Last Updated: 15 October 2024
A. How to interpret this Risk Warning
All terms used in this general risk warning (the “Risk Warning”), which are defined in the Binance Terms of Use available here (the “Terms of Use”), have the same meaning and construction as in the Terms of Use.
This Risk Warning provides users with information about the risks associated with trading in Crypto Assets and the services provided by Binance. You are strongly encouraged and advised to read this Risk Warning carefully before deciding to start using the Platform.
The risks outlined in this Risk Warning are not exhaustive and only describe the general nature of the risks involved with holding or trading Crypto Assets. The intention of this Risk Warning is merely to outline the risks, and not to discuss in detail all the risks associated with holding or trading Crypto Assets. You should undertake your own assessment of the suitability of trading Crypto Assets, where necessary with the help of a professional advisor, based on your own experience, risk tolerance, financial resources and objectives.
This Risk Warning does not explain all relevant risks or how such risks relate to your personal circumstances. It is important that you fully understand the risks involved before making a decision to use Binance Services and you should also read the relevant terms applicable to the specific Binance Service. By using the Binance Services and entering into any Transactions, you agree that you assume all of the related risks.
Some products or services referred to in this Risk Warning may not be available to certain user categories or to users in certain jurisdictions.
B. No Personal Advice or Monitoring
We do not provide personal advice in relation to Binance Services. We sometimes provide factual information, information about transaction procedures and information about the potential risks. However, any decision to use Binance Services is made by you. No communication or information provided to you by Binance is intended as, or shall be considered or construed as, investment advice, financial advice, trading advice, or any other sort of advice. You are solely responsible for determining whether any investment, investment strategy or related transaction is appropriate for you according to your personal investment objectives, financial circumstances and risk tolerance.
We do not monitor whether your use of Binance Services is consistent with your financial goals and objectives. It is up to you to assess whether any activity that you engage in through the Binance Services is appropriate given your financial position and risk appetite.
C. No Tax, Regulatory or Legal Advice
You have sole responsibility for determining what taxes you might be liable to, how and when they apply, and meeting such tax obligations, when transacting through the Binance Services. It is your responsibility to report and pay any taxes that may arise from entering into a Transaction by using the Binance Services, and you acknowledge that Binance does not provide legal or tax advice in relation to these transactions. If you have any doubts about your tax status or obligations when using Binance Services, or with respect to the Crypto Assets held to the credit of your Binance Account, you are encouraged to seek independent advice.
You acknowledge that, when, where and as required by Applicable Law, Binance will report information regarding your transactions, transfers, distributions or payments to tax or other public authorities. Similarly, when, where and as required by Applicable Law, Binance will withhold taxes related to your transactions, transfers, distributions or payments. Applicable Laws could also prompt Binance to request that you provide additional tax information, status, certificates or documentation or other information. You acknowledge that failure to comply with these requests within the specified timeframe, may result in taxes withheld by Binance being remitted to tax authorities as required by Applicable Law. You are encouraged to seek professional and personal tax advice regarding the above and before entering into any Transaction.
D. Market and Liquidity Risks
An investment in Crypto Assets carries significant risk. The value of an investment and any returns can go up or down, and you may lose all or part of your investment and not get back the amount you had invested. If you are new to Crypto Assets, consider investing only a small amount. Only invest what you can afford to lose. It is important to do your own research to understand the risks of investing in Crypto Assets. To learn more about Crypto Assets, you may want to refer to https://academy.binance.com/en.
Crypto Asset trading is speculative, prices are volatile and market movements are difficult to predict. Supply and demand for Crypto Assets can change rapidly without warning and can be affected by a variety of factors which may not be predictable, including regulation, general economic trends and developments in the Crypto Asset ecosystem. All investments in Crypto Assets carry the risk of loss.
Past performance is not a predictor of future performance. Binance does not in any way guarantee or provide any assurance about the performance or market price of Crypto Assets or products available through the Binance Services.
The Crypto Asset industry is subject to systemic and systematic risk. Systemic and systematic risks are both threats to the Crypto Asset markets and economy, but the cause of these risks and the approaches for managing them are different. Systemic risk is the risk that a company or industry-level risk could trigger a major collapse. Systematic risk is the risk inherent to the entire market, which can be economic, sociopolitical, technological, or natural in origin. These risks can affect the prices of Crypto Assets.
