Risk Disclosure Statement
Before using CoinByte, it is important that you fully understand the risks involved and are financially prepared to take them on. This document outlines some, but not all, of the risks associated with holding, trading, and using crypto assets in general, and CoinByte services specifically. It is intended to give you a general overview of the potential risks, but it does not provide a comprehensive list. Please be aware that there may be other significant risks that apply to your situation. In addition to carefully reading this document and our Terms of Service, you should always conduct your own research and assess whether you are comfortable accepting any associated risks before using CoinByte.
CoinByte views transparency and risk disclosure as an ongoing process and intends to regularly review, update, and improve this document. We are also mindful of the evolving regulatory environment surrounding crypto assets in both Australia and globally, and will ensure this document remains in line with the current regulatory landscape.
1. Nature of Digital Assets
1.1 Digital Assets are not considered legal tender and are not backed by any government, nor are they necessarily supported by any physical assets.
1.2 There is no guarantee that any party accepting Digital Assets as a form of payment or store of value will continue to do so in the future.
1.3 Digital Assets are generally regarded as a high-risk asset class. Therefore, it is important to exercise caution and sound judgment when trading Digital Assets, as well as any other types of assets.
1.4 The characteristics of Digital Assets can be highly complex, and their terms, features, and/or associated risks may not be easily or fully understood, given their intricate structure, novelty, and reliance on technological components.
2. Extreme volatility risk and risk of loss
2.1 Coins like Bitcoin and Ethereum differ from traditional fiat currencies, commodities, or goods in the market and are subject to extraordinary risks. Unlike fiat currencies, Coins are decentralized and are not backed by any government, central bank, or legal entity. At present, Coins are largely unregulated. Therefore, their value can fluctuate significantly based on market conditions, investor confidence, competing currencies, regulatory changes, technical issues, or other factors.
2.2 Dealing in crypto assets (including trading, holding, or using them) involves the risk of substantial and potentially total financial loss. Due to their inherent volatility, crypto assets carry a significant risk of loss in any form of trading, investing, holding, or usage. You should carefully evaluate whether participating in the trading, investing, holding, or other uses of crypto assets is appropriate for you, considering your financial situation and personal risk tolerance. Investing in crypto assets may be suitable only for individuals with a very high appetite for risk.
2.3 It’s noted that a user is deemed to have evaluated and confirmed that they understand the risks involved before opening an account.
3. Suitability
3.1 CoinByte offers an execution-only service and does not provide advice on the merits of any specific trade, the risks involved in trading, or any related tax implications. Additionally, CoinByte does not offer financial, investment, or legal advice in relation to its services.
3.2 CoinByte serves as a crypto exchange platform. As outlined in Clause 4.6, CoinByte and its affiliated parties may engage in certain trading activities.
3.3 As such, CoinByte is not responsible for determining whether: a. the services are appropriate for a user; or b. a particular trade is suitable for a user's needs.
3.4 Any information provided on the CoinByte platform is for informational purposes only and should not be considered financial or investment advice, financial advisory services, trading recommendations, or any other form of advice. CoinByte makes no representations or warranties regarding the accuracy, completeness, or usefulness of such information, and it should not be viewed as an offer to buy or sell digital assets. It is the user's sole responsibility to assess whether any trade is appropriate.
3.5 By opening an account, a user accepts the risks involved in trading digital assets. When entering into any trade, the user affirms that they have, are, and will continue to be solely responsible for independently evaluating the risks associated with each trade and the underlying digital assets.
3.6 By using CoinByte’s services, each user confirms that they possess sufficient knowledge, market experience, professional advice, and expertise to independently evaluate the merits and risks of any trade or digital asset before opening an account.
3.7 Each user must ensure they seek professional advice, if needed, considering their investment goals, level of experience, and risk tolerance.
3.8 Each user should fully understand the specific characteristics and risks related to any digital asset they intend to trade.
4. Availability of Digital Assets
4.1 Users may face limitations when purchasing Digital Assets on the CoinByte Platform, as such transactions depend on the availability of a counterparty willing to sell the Digital Asset. CoinByte has no control over this, and there are no guarantees regarding the timing or availability of the ability to buy or sell Digital Assets on the CoinByte Platform.
4.2 The value of Digital Assets is largely influenced by the ongoing willingness of Users to trade them, which introduces the risk of a total and permanent loss of value for a Digital Asset if its market disappears. Thinly traded or illiquid markets carry an increased risk of loss due to greater volatility. Users may face difficulties in opening or closing positions in a Digital Asset at desired times, favorable prices, or possibly even at all.
