Introduction
Virtual assets offer innovative opportunities, but they come with inherent risks that clients must fully understand. These risks can affect the value, liquidity, security, and transferability of virtual assets, potentially leading to significant financial losses. At Gap Three Partners FZCO (G3P),we are committed to ensuring transparency by highlighting these key risks to help you makeinformed decisions.
Material Risks Associated with Virtual Assets
Loss of Value and Volatility: Virtual assets are subject to extreme price volatility, with sudden and unpredictable changes that can result in partial or total loss of value.
Transfer Restrictions and Irreversibility: Virtual assets may not always be transferable betweenplatforms or wallets, and certain transactions may be irreversible, leading to potential permanent losses.
Liquidity Risks: Some virtual assets may lack sufficient liquidity, making it difficult to sell orconvert them to other assets when needed, especially during periods of high market volatility.
Privacy and Public Records: Many virtual asset transactions are recorded on public distributedledger technologies (DLTs), making them visible to others and limiting privacy in certain cases.
Fraud, Hacking, and Cybersecurity Threats: Virtual assets are vulnerable to risks such as fraud,market manipulation, hacking, and phishing attacks. These threats can lead to loss of assets through theft or unauthorized access.
Lack of Legal Protections: Virtual assets may not be subject to the same legal safeguards astraditional financial instruments, meaning clients could face losses without access to legal recourse or protections.
Given the complex nature of these risks, clients should exercise caution, perform due diligence,and consider seeking expert advice before engaging with virtual assets.
