Risk Warning

Understanding the risks in cryptocurrencies

Throughout these Terms, “cryptocurrency” refers to any type of digital or virtual asset that utilises cryptographic techniques to secure transactions, control the creation of additional units, and verify the transfer of assets. Cryptocurrencies operate on decentralised networks based on blockchain technology, which serves as a public ledger for all transactions. This definition encompasses 'digital assets', 'digital payment tokens', “digital currencies”, and any similar classifications in other jurisdictions where our Hata Platform is offered.

Section 1: The risks associated with cryptocurrencies

Cryptocurrencies, or digital assets, are new technologies that often work differently from your prior experience. They entail various risks that you should understand. Before using Hata, we encourage you to educate yourself about the risks associated with cryptocurrencies and not to invest money that you cannot afford to lose. We have highlighted some of the key risks below:

1. Cryptocurrency transactions are generally irreversible. This means that you may not be able to recover the cryptocurrency where: (i) you send cryptocurrency to an incorrect address, (ii) you send the incorrect amount of cryptocurrency, (iii) you send cryptocurrency to a fraudulent scheme or (iv) cryptocurrency transactions are made fraudulently from your account. Hata will not be liable to you for any losses resulting from these kinds of accidental or fraudulent transactions.
2. The volatility and unpredictability of the price of cryptocurrency relative to local currency may result in significant loss over a short period of time. Buying and selling cryptocurrency could result in a complete loss of your funds.
3. Cryptocurrencies listed on Hata are not backed by any entity. This means that you have no right of recourse against an issuing entity. It also means that neither Hata nor anyone else has an obligation to buy back your cryptocurrency in the future.
4. Cryptocurrencies supported by Hata are not considered legal tender and are not backed by any government. Accounts and value balances are not subject to any government-backed deposit insurance or any other government protections.
   1. Special note: For customers in the following countries, we are required to draw your attention to the following:
      1. Malaysia: Any losses resulting from your trading and/or investment in cryptocurrency are not covered by the Capital Market Compensation Fund.
5. Legislative and regulatory changes or actions at state or international level may affect the use, transfer, exchange, and value of cryptocurrency.
6. Cryptocurrency transactions are deemed to be made when recorded on a “blockchain” ledger, which is not necessarily the date or time that you initiate the transaction.
7. The value of each cryptocurrency is driven by the continued willingness of market participants to exchange that cryptocurrency for local currency. Should this demand disappear, it could result in permanent and total loss of the value of the cryptocurrency.
8. There is no assurance that a person or business who currently accepts cryptocurrency as payment will continue to do so in the future.
9. Buying and selling cryptocurrency may result in tax liability and you are solely responsible for complying with your tax obligations.
10. The nature of cryptocurrency may lead to an increased risk of fraud or cyber attack. You are responsible for keeping your Hata account secure from these types of attacks.
11. The nature of cryptocurrency means that any technological difficulties experienced by a service provider may prevent access to or use of your cryptocurrency.

Section 2: Hata’s business continuity arrangements

In the unlikely event Hata is unable to carry out (or ceases) its operations in one or more of our locations, Hata has robust business continuity arrangements in place to ensure minimal impact on our customers. Having regard to the severity of the situation and the services which may be affected, the following measures may apply (where appropriate):

• Activation of a dedicated response plan;
• Notification to relevant regulatory authorities and compliance with any regulatory instructions issued; and
• Provision of regular updates to customers by way of a status page.

The preservation of customer funds will take utmost priority in the event that Hata becomes unable to carry out its operations or ceases business. The Hata bank account into which you make fiat deposits is used exclusively for the purpose of holding and processing customer funds. These bank accounts, and our cryptocurrency storage system, are subject to robust controls and regular reconciliations.

Section 3: Arrangements and Processes to Manage Systems Error, Failure or Malfunction

Details of Arrangements and Processes to Manage Error

In the unlikely event where Hata's system has error, Hata may:

1. Halt the order matching system; and
2. Identify the orders and trades impacted by the issue, evaluate the extent of the damage, and implement necessary corrective measures.

Hata will only resume its operation after resolving the issue. The preservation of customer funds will take utmost priority in the event that Hata's system experiences error, failure or malfunction.

Details of Arrangements and Processes to Manage Outages

On the Hata Exchange, all instructions are placed in a queue before orders are matched. In the rare event of an Exchange outage where orders placed by customers are not matched, Hata may reboot the matching engine. Upon the reboot, when the matching engine goes back online, Hata will resume order matching and process them from the point it left off in the command input queue.

When there is an extended interruption/outage, Hata will pause the matching engine for a specified amount of time. During this time, customers are still able to place orders like normal, however, no orders will be matched regardless of the type of orders placed (e.g. market, limit, stop-limit). When the matching engine is resumed, there is a possibility that orders may be matched, depending on the order book at that point in time. Therefore, customers are encouraged to monitor their trades closely during this time.

