Client Agreement: Digital Assets Brokerage Services
Current Version: Version 1.0 1 October, 2024
Effective Date: 1 November, 2024
Introduction
This Digital Assets Brokerage Services Agreement (the “Agreement”) is between you, the client (“Client”, “you”, “your”), and Payward Digital Solutions Ltd., an exempted company limited by shares, incorporated in Bermuda with registered number 202403268 and registered address at Park Place, 55 Par-la-Ville Road, Hamilton, Pembroke, HM11, Bermuda (Kraken Derivatives, we, our, us), which is the owner and operator of an online platform for the provision of brokerage services in digital assets as detailed in Clause 1 below (the “Platform”) which is accessed via kraken.com, the mobile app, or via API. Payward Digital Solutions Ltd. is a wholly owned subsidiary of Payward, Inc. (together commonly referred as the “Group” and trading as “Kraken”).
This Agreement governs the provision of the Services to you and will govern all Orders and Derivatives entered in connection with the Services, as defined in Schedule 2. By making an Application, you agree to be bound by all of the terms of this Agreement and this Agreement shall be effective from the date that your Account is created following an Application. We are not obliged to provide any Service to you before the date set out for the commencement of such Service. This Agreement is supplemented by our Privacy Notice, which is applicable when you open an Account. A copy of our Privacy Notice is found here. You may be required to execute other agreements, which are intended to be consistent with this Agreement and each other, but in the event of conflict with this Agreement, this Agreement will prevail.
Unless otherwise specified herein, capitalised words used in this Agreement shall have the meaning given in Schedule 2.
Please read this Agreement carefully before using the Services. If you do not understand any of the provisions of this Agreement or your obligations under them, you should seek independent professional advice.
Payward Digital Solutions Ltd. is licensed by the Bermuda Monetary Authority to conduct digital assets business pursuant to the Digital Assets Business Act, 2018 and holds a Class F license. Please note that our services are not available for residents of certain jurisdictions. Please refer to the list of Prohibited Countries on the main website, kraken.com, (“Website”) for any geographical limitations that may apply.
We may make changes to this Agreement from time to time. We will provide not less than 30 days in advance of any proposed material changes to this Agreement. You should regularly check when the Agreement was last updated (as displayed at the top of this document) and review the current Agreement. It is your obligation to understand the terms of this Agreement. Any amendments to the Agreement that we consider likely to materially affect your rights and obligations, in our sole discretion, will be posted or sent by email to the address associated with your Account. If you do not accept the Agreement, or any amendment(s) to it, you must notify us immediately and stop using the Services. The continued use of your Account after any amendment to this Agreement or the absence of a notification that you have rejected the amendments prior to continuing to use the Platform or Services constitutes your acceptance of the modified Agreement. In the event of any translation of this Agreement or the Services, the English version shall prevail.
Please contact our customer support team at https://support.kraken.com/hc/en-us/forms if you have questions before you use or continue to use your Account.
As a Client you will be able to trade Derivatives on the price of digital assets (the Derivatives) by using our Services. Derivatives represent a legal contract between you and your trade Counterparty (see definition below) and allow you to economically participate in a decline or rise in the price of digital assets, depending on the direction of your position.
1 Services provided by us to you
1.1 This Agreement provides the basis on which we will provide you with the Services, as detailed in Schedule 3.
1.2 We may add, amend or discontinue any aspect of the Services in our sole discretion and without further notice to you, save where such addition, amendments or discontinuation would materially impact your rights, whereby we would provide prior notice of such change in accordance with the provisions detailed in the Introduction.
1.3 Our Services will be provided on a non-advised basis, meaning that we will not provide you with any advice as to the merits of any particular Order or Derivatives or whether a particular Derivatives contract is suitable for you. You are solely responsible for any decisions taken in respect of any and all Derivatives that you choose to enter or not enter into under this Agreement. We will not provide you with any investment, legal, tax or other form of advice, nor can you rely on any statements made by us.
1.4The information provided in the terms of this Agreement and/or Website are not marketing, promotional or an offer for any product or investment. You are solely responsible for any losses, damages or costs resulting from your reliance on any data or information that we may provide. You agree that your decisions are your own independent decisions with respect to access or use of the Platform.
1.5 You agree that you will enter into Derivatives contracts as in your own name. Unless we have agreed otherwise, you will be solely responsible for performing any obligations under this Agreement in connection with Derivatives entered into as part of the Services, and you will be solely responsible for performing any obligations under the Derivatives contracts themselves. Our obligations under this Agreement are owed exclusively to you and, unless we have agreed otherwise with you in writing, we shall owe no obligations to any other party in connection with our provision of the Services.
1.6 We may make available via the Platform market data and other information related to Derivatives. Any decision to make available market data or other information related to Derivatives is taken at our sole discretion. The provision of such market data and other information does not form part of the Services and we are not responsible for its accuracy or completeness, nor do we owe any obligations to you under this Agreement with respect to the provision of that market data and other information.
1.7 You agree that any Group Company may provide any part, or all of, any Service at any time without any further notification, unless the change materially affects your rights and/or obligations.
2 Applying to become a Client
2.1 In order to receive the Services, you must hold as a minimum an account on the Website. If eligible, you may create an Account with Payward Digital Solutions Ltd. via Kraken's Platforms supporting derivatives. Eligibility criteria to become a Client of Kraken Derivatives can be found on the Website and may be updated from time to time. Your eligibility to trade some or all of the Derivatives will depend on your jurisdiction of residence, which has been detailed on the Website. Based on your country of residence, additional “Know Your Customer” (KYC) information may be required to assess your eligibility to receive the Services.
