What can go wrong
Read this before you trade.
- 01
Total loss of principal
Private companies fail. Tokenized equity, perpetuals, OTC blocks, and prediction shares can each go to zero. Size to what you can lose in full.
- 02
Illiquidity
Private exposure is illiquid. Spreads widen in stress and depth can evaporate. No guarantee a buyer exists at your price when you need out.
- 03
ROFR (Right of First Refusal)
Companies can block an OTC sale, delay it indefinitely, or buy your block at the quoted price before your counterparty can.
- 04
Valuation staleness
Implied valuations often track the last funding round, which may be months old. Real-time discovery comes only from venue transactions.
- 05
Smart-contract risk
On-chain tokens and escrow depend on code. Audits reduce but do not eliminate bug and exploit risk.
- 06
Counterparty risk
OTC relies on the counterparty completing the deal. Perpetuals depend on the external protocol and its book. NDAs, SPAs, and escrow reduce but do not eliminate this.
- 07
Regulatory change
SEC, CFTC, state, and foreign rules can change. A rule shift mid-position can force closure, delisting, or re-papering.
- 08
Geographic restriction
Some venues are not available in every jurisdiction. Perpetuals and some prediction sources are US-blocked. Circumventing geo-blocks: you bear all consequences.
Not exhaustive. See Terms, Disclosures, and Compliance.
Not investment advice. See trust.