Outages on Hata's exchange will have no impact on customers' funds. Customers will still be able to deposit or withdraw their own cryptocurrencies. Nevertheless, any funds allocated for active limit orders will remain inaccessible until the matching system is restored online.

Section 4: Risk Disclosures Relating to Our Platform

Security Risks for Cryptocurrencies

Cryptocurrencies and their underlying technologies are vulnerable to attacks on its security, integrity or operations, including attacks intending to overwhelm or disrupt the normal operation of a blockchain. We make no representation, warranty or undertaking of any kind, express or implied, statutory or otherwise, regarding any blockchain’s functionality or its underlying technologies, nor for any breach of security in the blockchain’s functionality or its underlying technologies.

Any cryptocurrency may decrease in value or lose all of its value due to various factors, such as discovery of wrongful conduct, market manipulation, changes to its properties or perceived value of its properties, attacks, suspension or cessation of our support for a cryptocurrency or cessation of other exchanges or service providers’ support for a cryptocurrency, and other factors outside of our control.

We do not guarantee the continuity, functionality or security of any cryptocurrencies or their underlying technology. You acknowledge and accept the risk of any of these changes or security breaches to the cryptocurrencies stored in your cryptocurrency wallet (“Cryptocurrency Wallet”).

Our Platform’s Cybersecurity Risks

Using an Internet-based trading system (such as our Platform) comes with various risks. This includes, but is not limited to, hardware, software, and Internet connection failure; contact with malicious software; cyber-attack; unauthorized access by third parties to your information and/or assets (including your cryptocurrencies) stored on your behalf; failure of blockchain(s), their underlying technology or other networks; communication failures, disruptions, errors, or delays you may experience when using our Platform, howsoever caused; spyware, viruses, Trojan horses, worms or other malware that may adversely affect your device or other equipment; phishing, spoofing or other similar attacks. Any of these cybersecurity failures or breaches, whether involving our Platform or our third-party service providers could negatively impact the price, liquidity and/or tradability, or demand of your cryptocurrencies, or the use of our Platform.

You acknowledge and accept that we have no control over Internet signal power and Internet reception and that you are solely responsible for the configuration of your equipment and its reliability. We therefore shall not be responsible for any communication failures, disruptions, errors, or delays you may experience when trading via our Platform, however caused.

Operational Risks When Using our Platform

Given the nature of cryptocurrencies, any technological difficulties that we experience could prevent your access or use of the cryptocurrencies stored in your Cryptocurrency Wallet.

We securely store private keys in a combination of online and offline storage. As a result of our security protocols, it may be necessary for us to retrieve private keys or related information from offline storage in order to facilitate a transaction in accordance with your instructions. This may delay the initiation, execution and/or settlement of your transaction, which you acknowledge and accept.

We may, from time to time, perform routine or required maintenance on our Platform or on any of our services. This may lead to downtime and you being unable to access our Platform or any of our services, which may potentially delay or cancel any of your orders. We may also suspend or permanently cease support for one or more cryptocurrencies during network upgrades and/or network changes.

You may be prevented from sending instructions, transaction requests, or emails, or your instructions, transaction requests or emails may not be received by us and/or our Platform due to issues with our hardware or software. This may also include issues with Internet connection or other network connectivity issues. Your instructions, transaction requests or emails to us and/or our Platform may also be lost, intercepted, altered, or corrupted during transmission. Additionally, your deposits, withdrawals, and transfers may not be instantaneous. You acknowledge and accept that we are not responsible for any price movements during that time and any losses incurred by you due to any delays in your transaction requests.Your ability to purchase any cryptocurrencies through our Platform may depend on whether or not we are holding sufficient amounts of the relevant cryptocurrencies in our proprietary wallet(s) and/or our ability to acquire such cryptocurrencies before on-selling them to you. Therefore, we make no promises regarding the timing or your ability to purchase any digital assets on our Platform.

The entire balance displayed in your account may not be tradeable, withdrawable or transferable due to a portion of your funds being used to place limit orders on our Platform and/or reserved for pending withdrawals.

Risks Related to Communications with Us

When communicating with us, we may provide you with information or explanations in relation to transactions. If we make any suggestions or provide any information, explanations or expresses any views in relation to any transactions, these are purely for information purposes only and we do not assume any responsibility for any transactions made and you should not rely on or consider any such suggestions, information, explanations or views expressed as investment advice or a recommendation to enter into any transaction. In using our Services, you agree and understand that you are acting on your own account and that you make your own judgments in relation to transactions and their suitability and not in reliance of any statements or representations by us. If you have any doubts about the risks involved in any transaction, you should seek independent advice from financial, legal, investing, accounting, tax and other professional experts.