2.2 We will determine whether to accept your Application and open an Account at our sole discretion. Where we reject an Application, we will use reasonable endeavours to inform you of the reasons why, provided we are permitted to do so under applicable law and regulation.
2.3 By submitting an Application, you acknowledge that your account on the Website and your Account on the Platform are two separate accounts and that the services are offered by two different entities of the Group.
2.4 It is a condition of making an Application to become a Client of Payward Digital Solutions Ltd. that you agree to be bound by the terms of this Agreement. If you do not agree to be bound by this Agreement, then your Application will be rejected.
2.5 You acknowledge and agree that you will not open, or attempt to open, an Account under any name except your own, nor use your Account to submit Orders on behalf of any third party without our prior written consent. We reserve the right to verify this at any time, throughout the course of our relationship.
2.6 The Account is personal to you and must not be shared, nor are you allowed to create multiple Accounts which are not linked together in a sub-account structure. We do not permit Accounts to be opened jointly in the names of two or more persons. You alone will become the legal and beneficial owner of any positions in the Derivatives that you enter into via your Account.
2.7 Where you are a corporate Client, you are entitled to appoint certain representatives who may access and operate your Account on your behalf (“Users”). You acknowledge and agree that you take full responsibility for all activities undertaken by your Users on the Platform in respect of the Services. When you appoint Users, you must provide us with the full legal names of those Users and keep us updated as to any changes to the identity of your Users.
2.8 You are required to keep your details in your Account up-to-date at all times.
2.9 You, and any of your Users, are responsible for keeping your password(s) and any other security measures implemented on your Account secure. As a condition of opening an Account, you will be required to enable two factor authentication. You must notify us immediately if you, or any of your Users, have lost your password or suspect that your Account has been accessed without your permission. Unless we receive a notification from you under this Clause 2.9, we will treat all Orders made on your Account as authorised activity. We may need to obtain certain information from you in order to confirm your identity in the event that you make a notification under this Clause 2.9 and you agree to provide that information.
2.10 You confirm that the representations in Clause 7 are true and accurate.
3 Verifying Your Identity
3.1 We are required by applicable law and regulation to confirm and verify your identity prior to opening your Account. We will rely on the KYC information and verification processes conducted when you open an account with www.kraken.com and we might require additional information/documentation to satisfy any regulatory requirements applicable to the Services, based on the jurisdiction of the Platform and/or your jurisdiction of residence.
3.2 This obligation applies to natural persons and corporate Clients. You agree to provide us with all information that we may reasonably request in order to verify your identity in accordance with our obligations under applicable law and regulation. This may include, but is not limited to, a copy of your passport, a proof of address or other identifying documents or information that may be requested from time to time, including any other information as set out on the Website. You must notify us immediately of any material change in the information previously provided to us under this Clause 3.2.
3.3 We may decide to verify or otherwise re-confirm your identity at any time as long as you hold an account, using third party verification providers. You hereby consent to your data being used in this way.
3.4 We will retain any documentation or information provided by you to allow us to verify
your identity and will continue to hold such information following the termination of this Agreement in accordance with the periods specified under applicable law or regulation.
4 Confidentiality
4.1All information relating to this Agreement, but not the Agreement itself, shall be confidential and the parties agree to treat the information as such unless any disclosure is required under applicable law or by a party’s regulatory body.
4.2 The Client agrees that Kraken Derivatives may share any confidential information with its Affiliates and/or any third parties in order to carry out its obligations under this Agreement.
5 Fees and taxes
5.1 We will publish the fee schedule on the Website as set out in Schedule 3.
5.2 You are solely responsible for paying all taxes you might owe as a result of using the Services.
5.3 We may be required to cooperate with tax authorities, as well as governmental and regulatory agencies, and you hereby consent to your information being released for this purpose where necessary.
6 Data Protection and Intellectual Property
6.1 We hold and process data relating to, including but not limited to, your identity, address, company details, or other information you provide us with. We will hold your data on secure servers which may be located outside of the jurisdiction of the Platform or your local jurisdiction. For more details see our Privacy Notice on the Website.
6.2 We will make best endeavours to protect your data and we will not sell any of your data or licence it to third parties. To the extent required by applicable law, permissible, and that would not otherwise adversely affect our ability to respond to any breach of your data, we will promptly disclose any unauthorized access by a third party to your data in violation of this Agreement, our Privacy Policy, or our other policies.
6.3 We may transfer your personal information to other Group Companies or business partners outside of the jurisdiction of the Platform or your local jurisdiction. We will take steps to ensure that personal information is protected and such transfers comply with applicable laws.
6.4 We will retain your personal information for as long as required to perform the purposes for which the data was collected, depending on the legal basis for which that data was obtained and/or whether additional legal or regulatory obligations require us to retain it. For more details see our Privacy Notice on our Website.