4.3 Changes to the underlying technology of a Digital Asset, such as through a cyber-attack, could lead to a Digital Asset no longer operating as expected. These changes could potentially reduce the value of a User’s holdings or result in the redistribution of value from one Digital Asset to another.
4.4 A "fork" is an update to the code of a blockchain network, often arising from disagreements among stakeholders or efforts to undo a cyber-attack. A Hard Fork can create a permanent divergence from the previous blockchain version, effectively creating a new Digital Asset. The occurrence of a fork is beyond CoinByte’s control. Whether CoinByte can provide services for the new Digital Asset following a fork, or any similar protocol changes, may depend on third-party providers that are outside of CoinByte's control. CoinByte does not own or control the protocols associated with Digital Assets and their networks. Therefore, CoinByte is not responsible for any changes in the value of a Digital Asset, whether due to a fork or other protocol alterations, and does not guarantee the security, functionality, or availability of such protocols.
4.5 By using CoinByte's services, a User acknowledges and accepts all associated risks, including those related to hardware failure, software issues, and internet connection problems.
4.6 Users may face losses due to their inability to sell or convert Digital Assets into another asset of choice, either immediately or at a favorable rate. Liquidity risks can arise from various factors, such as a lack of buyers, limited trading activity, or underdeveloped secondary markets for the Digital Asset.
5. A Regulatory, political or legal risk
5.1 Unregulated Asset Class:
The legal standing of crypto assets remains unclear in many countries and jurisdictions across the globe. In most regions, including Australia and New Zealand, crypto assets are not recognized as legal tender or financial products. There is no assurance that anyone will accept crypto assets for their intended purpose at any point in the future. Market liquidity may be limited or subject to disruptions, and you cannot be certain that you will be able to sell or exchange your crypto assets at any price.
Crypto assets are largely unregulated in numerous countries, and the protections available to users in the event of a loss are often minimal or nonexistent. Unlike traditional financial exchanges or service providers, crypto exchanges and service providers may not be subject to the same degree of regulatory oversight or scrutiny. Investing in crypto assets differs significantly from trading traditional securities, and it is not governed by the same regulatory framework or compliance requirements.
5.2 Regulation of Crypto Assets:
The regulatory approach to crypto assets varies across jurisdictions, and the cross-border nature of blockchain technology and crypto assets means that they could be subject to the laws of multiple countries. In certain jurisdictions, crypto assets may be outright prohibited, or they may face specific restrictions and limitations. You are solely responsible for ensuring compliance with the relevant laws, and you assume the risk and cost of doing so. It is essential that you conduct your own research to understand the legal status of any crypto asset and its potential implications for you.
Predicting how regulatory bodies will apply existing laws to this technology and its use is challenging. This uncertainty extends specifically (but not limited to) to CoinByte and the crypto assets related to CoinByte services. Similarly, it is difficult to foresee how future regulatory or legislative changes may impact distributed ledger technology and its applications, including those relevant to CoinByte and the associated crypto assets.
5.3 Different Tax Regulations:
Tax treatments of crypto assets vary significantly between jurisdictions. It is crucial that you fully understand the tax implications of your actions and adhere to all applicable reporting and payment obligations. If you are unsure about your tax responsibilities, it is advisable to seek professional tax guidance.
6. Currency & conversion risk
6.1 Trades may be carried out in a currency different from the one initially deposited into your Account. You should be aware of the risks associated with currency fluctuations, as changes in exchange rates can either positively or negatively impact the profit or loss resulting from a trade.
6.2 If you convert Digital Assets after an order is executed or if the order is denominated in a Digital Asset other than your primary reference asset, there is a risk that, if market conditions move unfavorably, the net proceeds upon maturity (or earlier) could be significantly lower than the original value in your primary reference asset, potentially negating any gains or income entirely.
7. Technology risk
7.1 Understanding Digital Assets requires advanced technical knowledge. These assets are often described in highly technical terms, requiring a solid understanding of applied cryptography and computer science to fully grasp the associated risks. The listing of a Digital Asset on the CoinByte Platform does not imply CoinByte's approval or disapproval of the underlying technology, and should not replace a user's own research into the risks associated with that Digital Asset.