Blockchain technology is a relatively new technology that is evolving rapidly and is subject to continued technological development. The future development and growth of the Crypto Asset industry is subject to a variety of factors that are difficult to predict and evaluate. Similarly, the sustainability of Crypto Asset networks may also be affected by a range of different factors. All such factors may impact the value of a Crypto Asset.
One or more persons may directly or indirectly control significant portions of the total supply of a Crypto Asset and therefore may be able to influence or cause events that may have a detrimental effect on the price of such Crypto Assets.
Negative perceptions about Crypto Assets may reduce the confidence of investors in the industry and result in greater volatility of Crypto Asset prices, including possibly a significant depreciation in value. Any events that trigger negative publicity in respect of Crypto Asset markets may therefore have an adverse impact on the value of any investment in Crypto Assets.
Crypto Asset prices on the secondary market are driven by supply and demand and may be highly volatile. Crypto Assets may have limited liquidity which may make it difficult or impossible for you to sell Crypto Assets or to exit a position when you wish to do so. This may occur at any time, including at times of rapid price movements.
Currency exchange rate fluctuations may impact the returns of your Crypto Asset positions.
E. Risks related to Crypto Assets
Given the nature of Crypto Assets and their underlying technologies, there are a number of intrinsic risks, including but not limited to:
a. Crypto Assets are not legal tender and are not backed by any government;
b. faults, defects, hacks, exploits, errors, protocol failures or unforeseen circumstances occurring in respect of a Crypto Asset or the technologies or economic systems on which the Crypto Asset are based;
c. transactions in Crypto Assets may be irreversible, and, accordingly, losses due to fraudulent or accidental transactions may not be recoverable;
d. technological developments leading to the obsolescence of a Crypto Asset;
e. network delays causing transactions to not be settled in the expected timeframe;
f. attacks on the protocol or technologies on which a Crypto Asset depends, including, but not limited to: i. distributed denial of service; ii. sybil attacks; iii. phishing; iv. social engineering; v. hacking; vi. malware; vii. double spending; viii. majority-mining, consensus-based or other mining attacks; ix. misinformation campaigns; x. forks; and xi. Spoofing and scams;
g. some Crypto Asset transactions may be deemed to be made when recorded on a public ledger, which is not necessarily the date or time that the user initiates the transaction;
h. a “hard fork” may occur if Crypto Asset developers suggest changes to a particular Crypto Asset software and the updated software is not compatible with the original software and a sufficient number (but not necessarily a majority) of users and miners elect not to migrate to the updated software. This would result in two versions of Crypto Asset networks running in parallel and a split of the blockchain underlying the Crypto Asset network, which could impact the demand of the Crypto Asset and adversely impact the price of the Crypto Asset;
i. if one or more persons were to gain control over 51% of the computing power (hash rate) used by a blockchain network, they could use their majority share to double spend their Crypto Assets. Whilst the risk of this occurring for networks with wider adoption is remote, if such a “51% attack” were to be successful, this would significantly erode trust in public blockchain networks (like Bitcoin and Ethereum) to store value and serve as a means of exchange, which may significantly decrease the value of Crypto Assets;
j. Crypto Assets purchased and held in an account with Binance are not covered by any external investor compensation, customer asset protection, deposit protection, insurance or other similar schemes;
k. new risks may arise from investing in new types of Crypto Assets or market participants’ engagement in more complex transaction strategies; and
l. Crypto Asset markets are open 24 hours a day, 7 days a week, so rapid price changes may occur at any time, including outside of normal business hours and on weekends.
F. Security, Communication and Availability Risks
The nature of Crypto Assets exposes them to an increased risk of cyberattack. While Binance uses all reasonable efforts to safeguard Crypto Assets and protect the Platform from cyberattack, it is not possible for any exchange to eliminate security risks entirely. There can be no guarantee that systems in place to mitigate cybersecurity threats will always be effective to prevent improper access to the Platform and Crypto Assets.
