Risk Disclosure Statement

1 Introduction

Open Trade Digital Ltd. ("Open Trade," "we," "us," or "our") is a multi-exchange cryptocurrency brokerage that provides institutional clients and qualified users with unified access to multiple cryptocurrency exchanges through a single platform.

By opening an account and undertaking trades through Open Trade, you are deemed to have reviewed, understood, and accepted the risks associated with our Services. The market for digital assets is young and rapidly developing, thus the risks of trading digital assets are not fully known and/or understood.

Open Trade may update this Risk Disclosure Statement periodically. It is your responsibility to stay up to date with the current version published on our platform.

2 Nature of Digital Assets

Digital assets (also known as "cryptocurrencies," "virtual currencies," "digital tokens," or "crypto") have unique characteristics that distinguish them from traditional currencies and assets:

• Not Legal Tender: Digital assets are not legal tender and are not backed by any government, central bank, or physical assets.
• Decentralized: Most digital assets operate on decentralized networks without a central authority, which means there is no entity responsible for maintaining the network or ensuring its continued operation.
• Irreversible Transactions: Digital asset transactions are generally irreversible once confirmed on the blockchain. Accidental or fraudulent transactions may not be recoverable.
• Complex Technology: The nature of digital assets may be very complex, and their terms, features, and risks may not be readily or fully understood due to their reliance on cryptographic protocols and distributed ledger technology.
• No Intrinsic Value: Unlike traditional assets, digital assets may not have any underlying or intrinsic asset value or any assets supporting their price.
• Uncertain Acceptance: There is no assurance that any person or merchant will continue to accept digital assets as a form of payment or store of value in the future.

3 Price Volatility Risk

Digital asset values are highly volatile and can fluctuate substantially in comparison to fiat currencies or traditional investment products.

Factors that may contribute to price volatility include:

• Supply and demand dynamics, including large sales by significant holders ("whales")
• Market sentiment and speculation
• Regulatory announcements or actions
• Technological developments or security breaches
• Media coverage and social media activity
• Macroeconomic factors and global events
• Market manipulation and fraudulent activities
• Liquidity conditions across exchanges
• Network congestion and transaction fees

There may be limited or no fundamental reasoning behind the pricing of digital assets. Prices may be subject to irrational and uncontrollable market forces. Whether the future price for a digital asset will increase or decrease is unpredictable and purely speculative.

4 Risk of Loss

Investing in digital assets carries a high level of risk and may not be suitable for all investors.

Specific loss scenarios include:

• Market Loss: The value of your digital assets may decline to zero if there is no interest in or development of the digital asset.
• Exchange Failure: Partner exchanges may become insolvent, be hacked, or cease operations, potentially resulting in the loss of your assets held at those exchanges.
• Custody Loss: Digital assets held in custody may be lost due to security breaches, technical failures, or insolvency.
• Operational Loss: Errors in order entry, incorrect wallet addresses, or other user errors may result in irreversible losses.
• Protocol Loss: Bugs, vulnerabilities, or attacks on blockchain protocols may result in the loss or theft of digital assets.

Trading in digital assets is not appropriate for persons with limited resources, limited investment experience, or a low-risk appetite.

5 Liquidity Risk

Liquidity refers to the ability to buy or sell a digital asset quickly without significantly affecting its price.

• Market Liquidity: Some digital assets may have limited trading volume, making it difficult to execute large orders without significant price impact.
• Exchange Liquidity: Liquidity varies across exchanges. The best price may not always be available on the exchange where your funds are allocated.
• Withdrawal Liquidity: During periods of high demand or market stress, exchanges may experience delays in processing withdrawals.
• Market Depth: Thinly traded or illiquid markets have an increased potential risk of loss given their enhanced volatility.
• Counterparty Availability: Your ability to purchase or sell digital assets depends on the existence of a counterparty willing to transact at partner exchanges.

You may not be able to establish or liquidate positions in a digital asset when desired, at favorable prices, or at all.

