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Risk Disclosure Notice

Read this in full before committing capital

This document describes the principal risks associated with an allocation to Algotoria's systematic long–short crypto-futures programme and must be acknowledged alongside the Asset Management Agreement.

Version 1.0Effective · 20 April 2026

This notice provides critical information regarding the risks associated with the systematic investment strategies managed by Algotoria Limited.

1.General Investment Risk

Investing in digital assets and futures carries high levels of risk and may not be suitable for all investors.

  • Potential for Total Loss: There is a significant chance of losing the entirety of your allocated assets.
  • Prudent Allocation: It is recommended that investors do not allocate more than 10% of their total savings to these high-risk strategies.
  • No Guarantees: Past performance, whether based on actual trading or historical backtesting, is not indicative of future results.
The worst case is a complete loss of allocated capital. Do not allocate funds you cannot afford to lose.

2.Digital Asset and Market Volatility

The strategies primarily involve “Virtual Assets” and perpetual futures, which are subject to extreme price volatility.

  • Market Risk: Sudden and drastic price movements in virtual assets can lead to substantial losses in a short period.
  • Liquidity Risk: During periods of extreme market stress, certain instruments may become difficult to value or trade, potentially hindering execution.
  • 24/7 Market Operations: Digital asset markets operate continuously. Rapid changes in account value can occur at any time, including weekends and holidays.

3.Leverage and Drawdown Risks

Algotoria utilizes leverage to implement its strategies, which magnifies both potential gains and losses.

  • Leverage Limits: Depending on the selected risk profile, maximum leverage can reach up to 300% (×3.0) of the account value.
  • Drawdown Expectations: While typical annual drawdowns are generally observed in the 20–25% range, historical backtests over a 5-year period have shown drawdowns reaching 30%. Clients should be prepared for volatility of this magnitude.
Maximum aggregate leverage is hard-capped at 3.0× of account value. Annual drawdowns of 20–30% are within the normal operating range.

4.Operational and Technical Risks

The management of assets relies on proprietary technology and third-party infrastructure.

  • API and Software Failure: Inherent risks exist regarding development failures, bugs, or technical errors in the Application Programming Interface (API) used for trade execution.
  • Cybersecurity: Virtual assets and Service Providers (VASPs) are frequent targets for fraud, market manipulation, and cybersecurity breaches.
  • Infrastructure Reliability: Electronic communications may be delayed, intercepted, or fail due to internet instability or hardware malfunctions.

5.Third-Party and Counterparty Risk

Client assets are held in Separately Managed Accounts (SMAs) with third-party VASPs (e.g., Binance, OKX, Bybit).

  • VASP Insolvency: Algotoria is not liable for losses arising from the insolvency, acts, or omissions of any third-party exchange.
  • Regulatory Intervention: Actions by competent authorities against a VASP may make it impossible for Algotoria to fulfill its management obligations or for the client to access assets.
  • Stablecoin Depegging and Issuer Risk: The strategies managed by Algotoria may involve holding up to 100% of the portfolio assets in stablecoins, specifically USDT or USDC, to serve as primary collateral or liquidity. These instruments are subject to “depegging” risk, where the stablecoin may lose its 1:1 value parity with the underlying fiat currency. Such a loss of peg can occur due to issuer insolvency, loss of underlying reserves, regulatory interventions, or technical failures in the coin’s smart contract. In the event of an issuer default or a restriction on circulation, the market value of these assets may collapse, leading to a total loss of the capital held in these instruments regardless of the performance of the underlying trading algorithms.
Stablecoin depegging is a structural risk that algorithmic controls cannot eliminate.

6.Systematic and Model Risks

The strategies are 100% systematic and automated.

  • Model Limitations: Strategy parameters are based on historical data. Future market regimes may differ significantly from the past, rendering the models less effective.
  • Algorithm Malfunction: Automated systems may fail to function as intended due to malfunctions in execution signals or smart contract logic.
  • Jurisdictional Restrictions: Participation is prohibited for residents or entities in “Restricted States”.
  • Professional Investor Requirement: These services are strictly for “professional investors” as defined under the laws of the British Virgin Islands and the client's local jurisdiction.
  • Tax Responsibility: Clients bear sole responsibility for all tax liabilities and reporting requirements arising from trading activity.

Get Started

A few common questions — then a direct line to the team.