You are responsible for keeping your own devices and your Binance Account information secure, and you shall be responsible for all the Transactions under your Binance Account, whether you authorised them or not. Transactions in Crypto Assets may be irreversible, and losses due to fraudulent or unauthorised transactions may not be recoverable.
When you communicate with us via electronic communication, you should be aware that electronic communications can fail, can be delayed, may not be secure and/or may not reach the intended destination.
While we aim to deliver a seamless user experience, we cannot guarantee that the Binance Services will be available at any particular time or that Binance Services will not be subject to unplanned service outages or network congestion. It may not always be possible for you to buy, sell, transfer, send or receive Crypto Assets when you wish to do so.
There are legal requirements in various countries which may restrict the products and services that Binance can lawfully provide. Accordingly, some products and services and/or certain functionality within the Platform, including but not limited to fiat services, may not be available or may be restricted in certain jurisdictions or regions or to certain Users and any Binance campaigns, user competitions or other promotions will not be open to (and are not targeted at or intended for) Users to whom restrictions apply. Users are responsible for informing themselves about, and observing any restrictions and/or requirements imposed with respect to, the access to and use of the Platform and the Binance Services in each jurisdiction from which the Platform and the Binance Services are accessed by or on behalf of the User. Binance reserves the right to modify such restrictions or impose additional restrictions with respect to the access to and use of the Platform and/or the Binance Services from time to time in its sole discretion without notification.
G. Legal and Regulatory Risks
Most Crypto Assets operate without a central authority and are generally not backed by any government or authority. Changes in laws and regulations may materially affect the value of Crypto Assets. This risk is unpredictable and may vary from market to market, which in turn can have varying and unpredictable impacts on different Crypto Assets.
Legislative and regulatory changes at the national or international level may adversely affect or restrict (as applicable) the use, transfer, exchange and value of Crypto Assets, as well as the provision of the Binance Services in certain jurisdictions. Legislative and regulatory changes may occur quickly and without prior notice.
H. Third Party Risks
Third parties, such as payment service providers, wallet and crypto custody service providers, and banking partners, as well as Binance Affiliates, may be involved in the provision of certain Binance Services. Your use of some Binance Services may be subject to the terms and conditions of these third parties. The involvement of third parties may introduce additional operational and financial risks in the provision of certain Binance Services, which may include, but are not limited to, cyber security risks, fraud, and insolvency risks. Unless expressly provided otherwise, Binance will not be responsible for any loss that may be incurred by you as a result of or arising from the services provided by such third parties.
I. Fees & Charges
Our fees and charges are set out here. Binance may, in its discretion, update the fees and charges from time to time. Please be aware of all fees and charges that apply to you, because these will affect the returns you generate from using Binance Services.
J. Simple Earn Risk Disclosure
This Simple Earn Risk Disclosure is supplemental to and shall be read together with the Simple Earn Terms available here. Terms defined in the Simple Earn Terms shall have the same meaning in this Simple Earn Risk Disclosure.
To the extent that Simple Earn Assets deposited by users are loaned to Binance Group Entities or clients of Binance Group Entities, including under Margin and Loan products, these loaned assets are subject to the risk that the borrowing client will be unable or unwilling to repay the borrowed assets to Binance. Binance takes various precautions to minimise this counterparty risk, including conducting due diligence on prospective borrowers and requiring borrowers to provide collateral as security for the repayment obligation. In addition, the majority of the loans that are funded by Simple Earn Assets are overcollateralised, meaning that the borrowing client is required to provide collateral having a value that is greater than the amount of the loan.
Further, Binance and Binance Affiliates maintain an insurance fund that is available to cover losses that would otherwise be incurred by Binance when a user’s collateral is insufficient to cover the user’s debt obligation to Binance. Details of the insurance fund are available here.
However, it is important to note that you are not directly exposed to counterparty risk, as Binance has the obligation to return the Simple Earn Assets to you, rather than any underlying borrower of those assets.
While unlikely, Binance’s ability to return your Simple Earn Assets may be adversely affected or delayed if a significant number of borrowers default on the obligation to repay borrowed assets to Binance, the collateral held by or for the benefit of Binance is insufficient to cover the outstanding loan amount and outstanding debts cannot be recovered from the insurance fund.
