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risk disclosure

Risk Disclosure Statement


This Risk Disclosure Statement (“Statement”) provides the user (“User”, “you”, “your”, “them”) with information about the risks associated with trading in cryptocurrencies and services provided by National Digital Asset Exchange Inc. (“NDAX”, “our”, “we”, “us”).

NDAX offers its cryptocurrency trading services to Canadians under FINTRAC registration as a Money Service Business [MSB registration number: M18632135] and Autorité des marchés financiers registration as a Money-services business [License Number: 904486].

Cryptocurrencies that are purchased and held on the NDAX trading platform are not protected by an investor insurance safeguard mechanism such as the Canadian Investor Protection Fund or the Canadian Deposit Insurance Corporation.

The Statement is provided to you when you open your account with NDAX. You cannot open an account with NDAX without acknowledging that you have read, and understand, this entire Statement and agree to its terms. The Statement is available for review and retrieval at https://ndax.io (“Website”).

This Statement is not intended to disclose or discuss all of the risks associated with cryptocurrency trading, holding or other significant aspects of transactions entered into through the NDAX trading platform, but only outlines the general nature of risks. Users should carefully consider whether cryptocurrency trading is appropriate for them in light of their experiences, objectives, financial resources and other relevant circumstances. Cryptocurrency trading is not suitable for all people. You may incur significant losses in a short period of time. Further, cryptocurrency may not be advisable if you are trading using borrowed funds or drawing from emergency or retirement assets.

You should not execute trades on the NDAX trading platform unless you fully understand the various risks associated with cryptocurrency trading, and the nature of the contractual relationship with NDAX that you are entering into by opening an account with us. Please see your account user agreement, located at https://www.ndax.io/user-agreement for details on the nature of your contractual relationship with us.

In summary, your contractual relationship with NDAX is a contract to buy and sell cryptocurrencies. The contractual right to the cryptocurrencies that you may buy, hold and sell may itself constitute a security or derivative. This contractual relationship provides benefits to Users, but may also expose Users to certain risks arising from NDAX acting as custodian.

By opening an account with NDAX, the User agrees that they have fully evaluated and confirmed that they understand and accept the risks involved.


NDAX’s services are provided on an execution only basis. We do not provide investment advice in relation to buying and selling cryptocurrencies listed on https://ndax.io. The Website acts as the principal platform for trade execution with NDAX.

Trading in cryptocurrencies has certain risks and this Statement does not disclose all of the risks associated. Users of NDAX’s services should consider the following non-exhaustive risks, in no particular order, prior to engaging in cryptocurrency trading which include, but are not limited to:

  1. Trade Risks: Cryptocurrencies are complex digital representations of value, and are risky investments based on their highly speculative natures and the uncertainty of the market. They are not legal tender, nor are they supported by a government or central bank. The value of cryptocurrencies is entirely derived by international market forces, such as global supply and demand, and as such the value is volatile. If consumers and investors stop transacting in a cryptocurrency then its value will be materially impacted. Also, certain addresses on the Bitcoin, Ethereum and other networks may hold significant positions in these cryptocurrencies, and transactions from these addresses could materially affect both the price and volatility of these cryptocurrencies. Historically, cryptocurrencies have been more volatile than government issued fiat currency and have also been impacted by a variety of external factors including volume and liquidity, operational events, media coverage speculation, and changes in investor confidence.

    Also, cryptocurrencies vary in their structure and associated rights and governance. NDAX researches each cryptocurrency that is listed on its trading platform based on the criteria that included but is not limited to the market cap, global trading volumes, community support, customer demand and liquidity. NDAX only trades well-established cryptocurrencies that meets the above criteria.

    Cryptocurrency trading comes with a high risk of losing all of your invested capital. There is also a risk that domestic or international governments will restrict the trading of cryptocurrencies altogether. Users should not invest funds to trade in cryptocurrencies that they are not prepared to lose entirely. This type of trading may not be appropriate for someone with limited resources and limited investment or trading experience and low risk tolerance.

    It is very important that the User monitors their positions closely and failure to do so entails a degree of risk. It is the sole responsibility of the User to monitor their positions.

  2. New Investment Risk: Cryptocurrencies are a new investment product that has only recently been introduced to speculative markets. Compared to the market for traditional investment products like equity and debt, the market for cryptocurrencies is relatively untested. The technological underpinning is open source and subject to development. The relatively short period that an investment product of this nature has been available is subject to the question of whether value will endure over a comparatively longer period.

    Cryptocurrencies are heavily reliant upon a supporting community’s participation. While the participation for the cryptocurrencies listed on NDAX have enjoyed consistent support of their respective development communities, there is no guarantee that this will continue. These communities regularly propose and implement alterations and improvements to the blockchains that support these cryptocurrencies. There is no guarantee that these community-led changes will continue.

  3. Listing Risks: Cryptocurrency values and markets are highly volatile and widely fluctuate. Under certain trading circumstances it may be difficult or impossible to liquidate a position. Any cryptocurrency can be listed or delisted at any time and without notice or consent. Cryptocurrency markets are very unpredictable and can move up or down as a whole and/or any particular cryptocurrency can move independently and can lose all or a substantial value of the funds originally invested. NDAX is not responsible for the availability, transferability or liquidity of any cryptocurrency.

    There are risks related with holding long cryptocurrency positions. Being long means that you are buying cryptocurrencies on the market by speculating that the market price of the underlying asset will rise between the time of purchase and the time of sale. As the owner of a long position there are risks that you may suffer a loss if the underlying asset decreases in value.

