Risk Disclosure for Crypto Users When Using Our Platform

This Risk Disclosure Statement is provided by Mamoru South Africa (Pty) Ltd (FSP No. 53703), a licensed Crypto Asset Service Provider (CASP) authorised under the Financial Advisory and Intermediary Services Act 37 of 2002 (the FAIS Act). It sets out the principal risks of acquiring, holding, trading and transferring crypto assets on our platform. Crypto assets are high-risk and volatile, and you may lose some or all of the value of your assets. You should read this Statement carefully, together with our Terms and Conditions of Service, and ensure that you understand these risks before using the platform. If you are in any doubt, you should obtain independent professional advice. Trading fees, spreads and other charges apply and will reduce your returns.

1. Market Risk

It is important to note that a substantial shift in the number of users of a particular cryptocurrency can lead to a potential loss of principal or significant volatility in the price. Various elements can impact market risk, such as the prevailing sentiment in the cryptocurrency market, the level of investor demand, and the degree of trust placed in the wider blockchain-based system.

2. Volatility

Increased volatility leads to increased risk. Various cryptocurrencies exhibit varying degrees of volatility. Results can fluctuate significantly from day to day.

There is a significant potential for loss when trading or holding cryptocurrencies. Users should thoroughly evaluate the suitability of the services based on their individual circumstances. Users should be aware that the value of their assets can fluctuate at any time, potentially resulting in gains or losses. It is important to note that any position can experience significant fluctuations in value, and in some cases, it may even become completely worthless.

3. Liquidity

Acquiring the desired value and volume can be challenging due to low liquidity or trade volume. Engaging in the trading of a cryptocurrency with limited market liquidity may result in a potential delay in the settlement time. The value of a cryptocurrency can experience significant fluctuations prior to finalisation.

4. Currency

When trading in a market using a different currency than your own, it is important to consider how currency exchange fluctuations can affect your profits and losses.

5. Hacking

A programmer who exploits a substantial vulnerability in a system to acquire cryptocurrencies commits an act of theft. This could contribute to a substantial decrease in the market value of a particular cryptocurrency, as well as a loss of faith in the system and coins being traded.

6. Fraud and Insider Trading

When cryptocurrencies are not listed or accepted for trading on a regulated security exchange or multilateral or organised trading system, they may not be subject to regulations regarding insider trading and market manipulation. As a result, the market for cryptocurrencies may be more susceptible to fraudulent activities or insider trading.

7. Change of law

Changes in laws or their interpretation on some, or all, cryptocurrencies may have a detrimental influence on how they are valued or priced.

8. Lack of Supervision

Cryptocurrencies may not be supervised by any authorities or institutions (such as central banks). As a result, no authorities or institutions may interfere to stabilise or sustain the value of cryptocurrencies, as well as prevent or reduce illogical price fluctuations. The potential of a large or total loss of cryptocurrency exists at any time. In South Africa, providers of cryptocurrencies, Crypto Asset Service Providers (CASPs) are licensed by the Financial Sector Conduct Authority (FSCA). The FSCA’s licensing powers, however, are limited to the authorisation and supervision of CASPs only insofar as they render financial services related to cryptocurrency as defined under the FAIS Act, 2002. Authorisation as a CASP means only that the Company is licensed to render financial services in respect of crypto assets; it does not mean that the FSCA endorses, approves or guarantees any crypto asset, or that the FSCA protects users against loss.

9. Execution of Smart Contracts

The technical features of a cryptocurrency are determined by the smart contract used to create it. It is impossible to ensure that smart contracts will execute correctly or be used in the distributed ledger network in accordance with the expectations of the cryptocurrency issuer or investors. A cryptocurrency issuer can update the code of the smart contract at any time. Issuers have significant control over their cryptocurrency based on the rights and liabilities outlined in the smart contract. For example, they could decide to eliminate the cryptocurrency and replace it with alternative kinds of verification, such as paper certificates. The CASP is under no obligation to provide storage services for any cryptocurrencies, paper certificates, or other products that replace cryptocurrency.

10. Contentious Hardfork

A hardfork is when a new version of the original coin is created. A cryptocurrency can migrate to a new blockchain by consensus vote or a decision made by the core development team. This results in two different coins, and it is up to the user to determine which branch to keep. A hardfork could lead the value of cryptocurrencies to drop.

11. Technological Innovations

Cryptocurrencies are based on distributed ledger technology, which is currently in its early stages of development and will continue to undergo significant technological developments. Technological advances can be both an opportunity and a risk to the security of cryptocurrencies. In addition, alternative technologies to particular cryptocurrencies may emerge, rendering them less useful or even obsolete. If a cryptocurrency’s distributed ledger becomes outdated or less relevant, its price and liquidity may suffer.

12. Difficulty Risk

Increases in the number of verified transactions on the network can result in increased mining or consensus difficulty. This may cause the cryptocurrency’s value to fluctuate.

13. Change of Algorithm

The entire blockchain uses a consensus method to validate transactions. Most cryptocurrency blockchains use the Proof of Work consensus mechanism to verify transactions. This entails miners verifying transactions that have been added to the blockchain. The core development team or the miners can vote to alter the algorithm to, say, proof-of-stake. This may cause a change in the price of the underlying coin.

14. Cryptocurrency transactions

Credit risk exists whenever crypto assets are purchased or sold, and contractual rights in such transactions may be limited. Although cryptocurrencies or cash will be transferred to or from a trusted counterparty, it is possible that they will be transferred in incorrect amounts or to unauthorised third parties due to computer or human error, theft, or criminal action. If it is unable to seek a corrective transaction with such third party or identify the third party who received the cryptocurrencies or cash (due to error or theft), it will be unable to recover incorrectly transferred cryptocurrencies or cash and will suffer financial losses.