In extreme and exceptional circumstances, Binance may have insufficient liquid assets readily available to satisfy requests to Redeem Simple Earn Assets in a timely manner as a result of various different other factors including, without limitation, concentrated exposure to the performance of a particular Crypto Asset, a particular borrower or a particular depositor.
Binance has processes in place to monitor and minimise liquidity risk and concentration risk. Liquidity risk is the risk that, even if there are no significant defaults from debtors, there are not enough assets readily available to Redeem Simple Earn Assets or to make loans under the Margin and Loan products. Concentration risk refers to a number of risks related to concentrated exposure, either to the performance of a particular Crypto Asset, a particular debtor or even a particular depositor. Binance addresses these risks in a number of ways, for example, by imposing limits on the maximum amount that can be borrowed by each borrower, as well as the maximum amount that can be Subscribed to Simple Earn Offers. This limits the exposure to the counterparty risk of any particular borrower and also the dependency on the deposits of individual users in terms of providing liquidity for lending. In addition, to provide for sufficient liquidity for Redemptions, for each Crypto Asset, there is a maximum percentage of Simple Earn Assets that can be made available for lending, which is determined based on the volatility, liquidity and market capitalisation of the relevant Crypto Asset.
Crypto Assets that are deployed in on-chain staking will be subject to a number of risks, including the risk of protocol penalties (known as “slashing”) which result in the forfeiture of some or all of the Crypto Assets that are staked. Slashing is designed to discourage network validators from engaging in dishonest, malicious or other inappropriate activity and may occur due to errors in smart contracts, misbehaviour of validators, or mistakes during block production. Slashing is very rare. For example, only 0.04% of the over 500,000 Ethereum validators ever experienced a slashing event, according to data from February 2023. While Binance takes all reasonable precautions to avoid slashing and will generally replace Crypto Assets that are lost to due to slashing penalties (if any), in it is possible that some or all Simple Earn Assets that are deployed in on-chain staking activities could be lost, which could in turn adversely affect or delay Binance’s ability to return your Simple Earn Assets in a timely manner.
In the event of extreme market volatility, network delays, or when there is an unusually large number of Redemption requests, your Redemptions might be delayed.
Binance may run promotional campaigns from time to time that are sponsored by partner projects including short-term Simple Earn product offerings with higher APRs to benefit users. These higher rates may be temporary and you should consider whether the relevant offer still meets your needs once the interest rate reverts to its normal level when the promotion period expires.
Although Binance takes all reasonable precautions to minimise the risks described in this Risk Warning and to safeguard the return of Simple Earn Assets to users in accordance with the Simple Earn Terms, in extreme and exceptional circumstances Binance may not have sufficient assets readily available to return Simple Earn Assets to users in a timely manner. This could result in users losing some or all of their Simple Earn Assets or experiencing a delay in the return of all or some Simple Earn Assets to users. These exceptional circumstances could arise, for example, following a catastrophic hack or technical failure, a significant number of borrowers to whom loans have been granted under Margin and Loan products defaulting at the same time, depletion of the insurance fund, extreme market volatility, network delays or disruptions, systemic risk or other black swan events that affect the Crypto Asset market as a whole.
Simple Earn Assets do not benefit from the same level of on-chain asset segregation as other Crypto Assets held in custody by Binance Bahrain. While Crypto Assets are generally segregated on-chain in a separate omnibus cold wallet maintained solely for Crypto Assets held in custody for the clients of Binance Bahrain, Simple Earn Assets will be pooled on-chain in omnibus hot and cold wallets, together with Crypto Assets belonging to other Binance clients globally, as well as proprietary Crypto Assets of various Binance entities. Whereas Crypto Assets are held in custody by Binance on behalf of users and are not used for any other purpose, Earn Assets can be pooled and used in accordance with the relevant Product Terms.
K. ETH Staking Risk Disclosure
This ETH Staking Risk Disclosure is supplemental to and shall be read together with the ETH Staking Terms available here. Terms defined in the ETH Staking Terms shall have the same meaning in this ETH Staking Risk Disclosure.
