Risk disclosure

1. Read this first

This page expands the Risk Disclosure Statement in Schedule 3 of the Master Crypto-Backed Advance Agreement. The signed statement is what binds you. This page is a plain-English guide.

This page does not describe every risk. You should not take an advance unless you understand these risks, and you should take your own legal, tax and financial advice. Before an advance, you sign the statement and confirm that you understand the risks. (agreement clauses 3.1(c), 14.1(j), 28.9)

For a worked picture of how the levels work, see if the price falls.

2. Crypto price volatility

Crypto can fall sharply and quickly. A fall in the dollar price of your collateral raises your loan-to-value (LTV). A higher LTV can lead to a top-up demand or to a sale of your collateral.

You must keep the LTV below the top-up level at all times. Monitoring it is your responsibility. (agreement clauses 10.3, 10.12)

3. Sale without notice

If the LTV reaches the partial sale level (85%) or the full close level (90%), Boxwind CR may sell your collateral at once. This can happen during the 24-hour top-up period, at night, at a weekend, on a holiday, and without contacting you first. (clauses 10.7, 10.8; Schedule 3)

You may get little or no notice before a sale. If Boxwind CR is late with, or misses, a notice, its right to sell is not affected. We monitor your LTV continuously, including outside business days (a day banks are open in San José, Costa Rica, and New York), but watching it is also your responsibility, and a notice may not reach you in time. (clauses 10.1, 10.12)

Boxwind CR decides how much to sell, acting in a commercially reasonable manner. In a fast fall, more may be sold. Boxwind CR may sell on any venue it chooses, at the market price, without an auction or court. A sale at the prevailing market price is treated as commercially reasonable. Boxwind CR is not liable for the difference between that price and any other price you might have got. (clauses 11.1 to 11.3)

4. Fast falls through several levels

The price does not always fall in steps. It can jump past the warning and the top-up level, and past the partial sale level, before anyone can act. If more than one level is reached at once, Boxwind CR may act on the highest one. (clause 10.10)

Example in bitcoin, illustrative: 2.0000 BTC pledged. You owe USDT 104,625 at maturity. The partial sale level is about USD 61,544 per bitcoin and the full close level is about USD 58,125. If the price drops from USD 100,000 to USD 57,000 between two price checks, the LTV is about 92%. That is above the full close level. Boxwind CR may declare everything due and sell enough collateral to clear the debt, with no top-up period and no further notice. (clauses 10.8, 10.12)

A top-up only counts once the collateral has the confirmations, or the finality, that its network requires in the vault. A transfer that is on its way, or waiting for confirmations, does not stop a sale. (clause 10.6)

5. Stablecoin value

You must repay the full dollar value of what you owe. If your stablecoin is priced below USD 0.99 when you repay, you must pay more units of it to equal the dollar amount, or repay in the other stablecoin one for one, provided that one is not priced below USD 0.99. (clause 6.4; Schedule 3)

The reference price of a stablecoin is not assumed to be USD 1.00. Boxwind CR is not liable for loss from a change in the price of a stablecoin or from the repayment requirement. (Schedule 2, paragraph 3; clause 21.1)

6. Asset ineligibility

An asset can become ineligible. Causes include: it stops trading on enough venues or becomes too illiquid; its network halts or forks; a custody provider stops supporting it; holding it would put Boxwind CR in breach of law, sanctions or its policies; or an authority restricts it. (clause 12.3; Schedule 3)

You may then have to add collateral or repay part of what you owe within five business days. Boxwind CR can set a shorter time if the asset is falling fast or hard to move. Until the problem is fixed, the asset may be valued at zero. If you do not comply, it may be sold. (clause 12.4)

7. No yield on your collateral

Boxwind CR has agreed never to lend, re-pledge, rehypothecate, stake or otherwise use your pledged collateral. That protects your collateral, but it also means you earn no yield, staking reward or other income on it while it is pledged. (clauses 9.3, 9.4; Schedule 3)

Boxwind CR is also not liable for any lost staking reward. (clause 21.2)

8. Loss of collateral and shortfall

You may lose some or all of your collateral. After a sale, the proceeds are applied to costs of sale, then any unpaid fee, then the advance, then other secured obligations. (clause 11.4)

If the sale does not raise enough, you still owe the shortfall. It is a debt you must pay on demand. Boxwind CR may also set off amounts you owe against anything it owes you. (clauses 11.6, 19.1)

If you do not pay at maturity, Boxwind CR may apply your collateral without further notice. (clause 6.3)

9. Custody and technology

Your collateral is held in a vault on the Fireblocks platform. Failures of technology, networks, service providers or security could delay or stop access to it. (clause 9.1; Schedule 3)

Some events are outside Boxwind CR's control, such as a network halt, a fork, a cyber attack or an exchange or provider failure. Boxwind CR is not liable for those, except in cases of gross negligence, fraud or wilful misconduct, and its total liability is capped at the market value of the collateral the claim relates to. These events do not suspend your duty to repay or to keep the LTV in order, and do not limit Boxwind CR's right to sell. (clauses 9.8, 21.1, 27.1, 27.2)

If you send an asset to the wrong address or on the wrong network, or send an asset that is not eligible, it may be lost. Boxwind CR is not liable. (clause 9.6)

Boxwind CR may move your collateral to a replacement custody arrangement, on at least 10 business days' notice, or at once for security reasons. (clause 9.9)

10. Risk to Boxwind CR as your counterparty

You rely on Boxwind CR to hold your collateral and to send it back when you repay. You are exposed to Boxwind CR's operations, controls and solvency.

