RISK STATEMENT

Risk of Loss. The Investor could incur substantial, or even total, losses on the Contribution. The Contribution is only suitable for persons willing to accept this high level of risk.

Risks of Contributions Generally. All investments risk the loss of capital. No guarantee or representation is made that the Manager’s investment program will be successful. Certain investment techniques of the Manager can, in certain circumstances, substantially increase the impact of adverse market movements to which the Manager may be subject. In addition, the Manager’s investments may be materially affected by conditions in the financial markets and overall economic conditions occurring globally and in particular in countries or markets where the Manager invests its assets. The Manager’s methods of minimizing such risks may not accurately predict future risk exposures. Also, information used to manage risks may not be accurate, complete or current, and such information may be misinterpreted.

New Market. The market for digital assets is still new and uncertain. Whether the price for one or more digital tokens will increase or decrease, or whether a particular digital asset will lose all or substantially all of its value, is unknown. This applies whether the Manager takes long or short positions with respect to any digital asset.

Risks of the Contribution

No Operating History. The Manager is a recently formed entity and has no operating history upon which prospective investors can evaluate its likely performance. There can be no assurance that the Manager will achieve its investment objective.

Start–Up Periods. The Manager may encounter start-up periods during which it will incur certain risks relating to the initial investment of newly contributed assets. Moreover, the start–up periods also represent a special risk in that the level of diversification of the Manager’s portfolio may be lower than in a fully invested portfolio.

Reliance on the Manager and no Authority by the Investor. All decisions regarding the management and affairs of the Manager will be made exclusively by the Manager. Accordingly, no person should make the Contribution unless such person is willing to entrust all aspects of management of the Contribution to the Manager. The Investor will have no right or power to take part in the management. As a result, the success of the Manager for the foreseeable future depends solely on the abilities of the Manager.

Dependence on Key Personnel. The Manager is dependent on the services of its principal and key personnel. The success of the Manager will depend to a great extent on the investment skills of the Manager’s principals and key personnel. The Manager could be adversely affected if, because of illness, resignation or other factors, the services of the relevant people were not available for any significant period of time.

Investments Unspecified. The Manager may invest in assets that have not yet been selected. Identifying and structuring investments involves a high degree of uncertainty. The availability of investment opportunities generally will be subject to market conditions, competition and a variety of other factors. There can be no assurance that the Manager will be able to identify attractive investments in the future or that the Manager will be able to fully invest its committed capital. Further, the Investor will not have an opportunity to evaluate for themselves the investments in which the Manager’s capital will be invested or the terms of these investments. The Investor must depend upon the abilities of the Manager with respect to the selection of investments and decisions with respect to an investment once made or obtained, including when and if to divest of an investment.

Effect of Performance Fee Allocation. The Manager will receive a performance allocation based on a percentage of any net realized profits. Performance allocations may create an incentive for the Manager to make investments that are riskier or more speculative than would be the case in the absence of such incentive compensation arrangements. In addition, the Manager’s performance allocations will be based on unrealized as well as realized gains. There can be no assurance that such unrealized gains will, in fact, ever be recognized. Furthermore, the valuation of unrealized gain and loss may be subject to material subsequent revision.

Lack of Insurance. The assets of the Manager are not insured by any government or private insurer except to the extent portions may be deposited in bank accounts insured by the relevant laws. Therefore, in the event of the insolvency of a depository or custodian, the Manager may be unable to recover all of its funds or the value of its securities so deposited.

Digital assets

Digital Assets. Digital assets are loosely regulated and there is no central marketplace for currency exchange. Supply is determined by a computer code, not by a central bank, and prices have been extremely volatile. Digital asset exchanges have been closed due to fraud, failure or security breaches. Any of the Manager’s funds that reside on an exchange that shuts down may be lost.

Several factors may affect the price of digital assets, including, but not limited to: supply and demand, investors’ expectations with respect to the rate of inflation, interest rates, currency exchange rates or future regulatory measures (if any) that restrict the trading of digital assets or the use of digital assets as a form of payment. There is no assurance that digital assets will maintain their long–term value in terms of purchasing power in the future, or that acceptance of digital asset payments by mainstream retail merchants and commercial businesses will continue to grow.

Legal Risk. The legal status of certain digital assets may be uncertain. This can mean that the legality of holding or trading digital assets is not always clear. Whether and how one or more digital assets constitute property, or assets, or rights of any kind is also unclear.