6.5 We own or are the licensee of all the intellectual property that constitutes the Services.
7 Representations and Warranties
7.1 You represent and warrant when making your Application and continuously thereafter that each representation and warranty is deemed to be repeated by you each time you submit an Order or otherwise utilise the Services:
(a) if you are a natural person, that you are of the age of majority and have full legal capacity to enter into this Agreement;
(b) If you are a corporate Client, that the representative that executes this Agreement has full capacity and authority to bind you to this Agreement. We may require you to provide documentary evidence of the ability and authorisation of any of your representatives to enter into this Agreement on behalf of your legal entity;
(c) if you are a corporate Client and you have appointed Users in accordance with Clause 2.7, you will ensure that (i) your Users comply with applicable provisions of this Agreement when accessing the Services; (ii) your Users have appropriate skills, knowledge and expertise to use the Platform to access the Services; (iii) each User has the appropriate authority to bind you to Orders and Derivatives made under this Agreement; and (iv) that none of your Users are residents of or otherwise located in any Prohibited Country;
(d) that you are the legal and beneficial owner of the digital assets and/or legal tender that you are depositing into your Account;
(e) that any digital assets deposited in your Account is free of all charges, mortgages, security interests, pledges, liens or any other encumbrance;
(f) that all digital assets and / or legal tender deposited into your Account does not constitute the proceeds of crime;
(g) that using the Services does not infringe any local law of your country of incorporation, residence or location;
(h) that you hold all necessary authorisations, licences, permissions and consents to engage in the Services where applicable;
(i) that you will not use the Services to engage in any activity that is fraudulent, deceptive, misleading, manipulative, abusive, causes disorderly trading conditions or otherwise brings us into disrepute or causes that;
(j) that you are acting solely on your own behalf and not as agent for another person;
(k) that you only will apply for a single Account with us;
(l) that you have read the Risk Notice in Schedule 1 of this Agreement and understand the risks associated with trading Derivatives; and
(m) that you are not a resident of or otherwise located in any Prohibited Country.
8 Our Rights
8.1 To protect the integrity of the Services and to ensure our compliance with applicable law and regulation, we reserve the right to:
(a) request from you proof of source of funds and/or wealth;
(b) obtain confirmation of your control of your digital assets address;
(c) investigate any suspected breach of this Agreement, including but not limited to any suspected breach of the representations and warranties provided by you under Clause 7, or any other suspicious activity or behaviour;
(d) request from you proof of your identity and residential address;
(e) suspend your Account due to repetitive losses and to assess the appropriateness of the Services for you; and
(f) suspend or terminate your Account due to suspected misuse, if we suspect that you have breached the terms of this Agreement, applicable law and/or any of the trading terms detailed on our Website.
8.2 At our sole discretion we may suspend your Account whilst we are requesting information/documentation from you to verify your identity or, where you are a corporate Client, to confirm authority for a representative of yours to enter into this Agreement.
8.3 If you do not cooperate with us in our request for further information or documentation during the suspension of your Account, we reserve the right to keep your Account in suspension indefinitely or to terminate your Account and without stating the reasons.
8.4 We reserve the right to freeze and/or wind down the balance of any funds on your Account, including any digital asset balance and legal tender balance, for regulatory or legal reasons or to mitigate any liability related to your use of the Account in accordance with local law.
8.5 Where we suspect that you are breaching or potentially breaching or about to breach the terms of this Agreement or where we are directed to do so by a government or regulatory authority, we will suspend your Account and commence an investigation. You will not be able to use your Account during this investigation. We may not be able to give you specific information regarding the suspension, nor any timeframe during which it can be resolved, and you agree to cooperate fully with us during this period.
9 Liability
9.1 The Services and the Platform are provided on an “as is” basis. We will not be liable for any losses, damages or other amounts you or any other party may suffer or incur arising out of your use of the Platform, the malfunctioning, misuse, failure or stoppage of the Services or the unavailability of our Platform or for any indirect or consequential loss. We do not exclude liability for death or personal injury or otherwise to the extent we are not permitted to do so as a matter of applicable law. To the extent we are liable, our liability will be limited to the fees we received from you during the 30 days preceding the date on which the act or omission giving rise to the liability occurred.
9.2 We exclude all liability where the damage does not relate to our conduct, for example where the cause is due to a technical failure in a digital asset protocol, the fork of a digital asset protocol or an action by another Client or a third party.
9.3 You will indemnify us for any loss, liability, costs (including reasonable legal costs), damages or expenses arising from any breach by you of the terms of this Agreement, including any fraudulent, negligent or reckless act, omission or default or your misuse of the Services.
9.4 We will not be liable to you for any losses that result from the suspension or termination of your Account.
10 Complaints
10.1 We are committed to providing a high standard of service. If you are dissatisfied with the service you have received and wish to raise a complaint then please submit your complaint via email to https://support.kraken.com/hc/en-us/forms.
10.2 Please provide the following details in order for us to be able to process your complaint in time:
(a) your name;
(b) the email address you used to register your Account;
(c) a clear description of your concern or complaint;
(d) details of what you would like us to do to fix this matter;
(e) copies of any relevant correspondence.
10.3 We will provide you with an acknowledgement of your complaint within 5 business days of receipt. We will aim to resolve your complaint within 2 weeks of receipt. If we are unable to address the complaint within 2 weeks then we will write to you to explain what is happening with your complaint. Within 4 weeks we will send you a final response.
11 Inactive Accounts
We may mark any Account as dormant if it has been inactive for at least one year to protect both you and us. If you ask us, we will tell you how you can access your Account. If you have positive digital asset or legal tender balances in a dormant Account, it will remain your property (or if you die it will form part of your estate).
12 Account Termination
12.1 You may terminate the Agreement (and close your Account) at any time and for whatever reason upon giving 14 days’ written notice to us by email to https://support.kraken.com/hc/en-us/forms. Your right to terminate this Agreement will be subject to the settlement of all Derivatives to which you are a party as at the date we receive the notice of termination. The charges within the schedule of fees will apply as a result of closing out your positions.
12.2 On receipt of a notice to terminate from you under Clause 12.1, we will work with you to close any open positions.
12.3 We may terminate your Account at any time and for whatever reason upon giving you 14 days’ written notice via the contact details provided on your Account, such termination to be subject to the settlement of all Derivatives to which you are a party as at the date we issue you with a notice of termination. You will need to ensure that you withdraw any digital assets and/or legal tender balances from your Account as soon as possible following your receipt of a notification of termination, and in any event by no later than 14 days following the date of that notification.
