IMPORTANT WARNING: Trading in digital assets and cryptocurrencies involves substantial risk of loss and is not suitable for all investors. You may lose some or all of your invested capital. Before engaging Alpha Mirror's services, you should carefully consider whether such trading is appropriate for you in light of your experience, objectives, financial resources, and other relevant circumstances.
This Risk Disclosure Statement ("Statement") is provided by Alpha Mirror ("we", "us", "our", "the Company") to inform you of the material risks associated with trading, holding, and transacting in digital assets, cryptocurrencies, and related derivatives. This Statement is designed to help you understand the nature and risks of digital asset markets and make informed decisions.
This Statement applies to all services provided by Alpha Mirror, including but not limited to:
This Statement should be read in conjunction with our Terms and Conditions, Privacy Policy, and any specific service agreements. By engaging our services, you acknowledge that you have read, understood, and accepted all risks outlined herein.
Digital assets are subject to extreme and unpredictable price volatility. Prices can fluctuate dramatically within short timeframes due to market sentiment, regulatory announcements, technological developments, macroeconomic factors, or market manipulation. Price movements of 10%, 20%, or more within a single day are not uncommon. This volatility can result in substantial losses that may exceed your initial investment, particularly when using leverage or derivatives.
Digital asset markets may experience periods of low liquidity, making it difficult or impossible to execute trades at desired prices or exit positions. During volatile market conditions, liquidity can evaporate rapidly, leading to significant slippage, wider bid-ask spreads, and potential inability to close positions. Low-cap or newly listed assets may have particularly poor liquidity characteristics.
Unlike traditional financial markets, digital asset markets operate continuously without standard trading hours or circuit breakers. This means significant price movements can occur at any time, including weekends and holidays, potentially without the ability to monitor or react to market conditions.
Digital asset markets are susceptible to various forms of market manipulation, including pump-and-dump schemes, spoofing, wash trading, front-running, and coordinated manipulation through social media. The relative immaturity and fragmentation of these markets, combined with lower regulatory oversight compared to traditional financial markets, creates opportunities for bad actors to manipulate prices and trading activity.
Digital assets often exhibit high correlation with each other, particularly during market stress. A significant adverse event affecting one major cryptocurrency can trigger widespread selling across the entire market, limiting diversification benefits and potentially causing cascading liquidations.
Digital assets rely on blockchain technology and underlying protocols that may contain bugs, vulnerabilities, or design flaws. Protocol upgrades, hard forks, or network splits can create uncertainty, temporary loss of access to assets, or permanent value destruction. Consensus failures, 51% attacks, or other network-level attacks could compromise the integrity of a blockchain.
Many digital assets and DeFi protocols rely on smart contracts—self-executing code deployed on blockchains. Smart contracts may contain coding errors, logic flaws, or vulnerabilities that can be exploited by malicious actors, resulting in total loss of funds. Even audited smart contracts have resulted in significant losses due to unforeseen exploits.
Digital asset exchanges, wallets, and platforms are frequent targets of sophisticated cyberattacks. Historical incidents have resulted in the theft of billions of dollars worth of digital assets. Despite security measures, there is no guarantee that systems cannot be breached. Risks include:
Control of digital assets requires management of cryptographic private keys. Loss, theft, or unauthorized access to private keys will result in permanent and irreversible loss of assets. Unlike traditional financial systems, there is no central authority that can reverse transactions or recover lost keys. Custodial solutions introduce counterparty risk, while self-custody requires technical expertise and carries risk of user error.
Trading platforms, wallet services, and blockchain networks may experience technical failures, system outages, maintenance periods, or performance degradation. During critical market movements, system failures could prevent you from executing trades, accessing funds, or managing risk, potentially resulting in significant losses.
Many DeFi protocols and derivatives rely on external data sources (oracles) to determine prices and trigger contract executions. Oracle failures, manipulation, or inaccuracies can result in incorrect contract execution, unfair liquidations, or exploitation of pricing discrepancies.
Digital asset exchanges and trading platforms may fail, become insolvent, engage in fraud, or cease operations. Customer assets held on exchanges are subject to significant counterparty risk. Historical incidents include exchange insolvencies resulting in total loss of customer funds, fraudulent misappropriation of assets, and commingling of customer and corporate funds.
Third-party custodians holding digital assets may become insolvent, be hacked, engage in unauthorized activities, or fail to return assets. Custodial arrangements may not provide the same legal protections as traditional financial custodians, and recovery of assets in case of custodian failure may be difficult or impossible.
Stablecoins and synthetic assets purport to maintain stable value or track external assets but carry significant risks including:
DeFi protocols operate without centralized intermediaries, creating unique risks:
Trading with leverage amplifies both potential gains and potential losses. You can lose more than your initial investment when using leverage. Specific risks include:
Digital asset derivatives including futures, options, perpetual swaps, and structured products are complex instruments that may not be suitable for all investors. Understanding pricing mechanisms, Greeks (delta, gamma, vega, theta), funding rates, settlement procedures, and risk characteristics requires sophisticated knowledge. Misunderstanding these mechanisms can lead to unexpected losses.
Leveraged and derivative positions are subject to automatic liquidation when margin requirements are not met. During periods of extreme volatility or low liquidity, liquidations may occur at prices significantly worse than expected. Cascading liquidations can create self-reinforcing downward price spirals.