Risk Associated with Investments in an Underlying Partnership

The Manager may invest in private pooled investment funds or vehicles (each an “Underlying Partnership”) advised by independent investment managers (each an “Underlying Partnership Manager”) as a mean to pursue its investment objectives. The Manager endeavours to select Underlying Partnership Managers based, in part, upon a detailed evaluation of such a manager’s past performance. However, there can be no assurances that an Underlying Partnership Manager’s future result will be as successful as his or her past performance. Moreover, even where an Underlying Partnership Manager has achieved excellent results over an extended period, because of cyclical movements and volatility, period to period results may differ materially. Accordingly, the Managerbelieves that an investment is suitable only for those investors who intend to make a long-term investment.

Independence of Underlying Partnership Managers. Although the Manager will invest in a selected portfolio of Underlying Partnerships pursuing strategies in line with the Manager’s objective, the Manager cannot control any Underlying Partnership Manager, their choice of investments and other investment decisions, all of which will be wholly within the control of such Underlying Partnership Manager. The investments of the Manager are made pursuant to written disclosures forms and/or agreements with an Underlying Partnership Manager which provide, among other things, guidelines by which the Underlying Partnership Manager will trade for the applicable Underlying Partnership. Thus, while each Underlying Partnership Manager undertakes to follow specified trading strategies, the written disclosures and/or agreements discussed above typically provide the Underlying Partnership Managers with broad discretion to modify their trading strategies and therefore it is possible that a Underlying Partnership Manager could deviate from its trading strategies, and which deviation could result in, among other things, a less profitable trading strategy or a riskier approach than other similar private funds, or those other private funds which invest assets solely and directly into securities. The impact on the investment return of the Manager due to the combined fees and expenses of the Manager and the Underlying Partnerships could significantly reduce the investment returns.

Proprietary Investment Strategies. Underlying Partnership Managers may use proprietary investment strategies that are based on considerations and factors that are not fully disclosed to the Manager. For example, quantitative strategies rely on proprietary algorithms which are protected by the Underlying Partnership Manager for competitive reasons. Any Underlying Partnership may involve risks under some market conditions that are not anticipated by the Manager.

Similar Risks as between the Manager and the Underlying Partnerships. Many of the same risks encountered by Investors will be experienced by the Manager with regard to its investments in Underlying Partnerships. Such risks include, but are not limited to: limited diversification and/or concentration risks by the Underlying Partnership Managers’ proprietary trading methods; side letter and other confidential arrangements not available to the Manager; potential for unanticipated illiquid investments made by the Underlying Partnerships; poor performance by the Underlying Partnerships; failure by the Underlying Partnership Managers to thoroughly conduct due diligence on a potential investment; and many other risks associated with pooled investment vehicles.

Trading Risks

Liquidity Risk. Liquidity risk exists when particular investments are difficult to purchase or sell, possibly preventing the Managerfrom selling out of these illiquid investments at an advantageous price. The Manager may make investments that are subject to legal or other restrictions on transfer and for which no liquid market exists, such as private placements. There is no public market for such investments, and it may be impossible to sell such investments when desired or to realize their fair value in the event of a sale. Although these securities may be resold in privately negotiated transactions, the prices realized from these sales could be less than those originally paid.

Hedging Transactions. The Manager does not intend to hedge all market or other risks inherent in the Manager’s portfolio positions.

Lack of Diversification. Although the Manager will structure its portfolio so that investments (both individually and in the aggregate) have desirable risk/reward characteristics and so that the Manager may be able to satisfy Investor’ requests for withdrawals, the Manager is not subject to any restrictions. The Manager may have a non-diversified portfolio, including the Manager’s assets invested in digital assets. Such lack of diversification substantially increases the risk of loss associated with an investment in the Manager rather than if the Manager invested in a more diversified manner.

Digital assets Tracking Risk. Although the Manager will attempt to structure its portfolio of digital assets based on a methodology developed by the Manager, the Manager may not achieve exact correlation between its performance and that of the underlying digital assets it invests in. The difference in performance may be due to factors such as transaction costs, Investor withdrawals, pricing differences, or the cost to the Manager of complying with various new or existing regulatory requirements. Additionally, the performance of the Manager and the underlying digital assets may differ because the Manager incurs fees and expenses, while the underlying digital assets do not.