12.4 Notwithstanding the provisions of Clause 12.3, where you are in breach of this Agreement or we reasonably suspect that you are involved in any fraudulent or criminal activity, we may terminate this Agreement immediately. This will result in us terminating your Account with immediate effect and, where we consider it reasonably necessary to do so to ensure our compliance with applicable law and regulation, we may freeze the balances of digital assets and/or legal tender held on your Account at that time. In the event of termination under this Clause 12.4, we will cancel all your open Orders and close out all Derivatives to which you are a party as at the date of termination. Where we terminate this Agreement under this Clause 12.4 as a result of our reasonable suspicion that you are involved in any fraudulent or criminal activity, we reserve the right to take any further or other action against you in such respect.
12.5 The following clauses of this Agreement will continue to apply following the termination of this Agreement and the closure of your Account: 3.3, 7, 9.4, 13.8 and Schedule 2 and clause 4 of Schedule 3.
13 General
13.1 Assignment - We may assign any of our obligations or rights under this Agreement to any Group Company. Your Account is personal to you and is non-assignable.
13.2 No Third-Party Rights - A person who is not a party to this Agreement shall not have any rights under the Contracts (Rights of Third Parties) Act 2016 to enforce any term of this Agreement.
13.3 Severability - If any provision or part-provision of this Agreement is or becomes invalid, illegal or unenforceable, it shall be deemed modified to the minimum extent necessary to make it valid, legal and enforceable. If such modification is not possible, the relevant provision or part-provision shall be deemed deleted. Any modification to or deletion of a provision or part-provision under this clause shall not affect the validity and enforceability of the rest of this Agreement. If any provision or part-provision of this Agreement is invalid, illegal or unenforceable, the parties shall negotiate in good faith to amend such provision so that, as amended, it is legal, valid and enforceable, and, to the greatest extent possible, achieves the intended commercial result of the original provision.
13.4 Entire Agreement - This Agreement constitutes the entire agreement between the parties and supersedes and extinguishes all previous agreements, promises, assurances, warranties, representations and understandings between them, whether written or oral, relating to its subject matter. Each party agrees that it shall have no remedies in respect of any statement, representation, assurance or warranty (whether made innocently or negligently) that is not set out in this Agreement. Each party agrees that it shall have no claim for innocent or negligent misrepresentation or negligent misstatement based on any statement in this Agreement.
13.5 Notices - We will send you notices to the email address you provided in your Account. These will be deemed to be delivered to you if we do not receive a failed delivery message. You must send your notices to https://support.kraken.com/hc/en-us/forms. Your notices will be deemed delivered on the business day following the submission of that notice to us.
13.6 Force Majeure - We shall not be in breach of this Agreement nor liable for delay in performing, or failure to perform, any of our obligations under this Agreement if such delay or failure results from events, circumstances or causes beyond our reasonable control. We will take all reasonable steps to act in your best interests when a Force Majeure event occurs and may suspend or alter part or all of the Agreement, to the extent that we can no longer comply with the terms in question.
13.7 No Waiver - No failure or delay by a party to exercise any right or remedy provided under this Agreement or by law shall constitute a waiver of that or any other right or remedy, nor shall it prevent or restrict the further exercise of that or any other right or remedy. No single or partial exercise of such right or remedy shall prevent or restrict the further exercise of that or any other right or remedy.
13.8 Governing Law and Jurisdiction – This Agreement is between us and you and is in all respects governed by and construed and interpreted in accordance with California law, and the courts of California will have exclusive jurisdiction to settle any legal proceedings arising out of or in connection with this Agreement, including any non-contractual disputes and claims. Nothing in this clause will prevent us from bringing proceedings against you in any other jurisdiction. If you are situated outside of California, a process by which any proceedings in California are begun may be served on you by being delivered to the address provided by you when you opened your account or to any new address subsequently notified to us. Nothing in this Clause 13.8 affects our right to serve process in another manner permitted by law.
-
SCHEDULE 1
RISK NOTICE
This notice is provided by us and provides you with important information about the risks associated with the Services provided under this Agreement. You must read this risk notice carefully before you commence use of the Services. If you are in any doubt as to the appropriateness or suitability of the Services, you should take appropriate professional advice.
Payward Digital Solutions Ltd. is licensed by the Bermuda Monetary Authority to conduct digital assets business pursuant to the Digital Assets Business Act, 2018 and holds a Class F license. Please refer to the list of Prohibited Countries on the main website, kraken.com (“Website”), for any geographical limitations that may apply.
Trading derivatives and other instruments using leverage involves an element of risk and may not be suitable for everyone. The value of Derivatives you enter into may fall as well as rise and you may get back less than your initial investment, and in some cases you may lose your entire initial investment, as well as any Collateral. Certain of the Derivatives we make available as part of the Services utilise leverage. Whilst leverage can enhance your profits, it can also exacerbate your losses. Because of the possibility for rapid movements in the price of the Derivatives and the impact that this can have on a leveraged position, we may request that you provide additional Collateral with little or no prior notice.
When using the Services, it is your responsibility:
(a) to familiarize yourself with digital assets and the specifications for the Derivatives available on the Platform for either Service before you start trading;
(b) to monitor your open positions and to reduce your position or deposit additional Collateral to ensure compliance with your Collateral Requirement so as to avoid a losing position being closed out;
(c) not to deposit more than you can afford to lose; and
(d) not to build positions that are beyond your financial capacity to maintain.
