Digital Currencies represent a speculative investment and involve a high degree of risk. Investors should have the financial ability, sophistication/experience and willingness to bear the risks of an investment. An investment in digital currencies may not suitable for all investors. Digital currencies are NOT considered securities and are NOT subject to the same regulatory requirements as SEC-registered securities, exchange traded funds, or similar investment vehicles. Potential investors should carefully consider the long term nature of an investment in digital currencies prior to making an investment decision. You should note carefully the following:
- Digital currency is not legal tender, is not backed by the government, and accounts and value balances are not subject to Federal Deposit Insurance Corporation or Securities Investor Protection Corporation protections;
- Legislative and regulatory changes or actions at the state, federal, or international level may adversely affect the use, transfer, exchange, and value of digital currency;
- Transactions in digital currency may be irreversible, and, accordingly, losses due to fraudulent or accidental transactions may not be recoverable;
- Some digital currency transactions shall be deemed to be made when recorded on a public ledger, which is not necessarily the date or time that the customer initiates the transaction;
- The value of digital currency may be derived from the continued willingness of market participants to exchange fiat currency for digital currency, which may result in the potential for permanent and total loss of value of a particular digital currency should the market for that digital currency disappear;
- There is no assurance that a person who accepts a digital currency as payment today will continue to do so in the future;
- The volatility and unpredictability of the price of digital currency relative to fiat currency may result in significant loss over a short period of time;
- The nature of digital currency may lead to an increased risk of fraud or cyber attack;
- The nature of digital currency means that any technological difficulties experienced by Genesis may prevent the access or use of a counterparty’s digital currency; and
- Any bond or trust account maintained by Genesis for the benefit of its counterparties may not be sufficient to cover all losses incurred by counterparties.
Auction Rate Securities
The various risks described below are associated with buying, selling and owning Auction Rate Securities. Specific risks may vary from issue to issue.
- Complex securities. ARS are complex securities with unique terms, conditions, features and practices that can impact investment results. Investors should understand ARS, how auctions work, and the potential impact of a decision to either actively bid or passively hold ARS, as well as the potential impact of the actions other auction participants may have on investment results.
- Long-term maturity. ARS are long-term bonds or preferred stock; therefore, ARS may be owned and pay coupons or dividends until the final maturity or in perpetuity to the extent that the issuer can, in fact, pay coupons or dividends. The rate you receive if you hold an ARS until its final maturity could be less than what could have been earned on comparable long-term investments.
- Failed auctions. Successful auctions are not guarantee a successful auction; auctions can fail and, in the event of a failed auction, existing investorsmay not sell, but instead may continue to hold all or part of their ARS at the maximum rate, as described in the offering documents. If an auction fails, there may not be a market between auctions.
- Market for ARS outside of auction. The ability to buy or sell ARS between auction dates is limited. Genesis may purchase or sell ARS for its own account from or to the customer following the initial distribution by the issuer. However, Genesis has no obligation and does not ensure that it or others will trade ARS outside of auction. To the extent that a transaction in ARS can be effected outside of auction, the price received may be less than the amount originally invested, depending on market conditions for the given ARS.
- Credit risk. A rating agency could downgrade the credit rating on an ARS issue, thus making the shares less liquid at an auction or outside of auction. The creditworthiness of auction-rate preferred shares is a reflection of the assets in the investment company. The assets held by the investment company can vary in quality and maturity based on the investment practices described in the prospectus. Investment companies that issue ARS must meet an asset coverage requirement of at least 200% under the Investment Company Act of 1940