6 Custody and Asset Pooling Risk

Custody risks include:

• Asset Pooling: By using our Services, you agree to the pooling and commingling of your digital assets with those of other users in Open Trade's custody and at partner exchanges.
• Hot Wallet Risk: A portion of assets may be held in internet-connected "hot wallets" for operational efficiency, which are more vulnerable to cyber attacks than offline "cold storage."
• Insolvency Risk: In the event of Open Trade's insolvency, bankruptcy, or a security breach, you may experience total or partial loss of your digital assets.
• Pro-Rata Shortfall: In the case of an irreconcilable shortfall, you may share in that loss pro-rata with other affected users.
• Recovery Limitations: There may be limited or no mechanism for the recovery of lost or stolen digital assets.

7 Exchange Counterparty Risk

Exchange Insolvency or Failure

In the event of insolvency, bankruptcy, or failure of a partner exchange, you may:

• Experience total or partial loss of your digital assets held at that exchange
• Face significant delays in recovering your assets
• Have limited or no recourse for recovery
• Be subject to the insolvency proceedings of the exchange's jurisdiction

Exchange Security Breaches

Partner exchanges may be subject to hacking, cyber-attacks, or security breaches that could result in loss or theft of digital assets. While Open Trade conducts due diligence on partner exchanges, we cannot eliminate this risk entirely.

Exchange Operational Issues

Partner exchanges may experience:

• System outages or technical failures
• Suspension of trading or withdrawals
• Regulatory actions or license suspensions
• Liquidity crises
• Management failures or fraud

Any of these events could impact your ability to trade or withdraw your assets.

8 Cybersecurity Risk

The nature of digital assets means that they may be exposed to an increased risk of cyber-attack, which includes but is not limited to:

• Hacking: Unauthorized access to systems, wallets, or accounts
• Phishing: Deceptive attempts to obtain sensitive information
• Malware: Malicious software designed to steal or compromise digital assets
• Social Engineering: Manipulation techniques to gain access to accounts or assets
• DDoS Attacks: Distributed denial of service attacks that disrupt platform availability
• 51% Attacks: Attacks where a single entity gains majority control of a blockchain network
• Smart Contract Exploits: Vulnerabilities in smart contract code that can be exploited
• Private Key Theft: Theft of private keys that control digital assets

Disruptions, theft, cyber-attacks, and hacks of cryptocurrency platforms and theft of digital assets are unfortunately very common. Victims may face extreme difficulty recovering losses from hackers, platforms, or other related parties.

9 Technology Risk

Understanding digital assets may require advanced technical knowledge. Digital assets are often described in exceedingly technical language that may require a comprehensive understanding of applied cryptography and computer science.

Blockchain and Protocol Risks

• Forks: A "Fork" refers to an upgrade or split in the code of a blockchain network. A "Hard Fork" may result in a permanent split, effectively creating a new digital asset. The occurrence of a Fork is outside of Open Trade's control.
• Protocol Changes: A digital asset may change or cease to operate as expected due to changes made to its underlying technology.
• Open Source Risk: The software protocols underlying digital assets are often open source, meaning development and control is outside of Open Trade's control.
• Network Congestion: High transaction volumes may result in network congestion, delayed transactions, and increased fees.

Platform and Infrastructure Risks

• System Failures: Technical difficulties may prevent access to your account or execution of trades.
• Internet Dependency: Digital assets and the Open Trade Platform depend on the internet, which may be unreliable or unavailable.
• Third-Party Dependencies: We rely on third-party service providers whose failures could affect our Services.
• Irreversible Transactions: Once a transaction is confirmed on the blockchain, it generally cannot be reversed.

10 Regulatory Risk

The regulatory environment for digital assets is evolving and uncertain in many jurisdictions.

• Regulatory Changes: Any regulatory changes or actions by competent authorities may adversely affect the use, transfer, exchange, and value of digital assets or limit your ability to transact on the Open Trade Platform.
• New Regulations: New or amended regulations may restrict digital asset usage or otherwise affect demand, which could influence prices.
• Banking Access: Banks and other financial institutions may refuse to process funds for digital asset-related transactions or close accounts associated with digital asset activities.
• Tax Treatment: The tax treatment of digital assets is uncertain and may change, potentially resulting in unexpected tax liabilities.
• Licensing Requirements: Changes in licensing requirements may affect Open Trade's ability to operate in certain jurisdictions.
• Sanctions and Restrictions: You may be prohibited from transacting in certain digital assets or with certain counterparties due to sanctions or other restrictions.

