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Risks Disclosures

Oct 2019
Last changed: Sep 15, 2022
Volatility of Cryptoassets

Digital currencies and blockchain assets represent a speculative investment, are highly volatile, and involve a high degree of risk. There is considerable uncertainty about their long-term viability, which could be affected by a variety of factors, including many market-based factors such as economic growth, inflation, and others. As relatively new products and technologies, digital currencies and blockchain assets have not been widely adopted as a means of payment for goods and services by major retail and commercial outlets. Conversely, a significant portion of the demand for digital currencies and blockchain assets is generated by speculators and investors seeking to profit from the short or long-term holding of digital currencies and blockchain assets. The relative lack of acceptance of digital currencies and blockchain assets in the retail and commercial marketplace limits the ability of end-users to pay for goods and services with digital currencies and blockchain assets and contributes to high volatility. A lack of expansion by digital currencies and blockchain assets into retail and commercial markets, or a contraction of such use, may result in increased volatility.

Instability in the cryptocurrency exchange market and the closure or temporary shutdown of cryptocurrency exchanges due to fraud, business failure, hackers, malware, or government-mandated regulation may reduce confidence in the cryptocurrency exchange market and result in greater volatility in cryptocurrency prices. 
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NOTE: THESE DISCLOSURES ARE NOT COMPREHENSIVE.  YOU ARE SOLELY RESPONSIBLE FOR UNDERSTANDING THE RISKS INVOLVED IN INVESTING.  WE ENCOURAGE YOU TO DISCUSS ANY INVESTMENT DECISIONS YOU CHOOSE TO MAKE WITH YOUR TAX AND FINANCIAL ADVISORS.

Custody of Assets

Path Digital Advisors, LLC (“Path”) does NOT maintain custody of your digital assets or currencies on or within the exchanges you use. We may not support every exchange or wallet you hold assets on. Such exchanges and wallets have developed security systems to maintain confidential access to the private keys that have been generated and which control movement of the currencies. Path is not able to obtain control of the private keys generated by the exchanges utilized by you. Path employs a comprehensive due diligence process to select exchanges and wallets that it determines have developed sophisticated security systems and will continue to reevaluate the due diligence process and the security systems of the various exchanges and wallets. However, the systems and methodologies of the exchanges and wallets utilized by Path may be subject to exposure from hacking, malware and general security threats. Path or its managing members are not liable for the failure or penetration of the security system absent gross negligence, fraud or criminal behavior.

Risks Associated with Blockchain Technology

The nature of cryptocurrency may lead to an increased risk of fraud or cyber-attack. Hackers or other malicious groups or organizations may attempt to interfere with cryptocurrencies in a variety of ways, including, but not limited to, malware attacks, denial of service attacks, consensus-based attacks, Sybil attacks, smurfing, spoofing, social engineering, phishing emails, man-in-the-middle, phone hijacking, and ransomware. Among other things, you could lose your cryptocurrency due to these types of threats.

Path does not own or control the underlying software protocols that govern the operation of any blockchain network.  Path is not responsible for the operation of any blockchain network protocols.  You are responsible for educating yourself on protecting your personally identifiable information and on cybersecurity best practices.  Holders of cryptocurrency can be targeted by hackers, and holders’ private keys can be stolen.

Illiquidity

Digital currencies and Digital Assets can be illiquid. Exchanging cryptocurrencies and blockchain assets for a specific fiat currency may be impossible at any given moment.
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Illiquidity may be caused:
Government regulation;
Pre-ICO restrictions;
Lockup periods; or
Limited market for the exchange for cryptocurrencies.
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Because of the illiquidity of certain positions you may hold, the liquidation values of those positions may differ significantly from the interim valuations of such investments executed by our software.

Legality

It may be illegal, now or in the future, to own, hold, sell or use digital currencies or blockchain in one or more countries, including the United States. Although currently digital currencies and blockchain assets are lightly regulated in most countries, including the United States, one or more countries may take regulatory actions in the future that severely restricts the right to acquire, own, hold, sell or use digital currencies or blockchain assets or to exchange blockchain assets or digital currencies for fiat currency. Such an action may restrict your ability to hold or trade digital currencies and blockchain assets and could result in termination of your account at a time that is disadvantageous to you or may adversely affect an investment you hold.

Performance Information

Path makes no representation regarding the likelihood or probability that any actual or hypothetical investment will perform in any predictable manner. Any historical return information is hypothetical in the sense that it does not reflect trading in actual client account and may not reflect all factors that could impact such performance for an individual investor. Any performance information may change, be inaccurate, incomplete or outdated.  Past performance is not a guarantee of future actual results and returns in any period may be above or below those of a previous period.