In general, a high performance is usually correlated with a high level of risk. Moreover, past performance does not necessarily indicate future performance.
We therefore recommend to all our clients, before investing, to fully understand the risks associated with investing in crypto-assets and blockchain before deciding to invest in our services. We encourage our clients to read the appendix to this document, which lists some of these risks.
Furthermore, it is imperative to be informed about the risks and conditions before subscribing to an investment service. We recommend our clients to become familiar with the free information provided by heritages.io, on the Telegram discussion group, or any other platform outside of heritages.io.
In this regard, the client must have the financial resources to bear these risks. In particular, the client is informed and acknowledges that the acquisition of crypto-assets, of any nature, presents a risk of partial or total loss of their capital.
Appendix: Non-exhaustive list of risks related to investing in crypto-assets.
The risk of regulatory change. As of today, the crypto-asset market is inherently an international market operating within a non-harmonized European regulatory framework. In this context, the crypto-asset investment services offered by heritages.io are not all subject to mandatory registration or approval. As a result, the client is aware that they do not benefit from similar protections offered to individuals investing in "conventional" financial instruments, such as regulated banking and financial service providers under European law. The client acknowledges understanding and being aware that crypto-asset markets are decentralized and partially, or even non-regulated.
The risk of partial or total loss of your capital. The crypto-asset ecosystem offers a myriad of new opportunities that come with challenges and risks. This still unstable ecosystem is not immune to new episodes of turbulence and uncertainty in a market that is still highly volatile. Despite the rigorous analysis conducted by our teams and the utmost attention paid to studying cases before each investment, heritages.io cannot guarantee a return on investment. Investing in crypto-assets is done in the context of a highly volatile and extremely risky market. Therefore, the amount of the initial investment made by the Investor is not guaranteed. Before investing, the client ensures they have the necessary financial resources to bear the risk of total or partial loss of their capital.
The risk of illiquidity
By definition, the liquidity risk of an investor corresponds to the risk of not finding an available counterparty at the market price to execute a transaction. This difficulty may arise when selling crypto-assets on the market. This issue will be even more significant if the position size is large and the traded volumes are low at the time of sale.
The investor could then be forced to accept a devalued price in order to liquidate a position more quickly, or in an extreme case, be unable to sell their position in a particularly restricted or even non-existent market.
The market risk
Market risk is the risk of loss resulting from the evolution of the market value of a portfolio of financial assets. These losses result from fluctuations in the price of assets comprising a portfolio of financial instruments.
Two factors are to be considered in assessing the risk: the exposure of the portfolio and the market uncertainty on which the instruments are held. The investor is exposed to a major risk in the event of an adverse market evolution, where a loss could be incurred instead of the expected profit.
In the specific context of crypto-assets, investment remains a high-risk placement, as transparency and surveillance mechanisms are still insufficient or sometimes difficult to implement on certain parts of the blockchain. Moreover, in recent years, half of the crypto-assets listed on various exchanges have disappeared in one way or another, either presenting zero trading volumes or simply because the initiators of a project abandoned it midway. On the other hand, certain crypto-assets have been created exclusively for speculative purposes, or even fraud.
The risk of volatility
Volatility measures the instability of the price of an asset in a given market. When this price fluctuates within a wide range of values or when variations are inconsistent, it's referred to as instability or volatility of the asset. Volatility represents the amplitude of the asset's evolution over time.
Volatility depends on several factors, such as the limited liquidity, the nature of a market, or market sentiment in a specific period. Each selling or buying intervention can significantly raise or lower the price of an asset. Volatility is measured using a statistical indicator called the standard deviation. It is expressed as a percentage. If the price of a product varies greatly, the standard deviation increases. Thus, uncertainty grows about the possibility of selling with or without profit or loss. The lower the volatility of an investment, the lower or moderate the risk of losing money. The higher the volatility, the greater the risk of fluctuation, and, consequently the associated losses or gains. The crypto-asset market is characterized by particularly high volatility.
While the benefits of blockchain are undeniable in terms of transparency, data traceability, flexibility, and deployment of new technology, its vulnerabilities in terms of cybersecurity cannot be ignored. New processes are designed daily to address these gaps and failures and enhance security measures. However, there is still a long way to go for the blockchain ecosystem to be completely protected from the actions of malicious criminals. Technology-related risks are numerous. Among them are the hardware and software vulnerability of exchange platforms, vulnerability due to lack of awareness or training of end users, attacks against users (identity theft, malware, phishing, etc.), users' lack of awareness of the importance of strong passwords and protection through active management of their private keys. Despite the computational and human resources deployed to follow predetermined cybersecurity practices and best to protect the network and the storage elements of crypto-assets, the probability of such vulnerabilities cannot be ignored and underestimated.
The market value of the total circulating crypto-assets has increased by a factor of 10 between early 2020 and late 2021. Such a surge in the use of crypto-assets becomes an attractive source for cyber hacking that could result in theft of funds placed on platforms or wallets, despite significant security measures being put in place. So far, such incidents have not had a significant impact on the stability of the crypto-asset financial system. However, as crypto-assets become more widespread, potential repercussions on the broader economy and on investors may increase. Therefore, we strongly advise our clients to pay close attention to the use of advanced control measures (strong passwords, two-factor authentication 2FA, etc.) on their wallets.
Notification of Share Token Issuance to the Liechtenstein FMA
The company heritages.io has formally notified the issuance of $HERITAGES1 Share Token to the Liechtenstein Financial Market Authority (FMA Finanzmarktaufsicht Liechtenstein) pursuant to Art. 30 para. c TVTG, Art. 7 TVTV (Notification of Token Issuance) on September 20, 2022.
No Blockchain Services Offered
The company does not offer any blockchain services, particularly the company does not offer services as:
a) VT token depository under Art. 2 para. n TVTG,
b) VT protector under Art. 2 para. o TVTG, or
c) VT conversion agent under Art. 2 para. q TVTG.
Not Qualified as an Alternative Investment Fund or Collective Investment Scheme
The company pursues a general commercial objective as it trades goods and commodities, i.e., NFTs, art (ESMA, Guidelines on Key Concepts of the AIFMD, Clause