11 Tax Risk

The tax treatment of digital assets varies by jurisdiction and is subject to change.

• Digital asset transactions may be subject to capital gains tax, income tax, or other taxes.
• You are solely responsible for determining your tax obligations and for reporting and paying any taxes arising from your use of the Services.
• Open Trade does not provide tax advice and is not responsible for determining whether taxes apply to your transactions.
• Tax laws and regulations may change, potentially resulting in unexpected tax liabilities.
• You should consult with a qualified tax professional regarding your specific situation.

12 Operational Risk

You are solely responsible for any loss resulting from your actions, including but not limited to:

• Input Errors: "Fat finger" mistakes in price, quantity, timing, or other order parameters
• Timing Errors: Mistiming or mis-submission of trade instructions
• Password Security: Forgetting or disclosing your password or API keys
• Device Security: Computer or network issues, including hacks or viruses
• Address Errors: Transfer of digital assets to incorrect wallet addresses (which is generally irreversible)
• Third-Party Instructions: Executing instructions provided to you by fraudulent third parties
• Unauthorized Access: Unauthorized transactions resulting from compromised credentials

It is your sole responsibility to ensure that all account information and wallet addresses are verified before making any transfers.

13 No Investment Advice

Open Trade provides an execution-only service and does not offer advice as to the merits of any particular trade, trading risk, or associated tax consequences.

• Open Trade does not provide any financial, investment, tax, or legal advice in connection with the Services.
• Open Trade acts as a multi-exchange brokerage platform for trade execution and routing. We do not make markets or trade against clients.
• Any information provided on the Open Trade Platform is for information purposes only and is not, nor intended to be, financial advice, investment advice, or any other advice.
• Open Trade does not warrant the accuracy, completeness, or usefulness of any information provided.
• You are solely responsible for making your own independent appraisal and investigation into the risks of each trade and the underlying digital assets.

You should seek professional advice, including from financial, legal, and tax advisors, before engaging in digital asset trading.

14 No Government Insurance or Protection

Unlike bank deposits or securities held in brokerage accounts:

• There is no government guarantee or insurance protecting your digital assets
• In the event of Open Trade's insolvency or failure, you may have no recourse to recover your assets
• Digital assets are not considered "securities" in most jurisdictions and therefore do not benefit from securities investor protection schemes
• You assume full responsibility for the risk of loss of your digital assets

15 Suitability

Before using Open Trade's Services, you should carefully consider whether digital asset trading is appropriate for you based on:

• Financial Situation: Your income, assets, liabilities, and financial obligations
• Risk Tolerance: Your ability and willingness to accept the risk of losing your entire investment
• Investment Objectives: Your goals and time horizon for investing
• Knowledge and Experience: Your understanding of digital assets, blockchain technology, and trading
• Liquidity Needs: Your need for access to funds and ability to withstand illiquidity

Digital asset trading is NOT appropriate for persons with:

• Limited financial resources
• Limited investment experience
• A low-risk appetite or need for stable returns
• A need for regular income from investments
• A short investment time horizon

16 Acknowledgment

By using Open Trade's Services, you acknowledge and agree that:

• You have read, understood, and accepted this Risk Disclosure Statement in its entirety
• You understand that digital asset trading involves significant risk, including the risk of total loss
• You are solely responsible for your own investment decisions and for conducting your own due diligence
• Open Trade does not provide investment, financial, legal, or tax advice
• You have the financial resources, knowledge, and experience to trade digital assets
• You are not investing more than you can afford to lose
• You understand the risks associated with custody, exchange counterparty risk, and asset pooling
• You accept full responsibility for any losses you may incur
• This Risk Disclosure Statement does not disclose all possible risks and you should continuously assess your risk exposure