Risk Disclosures for Bitcoin Treasury Codex

IMPORTANT: Please read these Risk Disclosures carefully before using the Services provided by Bitcoin Treasury Codex. Cryptocurrency trading and algorithmic trading strategies involve substantial risks and may not be suitable for all investors. You should carefully consider whether our Services are appropriate for you in light of your financial condition, investment objectives, and risk tolerance.

By using our Services, you acknowledge that you have read, understood, and accepted all of the risks described below.

1. Cryptocurrency Market Risks

1.1 Extreme Price Volatility

Bitcoin and other cryptocurrencies are subject to extreme price volatility. The value of Bitcoin can fluctuate dramatically over short periods of time, sometimes by 10% or more in a single day. This volatility can result in significant gains or losses. You could lose a substantial portion or all of your investment.

1.2 Market Liquidity Risk

While Bitcoin is generally considered liquid, there may be periods of reduced liquidity, particularly during times of market stress. Reduced liquidity can result in wider bid-ask spreads, difficulty executing trades at desired prices, and increased price volatility.

1.3 24/7 Market

Cryptocurrency markets operate 24 hours a day, 7 days a week, 365 days a year. Price movements can occur at any time, including while you are sleeping or otherwise unable to monitor your account. Our algorithms trade continuously, which means positions may be opened or closed at any time without your direct oversight.

1.4 Regulatory Risk

The regulatory status of Bitcoin and other cryptocurrencies remains uncertain and varies by jurisdiction. Changes in laws or regulations could adversely affect the value of Bitcoin, the ability to trade Bitcoin, or the legality of holding Bitcoin. Regulatory actions could result in restrictions on trading, taxation, or even prohibition of cryptocurrency ownership.

1.5 No Government Backing

Unlike traditional currencies issued by governments, Bitcoin is not backed by any government, central bank, or physical commodity. Its value is derived entirely from market demand and the willingness of participants to accept it as a form of payment or store of value.

2. Algorithmic Trading Risks

2.1 Past Performance Not Indicative of Future Results

The backtested performance results displayed on our website are hypothetical and do not represent actual trading results. Past performance, whether actual or backtested, is not indicative of future results. There is no guarantee that our algorithms will be profitable in the future, even if they have been profitable in the past.

2.2 Backtesting Limitations

Backtested results have inherent limitations because they are designed with the benefit of hindsight. Backtesting assumes perfect execution, does not account for all market conditions, and may not reflect the impact of material economic and market factors. Actual results may differ significantly from backtested results.

2.3 Algorithm Performance Risk

Our proprietary algorithms are based on historical data, statistical models, and assumptions about market behavior. These algorithms may fail to perform as expected due to:

•Changes in market conditions or structure

•Unforeseen market events or "black swan" events

•Errors in the algorithm's logic or implementation

•Changes in market participant behavior

•Technological failures or bugs

2.4 No Guarantee of Profitability

There is no guarantee that our algorithmic trading strategies will generate profits or avoid losses. You may experience periods of losses, and these losses could be substantial. You should not invest money that you cannot afford to lose.

2.5 Drawdown Risk

Even successful trading strategies experience periods of drawdown (decline from peak value). Drawdowns can be prolonged and substantial. While our backtested results show certain drawdown characteristics, actual drawdowns may be larger and longer than historical or backtested results suggest.

2.6 Overfitting Risk

There is a risk that our algorithms may be "overfit" to historical data, meaning they perform well on past data but fail to generalize to future market conditions. We take steps to minimize overfitting, but this risk cannot be entirely eliminated.

3. Technology and Operational Risks

3.1 System Failures

Our Services rely on complex technology infrastructure, including software, APIs, internet connectivity, and third-party platforms. Any of these systems may experience failures, outages, or errors that could result in:

•Inability to execute trades

•Delayed trade execution

•Execution of unintended trades

•Loss of trading opportunities

•Financial losses

3.2 API and Exchange Connectivity Risk

Our algorithms execute trades through API connections to your SFOX account. These API connections may be interrupted due to technical issues, maintenance, or other factors beyond our control. Loss of API connectivity could prevent us from executing trades or managing positions.