Derivative instruments may not perfectly track the underlying asset price due to funding rates, contango/backwardation, liquidity differences, or structural features. This basis risk can result in unexpected profit or loss profiles.
The regulatory status of digital assets varies significantly across jurisdictions and continues to evolve rapidly. Regulatory changes can have immediate and severe impacts on digital asset markets, including:
Legal frameworks governing digital assets, smart contracts, and digital asset transactions remain underdeveloped in many jurisdictions. Legal protections available for traditional financial assets may not apply. Jurisdictional conflicts may arise regarding applicable law, enforcement of contracts, and resolution of disputes.
Engagement with digital asset services may require extensive compliance with anti-money laundering (AML) and know-your-customer (KYC) regulations. Failure to comply can result in account suspension, frozen assets, or legal penalties. Enhanced due diligence may be required based on transaction patterns or counterparty relationships.
Tax treatment of digital asset transactions varies by jurisdiction and transaction type. You are solely responsible for understanding and complying with all applicable tax obligations. Digital asset transactions may trigger taxable events including capital gains, income recognition, or other tax consequences. Failure to properly report and pay taxes can result in penalties, interest, and legal action.
Certain digital assets may be classified as securities under applicable laws, subjecting them to securities regulations including registration requirements, trading restrictions, and disclosure obligations. Securities law violations can result in enforcement actions, trading suspensions, or criminal penalties.
Alpha Mirror employs algorithmic trading strategies that carry specific risks:
Market making activities involve continuously quoting bid and ask prices, which exposes the firm and clients to:
Market orders and large trades may be executed at prices substantially different from expected due to slippage, particularly in volatile or illiquid conditions. Partial fills, order rejections, or failed transactions can result in unintended exposure.
Trading through APIs introduces risks including:
Providing liquidity to automated market makers (AMMs) or liquidity pools exposes you to impermanent loss—the difference between holding assets versus providing them as liquidity. Impermanent loss can be substantial during volatile periods and may exceed any fee income generated.
Blockchain forks (hard or soft) can create uncertainty regarding asset ownership, value distribution, replay attacks, and chain selection. Forks may result in temporary or permanent loss of value, double-spending risks, or asset access issues.
Digital asset portfolios may lack diversification, either through concentration in specific assets, sectors, protocols, or blockchains. Concentrated positions amplify the impact of adverse events affecting those specific exposures.
Blockchain networks can experience congestion leading to delayed transactions, failed executions, or extremely high transaction fees (gas fees). During critical periods, fee volatility can make transactions economically unviable or prevent timely execution.
Future advances in quantum computing could potentially compromise current cryptographic methods protecting digital assets, though this risk is currently theoretical and long-term in nature.
Past performance is not indicative of future results. No representation or guarantee is made regarding future performance, profitability, or investment outcomes. Trading strategies that have been historically profitable may fail or produce losses in the future.
Digital assets are not insured by government deposit insurance schemes such as the FDIC, FSCS, or similar programs. In the event of loss due to hack, fraud, insolvency, or other causes, you may have limited or no recourse to recover assets.
Blockchain transactions are generally irreversible. Once a transaction is confirmed, it cannot be undone, reversed, or cancelled. Errors in transaction details (such as sending to wrong addresses) will result in permanent loss of funds.
Alpha Mirror may engage in proprietary trading activities that could create conflicts with client interests. The firm may hold positions contrary to client positions or may compete with clients for liquidity or favorable execution.
As a market participant and service provider, Alpha Mirror may have access to information, analytics, or market intelligence not available to all clients. This information asymmetry could create advantages that benefit the firm at the expense of clients.
Alpha Mirror may act in multiple capacities including principal, agent, market maker, liquidity provider, and advisor, which may create conflicts regarding prioritization of interests.
By engaging Alpha Mirror's services, you represent and acknowledge that:
All investment and trading decisions remain your responsibility. Alpha Mirror's services, analytics, or recommendations should not be considered financial advice. You should consult independent legal, tax, and financial advisors before making decisions.
You are responsible for:
While Alpha Mirror implements various risk controls and security measures, no system can eliminate all risks. Our risk management framework includes:
However, you acknowledge that these measures cannot guarantee prevention of loss and do not eliminate the risks outlined in this Statement.
To the maximum extent permitted by law, Alpha Mirror's liability for losses arising from digital asset trading or our services is limited as specified in our Terms and Conditions. Alpha Mirror is not liable for losses resulting from:
Alpha Mirror reserves the right to update this Risk Disclosure Statement at any time to reflect changes in our services, market conditions, regulatory requirements, or risk landscape. Updated versions will be posted on our website with the effective date. Continued use of our services after updates constitutes acceptance of the revised Statement.
If you have questions about this Risk Disclosure Statement or need clarification on any risks described herein, please contact us at:
By accessing or using Alpha Mirror's services, you acknowledge that:
IF YOU DO NOT UNDERSTAND OR ACCEPT THESE RISKS, DO NOT USE ALPHA MIRROR'S SERVICES.
Version: 1.0
Effective Date: January 2026
Last Updated: January 2026
This Risk Disclosure Statement is incorporated by reference into Alpha Mirror's Terms and Conditions and constitutes a material part of the agreement between Alpha Mirror and its clients.