Before using any part of the Lama App and Cryptocurrency Services, or engaging in the purchasing, transferring, withdrawing and/or trading of Cryptocurrency, it is essential to understand the associated risks. The value of Cryptocurrency and your ability to engage with them could be significantly impacted if any of these risks occur. Using the Lama App and Services entails considerable risk and potential financial loss.
The risks related to Cryptocurrency include, but are not limited to, the following:
Unregulated Market. Lama operates under the laws of the Republic of Lithuania but is not a licensed financial service provider. It does not offer licensed services, is not overseen by the Bank of Lithuania, and does not function within a fully regulated industry. Consequently, purchasing Cryptocurrency does not provide the protections typically available to investors dealing with regulated financial services firms. Lama is supervised by the Financial Crime Investigation Service concerning Money Laundering Regulations.
Price Volatility. The value of Cryptocurrency can fluctuate dramatically and be highly volatile due to rapid changes in supply and demand. These fluctuations can result from various factors, including (a) media coverage, (b) developments in financial technology, (c) technological advancements, (d) market trends, (e) economic or political conditions, (f) level of adoption, (g) institutional support, (h) regulatory actions, (i) government backing, (j) market dynamics, (k) trading activities, (l) hacking incidents, and (m) events impacting significant service providers, such as exchanges.
Tax Liability. The tax status of Cryptocurrency is complex and uncertain, potentially leading to unexpected future tax consequences for buying, holding, selling, or using Cryptocurrency. It is crucial to seek tax advice to understand your tax obligations related to Cryptocurrency. Non-compliance with tax laws can result in severe penalties and criminal charges.
Changes in Laws and Regulations. The legal and regulatory landscape for Cryptocurrency and distributed ledger technology is unpredictable and varies widely across different jurisdictions. It is challenging to foresee how new legal and regulatory frameworks will impact the value of Cryptocurrency. New laws may limit or restrict your ability to hold or trade Cryptocurrency, potentially leading to financial losses.
Distributed Ledger Technology. Cryptocurrency relies on distributed ledgers, typically governed by various protocols. These protocols are at risk of malfunction, breakdown, or abandonment, which could severely impact the value and transferability of Cryptocurrency. Additionally, malicious actors might target these protocols through various attacks, such as malware, denial of service, consensus-based attacks, sybil attacks, smurfing, and spoofing. For instance, consensus mechanisms for transaction validation are vulnerable to attacks that could compromise transaction accuracy and lead to misappropriation of Cryptocurrency (known as double-spending attacks). Open-source protocols are also susceptible to weaknesses introduced during development, which could be exploited to misappropriate Cryptocurrency or disrupt protocol functionality.