Staking involves a risk of protocol penalties, also known as “slashing”, designed to disincentive dishonest and malicious validator activity, where some or all of a validator’s staked Crypto Assets are forfeited as a penalty. Slashing can occur due to errors in smart contracts, misbehaviour of validators, or mistakes during block production. Slashing is very rare, with only 0.04% of the over 500,000 Ethereum validators ever experiencing a slashing event, according to data from February 2023. While Binance takes all reasonable precautions to avoid slashing and will wish to compensate users as far as possible (acting at our discretion) to replace Crypto Assets lost to slashing penalties if they do occur, so that you should not experience any loss even in the event of slashing, in some rare situations it is possible you could lose some or all of your Staked Assets. This would include situations where slashing is the result of a hack, your own actions or other extreme events.
Staking Rewards are calculated based on the Variable Reward Rate and each user’s amount of Staked Assets. The Variable Reward Rate is determined by Binance in its discretion, based on the On-Chain Rewards and the commission fee charged by Binance, each of which may change from time to time. All On-Chain Rewards will be retained by Binance and participants in ETH Staking will only receive the Staking Rewards, which may be more or less than the amount of On-Chain Rewards.
Users may not be able to redeem the entirety of their Staked Assets in a single redemption request and may be required to submit multiple redemption requests over a period of time. Due to the processing limitations on the Ethereum network, redemptions are subject to the Redemption Pool and each user’s Daily Redemption Quota. The Redemption Pool is the total amount of ETH that Binance has unstaked and is available each day to satisfy requests for the redemption of Staked Assets. The Daily Redemption Quota is the maximum amount of Staked Assets that each user can request for redemption each day. Both the Redemption Pool, the Daily Redemption Quota and the anticipated processing time may change from time to time.
Binance does not guarantee that you will receive Staking Rewards at the Variable Staking Rate shown at the time you Subscribe. The Variable Staking Rate will change from time to time and may fluctuate up or down from the rate applicable at the time of Subscription. Any representation concerning possible returns at the time you Subscribe is an estimate only and not guaranteed; and based on the Variable Staking Rate at the relevant time, which may change.
Redeeming Staked Assets takes time. Redeeming BETH or WBETH for ETH is generally expected to take approximately six (6) days once a redemption request is successfully submitted, however the actual processing time may vary and could be significantly longer. Delivery of ETH following a redemption request or WBETH following a conversion request could be subject to additional delay in various circumstances including, without limitation, extreme market volatility, network delays and outages, validator or protocol failure, a significant number of simultaneous instructions to convert ETH to WBETH or WBETH to ETH from other Binance users, or other unanticipated events. There is no guaranteed timeframe for completion of redemption or conversion requests. Because Crypto Asset prices can be highly volatile, there is a risk that the market price of ETH could be significantly higher or lower by the time the redemption request is completed and users will be unable to dispose of their Staked Assets while a redemption request is being processed. In addition, in rare or extreme situations it is possible that the value of your Staked Assets or Staking Rewards may drop to zero.
Binance cannot guarantee uninterrupted or error-free operation of the ETH Staking Services or that it will correct all defects or prevent disruptions or unauthorised access. Binance may suspend or discontinue the ETH Staking Services in its sole discretion at any time. If there is any disruption, suspension or discontinuance of the ETH Staking Services, any Staked Assets may stop generating Staking Rewards and you may not receive any (and you may forfeit all or some) Staking Rewards. Binance has no liability or responsibility for and expressly disclaims any loss, liability or damage that users may incur directly or indirectly in connection with the ETH Staking Services, including without limitation loss, liability or damage arising directly or indirectly from interruptions, errors or defects in the ETH Staking Services, third party disruptions of or unauthorised access to the ETH Staking Services and any suspension or discontinuance of the ETH Staking Services.
L. SOL Staking Risk Disclosure
This SOL Staking Risk Disclosure is supplemental to and shall be read together with the SOL Staking Terms available here. Terms defined in the SOL Staking Terms shall have the same meaning in this SOL Staking Risk Disclosure.
Staking Rewards are reflected by the BNSOL Conversion Rate and each user’s amount of Staked Assets. The BNSOL Conversion Rate is based on the prevailing and applicable Solana validator-node APR and the Staking Fee charged by Binance, each of which may change from time to time. All On-Chain Rewards will be retained by Binance and participants in SOL Staking will only receive the Staking Rewards, which will be less than the On-Chain Rewards due to the Staking Fee.