By using the Services you acknowledge that you have understood the associated risks and that you accept these risks, in particular that:
(a) digital assets are a highly volatile asset class and are based on decentralised monetary protocols which are still in experimental stage and may change at any time;
(b) the legal and regulatory status of digital assets and the Derivatives is uncertain and may be prone to change;
(c) trading Derivatives exposes you to market risk. This is the risk that you suffer a loss as a result of a position in the Derivatives moving against you. If you hold a long position and the digital asset price declines or if you hold a short position and the digital asset price increases, you may lose the full value of your investment;
(d) trading Derivatives exposes you to credit risk. This is the risk that one or more of your Counterparties have deposited insufficient Collateral into their Account(s) such that you may not receive some or all the digital assets or legal tender they owe you;
(e) trading Derivatives exposes you to liquidity risk. This is the risk that you suffer a loss because you cannot close out a Derivatives position because there is no demand to take the other side of that trade;
(f) trading Derivatives exposes you to operational risk. This is the risk that you suffer a loss because of a malfunction of the Services, for example resulting from scheduled or unscheduled downtimes, matching system failure, database failure, erroneous pricing, digital asset transfer or storage failure, failure or malfunction of the Platform, hacker attacks or other failure or malfunction; and
(g) trading Derivatives exposes you to regulatory risk. This is the risk that you suffer a loss because we have to restrict or terminate elements of our Services in response to regulatory action.
SCHEDULE 2
DEFINITIONS
Account | means the account held in your name on the Platform via which you receive the Services.
|
---|---|
Application | means an application submitted via the Platform to open an Account.
|
Collateral | means the digital assets or legal tender deposited or held on your Account to be used as collateral for your obligations under Derivatives. The eligible components of collateral are detailed in Clause 3.3 of Schedule 3.
|
Collateral Requirement | has the meaning given in Clause 3.1 of Schedule 3.
|
Counterparty | means the counterparty to a SC Derivative or MC Derivative entered into by the Client.
|
Derivative | means a SC Derivative and/or an MC Derivative and “Derivatives” shall be construed accordingly.
|
Group Company | means any Company which is a direct or indirect holding company of Payward Digital Solutions Ltd or a direct or indirect subsidiary of that company, and any other direct or indirect subsidiary of the holding company.
|
MC Derivative | means a multi-collateral derivatives contract, such as a future or an option, as detailed on the Platform
|
MC Derivatives Operator | means Payward Digital Solutions Ltd., a company incorporated in Bermuda with registered company number 202403268, as operator of MC Derivatives.
|
MC Services | has the meaning given in Clause 1.1b) of Schedule 3.
|
Order | means a request to deal in a SC Derivative or an MC Derivative.
|
Platform | has the meaning given in the Introduction.
|
P&L Model | has the meaning given in Clause 3.2 of Schedule 3.
|
Portfolio Auction | has the meaning given in Clause 3.12 of Schedule 3.
|
Portfolio Unwind | has the meaning given in Clause 3.12 of Schedule 3.
|
Position Assignment | has the meaning given in Clause 3.8 of Schedule 3.
|
Position Covered Liquidation | has the meaning given in Clause 3.9 of Schedule 3.
|
Position Liquidation | has the meaning given in Clause 3.7. of Schedule 3.
|
Position Unwind | has the meaning given in Clause 3.10 of Schedule 3.
|
Prohibited Country | means any prohibited country as listed on the Website.
|
SC Derivative | means a since-collateral derivatives contract, as detailed on the Platform
|
SC Derivatives Operator | means Crypto Facilities Limited, a company incorporated in England and Wales with registered company number 09172128, which operates as a multilateral trading facility (MTF), as operator of SC Derivatives.
|
SC Services | has the meaning given in Clause 1.1a) in Schedule 3.
|
Services | means any or all of the SC Services, the MC Services and the Ancillary Services, as appropriate, as defined in Clause 1 of Schedule 3
|
Users | has the meaning given in Clause 2.7.
|
Website | has the meaning given in the Introduction.
|
SCHEDULE 3
SERVICES
1 Services provided to you by Kraken Derivatives
1.1. The services comprise of:
a) the receipt of Orders from you via the Platform in relation to SC Derivatives and the subsequent transmission of those Orders to SC as agent on your behalf for execution against a Counterparty (“SC Services”);
b) the receipt of Orders from you via the Platform in relation to MC Derivatives and the subsequent transmission of those Orders to the MC Derivatives Operator as agent on your behalf for execution against a Counterparty (“MC Services”); and
c) the provision of ancillary services (the “Ancillary Services”). We offer a number of ancillary services that you can utilise for your own convenience. By agreeing to this Agreement and asking to receive these Ancillary Services, you accept that these may be provided by third parties appointed by us, and will be delivered on a best efforts basis. We make no claims or warranties as to the fitness of these Ancillary Services. The availability and costs of these Ancillary Services may change from time to time.
1.2. With respect to the provision of the SC Services, you hereby appoint us as your agent to act on your behalf to procure the execution of your Orders on SC Derivatives Operator. Any SC Derivatives entered into by you as part of the SC Services will constitute a bilateral contract between you and the Counterparty and we will not be a counterparty to any SC Derivatives.
1.3. With respect to the provision of the MC Services, you hereby appoint us as your agent to act on your behalf to procure the execution of your Orders on the MC Derivatives Operator. Any MC Derivatives entered into by you as part of the MC Services will constitute a bilateral contract between you and the Counterparty and we will not be a counterparty to any MC Derivatives.
1.4. We may be required to provide certain information to the SC Derivatives Operator or the MC Derivatives Operator with respect to your dealings with us under the SC Services or the MC Services, respectively. This may include, but is not limited to, information about your SC Derivatives positions, your MC Derivatives positions and information about you. You consent to our provision of this information.
1.5. If you are a corporate Client, you acknowledge and agree that we may request that you provide us with your Legal Entity Identifier and that we may provide this information to the SC Derivatives Operator or the MC Derivatives Operator as required.
1.6. To enter into or close a Derivative, you must submit an Order via the Platform. You must indicate via the Platform whether your Order relates to a SC Derivative to be executed under the SC Services or an MC Derivative to be executed under the MC Services. We will not execute any SC Derivatives under the MC Services, nor will we execute any MC Derivatives under the SC Services.
