M1 Digital LLC Cryptocurrency Risk Disclosure

a. Loss of Principal

The value of crypto assets can be extremely volatile and unpredictable, which can result in significant losses in a short time, including possibly a loss of total value. You should not invest funds in cryptocurrencies that you cannot afford to lose. Trading cryptocurrencies can lead to large and immediate financial losses. The value of cryptocurrencies may also be derived from the continued willingness of market participants to exchange fiat currency for cryptocurrencies, which may result in the potential for permanent and total loss of value of cryptocurrencies should the market for those cryptocurrencies disappear.

b. Price Volatility

Cryptocurrencies derive their value from the markets in which they trade, and the markets for cryptocurrencies are global. The price of cryptocurrencies is based on the perceived value of the cryptocurrency and subject to changes in sentiment, which make these products highly volatile and unpredictable. It may be difficult to liquidate a position in cryptocurrencies at all or, if possible, such liquidation may occur at a significant loss. It is possible that the market for a given cryptocurrency can collapse altogether

c. Liquidity

Under certain market conditions, you may find it difficult or impossible to liquidate your cryptocurrency position quickly at a reasonable price. This can occur, for example, when the market for a particular cryptocurrency suddenly drops, or if trading is halted due to recent news events, unusual trading activity, or changes in the underlying software protocol. M1 does not own or control the underlying software protocols which govern the operation of Cryptocurrencies. Generally, the underlying protocols are open source, and anyone can use, copy, modify, and distribute them. We assume no responsibility for the operation of the underlying protocols and do not guarantee the functionality or security of network operations.

d. Insurance

CRYPTOCURRENCIES ARE NOT SUBJECT TO PROTECTIONS OR INSURANCE PROVIDED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR THE SECURITIES INVESTOR PROTECTION CORPORATION (SIPC).

e. Regulatory

Cryptocurrencies currently face an uncertain regulatory landscape in the United States and many foreign jurisdictions.

Different geographic locations have different rules, or oftentimes no rules, that apply to the trading of cryptocurrencies. One or more jurisdictions may, in the future, adopt laws, regulations or directives that affect cryptocurrency networks and their users. Changes in government regulation, such as the suspending or restricting of trading activity in a particular cryptocurrency or currencies, may adversely affect your ability to trade and exchange your cryptocurrencies and may decrease the value of any cryptocurrency in your account.

In the United States, cryptocurrency markets are not subject to federal regulatory oversight, but cryptocurrency exchanges are subject to federal anti-money laundering regulation and may be regulated by one or more state regulatory bodies. As compared to regulated markets, such as the United States securities markets, there are no uniform regulations governing trading or other mechanisms to prevent market manipulation or to normalize the cryptocurrency markets when they experience volatility issues. Unlike the laws, rules and regulations governing the United States securities markets, there are generally no laws, rules or regulations that require anyone to continue to support a cryptocurrency market, and there is no assurance that a person who accepts a virtual currency as payment today will continue to do so in the future.

f. Cryptocurrency Exchanges, Intermediaries and Custodians

Cryptocurrency exchanges, as well as other intermediaries, custodians and vendors used to facilitate cryptocurrency transactions, are Cryptocurrency exchanges, as well as other intermediaries, custodians and vendors used to facilitate cryptocurrency transactions, are relatively new and largely unregulated in both the United States and many foreign jurisdictions. In addition to a higher level of operational risk than regulated futures or securities exchanges, cryptocurrency exchanges can experience volatile market movements, flash crashes, fraud, various forms of market manipulation, theft, transaction processing delays and other cybersecurity risks. Trading in cryptocurrencies may be halted by the various trading venues due to unusual trading activity, outages or other problems with a cryptocurrency platform. If Bakkt Crypto experiences such technical difficulties, those difficulties could prevent you from accessing the cryptocurrency in your Bakkt Crypto account. Bakkt Crypto and M1 Digital LLC may not have sufficient financial coverage through bonds, insurance or other products to repay your losses.

g. Cybersecurity and Fraud

A cybersecurity event could result in a substantial, immediate and irreversible loss for market participants that trade cryptocurrencies. Cryptocurrency transactions may be irreversible, and, accordingly, losses due to a cybersecurity event may not be recoverable. Even a minor cybersecurity event in a cryptocurrency is likely to result in downward price pressure on that product and potentially other cryptocurrencies. Similarly, transactions may be irreversible, and, accordingly, losses due to fraudulent or accidental transactions may not be recoverable.

Furthermore, you are responsible for creating a strong password and maintaining security and control of any and all electronic devices, IDs, passwords, hints, or any other codes that you use to access the M1 platform. We assume no responsibility for any loss that you may sustain due to compromise of account login credentials due to no fault of M1.

h. Technology

Changes in the technology of a given cryptocurrency platform or changes resulting from cybersecurity attacks include but are not limited to a “fork,” which can have a negative impact on the value of a particular cryptocurrency and can result in the loss or cancellation of a cryptocurrency position or a sudden loss of value. The ability to participate in forks could also have implications for investors. For example, a market participant holding a cryptocurrency position through a cryptocurrency exchange may be adversely impacted if the exchange does not allow its customers to participate in a fork that creates a new product.