Custody of Manager’s Digital Assets. The Manager shall maintain custody of some or all of the Manager’s digital assets, by securely storing the private keys that control the movement of the various digital assets in cold wallets. Additionally, the Manager may store the digital assets on various digital asset exchanges and third-party custodial solutions. The Manager retains the right to use any third-party digital asset custodian in the future as firms and digital asset custody standards begin to develop. The Manager is responsible for taking such steps as it determines, in its sole discretion, to be required to maintain security of the digital assets and protect them from security threats. The Manager is not liable to the Investor for the failure or penetration of the security system absent gross negligence, fraud or criminal behavior on the part of the third parties. Maintaining digital assets on deposits or with any third party in a custodial relationship has attendant risks. These risks include security breaches, risk of contractual breach, and risk of loss. The Investor should be aware that the Manager may allow third parties to hold its property, and this may result in the occurrence of any of the risks abovementioned.

Digital asset Trading is Volatile and Speculative. Digital assets represent a speculative investment and involve a high degree of risk. As relatively new products and technologies, digital assets have not been widely adopted as a means of payment for goods and services by major retail and commercial outlets. Conversely, a significant portion of the demand for digital assets is generated by speculators and investors seeking to profit from the short or long-term holding of digital assets. The relative lack of acceptance of digital assets in the retail and commercial marketplace limits the ability of end–users to pay for goods and services with digital assets. A lack of expansion by digital assets into retail and commercial markets, or a contraction of such use, may result in increased volatility.

Risk of Loss of Private Key. Various digital assets are controllable only by the possessor of unique private keys relating to wallets by which the digital assets are held. The theft, loss or destruction of a private key required to access a digital asset is irreversible, and such private keys would not be capable of being restored by the Manager. Any loss of private keys relating to digital wallets used to store the digital assets could result in the loss of or delay in retrieving the digital assets and the Investor could incur substantial, or even total, loss of capital.

Risk of Loss Due to Incapacitation of Key Personnel. The Manager and/or the Manager’s principals, if any, are the only individuals in possession of the private keys required to access the digital assets held by the Manager. Although the Manager may implement certain compliance provisions with respect to custody and the private keys, the incapacitation of the principals of the Manager may result in the loss of or delay in accessing the private keys and, consequently, may result in the loss of the digital assets held by the Manager. In such an event, the Investor could incur substantial, or even total, loss of capital.

Technology and Security. The Manager must adapt to technological changes in order to secure and safeguard client accounts. As technological change occurs, the security threats to digital assets will likely adapt and previously unknown threats may emerge. Furthermore, the Manager believes it may become a more appealing target of security threats as the size of assets grows. To the extent that the Manager is unable to identify and mitigate or stop new security threats, the digital assets may be subject to theft, loss, destruction or other attack, which could have a negative impact on the performance of the Manager or result in loss of the Manager’s assets.

Security Breaches. Any security breach caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses, could result in the halting of the Manager’s operations, the suspension of redemptions or a loss of Manager’s assets.

Risk to digital asset Networks from Malicious Actors. If a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains a majority of the processing power dedicated to mining on certain digital asset networks, it may be able to alter the blockchain on which the digital asset relies. The malicious actor or botnet could control, exclude or modify the ordering of transactions, though it could not generate new digital assets or transactions using such control. The malicious actor could double spend its own digital assets and prevent the confirmation of other users’ transactions for so long as it maintains control. To the extent that such a malicious actor or botnet does not yield its majority control of the processing power on various digital asset networks, or the digital asset community does not reject the fraudulent blocks as malicious, reversing any changes made to the blockchain may not be possible. Such changes could adversely affect the Contribution (or any part of it) or the ability of the Manager to transact.

Stolen or Incorrectly Transferred Digital Assets May be Irretrievable. Once a transaction has been verified and recorded in a block that is added to the blockchain, an incorrect transfer of digital assets or a theft of digital assets generally will not be reversible,and the Manager may not be capable of seeking compensation for any such transfer or theft. It is possible that, through computer or human error, or through theft or criminal action, the digital assets could be transferred in incorrect amounts or to unauthorized third parties. To the extent that the Manager is unable to seek a corrective transaction with such third party or is incapable of identifying the third party which has received the digital assets through error or theft, the Manager will be unable to revert or otherwise recover incorrectly transferred digital assets. To the extent that the Manager is unable to seek redress for such an error or theft, such loss could adversely affect the Contribution (or any part of it).