The agreement says your collateral is held in a vault set up for you, kept apart from Boxwind CR's own assets and from other clients' assets, and that you keep ownership subject to Boxwind CR's security. (clauses 8.5, 9.1, 9.2) But a promise in a contract is not a guarantee. If Boxwind CR became insolvent, failed to follow its own controls, or lost access to the vault, you could be delayed in getting your collateral back, or could lose some or all of it. How Costa Rican law and the law of other places would treat your claim is not settled here.

Boxwind CR may transfer its rights under the agreement, or grant security over them, to an affiliate or to a person or vehicle that funds advances. The custody promises continue if it does. You may not transfer your rights. (clause 24)

No deposit insurance, compensation scheme or guarantee applies.

11. Not a bank or a deposit

Boxwind CR is not a bank or other supervised financial entity. An advance is not a deposit and is not insured. (clause 2.3; Schedule 3)

12. Fixed fee

Half the fee is taken from your advance when it is paid and is never refunded. The other half is due at maturity, even if you repay early. (clauses 5.3, 7.2; Schedule 3)

The fee is fixed, so it does not rise with time or default. But it also does not fall if you repay early. Boxwind CR may choose to waive part of the maturity half, but it need not. (clause 7.2)

13. Regulatory change

A change in Costa Rican or other law could require Boxwind CR to change or end this product, or to close out advances. (Schedule 3) Boxwind CR may refuse, delay or freeze transfers, or end the agreement, where it reasonably considers the law or its policies require it. (clauses 16.3, 26.3)

It becoming unlawful for Boxwind CR to keep an advance in place is an event of default. An authority restricting the holding or sale of an asset is an ineligibility event. (clauses 12.3(d), 17.1(m))

Rules on digital assets are changing in many countries. Rules that apply to you, or to your business or owners if you are a company, may also change.

14. Tax

A sale of your collateral may be a taxable disposal for you. You are responsible for all taxes arising from the agreement, including tax on a sale. If tax must be withheld from a payment you make, you must pay more so that Boxwind CR receives the full amount. Boxwind CR does not give tax advice. (clauses 13.2, 20.4; Schedule 3)

Take advice from your own tax adviser before you enter into an advance.

15. Other things to know

• Security. You grant Boxwind CR a first-ranking security interest over the collateral and authorise it in advance to sell it. You cannot revoke that while you owe anything. Boxwind CR has exclusive possession and control of the collateral while it is in the vault. (clauses 8.1, 8.3)
• Time matters. Time is of the essence for your obligations on repayment, LTV and ineligibility. (clause 28.8)
• Prices and records. We use the median of the US dollar prices from at least two reputable sources that we select. A median limits the effect of one bad price, but with two sources it is simply their average. If fewer than two sources are available, we may use another reputable source we select. Our calculation, and our records, are conclusive unless there is a manifest error. (Schedule 2, paragraph 3; clauses 10.2, 13.6)
• Disputes. The agreement is governed by the laws of England and Wales. Disputes go to LCIA arbitration in London. Costs and time may be significant. (clause 29)

16. Risks that differ by asset

The accepted assets are bitcoin, ether, solana, XRP and BNB, with more to come. Each asset carries its own risks, on top of those above:

• Network and chain risk. Each asset depends on its own network. A halt, fork, outage, congestion or software fault on that network can delay or stop transfers, can delay a top-up from counting, and can make the asset ineligible. (clause 12.3)
• The wrong network or a missing tag. ETH must be sent on Ethereum mainnet only, BNB on BNB Smart Chain (BEP-20) only, and XRP must carry the destination tag we give you. An asset sent on another network, or an XRP transfer without the tag, can be lost for good. Boxwind CR is not liable. (clause 9.6)
• Staking rewards you give up. Some assets, such as ETH, SOL and BNB, can earn staking rewards when held by their owner. Yours will not be staked while pledged, so you earn none.
• Each asset has its own price and its own levels. Assets can fall at different times and by different amounts. The levels on this site are the bitcoin values. Levels for other assets are set for each asset and stated in your Advance Confirmation.
• Regulation and market depth. The legal treatment of an asset, and how easily it can be sold, can differ from asset to asset and can change.

You should not take an advance unless you can afford to lose the collateral you pledge. Read the key terms summary and the full agreement as well.