7.2 The software protocols that support Digital Assets are usually open-source projects, meaning that: a. the development and control of these Digital Assets are outside of CoinByte’s control; and b. these protocols can undergo sudden and significant changes that could impact the availability, usability, or value of a particular Digital Asset.
7.3 CoinByte may experience technological issues that could prevent a user from accessing or using their Digital Assets. This includes the possibility of sophisticated cyber-attacks, unexpected surges in platform activity, or other operational challenges, which may cause interruptions to services or lead to the loss or theft of Digital Assets. By using the services, users accept the risk of transaction failures resulting from unforeseen or intensified technical difficulties, including those caused by sophisticated cyber-attacks.
7.4 Digital Asset transactions are irreversible. Once a user sends Digital Assets to a wallet address outside of the CoinByte Platform, there is a risk of permanent loss. For instance, if an incorrect wallet address is entered, the assets may not be recoverable if the rightful owner of the address cannot be identified, or if the wallet address belongs to an entity that will not return the Digital Assets.
7.5 The individual who holds the private key to an external wallet address is considered the owner of the Digital Assets associated with that address.
7.6 Using the CoinByte Platform on a jailbroken device may compromise security and could lead to potential losses or the termination of services.
7.7 Digital Assets and the CoinByte Platform rely on the internet and other technologies (including various communication channels and media). However, due to the public nature of the internet, parts or all of it may become unreliable or unavailable at any time. Additionally, during data transmission, there could be interruptions, delays, data corruption, or loss of confidentiality, or even malware transmission. These issues could result in transactions not being executed as intended or not being processed at all.
7.8 No technology is entirely secure. As such, users should exercise caution when using any technological service.
7.9 The internet and other electronic media, such as mobile devices, third-party telecom services (like mobile phones or handheld trading devices), or interactive voice response systems, are inherently unreliable communication tools. This unreliability may be beyond CoinByte’s control.
7.10 Any information or communication transmitted, or transactions made, over the internet or through other electronic media (such as mobile devices, third-party telecom services, or other communication methods) may face interruptions, delays, data transmission issues, or incorrect data, including erroneous price quotes or disruptions in price feeds. These issues may arise due to data congestion, internet traffic, market volatility, or the public nature of the internet and electronic media.
8. Custody and private key risk
8.1 Please note that CoinByte and our third-party providers do not offer custodial or fiduciary services. Your CoinByte account is not a traditional deposit, checking, or savings account, and is not insured against losses. Crypto assets and fiat currency may not always be held in separate, segregated client accounts, and may be mingled with CoinByte’s own assets. We regularly perform reconciliation processes to ensure accurate accounting of both customer and company assets.
8.2 While your crypto assets remain in your CoinByte account, you do not hold the private keys. Although we take great care in securing the wallets and private keys, there is a risk that the private keys may be lost, destroyed, or stolen, potentially preventing CoinByte from accessing the crypto assets.
8.3 When you store crypto assets in an on-chain digital wallet (referred to as "self-custody"), it is crucial to take extra care in safeguarding your private keys and backup phrase. Losing either of these may lead to the permanent loss of your funds. Because of the decentralized nature of blockchain, there is no central authority that can recover your private keys, retrieve your funds, or compensate you for any losses.
8.4 If a third party gains access to your wallet, they can withdraw your funds, and you may have no way of identifying or locating them. Never share your wallet’s private keys or backup phrase with anyone.
8.5 Self-custody of your crypto assets might be a suitable option depending on your situation and goals. You should carefully evaluate whether this approach is right for you.
9. Risks of Trading on CoinByte
9.1 Digital Asset transactions may not be covered by any investor compensation fund established by a government or regulatory body, and the Digital Assets held in a CoinByte account may not be protected under deposit protection schemes.
9.2 While using our Services, you may incur various fees. Before completing any transactions, you must obtain and fully understand all applicable commissions, fees, and costs that you may be responsible for. If any fees are unclear, you must seek clarification regarding the specific amounts and terms before using the Services or initiating any transactions.
9.3 Please be aware that the Digital Assets received or held by CoinByte may be subject to the laws of international jurisdictions beyond your country of residence and/or citizenship.
9.4 Allowing another person to trade or manage your account with us carries significant risks, and there is a possibility that any instructions you provide may not be properly authorized or executed. You assume all risks associated with such actions and fully and irrevocably release CoinByte from any liability related to or arising from these activities.