Transferring and Trading digital assets. The Manager will convert U.S. dollar, or any other currency agreed by the parties and in-kind contributions made by the Investor to digital assets as well as one kind of digital assets to another kind. The Manager may use certain digital assets to purchase other digital assets. Many digital asset networks are online end–user-to-end-user networks that host a public transaction ledger, known as the blockchain, and the source code that comprises the basis for the cryptographic and algorithmic protocols governing such networks. In many digital asset transactions, the recipient of the digital asset must provide its public key, which serves as an address for a digital wallet, to the party initiating the transfer. In the data packets distributed from digital asset software programs to confirm transaction activity, each digital asset user must “sign” transactions with a data code derived from entering the private key into a “hashing algorithm,” which signature serves as validation that the transaction has been authorized by the owner of such digital asset. This process may be vulnerable to hacking and malware and could lead to theft of the Manager’s digital wallets and the loss of the Manager’s digital assets. Many digital asset exchanges have been closed due to fraud, failure or security breaches. In many of these instances, the customers of such digital asset exchanges were not compensated or made whole for the partial or complete losses of their account balances in such digital asset exchange.

Counterparty Risk. Some of the markets in which the Manager may affect transactions are “over the counter” or “interdealer” markets. The participants in such markets are typically not subject to the same credit evaluation and regulatory oversight as are members of “exchange–based” markets. In addition, many of the protections afforded to participants on some organized exchanges, such as the performance guarantee of an exchange clearinghouse, might not be available in connection with such OTC transactions. This exposes the Manager to the risk that a counterparty will not settle a transaction in accordance with its terms and conditions because of a dispute over the terms of the contract (whether or not bona fide) or because of a credit or liquidity problem, thus causing the Manager to suffer a loss. The Manager is not restricted from dealing with any particular counterparty or from concentrating any or all of the Manager’s transactions with one counterparty. The ability of the Manager to do business with anyoneor number of counterparties, the lack of any meaningful and independent evaluation of such counterparties’ financial capabilities and the absence of a regulated market to facilitate settlement may increase the potential for losses by the Manager.

Intellectual Property Rights Claims May Adversely Affect the Operation of Digital Asset Networks. Third parties may assert intellectual property claims relating to the operation of various digital assets and their source codes relating to the holding and transfer of such assets. Regardless of the merit of any intellectual property or other legal action, any threatened action that reduces confidence in a digital asset’s long-term viability or the ability of end-users to hold digital assets may adversely affect the Contribution (or any part of it). Additionally, a meritorious intellectual property claim could prevent the Manager and other end–users from accessing a digital asset network or holding or transferring their digital assets, which could force the Manager to terminate and liquidate the digital assets (if such liquidation of the Manager’s digital assets is possible). As a result, an intellectual property claim could adversely affect the Contribution (or any part of it).

Cryptocurrencies and Bitcoin Generally

Digital assets and cryptocurrencies and other crypto assets are fast evolving, relatively new technologies. The methods whereby each digital asset is created, secured, accessed and used may differ from one digital asset to another. A general overview of the technology on which bitcoin, the oldest and most widely used digital asset, is based are set forth below. Other digital assets may contain similar (or different) risks and vulnerabilities.

Bitcoin is a decentralized digital currency that enables instant transfers to anyone, anywhere in the world. Managing transactions in bitcoins occurs via an open source, cryptographic protocol platform known as the Bitcoin Network, which uses peer-to-peer technology to operate with no central authority. The Bitcoin Network is an online, end-user-to-end-user network that hosts the public transaction ledger, known as the Bitcoin Blockchain, and the source code that comprises the basis for the cryptographic and algorithmic protocols governing the Bitcoin Network. No single entity owns or operates the Bitcoin Network, the infrastructure of which is collectively maintained by a decentralized user base. As the Bitcoin Network is decentralized, it does not rely on either governmental authorities or financial institutions to create, transmit or determine the value of bitcoins. Rather, the value of bitcoins is determined by the supply of and demand for bitcoins. Bitcoins can be used to pay for goods and services or can be converted to fiat currencies, such as the USD, at rates determined by Bitcoin Exchanges.

