FIRST CRYPTO EXCHANGE L.L.C
United Arab Emirates
March 2025
GENERAL
This Risk Disclosure Statement (this “Statement”) applies to the electronic trading platform (including any applicable mobile applications and websites used to access the same) (collectively the “Platform”) provided by First Crypto Exchange L.L.C (the “Company”, “we,” “us” or “our”), and shall be deemed as part of the Service Agreement between the User and the Company (the “Service Agreement”). All capitalized terms that are used but not otherwise defined herein shall have the meanings ascribed to them in the Service Agreement.
In acceding to or using the Platform and the Site, you represent and warrant that you are fully aware of the risks associated with the transactions involving Digital Assets or the use of Platform. You agree and understand that you are solely responsible for determining the nature, potential value, suitability, and appropriateness of these risks for yourself, and that the Company does not give advice or recommendations regarding any Digital Asset, including the suitability and appropriateness of, and investment strategies for, any Digital Asset. You agree and understand that you access and use the Platform and the Site at your own risk. This brief statement does not disclose all of the risks associated with the Digital Assets and using the Platform. You should, therefore, carefully consider whether such use is suitable for you in light of your circumstances and financial resources. You should be aware that you may sustain a total loss of the Digital Assets in your Account that under certain market conditions.
Risks Relating to Digital Assets[1]
The price and value of any investment in Digital Asset products and the income, if any, from them, can fluctuate and may fall against your interest. An individual Digital Asset product may experience downward price movements and may under some circumstances even become valueless. Digital Asset may not be liquid. An inherent risk of trading/investing in Digital Asset products is that losses may be incurred, rather than profits made, as a result of buying and selling such products.
Digital Assets are not legal tender and are not backed by the government, or by commodities such as gold or silver. There is no central bank that can take corrective measure to protect the value of Bitcoin and/or Ether and/or any other Digital Assets in a crisis or issue more Digital Assets. Instead, Bitcoin, Ether and any other Digital Assets are autonomous and largely unregulated on worldwide networks. Traders put their trust in a digital, decentralized and partially anonymous system that relies on peer-to-peer networking and cryptography to maintain its integrity.
Transactions involving digital assets may be susceptible to various types of fraud, manipulation, theft, they may be erroneous, technically irreversible or there may be no technical feasibility to execute the transaction. Losses in such cases may not be possible.
Some Digital Asset transactions shall be deemed to be made when recorded on a public ledger, which is not necessarily the date or time that you initiated the transaction.[2]
Some digital asset transactions may not be private and may be permanently recorded in public distributed ledger technology (DLT).The value of Digital Assets may be derived from the continued willingness of market participants to exchange fiat currency or Digital Assets for Digital Assets, which may result in the potential for permanent and total loss of value of a particular Digital Asset should the market for that Digital Asset disappear.
The nature of Digital Assets may lead to an increased risk of fraud, manipulation, theft (including through hacking and targeted schemes) or cyber attack, and may mean that technological difficulties experienced by the Platform and the possible absence of remedial mechanisms of legal protections may prevent the access to or use of your Digital Assets.[3]
Trading of Digital Assets is susceptible to irrational (or rational) bubbles or loss of confidence, which could collapse demand relative to supply. For example, confidence might collapse in Bitcoin because of unexpected changes imposed by the software developers or others, a government crackdown, the creation of superior competing alternative cryptocurrencies, or a deflationary or inflationary spiral. Confidence might also collapse if the anonymity of the system is compromised, if money is lost or stolen, or if hackers or governments can prevent any transactions from settling.
Deposits into your Account is not considered deposits under the applicable laws, rules, or regulations in your jurisdiction.
Digital Assets in your Account is not subject to applicable deposit insurance protection.
Other Risks
Legislative and regulatory changes or actions at the state, federal, or international level may adversely affect the use, transfer, exchange, and value of Digital Assets.
The Company and the Platform is registered as a broker on capital market service provider in UAE jurisdiction. The trading and settlement of the transactions regarding the Digital Assets are overseen by governmental authority.
The Platform or the Site may become unavailable due to changes of applicable laws and you may suffer loss or incur liabilities due to the termination or suspension of the Platform or any or all of the Accounts.
