Skrill USA Cryptocurrency Services – Risk Disclosures
CRYPTOCURRENCY ASSETS ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC), THE SECURITIES INVESTOR PROTECTION CORPORATION (SIPC) OR ANY OTHER PUBLIC OR PRIVATE INSURER, INCLUDING AGAINST CYBER THEFT OR THEFT BY OTHER MEANS. CRYPTOCURRENCY ACTIVITY IS NOT A REGULATED ACTIVITY IN MANY STATES. THE VALUE OF CRYPTOCURRENCY ASSETS CAN BE EXTREMELY VOLATILE AND UNPREDICTABLE, WHICH CAN RESULT IN SIGNIFICANT LOSSES IN A SHORT TIME, INCLUDING POSSIBLY A LOSS OF TOTAL VALUE. THE PRICE AND LIQUIDITY OF CRYPTOCURRENCY ASSETS HAS BEEN SUBJECT TO LARGE FLUCTUATIONS IN THE PAST AND MAY BE SUBJECT TO LARGE FLUCTUATIONS IN THE FUTURE. BUYING AND SELLING CRYPTO ASSETS IS INHERENTLY RISKY, AND YOU SHOULD CONSIDER THE RISKS BEFORE DECIDING TO BUY OR SELL CRYPTOCURRENCY ASSETS.
Please read the following risk warnings carefully before using the Cryptocurrency Services.
This document provides you with information about the risks associated with using the Cryptocurrency Services, which allows you to buy or sell Interests in cryptocurrency via a Cryptocurrency Exchange.
The trading of Interests in virtual currencies (including the Supported Cryptocurrencies) entails certain risks. This document provides you with information about some of these risks but cannot predict all of the risks which may arise nor can it describe how such risks relate to your personal circumstances. If you are in any doubt about whether the Cryptocurrency Services is right for you, you may wish to seek guidance from a professional adviser.
While we will try to complete purchases and sales of Interests that you authorize and that comply with the Skrill USA Cryptocurrency Terms and Conditions, we do not guarantee your ability to buy or sell Interests. Your ability to buy or sell Interests may be delayed or unavailable due to the availability of the Interests, Supported Cryptocurrencies or funds from your funding source, issues with the trading network or our ability to interface with our Cryptocurrency Exchange, system downtime, limitations or suspensions we impose on your Skrill USA Account or your Cryptocurrency Account in our sole discretion, for required safety, security, or legal reasons, or for other reasons outside Skrill’s or any Cryptocurrency Exchange’s control, and we are not liable to you if we are unable or delayed in executing your transactions.
Your access the Cryptocurrency Services to hold, buy or sell Interests, including the price for buying and selling, can also change or be limited by extraordinary circumstances outside our control (for example, fire, flood, accident, riots, war, terrorist act, epidemic, pandemic, quarantine, civil commotion, breakdown of communication facilities, breakdown of web host, breakdown of internet service provider, natural catastrophes, governmental acts or omissions, changes in laws or regulations, national strikes, fire, explosion, generalized lack of availability of raw materials or energy, or extreme financial market conditions), which we either did not reasonably foresee or that happened despite our reasonable precautions ("Extraordinary Circumstances"). Skrill USA will not be liable to you for limits, suspension, delay, or change to your Cryptocurrency Services or your inability to transact in Interests because of Extraordinary Circumstances, including any changes in the buy or sell price of Interests or Supported Cryptocurrencies because of Extraordinary Circumstances.
You should carefully assess whether your financial situation and tolerance for risk is suitable for any form of exposure to cryptocurrencies. It is your responsibility to determine what taxes, if any, apply to Cryptocurrency Transactions you make using the Cryptocurrency Services.
Trading in cryptocurrencies carries special risks.
- Cryptocurrencies also carry special risks not generally shared with official currencies or goods or commodities in a market. Unlike most currencies, which are backed by governments or other legal entities, or by commodities such as gold or silver, cryptocurrency is a unique medium of exchange, in that there is no central bank that can take corrective measures to protect the value of cryptocurrency in a crisis.