To prevent the possibility of double spending a single bitcoin, each transaction is recorded, time stamped and publicly displayed in a “block” in the publicly available Bitcoin Blockchain. Thus, the Bitcoin Network provides confirmation against double-spending by memorializing every transaction in the Bitcoin Blockchain, which is publicly accessible and downloaded in part or in whole by many Bitcoin Network users’ software programs.

Prior to engaging in bitcoin transactions, a user must first obtain a digital bitcoin “wallet” (analogous to a bitcoin account) to store bitcoins. A “wallet” is an open-source software program that generates bitcoin addresses and enables users to engage in the transfer of bitcoins with other users. A user may install a bitcoin software program on its computer or mobile device that will generate a bitcoin wallet or, alternatively, a user may retain a third party to create a digital wallet to be used for the same purpose. There is no limit on the number of digital wallets a user can have, and each such wallet includes one or more unique addresses and a verification system for each address consisting of a “public key” and a “private key,” which are mathematically related.

The process by which bitcoins are created, and bitcoin transactions are verified is called mining. To begin mining, a user, or “miner,” can download and run a mining client, which, like regular Bitcoin Network software programs, turns the user’s computer into a “node” on the Bitcoin Network that validates blocks. Sets of bitcoin transactions are combined in new blocks that need to be added to the Bitcoin Blockchain. Miners, through the use of the bitcoin software program, engage in a set of prescribed complex mathematical calculations in order to add a block to the Bitcoin Blockchain and thereby confirm bitcoin transactions included in that block’s data. A miner who was the first to complete the calculations adds a new block to the Bitcoin Blockchain and is rewarded with newly issued bitcoins.

Bitcoin is an open-source project with no official developer or group of developers that controls the Bitcoin Network. However, the Bitcoin Network’s development is overseen by a core group of developers who are able to access and can alter the Bitcoin Network source code and, as a result, they are responsible for quasi-official releases of updates and other changes to the Bitcoin Network’s source code. The release of updates to the Bitcoin Network’s source code does not guarantee that the updates will be automatically adopted. Users and miners must accept any changes made to the bitcoin source code by downloading the proposed modification of the Bitcoin Network’s source code. A modification of the Bitcoin Network’s source code is only effective with respect to the bitcoin users and miners that download it. If a modification is accepted only by a percentage of users and miners, a division in the Bitcoin Network will occur such that one network will run the pre-modification source code and the other network will run the modified source code; such a division is known as a “fork” in the Bitcoin Network.

Risks Relating to digital assets

Development and Acceptance of Digital Assets. As a relatively new product and technology, digital assets are not yet widely adopted as a means of payment for goods and services. Banks and other established financial institutions may refuse to process funds for digital asset transactions, process wire transfers to or from digital asset exchanges, digital asset-related companies or service providers, or maintain accounts for persons or entities transacting in digital assets. The use of digital assets as an international currency may be hindered by the fact that it may not be considered as a legitimate means of payment or legal tender in some jurisdictions. To date, speculators and investors seeking to profit from either short- or long-term holding of digital assets drive much of the demand for it. Further, certain virtual currencies or payment systems may be the subject of a U.S. or foreign patent application (i.e., JP Morgan Chase Bank's patent application for "Alt-Coin" with the United States Patent & Trademark Office), successfully patented, or, alternatively, mathematical digital asset network source codes and protocols may be patented or owned or controlled by a public or private entity. The Manager could be adversely impacted if digital assets fail to expand into retail and commercial markets.

Development and Acceptance of the Digital Asset Networks. The growth and use of virtual currencies generally is subject to a high degree of uncertainty. Indeed, the future of the industry likely depends on several factors, including, but not limited to: (a) economic and regulatory conditions relating to both fiat currencies and virtual currencies; (b) government regulation of the use of and access to virtual currencies; (c) government regulation of virtual currency service providers, administrators or exchanges; and (d) the domestic and global market demand for—and availability of—other forms of virtual currency or payment methods. Any slowing or stopping of the development or acceptance of digital assets or digital asset network may adversely affect the Contribution (or any part of it).