Staking Rewards are reflected by the BNSOL Conversion Rate and each user’s amount of Staked Assets. The BNSOL Conversion Rate is based on the prevailing and applicable Solana validator-node APR and the Staking Fee charged by Binance, each of which may change from time to time. All On-Chain Rewards will be retained by Binance and participants in SOL Staking will only receive the Staking Rewards, which will be less than the On-Chain Rewards due to the Staking Fee.
Users may not be able to redeem the entirety of their Staked Assets in a single redemption request and may be required to submit multiple redemption requests over a period of time. Due to potential processing limitations on the Solana network caused by network failure or congestion, redemptions may be subject to limitations set by Binance. You can check the delivery date and status for submitted redemption requests on the Platform. BNSOL in respect of which a redemption request is being processed will not reflect, accrue or otherwise be entitled to receive any further Staking Rewards.
Redeeming Staked Assets takes time. Redeeming BNSOL for SOL is generally expected to take approximately four (4) days once a redemption request is successfully submitted, however the actual processing time may vary and could be significantly longer. Delivery of SOL following a redemption request or BNSOL following a conversion request could be subject to additional delay in various circumstances including, without limitation, extreme market volatility, network delays and outages, validator or protocol failure, a significant number of simultaneous instructions to convert SOL to BNSOL or BNSOL to SOL from other Binance users, or other unanticipated events. There is no guaranteed timeframe for completion of redemption or conversion requests. Because Crypto Asset prices can be highly volatile, there is a risk that the market price of SOL could be significantly higher or lower by the time the redemption request is completed and users will be unable to dispose of their Staked Assets while a redemption request is being processed. In addition, in rare or extreme situations it is possible that the value of your Staked Assets or Staking Rewards may drop to zero.
Binance does not guarantee uninterrupted or error-free operation of the SOL Staking Services or that it will correct all defects or prevent disruptions or unauthorised access. The Solana Network may be subject to unplanned disruptions or outages. Binance may suspend or discontinue the SOL Staking Services in its sole discretion at any time. If there is any disruption, suspension or discontinuance of the SOL Staking Services, any Staked Assets may stop generating Staking Rewards and you may not receive any (and you may forfeit all or some) Staking Rewards. Binance has no liability or responsibility for and expressly disclaims any loss, liability or damage that users may incur directly or indirectly in connection with the SOL Staking Services, including without limitation loss, liability or damage arising directly or indirectly from interruptions, errors or defects in the SOL Staking Services, third party disruptions of or unauthorised access to the SOL Staking Services and any suspension or discontinuance of the SOL Staking Services.
M. Risks of trading using leverage
Trading using leverage entails significant risk and may result in the total loss of funds invested. In rare and extreme circumstances, you could even lose more than you deposited into your account. It is important that you fully understand the risks involved in trading Crypto Assets using leverage.
Leveraged trading carries substantial risk and amplifies both losses and profits. A relatively small market movement will have a proportionately larger impact on a leveraged position. This may work against you as well as for you. You may sustain a total loss of the initial margin deposited to open e leveraged position, as well as any additional funds deposited to maintain your position. If the market moves against your position or margin requirements are increased, you may be called upon to pay additional funds on short notice to maintain your position. If you fail to comply with a request for additional funds, your position may be liquidated at a loss.
N. Risks of trading Futures
Futures are complex leveraged products and may not be suitable for inexperienced investors. Before investing, investors must understand the nature and accept the risks of futures products, including extreme price volatility of Crypto Asset Futures and the risk that the value of a Crypto Asset Futures position may decline rapidly and significantly, including to zero. While Crypto Asset Futures amplifies the potential profit of trading in Crypto Assets, it also amplifies the risk of loss. All the risks relating to the underlying Crypto Assets may be magnified in Crypto Asset Futures because of the use of leverage.
The risk of loss is substantial. In volatile market conditions, the price of Crypto Assets, and therefore the price of Crypto Asset Futures, may decline significantly in a short period of time, including to zero. An investor in Crypto Asset Futures must be prepared and able to bear the loss of the entirety of their investment.