1.7. The eligible SC Derivatives to which an Order can relate will be determined by the SC Derivatives Operator in its sole discretion, and we have no control in this regard.
1.8. In respect of the MC Services, the MC Derivatives Operator shall determine in its sole discretion which MC Derivatives an Order can be made in relation to.
1.9. When you use our SC Services, the Position Liquidation process will be implemented by SC Derivatives Operator and may be slightly different than that used for the MC Services. Both processes will be documented on the Website.
2 Trading Derivatives: Orders
To enter into or close a Derivative, you must submit an Order via the Platform.
2.1. We will handle your Orders in accordance with our order handling procedures, which are detailed on the Website.
2.2. We will determine in our sole discretion whether or not to accept any Order. We will notify you if an Order is rejected, but we shall not be required to explain why your Order was rejected.
2.3. Each Order that you submit will be binding on you, and represents your intention to enter into a Derivative and assume the relevant obligations under that Derivative.
2.4. You acknowledge and agree that whether you in fact enter into a SC Derivative as a result of an Order made as part of the SC Services is not within our control, and that the execution of that Order will depend on the ability of the matching engine of SC Derivatives Operator to find an appropriate Counterparty in respect of that Order.
2.5. You acknowledge and agree that whether you in fact enter into an MC Derivative as a result of an Order made as part of the MC Services is not within our control, and that the execution of that Order will depend on the ability of the matching engine of the MC Derivatives Operator to find an appropriate Counterparty in respect of that Order.
2.6. We may be required to reject or cancel your Order, or wind down a SC Derivative or an MC Derivative, because of a request from a third-party, such as the SC Derivatives Operator or a regulatory authority. You acknowledge and agree that we shall have no liability to you in respect of Orders that are cancelled or not executed, or in respect of a SC Derivative or an MC Derivative that is wound down, whether pursuant to this Clause 2.6 or otherwise.
2.7. In order to submit an Order, you must ensure that you can access the Platform. We will seek to continuously make our Platform available, but we cannot guarantee that it will always be available. We will not be liable to you for the unavailability of our Platform. Where the Platform is to be unavailable as a result of scheduled or unscheduled maintenance, we shall seek to give you reasonable advance notice of such unavailability if reasonably practicable.
2.8. In relation to a SC Derivative or an MC Derivative, you will be anonymous to your Counterparty, and likewise your Counterparty will be anonymous to you. We will not provide you with any information about such Counterparty, nor will we provide any information to the Counterparty about you.
2.9. At our sole discretion we may cancel any Orders that have previously been submitted and accepted if, in our opinion, such Orders have been submitted erroneously or constitute market abuse or could unduly influence market prices. We may also cancel Orders at our sole discretion in order to perform scheduled maintenance and system upgrades.
2.10. At our sole discretion we may reject, cancel, or take any other such action within a time period of 72 hours any Derivatives to correct any error or malfunction, including if, in our opinion, such Derivatives were executed at unreasonable prices or constitute market abuse or unduly influenced market prices or occurred because of a malfunctioning of the Services or were erroneously submitted by a Client.
3. Trading Derivatives: P&L and Collateral
3.1. For each open long and short Derivatives position and each open Order to buy or sell Derivatives that would establish a position or further increase an existing position size, you need to provide Collateral. The exact amount of Collateral to be provided shall be determined on the basis of the formula detailed on the Website (the “Collateral Requirement”).
3.2. We calculate the profit and loss of your open positions in the Derivatives based on a proprietary model (the “P&L Model”). We choose the specification of the P&L Model such that it reflects our view of the fair market price of the Derivatives and we may change the specification at our sole discretion and at any time.
3.3. The Collateral on your Account can comprise any combination of (i) the digital assets or legal tender deposited; (ii) your realised profit or loss from past positions in Derivatives that are now closed; and (iii) the unrealised profit or loss from your open position in the Derivatives as calculated by the P&L Model.
3.4. We will determine your Collateral Requirement by utilising a variety of third-party indices and benchmarks such that we can undertake a mark-to-market valuation of your Derivatives. We have no control over these indices and benchmarks and make no representation as to their accuracy or completeness.
3.5. It is your responsibility to constantly monitor your Collateral and to ensure that it is equal to or higher than your Collateral Requirement at any given time. If this is not the case, it is your responsibility to immediately deposit additional digital assets and/or legal tender into your Account and/or to cancel open Orders and/or to trade out of existing positions in Derivatives such that your Collateral is equal to or higher than your Collateral Requirement.
3.6. You represent and warrant that the Collateral assets in your Account are free and clear of all liens and encumbrances other than those arising hereunder, and that you have the right to grant a first priority security interest hereunder. Any and all Collateral shall be security for your obligations in respect of any Collateral Requirement and for any other obligations you have to us arising hereunder. Accordingly, you hereby pledge, assign and grant to us a continuing first priority security interest in, and a lien upon, the Collateral on your Account necessary to satisfy your Collateral Requirement, plus all related fees and expenses due hereunder. In addition to the rights and remedies granted to us hereunder, we shall have all the rights and remedies of a secured party under the Uniform Commercial Code and any other applicable law. You shall take all action that may be necessary and that we may reasonably request so as at all times to maintain the validity, perfection, enforceability and priority of our security interest in and lien on the Collateral or to enable us to protect, exercise or enforce its rights hereunder and in the Collateral, including, but not limited to, (i) promptly discharging all liens on the Collateral other than our security interest or any other liens permitted herein and (ii) executing and delivering financing statements, control agreements, instruments of pledge, notices and assignments, in each case, in form and substance reasonably satisfactory to us, relating to the creation, validity, perfection, maintenance or continuation of our security interest in and lien on the Collateral under the UCC or other applicable law. You hereby authorize us to file against you one or more financing, continuation or amendment statements pursuant to the UCC or other applicable law in form and substance reasonably satisfactory to us, provided that the description of the collateral in any such statement is limited to only the Collateral necessary to meet your Collateral Requirement and any related fees and expenses due hereunder.