Price Volatility.A principal risk in trading digital assets is the rapid fluctuation of their market price. High price volatility undermines digital assets' role as a medium of exchange as retailers are much less likely to accept them as a form of payment. The value of the Contribution balance relates directly to the value of the digital assets held by the Manager and fluctuations in the price of digital assets could adversely affect the net asset value of the Manager. There is no guarantee that the Manager 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. The price of digital assets achieved by the Manager may be affected generally by a wide variety of complex and difficult to predict factors such as digital asset supply and demand; transaction fees for recording transactions on the blockchain; availability and access to virtual currency service providers (such as payment processors), exchanges, miners or other digital asset users and market participants; perceived or actual digital asset network or digital asset security vulnerability; inflation levels; fiscal policy; interest rates; and political, natural and economic events.

To the extent the public demand for digital assets was to decrease, or the Manager was unable to find a willing buyer, the price of digital assets could fluctuate rapidly and the Manager may be unable to sell the digital assets in its possession or custody. The Investor will be subject to the risk of price fluctuations of digital assets until they are fully withdrawn from the Manager. Further, if the supply of digital assets available to the public were to increase or decrease suddenly due to, for example, a change in a digital asset's source code, the dissolution of a virtual currency exchange, or seizure of digital assets by government authorities, the price of digital assets could fluctuate rapidly. Such changes in demand and supply of digital assets could adversely affect the Contribution (or any part of it). In addition, governments may intervene, directly and by regulation, in the digital asset market, with the specific effect, or intention, of influencing digital asset prices and valuation (e.g., releasing previously seized digital assets). Similarly, any government action or regulation may indirectly affect the digital asset market or digital asset network, influencing digital asset use or prices.

Third Party Wallet Providers. The Manager intends to use third party wallet providers to hold some of the digital assets. The Manager may have a high concentration of its digital assets in one location or with one third party wallet provider, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware, or cyber-attacks. The Manager is not required to maintain a minimum number of wallet providers to hold the digital assets. Certain third-party wallet providers may not indemnify the Manager against any losses of digital assets. Digital assets held by third parties could be transferred into "cold storage" or "deep storage," in which case there could be a delay in retrieving such digital assets. The Manager may also incur costs related to third party storage. Any security breach, incurred cost or loss of digital assets associated with the use of a third-party wallet provider, may adversely affect the Contribution (or any part of it).

Security. While the Manager intends use industry levels of data protection and information assurance internally, at some points during transferring digital assets into or out of the Manager's platform, the Manager’s platform requires interfacing with outside entities whose methods, practices and standards may be outside of the Manager's control or who may be under the influence of bad actors. Events may occur where the Manager's platform is penetrated by bad actors, which could compromise the Manager's operation or result in loss of digital assets, adversely affecting the Contribution (or any part of it).

There exists the possibility that while acquiring or disposing of digital assets, the Manager unknowingly engages in transactions with bad actors who are under the scrutiny of government investigative agencies. As such, the Manager's systems or a portion thereof may be taken offline pursuant to legal processes such as the service of a search and/or seizure warrant. Such action could result in the loss of digital assets previously under the Manager's control.
The development team and administrators of a digital asset network's source code could propose amendments to the network's protocols and software that, if accepted and authorized, or not accepted, by the digital asset network community, could adversely affect the supply, security, value, or market share of the digital assets, and thus Contribution (or any part of it). Further the Manager may be adversely affected by the manipulation of a digital asset source code.

Hackers. Hackers or malicious actors may launch attacks to steal, compromise, or secure digital assets, such as by attacking digital asset network source code, exchange servers, third-party platforms, cold and hot storage locations or software, Manager’s platform,or digital asset transaction history, or by other means. For example, in February 2014, Mt. Gox suspended withdrawals because it discovered hackers were able to obtain control over the exchange's bitcoins by changing the unique identification number of a Bitcoin transaction before it was confirmed by the Bitcoin Network. Further, Flexcoin, a so-called Bitcoin bank, was hacked in March 2014 when attackers exploited a flaw in the code governing transfers between users by flooding the system with requests before the account balances could update—resulting in the theft of 896 Bitcoin. As the Manager increases in size, it may become a more appealing target of hackers, malware, cyber-attacks or other security threats. As a result, the Manager will undertake efforts to secure and safeguard the digital assets in its custody from theft, loss, damage, destruction, malware, hackers or cyber-attacks, which may add significant expenses to the operation of the Manager. There can be no assurance that such securities measures will be effective. At this time, there is no U.S. or foreign governmental, regulatory, investigative, or prosecutorial authority or mechanism through which to bring an action or complaint regarding missing or stolen digital assets. Consequently, the Manager may be unable to replace missing digital assets or seek reimbursement for any theft of digital assets, adversely affecting the Contribution (or any part of it).