Transactions that have been confirmed and recorded as a block on the blockchain are often irreversible. Even if the transaction is found to have been made in error or as a result of a user’s crypto asset being stolen, it cannot be reversed.

15. Custodian

We may elect to store the cryptocurrency we received in connection with the supply of the Services in wallet types / storage methods at our sole and complete discretion. That could involve an agreement in which the cryptocurrencies are stored by a third-party custodian with whom we have a commercial connection. Regardless of the arrangement(s), we will record the user’s ownership of cryptocurrencies in our internal records.

Having cryptocurrency deposited with a third party in a custodial arrangement carries some dangers. These hazards include security breaches, contractual breaches, and losses. Third-party wallet services may be utilised to store the cryptocurrency. Having a large concentration of cryptocurrencies in one area or with a single third-party wallet provider increases the risk of losses due to hacking, password loss, compromised access credentials, malware, or cyber-attacks. Such third-party wallet providers may not have undergone extensive information technology due diligence, and as a result, they may be unaware of all security flaws and threats. Certain third-party wallet providers may not cover cryptocurrency losses. Third-party coins may be transferred to “cold storage” or “deep storage,” resulting in a delay in retrieval. It may also incur charges for third-party storage. Any security breach, incurred cost, or loss of cryptocurrency related with the use of a third-party wallet provider may negatively affect the investment.

16. Insurance

Insurance may be unavailable due to a lack of available policies or an excessively high cost. If an uninsured loss happens or the loss exceeds the policy limitations, the investment may lose some or all of its assets.

Cryptocurrencies in users' accounts are not eligible for public or private deposit protection from insurance. The Company is not a bank, and crypto assets held with or through the Company are not deposits. They are not covered by any deposit-insurance, investor-compensation or similar protection scheme, whether public or private.

17. Valuation

The valuation of cryptocurrency may include uncertainty and subjective decisions. An erroneous valuation might have a negative impact on the investment’s value. In extreme cases, independent pricing information for some of the cryptocurrencies invested in may be unavailable.

18. No Advice

Even though we are licensed in terms of the Financial Advisory and Intermediary Services Act 37 of 2002 as a Crypto Asset Services Provider, we are not licensed or authorised to provide financial advice and the information that we provide should not be construed as advice. Investors are reminded that the value of cryptocurrencies may go down as well as up and past performance is not necessarily a guide to future performance as trading in cryptocurrencies could potentially result in gains or losses. Nothing on our platform constitutes financial, investment, legal or tax advice or a recommendation to acquire, hold or dispose of any crypto asset. We do not assess the suitability or appropriateness of any crypto asset for you, and you transact solely on your own judgement and at your own risk.

19. Operational, Platform and Cybersecurity Risk

Access to the platform may be interrupted, delayed or suspended as a result of system maintenance, technical failures, network congestion, cyber-attacks or events beyond our reasonable control. During such periods you may be unable to place, amend or cancel orders, deposit or withdraw crypto assets, or access your account, and prices may move against you. Distributed-ledger networks may themselves experience congestion, delays or failures that affect the confirmation of transactions. While we implement security controls to protect the platform, no system can be guaranteed to be secure, and a security breach could result in loss of crypto assets or personal information.

20. Anti-Money Laundering, Sanctions and Transaction Monitoring

The Company is an accountable institution under the Financial Intelligence Centre Act 38 of 2001 (FICA) and is subject to anti-money laundering, counter-terrorist-financing and sanctions obligations. We are required to identify and verify customers, to monitor transactions on an ongoing basis, and to screen customers and transactions against applicable sanctions lists. We may, without prior notice and to the extent permitted or required by law, request additional information, delay, decline, freeze or reverse a transaction, suspend or terminate an account, and report suspicious or unusual activity to the Financial Intelligence Centre. Blockchain analytics may be used to assess the risk associated with wallet addresses and transactions, and transfers to or from high-risk or sanctioned addresses may be blocked.

21. Travel Rule and Information Sharing

In line with international standards for virtual asset service providers, the Company may be required to collect, hold and transmit information identifying the originator and beneficiary of a crypto asset transfer, and to share that information with counterparty service providers, correspondents and regulators. By transacting on the platform you acknowledge that such information may be shared for compliance purposes, subject to applicable data-protection law and our Data Protection and Privacy Policy.

22. Taxation

The tax treatment of crypto asset transactions depends on your individual circumstances and may change. You are solely responsible for determining, reporting and paying any tax, duty or levy arising from your dealings in crypto assets, including in your dealings with the South African Revenue Service. The Company does not provide tax advice, and nothing in this Statement should be relied upon as such. You should obtain independent tax advice where necessary.

23. Conflicts of Interest

The Company may act as principal, including on an over-the-counter basis, in transactions with you, and may earn fees, spreads or other remuneration in connection with your use of the platform. Actual or potential conflicts of interest are identified, avoided where possible, and otherwise managed and disclosed in accordance with our Conflict of Interest Policy and section 3A of the General Code of Conduct.

24. Complaints and Dispute Resolution

If you are dissatisfied with any aspect of our service, you may lodge a complaint in accordance with our Complaints Resolution Policy, details of which are available on request. If your complaint relates to a financial service and is not resolved to your satisfaction, you may be entitled to refer it to the Office of the Ombud for Financial Services Providers (the FAIS Ombud), subject to that office’s jurisdiction and rules.

Note: This Risk Disclosure is a key component of our Terms and Conditions of Service for trading cryptocurrency on our platform. Unless otherwise stated, all capitalised terms in this document have the same meaning as those in the Terms and Conditions of Service.