- Instead, cryptocurrencies are an as-yet autonomous and largely unregulated worldwide system of currency. Traders of such currencies often put their trust in a digital, decentralized and partially anonymous system that relies on peer-to-peer networking and cryptography to maintain its integrity.
The value of cryptocurrencies is highly volatile.
- The market for the Supported Cryptocurrencies is still relatively new and uncertain. The price or value of cryptocurrency (including Supported Cryptocurrencies) can rapidly increase or decrease at any time and may even fall to zero. The risk of loss in trading or holding an Interest in cryptocurrencies can be substantial and can result in the loss of the entire value of your Interest in cryptocurrency.
- The cryptocurrency market is highly susceptible to market manipulation and other misuse for illegal activities. The market is likely to be adversely affected if law enforcement agencies investigate any allegedly illegal activities on the Cryptocurrency Exchange or any other cryptocurrency platform.
- More generally, cryptocurrencies are susceptible to bubbles or loss of confidence (irrational or otherwise), which could collapse demand relative to supply. For example, confidence might collapse in any given cryptocurrency because of unexpected changes imposed by the software developers or others, a government crackdown, the creation of superior competing alternative currencies, or a deflationary or inflationary spiral. Confidence might also collapse because of technical problems: if the anonymity of the system is compromised, if money is lost or stolen, or if hackers or governments are able to prevent any transactions from settling.
Cryptocurrency Exchanges are vulnerable to cyber attacks.
- Cryptocurrency exchanges are entirely digital and, as with any virtual system, are at risk from hackers, malware and operational glitches. Even though Cryptocurrency Exchanges take various steps to preserve the security of their platforms, cryptocurrency which is held in wallets provided by such exchanges remain vulnerable to hacking.
- If a thief gains access to one or more Supported Cryptocurrencies (i.e. by stealing the private encryption key to the Cryptocurrency Exchange wallets), he/she could transfer the stolen assets to another account. If the private key is compromised or lost, the applicable cryptocurrency assets may be permanently lost and unrecoverable.
- Accordingly, a hack is likely to lead to substantial depletion of the Supported Cryptocurrency held on your behalf (see below). While the Cryptocurrency Exchange may be willing to compensate users for any such loss, they are not obliged to do so. A serious hack could also have the effect of putting a Cryptocurrency Exchange into bankruptcy or insolvency.
The Supported Cryptocurrencies (and the fiat currency used to buy/sell them) are held in custody by a third party.
- When you use the Cryptocurrency Services to buy Interests in one or more of the Supported Cryptocurrencies, they will be held on your behalf by a third party (usually the Cryptocurrency Exchange) who will act as custodian (the “Custodian”). Records will be held by the Cryptocurrency Exchange and us to show that the Supported Cryptocurrencies are held on your behalf and do not belong to any third party.
- The Supported Cryptocurrencies may be held on an “omnibus basis” with the Custodian, which means that your Interests may be held at a single blockchain address together with those of other customers of that Custodian. If the Custodian becomes insolvent, there may be delays in identifying the assets belonging to you. There may be also be an increased risk of loss if there should be a shortfall between the assets held in the Custodian’s omnibus account and the claims of all of its customers (in which case, you may have to share proportionately in that shortfall with other customers).
- Otherwise, in the event of insolvency of the Custodian, please note there is no specific legal protection that covers you for losses arising from any Supported Cryptocurrencies that were held with such Custodian. This could mean that you have no specific rights under insolvency or bankruptcy law to recover cryptocurrency held by the Custodian and you may be treated as an ordinary creditor of the same.
- When you sell your Interests in the Supported Cryptocurrencies, the proceeds from the sale will be held in a pooled segregated bank account of the Cryptocurrency Exchange. As with the Supported Cryptocurrencies, records will be held by the Cryptocurrency Exchange and us to show that funds are held on your behalf and do not belong to any third party. In the event of the Cryptocurrency Exchange’s insolvency or bankruptcy, you may be able to claim for the return of your fiat currency from this pool.
