Understanding Crypto Risks
Cryptocurrencies represent innovative technologies that may operate differently from what you are used to. They carry unique risks that you should fully understand. Before using Compose Finance, we strongly recommend that you familiarize yourself with the risks involved in cryptocurrency and only invest funds you can afford to lose. Below, we outline some of the main risks to consider:
Key Risks
Irreversible Transactions
Cryptocurrency transfers are typically final and cannot be reversed. This means you may not be able to recover your assets if you:
- Send cryptocurrency to the wrong address,
- Transfer the wrong amount,
- Fall victim to a fraudulent scheme, or
- Experience unauthorized transactions from your account.
Compose Finance cannot be held responsible for losses resulting from these types of errors or fraudulent activity.
Price Volatility
The value of cryptocurrencies can fluctuate sharply and unpredictably, sometimes resulting in significant losses over a short period. Buying or selling cryptocurrency could lead to the complete loss of your investment.
No Underlying Backing
Some of the cryptocurrencies supported by Compose Finance are not backed by any entity or government. This means there is no guarantee that anyone, including Compose Finance, will buy back your cryptocurrency in the future, nor do you have recourse to an issuer.
Not Insured
Cryptocurrencies are not insured or protected by any government deposit insurance schemes.
Regulatory Uncertainty
Changes in laws or regulations at the local or international level may impact the use, transfer, exchange, or value of cryptocurrencies.
Blockchain Timing
Cryptocurrency transactions are considered complete when recorded on the blockchain, which may not be the same as the time you initiate the transaction.
Market Demand
The value of each cryptocurrency depends on the ongoing willingness of others to exchange it for local currency. If demand disappears, the value could fall to zero.
Merchant Acceptance
There is no guarantee that businesses or individuals who currently accept cryptocurrency will continue to do so in the future.
Tax Obligations
Buying or selling cryptocurrency may result in tax liabilities. You are solely responsible for understanding and fulfilling your tax obligations.
Fraud and Cybersecurity Risks
The nature of cryptocurrencies can make them more susceptible to fraud and cyberattacks. You are responsible for keeping your Compose Finance account secure.
Technical Risks
Service disruptions or technical issues experienced by a provider may temporarily prevent access to your cryptocurrency.
This summary is intended to help you understand the significant risks associated with cryptocurrencies. Please ensure you are comfortable with these risks before proceeding with any transactions.