Xapo DLT Wealth Product Risk Disclosure Statement

General Risk Warning

This Risk Disclosure Statement, together with the Xapo VASPTerms and Conditions and the Xapo VASP Wealth Terms and Conditions (jointly the “Terms”), Privacy Policy, Cookie Policy and any other documents referred to in those documents, is given by Xapo VASP Limited and sets out the risks to you associated with using the DLT Wealth Product.

How to interpret this Risk Disclosure Statement

All terms used in this Risk Disclosure Statement, which are defined in the Terms, have the same meaning and construction as in the Terms.

DLT Wealth Product

This Risk Disclosure Statement provides you with information about the risks associated with the DLT Wealth Product. This Risk Disclosure Statement should be read alongside section 9 of the Xapo VASP Terms and Conditions which provides general risk disclosures.

This Risk Disclosure Statement does not explain all of the risks or how such risks relate to your personal circumstances. It is important that you fully understand the risks involved before deciding to use the DLT Wealth Product.

‍THE RISKS DESCRIBED BELOW ARE NOT, NOR ARE THEY INTENDED TO BE, A COMPREHENSIVE OR EXHAUSTIVE LIST OF RISK FACTORS. YOU REMAIN RESPONSIBLE FOR TAKING CARE TO UNDERSTAND THE TECHNOLOGICAL, ECONOMIC AND LEGAL NATURE OF DIGITAL CURRENCIES AND FOR CAREFULLY MANAGING YOUR EXPOSURE IN ACCORDANCE WITH THAT UNDERSTANDING AND YOUR RISK APPETITE FOR INNOVATIVE, VOLATILE AND SPECULATIVE NEW TECHNOLOGIES, INCLUDING DIGITAL CURRENCIES.

By becoming a Xapo Account holder and/or using the DLT Wealth Product you expressly acknowledge, accept and assume the following risks and agree that neither Xapo, nor its affiliates, shall be responsible for or otherwise liable for any direct or indirect loss or damage of any kind whatsoever arising directly or indirectly from the occurrence in full or in part of any of the following:

Market risks
Market risks	Digital Currency investments are subject to high market risk and price volatility. Changes in value may be significant and may occur rapidly and without warning. Past performance is not a reliable indicator of future performance. The value of an investment and any returns can go down as well as up, and you may not get back the amount you invested.This is some text inside of a div block.

Liquidity risks
Liquidity risks	Digital Currency investments may have limited liquidity which may make it difficult or impossible to sell or exit a position when intended. This may occur at any time, including at times of rapid price movements.This is some text inside of a div block.

Availability risk
Availability risk	We do not guarantee that the DLT Wealth Product will be available at any particular time or that they will not be subject to unplanned service outages or network congestion.This is some text inside of a div block.

Third party risk
Third party risk	Third parties, such as payment providers, custodians, exchanges and banking partners may be involved in the provision of the DLT Wealth Product. You may be subject to the terms & conditions of these third parties, and Xapo may not be responsible for any loss that these third parties may cause to you.This is some text inside of a div block.

Security risk
Security risk	It is not possible for Xapo to eliminate all security risks. You are responsible for keeping your password safe, and you may be responsible for all the transactions under your Xapo Account, whether you authorised them or not. Transactions in Digital Currencies may be irreversible, and losses due to fraudulent or unauthorised transactions may not be recoverable.

General Digital Currency risks
General Digital Currency risks	Given the nature of Digital Currencies and their underlying technologies, there are a number of intrinsic risks, including but not limited to: faults, defects, hacks, exploits, errors, protocol failures or unforeseen circumstances occurring in respect of a Digital Currency or the technologies or economic systems on which the Digital Currency rely; transactions in Digital Currencies being irreversible. Consequently, losses due to fraudulent or accidental transactions may not be recoverable; technological development leading to the obsolescence of a Digital Currency; delays causing transactions not to be settled on the scheduled delivery date; technological development leading to the obsolescence of a Digital Currency; and attacks on the protocol or technologies on which a Digital Currency depends, including, but not limited to: i. distributed denial of service; ii. sybil attacks; iii. phishing; iv. social engineering; v. hacking; vi. smurfing; vii. malware; viii. double spending; ix. majority-mining, consensus-based or other mining attacks; and x. misinformation campaigns.

Monitoring risks
Monitoring risks	Digital Currency markets are typically open 24 hours a day, 7 days a week. Rapid price changes may occur at any time, including outside of normal business hours.

Software weakness
Software weakness	Because Digital Currencies are based on blockchains or distributed ledgers, any malfunction, breakdown or abandonment of any blockchain may have a material adverse effect on the relevant Digital Currencies. Moreover, advances in cryptography could present risks to Digital Currencies, by rendering ineffective the cryptographic consensus or other technological components and mechanisms that underpin blockchains.

Regulatory Risk
Regulatory Risk	Blockchain technology allows new forms of interaction and it is possible that certain jurisdictions will apply existing regulations to, or introduce new regulations addressing, blockchain technology based applications, and which may, inter alia, result in substantial modifications to the DLT Wealth Product, including its termination.

Risks associated with uncertain regulations and enforcement actions
	We may cease operations in a jurisdiction in the event that regulatory actions, or changes to law or regulation, make it illegal to operate in such jurisdiction, or commercially undesirable to obtain the necessary regulatory approval(s) to operate in such jurisdiction. This may result in you losing access to the DLT Wealth Product and may further result in the loss of any Digital Currency stored or held on your Account.