Is total loss of invested capital possible?
Yes. Investing in digital-asset derivatives carries a high level of risk and total loss cannot be categorically excluded. The firm’s risk architecture — hard-coded leverage caps (3.0× aggregate ceiling), dynamic volatility scaling, automated stop-losses, and a drawdown-halt circuit breaker enforced in code — is specifically designed to make catastrophic loss unlikely. But the inherent volatility of the underlying markets, the possibility of an exchange insolvency, a stablecoin depeg, or a black-swan combination of all three, means the worst case is a complete loss of the allocated assets. Allocate only capital you can afford to lose.
Source · qa/05-risk-management.md §5.5
How is drawdown measured, and why does the gross figure differ from the net figure?
The Algotoria risk-monitoring engine measures drawdown every 5 minutes as: Current Margin Balance / Adjusted Max Margin Balance − 1. “Adjusted” means a spike-resistant peak — a new high is only locked in after the 24-hour minimum following the spike, which filters transient exchange glitches from artificially inflating the reference. All firm risk limits operate on the gross trading-account margin balance, before the quarterly performance fee is deducted. Net-of-fee drawdowns experienced by the investor are larger by construction.
Source · qa/05-risk-management.md §5.3
What about stablecoin depeg and issuer risk?
Algotoria Stable holds up to 100% of the portfolio in USDT (occasionally USDC) as primary collateral. These instruments carry depeg risk — they may lose their 1:1 fiat parity due to issuer insolvency, loss of underlying reserves, regulatory intervention or smart-contract failure. In an issuer default or a freeze on circulation, the market value of the stablecoin can collapse and the capital held in it can be lost in full, irrespective of how the trading engine performed. Algotoria Diversified partly mitigates single-issuer concentration but does not eliminate the risk.
Source · qa/05-risk-management.md §5.5
What happens in an exchange insolvency or a regulatory action against a venue?
Client assets sit at the exchange in the client’s own account, so an exchange insolvency directly impacts the client. Algotoria selects venues with proof-of-reserves practices and strong regulation, but the residual venue risk is the client’s. If a competent authority takes enforcement action against a supported VASP, the firm will immediately halt algorithmic trading on the affected exchange and, where feasible, assist the client in migrating their SMA to an alternative approved exchange. The firm is not liable for losses arising from regulatory actions against third-party VASPs.
Source · qa/05-risk-management.md §5.5
How does Algotoria prepare for black-swan events?
The firm models extreme statistical deviations in price, liquidity and infrastructure connectivity rather than specific geopolitical narratives. The trading logic is back-tested against historical data extending to 2014, including the 2018 liquidity crunch, the March 2020 COVID flash crash, the May 2021 flash crash, the Terra-Luna algorithmic collapse, the November 2022 FTX insolvency and the October 2025 drawdown. Portfolio liquidity is algorithmically capped so the book can be fully unwound within 24 hours while consuming at most 33% of the 30-day average daily volume of each instrument.
Source · qa/05-risk-management.md §5.4
How is leverage capped, and what happens if a tier ceiling is breached?
Each Investment Committee–approved risk tier carries hard-coded leverage and drawdown ceilings: average leverage of 33% / 67% / 100% at Conservative / Medium / High, with max leverage capped at 100% / 200% / 300% respectively, and matching maximum-drawdown ceilings (Stable: 10 / 20 / 30%; Diversified: 15 / 25 / 35%). The risk engine monitors live exposure against the tier limit; if gross drawdown from the most recent peak crosses the ceiling, position sizing is automatically scaled down, the Investment Committee reviews the book before any resumption, and the event is notified to the client.
What is the AI / model risk in the operating layer, and how is it bounded?
AI-assisted workflows handle compliance triage, reporting, customer communications and policy drafting under named human-in-the-loop oversight; every AI artefact is preserved in tenant-level audit logs for at least twelve months. Trading itself is deterministic and rules-based — no AI model places orders without explicit Investment Committee sign-off on the underlying sub-strategy logic. The Board-approved AI Policy is aligned with ISO/IEC 42001 and NIST AI RMF, and the boundary between AI-permissible operational tasks and human-only trading decisions is reviewed quarterly.
See the full due-diligence FAQ for 50+ additional questions.
Download strategy factsheets and investor materials from the Documents page.

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Algotoria Limited is a BVI-regulated Approved Investment Manager under the Securities and Investment Business Act, 2010. The content on this page is informational and does not constitute an offer to sell securities or investment advice. Services are available to qualified investors only. Past performance is not indicative of future results.