Please be aware that it is possible that fraudsters may solicit you to invest in cryptocurrency by impostering our employees through social media, text or email, trying to steal your personal information or your money.
SEC, FINRA, and CFTC staff have observed investment scams where fraudsters are creating fake websites or social media accounts using the names and professional details of actual industry professionals. Some may even tout digital asset or “cryptocurrency” advisory and trading businesses.
RWM does not and will not solicit investments in Digital Assets or any other investments. Only existing clients of RWM may invest in the RTREE portfolio at this time through our firm. Make sure you know who you’re dealing with when investing, and contact RWM with any concerns.
How to avoid cryptocurrency scams:
• Be cautious on social media sites or chat apps
• Do not send money or personal information without verifying the recipient.
• When in doubt, pick up the phone and call us at (212) 625-1200.
Digital Asset Disclosures
Digital Asset: The term “Digital Asset” refers to an asset that is issued and/or transferred using distributed ledger or blockchain technology, including, but not limited to, so-called “virtual currencies”, “coins”, and “tokens”.
Investing in Digital Assets involves a high degree of risk and potential loss of your entire investment. Our firm does not guarantee the future performance of the Digital Assets or any specific level of performance, the success of any investment decision or strategy that we may use, or the success of our firm’s overall management of the Digital Assets.
Given the complexity of the products and technology that Digital Assets pose, investment decisions made with respect to the allocation of any portfolio to Digital Assets are subject to various potential risks including technical, legal, market, and operational risks, price volatility, illiquidity, valuation methodology, related-party transactions, and conflicts of interest, and that those investment decisions will not always be profitable.
Risk of Loss:
Investments in Digital Assets is highly speculative and involves a high degree of risk. Investments in Digital Assets are extremely volatile in nature and can have higher volatility than other traditional investors such as stocks and bonds, and market movements can be difficult to predict. The value of Digital Assets can change constantly and dramatically. If the value goes down, there’s no guarantee that it will rise again. Investors should be prepared for volatile market swings. As a result, there is a significant risk of loss of your entire principal investment. Interests should not be purchased by any person who cannot afford the loss of their entire investment. Due to the high price volatility, gains or losses are unpredictable and there can be no guarantee of returns. Transactions in Digital Assets may be irreversible, and, accordingly, losses due to fraudulent or accidental transactions may not be recoverable.
Valuation of Digital Assets can differ significantly depending on the price source or otherwise due to factors such as market fragmentation, unregulated markets, illiquidity and volatility. There is no guarantee that a client will be able to achieve a better than average market price for Digital Assets or will purchase Digital Assets at the most favorable price available.
In addition to traditional market price risk factors such as inflation, interest rates, market and other political or economic events, the price of Digital Assets may be affected by a wide variety of additional complex factors including supply and demand as well as access to Digital Asset service providers, exchanges, miners or and market participants.
Regulatory Uncertainty Risk:
Digital currencies are NOT considered securities and are NOT subject to the same regulatory requirements as Securities and Exchange Commission registered securities, exchange-traded funds, or similar investment vehicles.
There can be no assurance that Digital Asset investments will not be adversely affected by increases in regulatory activity concerning particular Tokens or Token exchanges or trading platforms. Regulatory agencies and/or the constructs responsible for oversight of a Digital Asset or a Digital Asset network may not be fully developed and subject to change. Regulators may adopt laws, regulations, policies or rules directly or indirectly affecting Digital Assets their treatment, transacting, custody, and valuation.
Regulatory actions could negatively impact Digital Assets in various ways, including, for example, through a determination that one or more digital assets are deemed regulated financial instruments or securities that require registration or licensing.
Any liquidity may be limited or disrupted, and there can be no guarantees on the ability to sell or exchange Digital Assets at any price. It is also possible that regulatory agencies may then consider certain Digital Asset trading being conducted as unlawfully under interpretations of existing law and may take action at any time to freeze or stop Digital Assets from being released or traded.
Exchanges can stop operating due to security breaches, fraud, insolvency, market manipulation, market surveillance, KYC/AML procedures, non-compliance with applicable rules and regulations, technical glitches, hackers, malware or other reasons; blockchain technology is a relatively new and untested technology which operates as a distributed ledger. Blockchain systems could be subject to internet connectivity disruptions, consensus failures or cybersecurity attacks, and the date or time that you initiate a transaction may be different than when it is recorded on the blockchain.
Digital asset holdings are not considered legal tender and are not insured by the government like U.S. bank deposits and therefore, you don’t have the same protections as a bank account. Unlike most traditional currencies, such as the U.S. dollar, the value of a Digital Asset is not tied to promises by a government or a central bank. Digital asset investments are not insured.
There is currently no regulation or standard auditing practice of accounts holding Digital Assets to verify ownership. There are counterparty and custody risks associated with Digital Assets including loss or theft of the Digital Asset.The organizations offering custody services for Digital Asset are likely to be much less liable or secure than more common custodians due to their lack of regulatory experience. In general, digital assets cannot be held in custody by US broker-dealers. Therefore, under the Advisers Act, as an SEC registered investment adviser, we are required to use a “qualified custodian” that is suitably licensed to maintain client assets in separate accounts in their own name. Theft is less likely when holding digital assets at a qualified custodian in offline systems (cold storage) with institutional security and controls.
Digital Assets exist as computer-coded entries on a digital ledger, or blockchain, visible to and verifiable by nodes. Ownership is reflected in a string of numbers on a distributed ledger, accessible only by a public key and a private key in “wallets”.
To satisfy regulatory requirements, a custodian could hold a “private key” and a “public key” to the digital asset. A custodian can maintain private keys in digital form on a computer hard drive unconnected from the internet and protected by layers of cybersecurity. Or, the custodian can maintain and secure the private key in a “cold wallet” by, for example, locking it in a physical vault. In any event, the technology used for safeguarding digital assets is emerging. Digital Assets are essentially bearer assets. In general, anyone who obtains possession of the private key can, in theory, misappropriate the asset, no matter where the private key is maintained. The custodian may periodically store Digital Assets in “hot wallets” which are connected to the internet to facilitate transactions in. Digital Assets stored in “hot wallets” may be more susceptible to theft or compromise than Digital Assets stored in other digital wallets. There can be no assurance the Digital Assets storage process will not be compromised.
THIS IS NOT A COMPLETE SET OF RISKS.
The risks disclosed therein may not be inclusive of all risks that may occur since there are other risks associated with the purchase of Digital Assets that Ritholtz Wealth Management is unable to anticipate. Such risks may further materialize as unanticipated variations or combinations of the risks discussed in this document.