Risk of mining attacks
Risk of mining attacks	Blockchains are susceptible to mining attacks, including but not limited to double-spend attacks, majority mining power attacks, “selfish-mining” attacks, and rare condition attacks. Any successful attacks present a risk to the DLT Wealth Product, and the expected proper execution and sequencing of transactions carried out through the DLT Wealth Product. You understand and accept that the network of miners will ultimately be in control of the delivery of Digital Currency via the blockchain, and that a majority of miners could agree at any point to make changes, updates, modifications to, or effect a deletion or destruction of the blockchain.

Unanticipated risks
Unanticipated risks	Digital Currencies and blockchain technology are new technology. In addition to these risks, there are other risks associated with your acquisition, storage, transfer and use of any Digital Currencies via your Account, including those that we may not be able to anticipate. Such risks may further materialize as unanticipated variations or combinations of these risks.

Project risk
Project risk	Digital Currencies and other virtual assets might be created and sustained by teams or entities that might fail for non-technological reasons. Even though Xapo carries out certain analysis prior to listing a particular project, projects might still fail. Moreover, Digital Currencies and other virtual assets may be cancelled, lost or double spent, or otherwise lose all or most of their value, due to forks, rollbacks, attacks or failure of the Digital Currencies to operate as intended.

Liquidity slippage risks
Liquidity slippage risks	Xapo makes proper efforts and works to monitor and maintain liquid order books. Nevertheless, market conditions might create a lack of liquidity that might create a severe devaluation of the asset or a strong slippage on price when creating a market order.

Counterparty risk
Counterparty risk	Your assets will be exposed to the risk of the counterparties with which or through which the Xapo deals. You may have exposure to one or more counterparties by virtue of the DLT Wealth Product. To the extent that a counterparty defaults on its obligations and Xapo is delayed or prevented from exercising its rights with respect to the investments, it may experience a decline in the value of the position, lose income and/or incur costs associated with asserting its rights. Such risks will increase where Xapo uses only a limited number of counterparties. Xapo may, in certain circumstances, be fully subject to the default of a single counterparty. Although Xapo will adopt measures to prevent and detect errors by, and misconduct of, counterparties and service providers, and transact with counterparties and service providers they believe to be reliable, such measures may not be effective in all cases. In particular, the technology diligence on certain crypto and blockchain related asset counterparties may not identify all security vulnerabilities and risks, which is especially pertinent given the limited (but growing) number of viable crypto and blockchain related asset counterparties. Any errors or misconduct could have a material adverse effect on the investments.

Systemic risk
Systemic risk	Systemic risk is the risk of broad financial system stress or collapse triggered by the default of one or more financial institutions, which results in a series of defaults by other independent financial institutions. Financial intermediaries, such as banks and crypto and blockchain related asset exchanges which Xapo interacts with, as well as Xapo, are all subject to systemic risk. A systemic failure could have material adverse consequences on Xapo and on the markets in which the DLT Wealth Product seeks to invest.

Loss, theft or destruction of crypto and blockchain related assets
	There is a risk that some or all your Digital Currencies could be lost, stolen or destroyed. If your Digital Currencies are lost, stolen or destroyed under circumstances rendering a party liable to Xapo, the responsible party may not have sufficient financial resources to satisfy a claim. Also, although third parties may use security procedures to minimize the risk of loss, damage and theft, neither the third parties nor Xapo can guarantee the prevention of such loss, damage or theft, whether caused intentionally, accidentally or by an act of God.

Disclaimers

By having an Account and/or using the DLT Wealth Product you expressly acknowledge the following disclaimers:

Deposit Guarantee Scheme
Deposit Guarantee Scheme	You acknowledge and understand that, while Xapo is regulated as a distributed ledger technology provider by the Gibraltar Financial Services Commission, Digital Currencies are not covered by any government backed compensation scheme or protections offered to investors or creditors of other regulated institutions, such as banks. Accordingly, Digital Currencies held in your Account are not protected by any public or private deposit guarantee or investor compensation scheme.

Volatility
Volatility	The profitability of investments substantially depends upon the [person responsible for taking investment decisions] correctly identifying investment opportunities. Such opportunities may not always be available to the same extent. Accordingly, the results of a particular period will not necessarily be indicative of results in future periods. Variance in the degree of volatility may produce losses.

Trading costs
Trading costs	The profitability of investments substantially depends upon the [person responsible for taking investment decisions] correctly identifying investment opportunities. Such opportunities may not always be available to the same extent. Accordingly, the results of a particular period will not necessarily be indicative of results in future periods. Variance in the degree of volatility may produce losses.

Investments may not be successful
Investments may not be successful	There can be no assurance that any investment made using the DLT Wealth Product will produce profitable results. Investments can produce random and unpredictable results, rather than defined trends or patterns. This may generate a series of losses.

Loss of investment
Loss of investment	Any investment may not perform as well as forecast, either because of changes in the economic climate or otherwise, resulting in the total loss of the investment.

Forward looking statements
Forward looking statements	Certain statements used in the Terms, this Risk Disclosure Statement and marketing material used by Xapo constitute “forward-looking statements”. When used, the words “project”, “anticipate”, “believe”, “estimate”, “expect”, and similar expressions are generally intended to identify forward-looking statements. Such forward-looking statements, including the intended actions and performance objectives, involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. All forward-looking statements speak only as of the date they are issued. Xapo expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained to reflect any change in its expectation with regard thereto or any change in events, conditions or circumstances on which any such statement is based.This is some text inside of a div block.