3.7. If your Collateral is lower than your Collateral Requirement we may, at any time and without advance notice to you, at our sole discretion, cancel your open Orders in Derivatives and/or liquidate some or all of your open positions in Derivatives (“Position Liquidation”). We will liquidate long positions by selling them to another Client, and we will liquidate short positions by buying them back from another Client. We will liquidate all positions at the best available price at the time of Position Liquidation, and you agree to accept this price. When you use our SC Services, the Position Liquidation process will be
implemented by SC and may be slightly different than that used for the MC Services. Both processes will be documented on the Website.
3.8. If we cannot liquidate some or all of your open positions in Derivatives, for example due to lack of demand by other Clients to buy or sell, we may, at our sole discretion, and without advance notice to you, assign some or all of your remaining open positions to another Client who has previously agreed to receive assignments of positions for this purpose (“Position Assignment”). We will select the price at which your position(s) are assigned such that your remaining Collateral is zero.
3.9. If we cannot assign some or all of your open positions in MC Derivatives, for example because there is insufficient demand for Position Assignment, and if market conditions permit, we may, at our sole discretion, attempt to liquidate your remaining open positions to another client, and cover any negative balances from the Liquidity Pool (“Position Covered Liquidation”).
3.10. If we cannot assign and or liquidate some or all of your open positions in Derivatives, for example because there is insufficient demand for Position Assignment, we may, at our sole discretion, and without advance notice to you, unwind some or all of your open positions (“Position Unwind”). Your open positions in Derivatives will then terminate at the unwind price. We will select the unwind price for each of your open positions such that all of your remaining Collateral is split equally between your Counterparties, commensurate with the size of the open positions you have with each Counterparty.
3.11. If the open positions in the Derivatives of one of your Counterparties are subject to Position Unwind, the remaining Collateral of your Counterparty is split equally between claimant Counterparties, including you, commensurate with the size of the open positions each claimant has with the Counterparty. As one of the claimants, you may therefore receive a payment that may or may not cover the whole liability your Counterparty has towards you. You agree to forfeit any claims vis-à-vis your Counterparty in excess of this payment.
3.12. If your MC Derivatives portfolio contains options and the value falls below the maintenance margin requirements, we may try to make your portfolio delta neutral by liquidating or opening futures positions to offset options positions. If we cannot make both your portfolio neutral and its value above maintenance margin requirements, your portfolio will be sold into auction ("Portfolio Auction"). If there is insufficient demand for your portfolio, then the open interest will be reduced to zero ("Portfolio Unwind").
3.13. We do not benefit from Position Liquidations, Position Assignments, Position Unwinds, Portfolio Auctions, or Portfolio Unwinds other than in the form of standard transaction fees.
3.14. The rules and procedures we apply regarding the calculation of the P&L Model, the calculation of Collateral, the calculation of the Collateral Requirement, Position Liquidations, Position Covered Liquidations, Position Assignments, Position Unwinds, Portfolio Auctions, and Portfolio Unwinds are identical for all Clients.
3.15. When you hold an open position which is marked at a loss, we reserve the right at any time and without advance notice to you, to convert any Collateral that is deposited in a currency which is not the margin currency of the Derivative as stated on the Website into that stated margin currency. If such a conversion is required, we may use the services of a third party, which may result in additional fees being charged to your Account. Our choice of third party and acceptance of additional fees are at our sole discretion.
3.16. You agree and acknowledge that our calculations and decisions associated with operating the Services, in particular, but not limited to, the use of the P&L Model, calculation of any Collateral Requirement, and use of Position Liquidation, Position Assignment, Position Covered Liquidation, Position Unwind, Portfolio Auction, and/or Position Unwind shall be made in our sole discretion and shall be binding and final. We may change the methodology by which we make any such calculations at our sole discretion. Where that change has a material effect on your rights under this Agreement, we will notify you not less than 30 days' prior to such change becoming effective.
3.17. You agree and acknowledge our right to change the methodologies by which we calculate the P&L of open positions in the Derivatives, Collateral, Collateral Requirements, Position Liquidation, Position Assignment, Position Covered Liquidation, Position Unwind, Portfolio Auction, and Position Unwind and all other rules and processes associated with operating the Services. We will notify you of any such change where it materially affects you.
4. Custody, Deposits and Withdrawals
4.1. Before placing any Orders, you will need to deposit sufficient funds into your Account to act as Collateral. You will find instructions on how to deposit funds, and further applicable terms, on the Website, which also provides a list of Collateral that is considered eligible. Any attempt to deposit funds that is not an eligible form of Collateral will be rejected. You shall bear the sole risk of any transfer of funds into your Account.
4.2. We are licensed by the Bermuda Monetary Authority to conduct digital assets business pursuant to the Digital Assets Business Act, 2018 and hold a Class F license. This license does not provide statutory insurance protection for the deposits in your Account.
4.3. You instruct us to hold any digital assets deposited or credited to your Account as custodian, where the Service you utilise requires this. We may appoint any other person as a sub-custodian or to otherwise hold the digital assets. You acknowledge and agree that we will not be liable for the acts or omissions of any third-party whom we appoint to safeguard and administer digital assets on our behalf. We will maintain appropriate books and records to document the value of any digital assets on your Account and will present your digital assets balance in respect of your Account via the Platform.