3.3 Cybersecurity Risk

Despite security measures, there is a risk of cyberattacks, hacking, or unauthorized access to systems. While we do not have custody of your assets, a security breach could potentially compromise API keys or trading permissions, resulting in unauthorized trading activity.

3.4 Software Bugs and Errors

Like all software, our algorithms may contain bugs or errors that could result in unintended trading behavior, financial losses, or system failures. We continuously test and monitor our systems, but we cannot guarantee they are error-free.

4. Third-Party Risks

4.1 SFOX Platform Risk

Our Services depend entirely on the SFOX trading platform. We have no control over SFOX's operations, and we are not responsible for:

•SFOX platform outages or downtime

•SFOX's execution quality or pricing

•SFOX's security or custody practices

•SFOX's compliance with laws and regulations

•SFOX's financial stability or solvency

If SFOX experiences operational issues, becomes insolvent, or ceases operations, it could result in inability to trade, loss of access to your account, or loss of assets.

4.2 Custody Risk

If you use custody services through SAFE Trust Company (affiliated with SFOX), your assets are held by a third party. While SAFE Trust Company represents itself as a regulated trust company with insurance and security measures, we cannot verify or guarantee these representations. You should independently verify SAFE Trust Company's regulatory status, insurance coverage, and security practices.

4.3 Counterparty Risk

When trading on SFOX or any exchange, you are exposed to counterparty risk—the risk that the exchange or other market participants may fail to fulfill their obligations. This could result in losses or inability to access your funds.

5. Liquidity and Execution Risks

5.1 Execution Risk

There is no guarantee that trades will be executed at desired prices or at all. Market orders may be executed at prices significantly different from expected prices, particularly during periods of high volatility or low liquidity. This is known as "slippage" and can result in worse-than-expected trade execution.

5.2 Partial Fills

Orders may be only partially filled, meaning that only a portion of an intended trade is executed. This can result in unintended position sizes and exposure.

5.3 Market Impact

Large trades may move the market price, resulting in less favorable execution prices. While our algorithms are designed to manage position sizing, market impact risk cannot be entirely eliminated.

6. Leverage and Margin Risks

Currently, our Services do not utilize leverage or margin trading. However, if we were to offer leveraged strategies in the future, you should be aware that:

•Leverage magnifies both gains and losses

•Leveraged positions can result in losses exceeding your initial investment

•Margin calls may require you to deposit additional funds or liquidate positions at unfavorable prices

We will notify you and update these Risk Disclosures if we introduce leveraged strategies.

7. Tax Implications

7.1 Tax Reporting Obligations

Cryptocurrency trading may have significant tax implications. In the United States, the IRS treats cryptocurrency as property, and each trade may be a taxable event. You are responsible for:

•Tracking all trades and calculating gains and losses

•Reporting cryptocurrency transactions on your tax returns

•Paying applicable taxes on gains

7.2 Complex Tax Treatment

Algorithmic trading strategies that execute frequent trades may result in complex tax situations, including:

•Numerous taxable events to track and report

•Short-term capital gains (taxed at higher ordinary income rates)

•Wash sale considerations (though current IRS guidance suggests wash sale rules may not apply to cryptocurrency)

We strongly recommend consulting with a qualified tax professional regarding the tax implications of using our Services.

8. Regulatory and Legal Risks

8.1 Regulatory Uncertainty

The regulatory environment for cryptocurrency and algorithmic trading is evolving and uncertain. Future regulatory actions could:

•Restrict or prohibit cryptocurrency trading

•Impose new compliance requirements

•Result in taxation or fees

•Affect the legality or viability of our Services

8.2 Jurisdictional Differences

Cryptocurrency regulations vary significantly by country and even by state within the United States. You are responsible for ensuring that your use of our Services complies with all applicable laws in your jurisdiction.