  4. Regulatory Risks: Cryptocurrency is an evolving market segment. Regulations are developing, and in many cases unsettled or unclear in many jurisdictions, and any changes in laws, rules and regulations may materially impact the cryptocurrency market. Regulators also may be limited in their ability to enforce Canadian laws in foreign territories. There can also be significant discrepancy in the international regulatory frameworks applicable to cryptocurrencies and trading platforms. Foreign legal discrepancies can also affect banking, wire transfer and processing, or other international financial transaction rules. Users are responsible for knowing how cryptocurrencies are regulated and controlled under the applicable laws in their own jurisdiction.

  5. Platform Risks: Cryptocurrencies trading on the NDAX trading platform are entirely digital, and as such face cybersecurity and system failure risks, including hardware, software, network, power or communication failures, and cyber attacks. Cryptocurrencies may be subject to external or cyber attack, and such attempts on the NDAX trading platform could result in a loss of cryptocurrency, private information, and operational capacity; as well as the potential for data corruption. This could also lead to corrective, compliance, regulatory and reputational costs for NDAX. To protect against such risks, NDAX has established a world-class risk management system including the use of reputable third party security solutions, and the development of risk-mitigating and contingency systems for operational or other disruptive events.

    NDAX takes material steps to secure both the NDAX trading platform, and user cryptocurrencies, including but not limited to secure storage mechanisms and independent ledgers of all transactions. Users should be aware that failure, malfunctions or disruptions of any transmission, power, routing, network or communication system, computer facility or trading software may occur, this may result in an order being delayed or failure to complete an order. If such occurs you may not be able to execute a trade, or sell a position, at your desired price (or at all). Trading online does not reduce the risks associated with cryptocurrency trading. You acknowledge that NDAX is not liable for any loses resulting therefrom.

  6. Currency Risks: Some transactions may be executed in a currency which may be different from the currency the User deposited to their account, and accordingly the User should be aware of the relevant currency fluctuation and any risks related to it. In respect of any foreign exchange transaction, a movement in an exchange rate may have a favourable or an unfavourable effect on the gain or loss achieved on such transaction.

  7. Default/Counterparty Risk: NDAX administers and operates the trading platform for cryptocurrency. NDAX is not a counterparty to the trade or transaction of cryptocurrency traded on the Website and is not responsible for a third-party buyer or seller failing to honor their financial obligations. We are not responsible for losses you may suffer as a result of any defaults, or insolvency of other Users.

  8. Lack of Investor Protection Insurance: Cryptocurrencies purchased and held in an account with NDAX are not protected by the Canadian Investor Protection Fund, the Canadian Deposit Insurance Corporation or any other investor protection insurance scheme.

  9. Underlying Technology Risk: The cryptocurrencies that trade on the NDAX trading platform use open source blockchain technology, and this industry will continue to evolve over time. There is risk that technological evolution will affect the economic and functional aspects of the cryptocurrencies that NDAX currently lists, or will list in the future. The integrity, scalability, security, and subsequent development of existing open source blockchain networks to meet network and scaling needs is not guaranteed, and the timing of such developments is unknown. Further, there may be unforeseen technology risks in the future that could impact the value of cryptocurrencies traded on the NDAX platform.

    As open source software, cryptocurrencies are susceptible to modifications or “forks” (splits) of the underlying blockchain – causing two independent and parallel blockchains to be created, each governed by different software. Forks have previously occurred in both the Bitcoin and Ethereum blockchain networks. A future fork could affect the value (and integrity) of a cryptocurrency that is traded on the NDAX trading platform. There may also be structural problems, or vulnerabilities, in the underlying source code of a cryptocurrency that could expose you to loss and / or cyberattack.

    Further, if any party (or consortium of parties) gains control over a certain threshold of the computing power used by a given blockchain network they could use this control to materially affect the price of the respective cryptocurrency.

  10. Cryptographic and contract code risk: As stated, cryptocurrencies are reliant on open source code. For certain cryptocurrencies this underlying code has proven to be flawed and has led to detrimental consequences for the investor. While NDAX aims to list cryptocurrencies with an infrastructure that have proven resilient from such flaws, there is no guarantee that flaws will not arise in the future. Mathematical and computing resource improvements could result in previously unknown flaws becoming exposed. This could negatively affect the value of the cryptocurrencies traded with NDAX or render them unusable entirely.

When trading in cryptocurrencies and similar products, Users must ensure they fully understand any risks involved and seek independent advice from a reliable source if necessary, taking into consideration investment objectives, level of experience and risk tolerance. NDAX does not provide investment, tax, legal or other advice to users. Users should not risk more than they are fully prepared to lose.

Information provided on the Website is for informational purposes only and is not, nor intended to be investment advice or trading recommendations. Such information is not and should not be considered as an offer to buy or sell, or solicitation of an offer to buy or sell any cryptocurrencies. The User’s decision as to whether such transaction is appropriate for them, is the User’s independent decision. NDAX is not acting as an advisor or serving as a fiduciary to the User. Users are responsible for managing their own legal, financial and tax affairs and seeking independent professional advice.

Should a price quoting error occur, NDAX is not liable for any resulting errors in account balances and reserves the right to make necessary corrections or adjustments to the relevant account. Any dispute arising from such price quoting errors will be resolved based on the fair market value, as determined by NDAX in its sole discretion and acting in good faith, of the relevant market at the time such an error occurred. In cases where the prevailing market represents prices different from the prices we have posted on our platform, NDAX will attempt, on a best efforts basis, to execute orders on or close to the prevailing market prices. This may or may not adversely affect the User’s realized and unrealized gains and losses.

NDAX does not make any representations or warranties regarding any cryptocurrency traded on the Website. The risks associated with cryptocurrency and trading cryptocurrency apply notwithstanding the NDAX trading platform, and the risks associated with the use and trading cryptocurrencies are the Users and the Users alone.

This Risk Disclosure Statement was last updated on December 1, 2020.