9.5 Digital Asset transactions are final and irreversible. As a result, accidental or fraudulent transactions involving Digital Assets may not be recoverable. You should therefore exercise caution when transferring Digital Assets and accept full responsibility for any losses that may occur.
9.6 Any order placed on the CoinByte platform becomes binding once the steps outlined in these Terms are completed. Orders will not be held unless otherwise specified in these Terms. There is a risk that the final binding order may not occur simultaneously with your instructions, which could lead to losses if the order is not executed at the desired time. Specifically, contingent orders, such as options or perpetual swaps, may not limit your losses to the intended amounts due to market volatility.
9.7 There is a genuine risk that unauthorized third parties may gain access to your account(s) and conduct transactions without your knowledge or consent, either by taking control of a device or account you use or through other means.
9.8 CoinByte is not obligated to provide any updates, enhancements, or modifications to the materials or information available on the CoinByte platform. For example, you may be using an outdated version of the CoinByte app, and new features may not be available in your current version. It is your responsibility to ensure that you update the app and download the latest versions and updates.
10.Legal & market risks
10.1 You are responsible for understanding and complying with all applicable laws and regulations that govern your transactions, including any relevant tax obligations. You bear full responsibility for reporting and paying any taxes arising from your use of the Services.
10.2 Due to the nature of Digital Assets, your bank may freeze your account or reject incoming funds if it determines that those funds are linked to the buying or selling of Digital Assets.
10.3 You may incur losses if the value of a Digital Asset you’ve purchased decreases due to controls imposed by an authorized authority. Any repayments or payments owed to you may be delayed or even blocked as a result of regulations or actions taken by government or regulatory bodies that oversee Digital Assets and their ecosystem.
10.4 Digital Assets may not have a fixed supply, either by design or due to network events. If additional Digital Assets are created, the price of the specific Digital Asset you hold could decrease due to inflationary effects, as more assets are introduced into the market.
10.5 At any given time, one or more individuals may control a significant portion of the total supply of a particular Digital Asset, often referred to as “whales.�?Whether acting alone or in concert, these whales may significantly influence the market and may trigger events that negatively affect the price, value, or functionality of Digital Assets. Moreover, these whales or other participants in the network may make decisions that do not align with your best interests as an investor in Digital Assets.
11. Risk of Financial Crime and cyber crime
11.1 Digital Assets are inherently vulnerable to increased risks of financial crime and cyber-attacks. These risks include, but are not limited to, malware, hacking, phishing, double spending, smurfing, spoofing, sybil attacks, social engineering, majority-mining, consensus-based attacks, misinformation campaigns, distributed denial of service (DDoS) attacks, and network forks. When transferring Digital Assets into a digital wallet, the assets are exposed to potential loss due to security breaches from cyber-attacks that can result in the theft of Digital Assets.
11.2 There is often little, or in some cases no, recourse for recovering lost or stolen Digital Assets.
11.3 While you may choose to store your Digital Assets in hot wallets, these wallets are particularly susceptible to hacking, cyber-attacks, and the risks mentioned in paragraph 11.2. Disruptions, theft, cyber-attacks, and hacks targeting Digital Asset trading platforms are unfortunately common. Victims of such incidents often face significant difficulty in recovering their assets from hackers, trading platforms, or other involved parties. This can lead to substantial financial losses and other negative consequences that may seriously impact your interests.
12. Other potential risks
12.1 Counterparty risk: To facilitate near-instantaneous settlement of crypto trades as part of its business model as a crypto asset broker, CoinByte may transfer customer crypto assets to third parties, external platforms, and systems, in accordance with its Terms of Service. For clarity, CoinByte does not and will not lend customer assets to any third party. CoinByte performs thorough due diligence on any third-party platforms or systems, including assessments of security, financial stability, and credibility. However, CoinByte cannot guarantee that these third parties or platforms will be immune to breaches, asset losses, or failure to return assets, which could result in financial losses. Additionally, there is a risk that CoinByte may be unable to process transactions if it is unable to access the storage mechanism or initiate the transaction with the third-party provider.
12.2 Misleading information: information provided to consumers looking to purchase crypto assets is often limited and may be misleading. It can be incomplete, hard to comprehend, and may not fully disclose the associated risks of crypto assets. You should carefully evaluate these risks before deciding to purchase any crypto asset.
12.3 Fees and spreads: While we will try our best to offer one of the lowest fees and spreads to our customers, we could not claim that our fees and spread will remain unchanged at the same level.