8.3 Investment Adviser Registration

Bitcoin Treasury Codex is not currently registered as an investment adviser with the SEC or any state securities regulator. Our Services are provided on a technology platform basis, and we do not provide personalized investment advice. However, regulatory interpretations may change, which could affect our ability to provide Services.

9. Suitability and Financial Capacity

9.1 High-Risk Investment

Our Services are suitable only for individuals who:

•Understand and can bear the risks of cryptocurrency investing

•Have sufficient financial resources to sustain potential losses

•Do not need immediate access to invested funds

•Have a high risk tolerance

•Understand algorithmic trading strategies

9.2 Not Suitable for Everyone

Our Services are not suitable for:

•Individuals who cannot afford to lose their investment

•Individuals who need guaranteed income or capital preservation

•Individuals who do not understand cryptocurrency or algorithmic trading

•Individuals who are risk-averse

9.3 No Personalized Advice

We do not provide personalized investment advice or assess the suitability of our Services for your individual circumstances. You are solely responsible for determining whether our Services are appropriate for you. We strongly recommend consulting with a qualified financial advisor before using our Services.

10. Conflicts of Interest

10.1 Revenue Sharing with SFOX

Bitcoin Treasury Codex receives a portion of the trading fees charged by SFOX. This creates a potential conflict of interest because we benefit financially from trading activity in your account. More trading activity results in more fees, which could incentivize excessive trading.

How we address this conflict:

•Our algorithms are designed to optimize returns, not to maximize trading frequency

•We provide monthly performance reports so you can monitor trading activity

•You have full transparency into all trades executed in your account

•You can terminate our Services at any time if you believe trading activity is excessive

10.2 Proprietary Strategies

Our trading algorithms are proprietary, and we do not disclose the specific logic or parameters used. While this protects our intellectual property, it means you must trust our approach without full transparency into how trading decisions are made.

11. Limitation of Liability

As stated in our Terms of Service, our liability to you is limited. We are not liable for:

•Market losses resulting from cryptocurrency price movements

•Losses resulting from algorithm performance

•Losses resulting from third-party failures (such as SFOX outages)

•Indirect, consequential, or punitive damages

You use our Services at your own risk.

12. No Guarantee of Availability

We reserve the right to discontinue our Services at any time, for any reason. We may also decline to provide Services to certain individuals or in certain jurisdictions. There is no guarantee that our Services will be available to you indefinitely.

13. Acknowledgment and Acceptance of Risk

By using our Services, you acknowledge and agree that:

•You have read and understood all of the risks described in this document

•You understand that cryptocurrency and algorithmic trading involve substantial risk of loss

•You have sufficient financial resources to bear the risk of loss

•You are not relying on any representations or guarantees of profitability

•You have consulted with financial, legal, and tax advisors as appropriate

•You accept full responsibility for your decision to use our Services

•You will not hold Bitcoin Treasury Codex liable for losses resulting from the risks described above

14. Additional Resources

We encourage you to educate yourself about cryptocurrency investing and algorithmic trading before using our Services. Some resources include:

•SEC Investor Education: investor.gov

•CFTC Consumer Education: cftc.gov/ConsumerProtection

•FINRA Investor Alerts: finra.org/investors

15. Questions and Contact Information

If you have any questions about these Risk Disclosures or the risks associated with our Services, please contact us:

•Website: codexyield.com

•Text: "Codex" to 251-228-0500

•Contact Form: Available on our website

IMPORTANT REMINDER: Cryptocurrency trading and algorithmic trading involve substantial risk. You should not invest money that you cannot afford to lose. Past performance is not indicative of future results. Consult with qualified professionals before making investment decisions.

By using our Services, you acknowledge that you have read, understood, and accepted all of the risks described in this document.