Hata is entitled (but not obliged) to verify and satisfy itself with the identity of the person purporting to give instructions through our Platform. However, there is a risk that you may suffer losses arising from or in connection with (a) Hata accepting and acting on any instructions over our Platform and/or any other channel, platform or communication service which appears to us to be from you and which turns out to have been forged, fraudulent or unauthorised and/or (b) any miscommunication, communication breakdown, delay, forgery, mutilation or duplication in connection with the transmission of any of your instructions to us.

Risks and Disclosures Related to Safeguarding Arrangements

Safeguarding Arrangements

Fiat Currency. Your fiat currency will be held by us on your behalf in one or more trust accounts maintained with one or more appointed financial institutions.

Cryptocurrency Assets. Customers’ cryptocurrency assets will be held by us on your behalf in two or more vault accounts maintained by us.

Notwithstanding the above, due to operational needs, including for Hata to facilitate your transactions from time to time, there may be circumstances whereby not all fiat currency and/or cryptocurrency assets will be held in trust accounts / our vaults at all times, although we will endeavour to do so as soon as practicable. Fiat currency and/or cryptocurrency assets that are not held in trust accounts/vaults may not be afforded the same protections as those held in trust accounts/vaults and may be subject to additional risk of losses.

Commingling of Assets and Risks

Fiat Currency. Fiat currency that is received from you and deposited in a trust account will be held together and commingled with the fiat currency received by us from other users.

Cryptocurrency Assets. Cryptocurrency assets that are received from you and deposited in our vault will be held together and commingled with cryptocurrency assets that we receive from other users. We create and provide unique public addresses for each user and their Cryptocurrency Wallet. Your interest in your cryptocurrency assets will therefore be identifiable by these public addresses.

Risks of Commingling. As fiat currency and/or cryptocurrency assets held on your behalf will be commingled with assets of other users, in the event that we become insolvent and/or if the fiat currency and/or cryptocurrency assets held in the trust accounts/vaults are insufficient to cover the claims of all users made against us, you may not be able to recover all of your fiat currency and/or cryptocurrency assets that are held on your behalf in the trust accounts/vaults.

Disclaimers Relating to Safeguarding Arrangements

No Contractual Relationship. Despite the safeguarding arrangements in place for fiat currency and/or cryptocurrency assets, unless expressly stated otherwise, these arrangements do not create any contractual relationship between you and our appointed financial institutions or other entities we deal with to safeguard fiat currency and/or cryptocurrency assets, and you have no rights to enforce or enjoy the benefit of any contractual term against these entities.

No Guarantee of Recovery. These safeguarding arrangements do not guarantee that we will be able to satisfy all of your claims in relation to fiat currency and/or cryptocurrency assets. You will not be eligible for compensation where the fiat currency and/or cryptocurrency assets held in the trust accounts/vaults are insufficient to satisfy all of your claims.

Risks of Insolvency. If our appointed financial institution or other related entities become insolvent, there is a risk that you may not be able to recover all of your fiat currency or cryptocurrency assets that we hold on your behalf in the trust accounts/vaults.

Risks of Default. If our appointed financial institution or other related entities are in default of any of their obligations in relation to safeguarding your fiat currency or cryptocurrency assets, there is a risk that you may not be able to recover all of your fiat currency or cryptocurrency assets that are held on your behalf.

Policy on Storage Arrangements for Customers’ Assets

Storage of Your Assets in Hot Wallets. Your assets will generally be stored in hot wallets, which are electronic wallets that are connected to the internet via online or wireless means. Hot wallets typically allow you to transfer your assets quicker and more efficiently.

Security Measures. Keeping your assets secure is our priority. We seek to implement appropriate levels of security measures that mitigate the risks of losing your assets due to cyber-attacks, including:

• conducting regular security audits on our wallet infrastructure and assets storage policies;
• implementing robust information security principles in connection with the safeguarding of your assets, including policies and processes to align with applicable laws and international security standards, and the use of two-factor authentication in connection with hot wallets; and
• implementing additional manual authorisation requirements and/or transfer limits for certain transfers from hot wallets to mitigate against the risks of unauthorised transfers of your assets.

Acknowledgement of Storage in Hot Wallets. Any system of storage of assets in hot wallets is subject to inherent risks associated with cyber-attacks, hacking, phishing, and any other security or data breaches, which may lead to a total loss of your assets. Whilst we strive to implement security measures to safeguard your assets, we are not able to guarantee against any loss of your assets.

The risks described in this risk warning may result in you losing cryptocurrency, a decrease in or complete loss of value in your cryptocurrency, being unable to access, transfer or trade your cryptocurrency, being unable to receive benefits available to other cryptocurrency holders on our Platform, and other financial losses. These risks are not exhaustive and there may be additional risks that we have not foreseen or identified in this risk warning. You hereby acknowledge that we will have no responsibility or liability for any such risks whether identified in this risk warning or not.