The Cryptocurrency Exchange may suspend or terminate their service at any time.
- To provide the Cryptocurrency Services to you, we partner with one or more Cryptocurrency Exchanges to (a) facilitate the buying and selling of Interests in Supported Cryptocurrencies; and (b) hold the Supported Cryptocurrencies as Custodian.
- Given the various risks attaching to cryptocurrency exchanges (including the uncertain legal environment), it is possible that a Cryptocurrency Exchange could suspend or terminate its relationship with us and sometimes won’t tell us why. In these circumstances, we may have to suspend the Cryptocurrency Services ourselves but we will try to transfer the underlying Supported Cryptocurrency to another Cryptocurrency Exchange as soon as possible.
- If we are unable to place Orders on Cryptocurrency Exchanges in accordance with an Order Instruction, we may not be able to complete a Cryptocurrency Transaction and you may suffer losses as a result. For example (in respect of a Sell Order) the price of the Supported Cryptocurrency may fall in the period in which we are unable to place Orders on Cryptocurrency Exchanges meaning that your profit on a Cryptocurrency Transaction may be decreased or your losses increased.
The legal status of cryptocurrency is uncertain and constantly evolving.
- Given that the market for cryptocurrencies is relatively new, the legal nature of cryptocurrency is – in most jurisdictions – yet to be determined by statute, regulation or case law. In the absence of definitive authority, it is not clear how a regulator or court may treat Interests or rights arising trading in cryptocurrency, including, without limitation, under federal or state securities laws and regulations, commodities laws and regulation, money transmitter laws and regulations and various consumer protection and finance laws and regulations. In addition, the law applicable to companies who hold cryptocurrencies in custody (particularly in the event of such company’s insolvency or bankruptcy) is far from clear.
- It is possible that a federal or state regulator may take unilateral action to regulate the cryptocurrency market in a manner which prevents or encumbers the proper operation of the market in your jurisdiction. This may impact whether we can offer the Cryptocurrency Services to you.
The functioning of the cryptocurrency network is outside our control.
- Since the blockchain is an independent public peer-to peer network and is not subject to regulation or control by any authority or firm, we are not responsible for any failure, mistake, error and/or breach which shall occur on the blockchain or on any other networks in which the Supported Cryptocurrencies are being issued and/or traded.
- We do not own or control the underlying software protocols which govern the operation of the Supported Cryptocurrencies and these software protocols can change suddenly and unexpectedly in a way that has a significant impact on your Interests. In general, the underlying protocols are open source and anyone can use, copy, modify, and distribute them. Because we don't control this technology, we are not responsible for the operation of the underlying software protocols and cannot guarantee the continued functionality, security or availability of the Interests or Supported Cryptocurrencies. We will only support those cryptocurrency assets for which we have performed the necessary due diligence.
- The underlying protocols of the Supported Cryptocurrencies are subject to sudden changes in operating rules (‘forks’). A fork can have a material change on the operation, functionality, value or even name of the Supported Cryptocurrencies. A fork may result in multiple versions of a Supported Cryptocurrency, and each version could have a very different, and possibly lower, value than the Interest and the Supported Cryptocurrency before the fork. We may or may not support the fork of a Supported Cryptocurrency, whether or not the fork holds any value. In the event of a fork, we may temporarily suspend trading of Interests in order to determine whether or not it will support any particular fork. In the event of a fork, we will evaluate the feasibility of supporting the fork and determine whether and to what extent any new assets resulting from the fork may be supported and/or allocated. This evaluation will take into account factors such as, but not limited to, the technical issues around supporting a fork, Cryptocurrency Exchange dependencies, and legal and regulatory considerations. You agree that we are not responsible or liable to you for any losses or damages, including lost profits, which may occur as the result of a change in the underlying software protocol of a Supported Cryptocurrency, our determination to support or not support any particular fork or modified software protocol, and any interruption of trading while we make such determination. If we determine not to support a fork or modified software protocol, you may never get access to an interest in the assets governed by that fork or software protocol.