Lack of Transparency. Given the type and extent of the security measures necessary to adequately secure digital assets, investors will not fully know how the Manager stores or secures its digital assets or the Manager's complete holding of digital assets at any time.

Reliance on Virtual Currency Service Providers. Due to audit (if any) and operational needs, there will be individuals who have information regarding the Manager's security measures. Any of those individuals may purposely or inadvertently leak such information. Further, several companies and financial institutions (including banks) provide support to the Manager related to the buying, selling, and storing of virtual currency. To the extent that service providers no longer support the Manager or cannot be replaced, an investment in the Manager may be adversely affected.

Initial Coin Offerings (“ICOs”). An ICO involves the issuance of a new token or cryptocurrency via crowdfunding to raise capital from token buyers for a new blockchain project or venture. Holders of the new digital asset may or may not have the right to royalties or some other form of ownership in the new project and may benefit from appreciation in the price of the new digital asset itself. Since these new digital assets have not been tested or used in the market, the risk that these ICOs contain imperfections and/or be susceptible to hackers is greater than that for established digital assets.

Digital assets acquired by the Manager in connection with ICOs may also entail promises to sell within, or hold for, specified periods of time. As a result, the Manager may be forced to sell an investment at an inopportune time or hold an investment at times where it would be advantageous to sell.

ICOs offer the Manager the ability to purchase digital assets at discounted prices. Digital assets purchased by the Manager will generally be valued at cost until active trading in such digital assets develops. Accordingly, while the investors, including the Manager, who invest prior to the emergence of such active trading will receive the benefit of purchasing such digital assets at discounted prices, any withdrawal proceeds paid to the investors, including the Manager, who withdraws prior to the emergence of such active trading will reflect the lower, discounted prices and not the expected trading price of such digital assets on any active exchange or other market.

ICOs in which the Manager participates generally are unregulated and may turn out to be fraudulent. There is no guarantee that funds lost due to such fraudulent actions will be recovered by the Manager.

Regulatory Status of Cryptocurrencies and Digital Assets

The Manager invests primarily in digital currencies which are not currently regulated by Swiss and/or U.S. federal and state governments, or self-regulatory organizations. As digital currencies have grown in popularity, certain U.S. regulatory agencies, such as the Financial Crimes Enforcement Network (“FinCEN”) and the CFTC, have begun to examine digital currencies and the operations of their networks. Currently, neither the CFTC nor the SEC has formally asserted regulatory authority over digital currencies, although the CFTC has stated that is considers cryptocurrencies to be commodities and the SEC has stated that certain digital assets are securities. On July 25 2017, the SEC issued a reporting finding that a 2016 token offering (an initial coin offering or “ICO” capital raise) involved the offering of a “security” under U.S. federal law which should have been registered (the “SEC Release”). The agency stated that similar token offerings fall within the jurisdiction of federal securities laws, while declining to state categorically that all such ICOs are securities offerings. Furthermore, the SEC indicated it intends to treat assets valued in virtual currencies, such as tokens, which otherwise possess the characteristics of a security, in the same way as conventional securities valued in U.S. Dollars or other fiat currency.

To the extent that digital currencies are ultimately determined to be a security, commodity future or other regulated asset, or to the extent that a Swiss, U.S. or other foreign government or quasi-governmental agency exerts regulatory authority over the digital currencies, the Manager may be adversely affected.

Digital currencies currently face an uncertain regulatory landscape in not only Switzerland or the United States but also in many other foreign jurisdictions. While many jurisdictions have either taken no formal position with respect to cryptocurrencies or have stated that cryptocurrencies are legal tender in their jurisdiction, others have banned the use of cryptocurrencies in their jurisdictions. In addition, very few jurisdictions have enacted cryptocurrency-specific regulations that govern the creation, transmittal or use of cryptocurrencies. One or more jurisdictions may, in the future, adopt laws, regulations or directives that affect digital currency networks and their users, particularly digital currency exchanges and service providers that fall within such jurisdictions’ regulatory scope. Such laws, regulations or directives may conflict with those of Switzerland or the United States and may negatively impact the acceptance of digital currencies by users, merchants and service providers outside of Switzerland or the United States and may therefore impede the growth of the digital currency economy. The effect of any future regulatory change on the Manager is impossible to predict, but such a change could be substantial and adverse.