You should not invest any amount that you cannot afford to lose. You are strongly encouraged to seek independent professional advice when deciding whether Crypto Asset Futures products are suitable for you, having regard to your risk appetite, financial position and knowledge about Crypto Assets.
When trading Futures, it is your responsibility:
a. To familiarise yourself with Crypto Assets and Futures before you start trading.
b. To monitor your open positions and, when required, to reduce your position or deposit additional margin to avoid liquidation.
c. Manage your exposure and not risk more than you can afford to lose.
When trading Futures you may suffer a loss as a result of a number of factors including but not limited to the following:
a. a position in Futures moving against you, for example, you hold a long position and the price of the underlying Crypto Asset declines or you hold a short position and the price of the underlying Crypto Asset increases. You may lose the entirety of your investment, including all assets that you have made available as margin for the position;
b. your profitable position may be force closed under auto-deleveraging, because one or more of the counter-parties to your profitable position has provide insufficient collateral, resulting in you not receiving some or all of the profits that you may otherwise be entitled to receive;
c. you cannot close a Futures position because there is insufficient market liquidity or demand for the other side of that trade;
d. we are required to change parameters on the Platform such as the margin requirements;
e. there is a malfunction of the Platform, for example resulting from scheduled or unscheduled downtimes, matching system failure, database failure, Crypto Asset transfer or storage failure, failure or malfunction of the API, hacker attacks or other failure or malfunction.
The market price of a Futures contract for a Crypto Asset may not mirror the price of the relevant Crypto Asset in the spot market. The price of a Futures contract for a Crypto Asset may also fluctuate significantly in response to movements in the price of the underlying Crypto Asset, supply and demand, and other market factors.
In order to open and maintain a Futures position, you will be required to provide collateral as margin. The use of leverage allows traders to provide a relatively small amount of margin for a position with significantly more market exposure. However, this use of leverage means that a relatively small change in the market price of the underlying Crypto Asset could result in liquidation of a position and loss of assets. For example, a 1% decrease in the price of a Crypto Asset underlying a 10x leveraged long Futures contract is equal to a 10% loss in the long Futures position. Conversely, a 1% increase in the price of a Crypto Asset underlying a 10x leveraged short Futures contract is equal to a 10% loss in the short Futures position.
If the market moves against your Futures position, you may be required to provide additional margin on short notice in order to maintain your Futures positions, failing which your position may be liquidated. If you are subject to liquidation, you may sustain a total loss of all collateral that has been provided or otherwise made available to establish or maintain a position, including collateral provided to meet margin calls. It is your responsibility to ensure that you have sufficient margin in your Account to maintain all open positions.
Perpetual Futures Products do not have a fixed term. You will be subject to funding rates for the duration of your positions in Perpetual Futures Products, which will impact the overall return of your perpetual Futures position. You can read more about funding rates here.
Binance may at its sole discretion terminate the offering of Futures. If you are required to close your Futures positions, or your Futures positions are forced closed, at a time when the market price of the underlying Crypto Asset is not favourable, you may suffer losses as a result. Binance will not be responsible for any losses resulting from such termination.
The placing of certain “stop-loss” orders, or “stop-limit” orders which are intended to limit losses to certain amounts may not always be effective because rapidly changing market conditions may make it impossible to execute such orders. Strategies using combinations of positions such as “spread” and “straddle” positions may be as risky as taking simply “long” or “short” positions.
O. Risks of trading Options
Transactions in options carry a high degree of risk. You should familiarise yourself with the type of option (i.e. put or call) which you intend on trading and the associated risks. You should calculate the extent to which the value of the options must increase for your position to become profitable, taking into account the premium and all transaction costs.
“Writing” or “granting” an option involves considerably greater risk than purchasing options. The premium received is fixed, however you may sustain a loss well in excess of that premium amount. You may be liable for additional margin to maintain the position if the market moves unfavourably. You may also be exposed to the risk of the purchaser exercising the option and you may be obligated to either settle the option or to acquire or deliver the underlying interest. If the option is “covered” by holding a corresponding position in the underlying interest, the risk may be reduced. If the option is not covered, the risk of loss can be unlimited.