The Company’s trading facilities are supported by computer-based component systems for the order-routing, execution, matching, registration or clearing of trades. As with all facilities and computer systems, customers will be exposed to risks associated with the systems including the failure of hardware and software. The result of any system failure may be that your order is either not executed according to instructions or is not executed at all. You should also be aware that the Internet is not a completely reliable transmission medium and there may be delays in service provisions.
You should note in particular that the proceeds from the sale of Digital Assets and other income may be or may become subject to tax, levies, duties or other fees or charges imposed by the authorities in that market, including taxation levied by withholding at source. Tax law and practice regarding Digital Assets in certain countries may not be clearly established. It is therefore possible that the current interpretation of the law or understanding of practice may change, or that the law may be changed with retrospective effect.
| FCE providing Broker-Dealer Services shall publish on its website in a prominent place or make available by other publicly accessible means—[4]
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| a. | a detailed description of any actual or potential conflicts of interest arising out of their activities, and how these are managed; |
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| b. | their policies and procedures relating to data privacy, whistleblowing and handling of client complaints; |
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| c. | a summary containing the following information pertaining to each Virtual Asset offered by the VASP—
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| i. | name and symbol; | ||
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| ii. | date of issuance; | ||
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| iii. | market capitalisation and fully diluted value; | ||
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| iv. | circulating supply, including as a percentage of maximum total supply [if applicable]; | ||
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| v. | whether the Virtual Asset has been subject to an independent smart contract audit and the date of the most recent audit; and | ||
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| vi. | largest reduction in price from high to low stated as both an absolute amount and a percentage change, including when it occurred;
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| d. | a description of how the VASP determines the prices of the Virtual Assets it quotes to clients; |
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| e. | a description of the VASP's routing practices, including if twenty percent [20%] or more of client orders are routed to any liquidity source and if so, the identity of such source[s]; |
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| f. | a statement as to whether the VASP holds or maintains funds or Virtual Assets or provides clearing services for other VASPs providing Broker-Dealer Services and if so, include a description of those services; |
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| g. | a statement as to the VASP’s arrangements for the protection of clients’ ownership of assets held by the VASP; |
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| h. | a statement of whether the VASP refers or introduces clients to other Entities including, but not limited to, other VASPs and, if so, a description of the terms of such arrangements and the monetary or non-monetary benefits received by the VASP, including by way of reciprocation for any service or business; and |
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| i. | a statement of whether the VASP has accounts, funds or Virtual Assets maintained by a third party and if so, provide the identity of that third party.
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2. | Other disclosable matters. To the extent permissible under applicable laws, VASPs providing Broker-Dealer Services shall publish on their website or by other publicly accessible means— |
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| a. | details of any past convictions or prosecutions of any member[s] of their Senior Management or Board, whether before the courts of the UAE or the courts of another jurisdiction; and |
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| b. | any such other information relating to their business or activities as VARA may reasonably require.
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3. | The disclosure requirements set out in the Broker-Dealer Services Rulebook are in addition to all disclosures required under the Market Conduct Rulebook and to all notifications to VARA required under the Compliance and Risk Management Rulebook. |
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The Company is kindly requested to include in its Risk Disclosure Statement a clear reference to the risk that Digital Assets may not be liquid, in accordance with the mandatory disclosure requirements set out under the VARA Market Conduct Rulebook.
Kindly note that the current disclosure regarding the timing of Digital Asset transactions does not address the requirement to inform clients that some transactions may not be private and could be permanently recorded on public Distributed Ledger Technologies (DLTs). As per VARA’s Market Conduct Rulebook, the Company is requested to clearly include this privacy-related risk in the Risk Disclosure Statement.
Kindly note that while the current wording outlines risks of fraud and cyberattacks, it does not fully meet VARA’s disclosure requirements. The Company is requested to expand this risk disclosure to explicitly include the potential for manipulation, theft (including through hacks and targeted schemes), and to clearly state that Digital Assets may not benefit from legal protections. This is a mandatory public disclosure requirement.
Please note that these are mandatory public disclosure requirements under the VARA Broker-Dealer regulations. They must be clearly reflected in the Company’s risk disclosure document and prominently published on the website. These disclosures must be fully addressed here and implemented prior to the website going live.
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