Risk Disclosure

The trading of goods and products, real or virtual, as well as virtual currencies, involves significant risk. Prices can and do fluctuate on any given day. Due to such price fluctuations, you may increase or lose value in your assets at any given moment. Any currency – virtual or not – may be subject to large swings in value and may even become worthless. There is an inherent risk that losses will occur as a result of buying, selling or trading anything on a market.Bitcoin trading also has special risks not shared with official currencies or goods or commodities in a market. Unlike most currencies, which are backed by governments or other legal entities, or by commodities such as gold or silver, Bitcoin is a unique and backed by technology and trust. There is no central bank that can take corrective measure to protect the value of Bitcoins in a crisis or issue more currency.Instead, Bitcoin is an as-yet autonomous and largely unregulated worldwide network. 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.Bitcoin trading is probably 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 currencies, or a deflationary or inflationary spiral. Confidence might also collapse because of technical problems: 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.Because on this platform there are derivatives being traded, there is additional counter party risk. Under extreme market circumstances Deribit could decide to partially or entirely close winning positions to be able to close losing positions. Derivatives settle every day in 24h sessions. If bankruptcies in a session deplete the insurance fund, any further losses will be covered by profits made by traders on the platform on a pro rata basis. In such a case a all winning traders of a session would get taxed a percentage on their earnings to cover for other traders bankruptcies.Though Deribit is only allowed to take such steps after the Deribit insurance fund is depleted. The fund was credited by Deribit with 25BTC. The fund will be used to cover for system losses due to bankruptcies. The current status of the insurance fund is shown in real-time on the “Insurance” page accessible on the platform.Due to the nature of cryptocurrencies, there could occur situations where Deribit takes the step where contracts will be closed prematurely for platform integrity. Users of the platform are assumed to understand those risks. An extreme situation could for example occur during forks and splits of the bitcoin network.There may be additional risks that we have not foreseen or identified in our Terms of Use.You should carefully assess whether your financial situation and tolerance for risk is suitable for buying, selling or trading Bitcoins.

Customer Advisory: Understand the Risks of Virtual Currency Trading