may change with retroactive effect. Counterparties are solely responsible for determining and fulfilling their tax obligations in all applicable jurisdictions. Exchange Capital does not provide tax advice.
Acknowledgement
By accessing and using Exchange Capital's OTC services, you confirm that:
- You have read and understood this Risk Disclosure Statement in full.
- You are an institutional or professional counterparty with the expertise and resources to assess and bear the risks described herein.
- You have obtained independent professional advice where appropriate.
- You accept all risks associated with Digital Asset OTC trading.
- You will not hold Exchange Capital liable for losses arising from risks disclosed herein except to the extent caused by Exchange Capital's gross negligence or wilful misconduct.
For questions regarding this disclosure, please contact compliance@excap.io.