4.4. Any digital assets you deposit may be held by us or our sub-custodian(s) in omnibus wallets, such that it is co-mingled with digital assets of other Clients of ours and/or our Group Companies. You acknowledge and agree that your
redelivery rights in respect of any digital assets deposited in your Account are not necessarily for the exact same digital assets as you deposited, but will instead be in respect of an equal amount of digital assets which is based on the same cryptographic protocol of that deposited. The treatment of any shortfall of digital assets in the event of our or any sub-custodian’s insolvency will be determined by applicable law and regulation. Further information and terms applicable to the way we hold digital assets are on the Website.
4.5. We shall have no obligation to insure any digital assets that are held by us as custodian in connection with the Services.
4.6. Any legal tender deposited or credited to your Account will be held in bank accounts with our third-party banking providers. These accounts will be owned and operated by us or any Group Company on your behalf. Your legal tender will be pooled with legal tender of our other Clients and/or those of our Group Companies.
4.7. You understand that the treatment of any legal tender deposited with our third-party banking providers will be subject to the applicable law and regulation of the jurisdiction in which that banking provider is located and/or where the legal tender is held. We are not responsible for the actions, omissions or solvency of our third-party banking providers. In the event that a third-party banking provider becomes insolvent, you will be an unsecured creditor of that banking provider, and we make no guarantee that you will be able to recover some or all of the legal tender recorded as being held on your Account.
4.8. You acknowledge and agree that you may only deposit legal tender in connection with your use of the Services. We reserve the right to impose restrictions on the maximum amount of legal tender that may be held on your Account.
4.9. We shall have no obligation to pay interest on any legal tender balances held by us in connection with the Services.
4.10. You can submit a request to withdraw digital assets or legal tender from your Account at any time. In order to withdraw digital assets to the blockchain, the assets must first be withdrawn from Kraken Derivatives to the user’s spot account. Direct on-chain withdrawals from Kraken Derivatives are not supported. In order to withdraw legal tender to an external bank account, the money must first be withdrawn from Kraken Derivatives to the user’s spot account. Direct withdrawals of legal tender from Kraken Derivatives are not supported. Instructions for submitting withdrawals will be displayed on your Account within the Platform
4.11. You cannot withdraw digital assets or legal tender that are required to cover your losses or are being used as Collateral for your open Derivatives or Orders. We shall only transfer any withdrawn digital assets or legal tender to the same account or wallet that you used to deposit those digital assets or legal tender into your Account. Any withdrawals may take up to 48 hours and will be conducted on a best efforts basis. You acknowledge and accept that we
may not be able to immediately execute any withdrawal request and that we are not liable for any damages incurred due to a delay in executing your withdrawal request.
4.12. Only you, as the Account holder, can fund your Account with your own funds and no third party funds will be allowed to deposit funds in your Account. Likewise, you will not be able to withdraw any funds from your Account to an account that is not held in your name. Any references to funds herein includes legal tender and/or digital assets.
5 Fees
5.1. We may charge a fee in relation to all Orders, including Position Liquidations, Position Assignments, Position Covered Liquidations, and Position Unwinds. This fee may be charged in digital assets or legal tender based on your stated preference depending on the Service you have elected to consume. Details of our fees can be found on the Fee Schedule on our Website and may change from time to time. Fees must be paid in accordance with the procedures made available via the Platform. Any attempts to pay fees other than via an available method will be rejected.
5.2. Unless we have agreed otherwise, all fees arising in connection with the provision of the Services shall be due and payable by you to us immediately. If you fail to pay the relevant fee or you have insufficient funds on your Account to cover the value of the fee, then your Order may be rejected or cancelled.
5.3. You may deposit digital assets in your Account without charge. We reserve the right to introduce a charge in respect of any deposit of digital assets and, if introduced, the amount of any such charge will be communicated on the Website.
5.4. You may withdraw digital assets or legal tender from your Account to your spot account. Any withdrawals from your spot account may be subject to fees, the amount of which will be communicated on the Website.
5.5. Where you have a positive legal tender balance on your Account or we are liable under this Agreement to pay you any legal tender, we may at any time and without notice to you, apply that positive legal tender balance to (i) recover any legal tender you owe to us under this Agreement; or (ii) reduce the balance of legal tender that we owe to you. If we exercise our rights under this Clause 5.6, we shall give notice to you of the amount of any debt that has been repaid and the amount of any debt that remains outstanding and, therefore, payable by you to us.
5.6. Collateral in your Account will be valued at fair market value, determined by us, and adjusted by a discount to provide for potential fees for Ancillary Services that you will have access to. Due to market conditions, including lack of liquidity and high price volatility, your Collateral may be converted at a rate inclusive of the discount.
5.7. We reserve the right to apply certain fees and charges to your use of the Services as may be required to facilitate the positions you have open, or initiate.
5.8. The Services will provide access to Order, Deposit, and Withdrawal information applicable to your account, including confirmation of the type, value, date, time, and amount of each Order, Deposit, and Withdrawal.
6 Market Abuse
6.1. As a Client you will not:
(a) use the Services in contravention of any laws related to insider dealing, market manipulation or market conduct or behaviour deemed to be market abuse;
(b) adopt any practices in relation to your access of the Platform or use of the Services that are abusive, manipulative, disorderly, fraudulent, misleading or otherwise not in compliance with the promotion of fair, efficient and orderly trading activity;
(c) use the Services in a way to deliberately transfer digital assets between one digital asset wallet and another; or
(d) act in any way to damage the fairness, integrity or functioning of the Services.
6.2. We may implement any measures, procedures or arrangements that we determine, in our sole discretion, to be necessary to limit the possibility of the behaviours detailed in Clause 6.1.