Unsettled Regulatory Landscape. The regulatory landscape governing cryptocurrencies, virtual assets, digital tokens, blockchain technology, decentralized exchanges, and exchange aggregators is continuously evolving and remains unsettled in many jurisdictions. Changes in applicable law or in the manner in which it is interpreted may prevent the Manager from acquiring or using any digital assets.

Suspension or Termination of Digital Assets Development. In case there are newly identified legal risks that restrict or prohibit the development of any digital assets, a company in charge of development of such digital assets may suspend or terminate the development of them.

Other Risks

Banks May Refuse to Provide Continued Banking Services to the Manager. While the Manager has established a relationship with a bank to open an account, a number of funds and other companies that hold or otherwise deal in cryptocurrency have been unable to find banks that are willing to provide them with bank accounts and banking services. Similarly, a number of such entities have had their existing bank accounts closed by their banks. Banks may refuse to provide bank accounts and other banking services to cryptocurrency related companies or companies that accept cryptocurrencies for a number of reasons, such as perceived compliance risks or costs. The difficulty that many businesses that provide cryptocurrency related services have and may continue to have in finding banks willing to provide them with bank accounts and other banking services may be currently decreasing the usefulness of cryptocurrencies as a payment system and harming public perception of cryptocurrencies or could decrease itsusefulness and harm its public perception in the future. Similarly, the usefulness of cryptocurrencies as a payment system and the public perception of cryptocurrencies could be damaged if banks were to close the accounts of many or of a few key businesses providing cryptocurrency related services. This could decrease the price of digital assets and therefore adversely affect the Contribution (or any part of it). Further, there is no guarantee that the Manager’s bank will maintain its current policy on cryptocurrency-related services, which could have a materially negative effect on the Manager.

Contingency Reserves. Under certain circumstances, the Manager may find it necessary to set up one or more reserves for contingent or future liabilities or valuation difficulties and, upon withdrawal by the Investor. This could happen, for example, if the Manager or the issuer of an asset were involved in a dispute regarding its value, in litigation, or subject to a tax audit at the time the withdrawal request would otherwise be satisfied.

Undistributed Income. The Manager in its sole discretion may, but is not required to, make distributions to the Investor during the Term. Taxable income realized in any year by the Manager will be taxable to the Investor in that year regardless of whether they have received any distributions from the Manager. Accordingly, the Investor may recognize taxable income for federal, state, and local income tax purposes without receiving any or a sufficient distribution from the Manager with which to pay the taxes thereon. The Manager may consider such a possible tax liability of the Investor when determining whether to make distributions, but no assurance is given that distributions, if made, will equal the amount of any Investor’s tax liability.

Side Letters. The Manager may enter into agreements with certain investors that will result in different terms of an investment than the terms applicable to other investors. As a result of such agreements, certain investors may receive additional benefits which other investors will not receive (e.g., additional information regarding the Manager’s portfolio, different withdrawal terms, lower Management Fee, lower performance allocations). The Manager will not be required to notify the other investors of any such agreement or any of the rights and/or terms or provisions thereof, nor will the Manager be required to offer such additional and/or different terms or rights to any other investor.

Revised Regulatory Interpretations Could Make Certain Strategies Obsolete. In addition to proposed and actual accounting changes, there have recently been certain well-publicized incidents of regulators unexpectedly taking positions which prohibited trading strategies which had been implemented in a variety of formats for many years. In the current unsettled regulatory environment, it is impossible to predict if future regulatory developments might adversely affect the Manager.

Activity in Switzerland. The Manager is registered under and carries out its activities under the laws of Switzerland. Moreover, the Manager is a member of PolyReg, a self-regulatory organization (“SRO”) recognized by the Confederation in accordance with Article 24 of the Anti-Monay Laundering Act (“AMLA”) who supervises the Manager with regard to the compliance with applicable (Swiss) law as well as PolyReg’s regulations and statues allowing the Manager to carry out its activities under the laws of Switzerland. In case of any regulatory or statutory changes (including changes of PolyReg’s regulations and/or statutes), the Manager may postpone its business activities for an indefinite term.

THE FOREGOING LIST OF RISK FACTORS DOES NOT PURPORT TO BE A COMPLETE ENUMERATION OR EXPLANATION OF THE RISKS INVOLVED HEREIN.