CONFLICTS OF INTEREST POLICY
Version: 1.0
Last update: 29th day of January, 2024
The present Conflicts of Interest Policy is provided to you (hereinafter “Client” or “you”) by Coinrate.pro Asset Management LLC, registered under the laws of Saint Vincent and the Grenadinesand registration address at Suite 351 Beachmont Business Centre, Beachmont, Kingstown, Saint Vincent and the Grenadines (hereinafter “Company”).
Scope of the Policy
The present Conflicts of Interest Policy set out potential conflicts of interest and measures that the Company undertakes in order to prevent or manage such conflicts. The Company undertakes all reasonable care in order to minimize such conflicts.
However, the Company should not be liable in case any conflicts of interest take place.
A Conflict of Interest exists where the impartial and objective exercise of the functions of the Company, its employees, independent contractors or other subjects involved in budget implementation (the Company) are compromised for reasons involving family, emotional life, political or national affinity, economic interest or any other direct or indirect personal interest.
A Conflict of Interest can arise even if the Company do not actually benefit from the situation, as it is sufficient that circumstances compromise the exercise of their functions in an objective and impartial manner. However, such circumstances must have a certain identifiable and individual link with (or impact on) concrete aspects of the conduct, behaviour or relationships of the Company.
A Conflict of Interest can arise between the interests of:
- multiple clients of the Company, to whom the Company provides or wishes to provide Services;
- the Company or the Client and the Company’s employees and/or independent contractors;
- the Company and the interests of the Client;
- the Company and its affiliates.
When the Company works with multiple clients
Taking into account the nature of the Company’s business model, the Company is supposed to have multiple clients. There may occur a situation where one transaction concluded by the Company in the course of Service provision to one Client may have impact on Virtual Currency funds and their value of another Client.
The risk of this type of conflict increases where the Company provides Services, inter alia, to its affiliates, parent company, shareholders, etc. (Internal Clients). In this case there is a risk of conflict of interest between Internal Clients and other Clients (External Clients).
Additionally, if the Company invests in a low liquid Virtual Currency (for example, a Virtual Currency strat-up offers a limited amount of its Virtual Currency for sale), there may be an incentive to favor one client over another.
Applicable measures
The Company develops and coordinates investment strategy with every Client before starting providing Services. Still, since the Company focuses on collective investment strategy rather than applying an individualistic approach, the Company ensures that this Client’s strategy complies with the Company’s global strategy and that it does not contradict with strategies of other Clients.
The Company also ensures fair treatment of every Client by implementing standardized dealing procedures that cover, inter alia, internal management systems.
Personal Interests of the Company’s Representatives
The Company’s employees and independent contractors (Representatives) that take part in managing the Client’s Virtual Currency funds may have personal interest above those of the Client’s when conducting their own personal affairs. For instance, the Company’s Representative may have share ownership, be a director or hold other status in entities that are in conflict with the Company’s activities. Such situations may cause a Conflict of Interest between the Company’s Representative and the Clients.
Additionally, there is a risk that the Company’s Representative may conduct transactions with Virtual Currencies on its own account and benefit, but at the expense of the Client.
Moreover, the Company’s Representatives could potentially favor a certain Client rather than other Clients based on personal interest such as increased remuneration, reward, and other personal arrangements with this particular Client.
Applicable measures
The Company has organized its corporate structure in such a way that the duties of the Representatives are clearly segregated in order to avoid possible Conflicts of Interest described in this section.
Every Representative has an obligation to disclose any interest in other entities, including when a Representative holds share ownership, is a director or holds other status in entities that are in conflict with the Company’s activities.
If a Representative wishes to conduct transactions with Virtual Currencies on its own account, this Representative should obtain a pre-approval from the Company prior to conducting such transactions. Furthermore, Representatives on a regular basis should disclose to the Company transactions with Virtual Currencies that they made on their own account and that coincide with the Clients’ transactions.
In order to prevent a risk of favoring a certain Client rather than other Clients based on personal arrangements and other inappropriate behavior, the Company provides its Representatives with appropriate and fair salary and/or remuneration for services.
Gifts and Entertainment
There is a risk that the Company and its Representatives may give and/or receive gifts and/or entertainment to/from Clients and/or third parties. This may influence the Company’s and its Representatives behaviors or induce them to act in an unethical way and against the Company’s policies.
Applicable Measures
The Company and its Representatives do not give and/or accept gifts and/or entertainment to/from Clients and/or third parties if there is a risk of Conflict of Interest.
The Company pre-approves every made or received gift and/or entertainment in accordance with the best compliance practices and internal policies.
Transactions with Third Parties
In accordance with the Company’s Terms of Service The Company may contract third parties in order to provide the Client with Services in full (Third Party Service Providers). Services provided by third parties may include, but are not limited to, IT, legal, management services, etc.Additionally, the Company may contract with other third parties for its own purposes.
In this sense, there is a risk that the Company may place its own interests before the interests of its Clients. For instance, the Company may conclude a partnership with a third party service provider because it will give benefits to the Company’s shareholders, senior managers or bring other non-related favorable terms, and not because such a third party can be the service provider for the Client’s needs.
Applicable measures
The Company implements a third party selection process which is conducted in an independent manner, based on the quality of the services provided and which controls that the provided services fully cover business and Client’s needs.
Conducting Investments with the Company’s own funds alongside the Client’s Investments
There could arise a Conflict of Interests where the Company conducts similar investments in Virtual Currencies with the Company’s own funds alongside the Client’s Investments. Similar investments may include transacting with Virtual Currencies that are already trading and purchasing Virtual Currencies of start-ups during seed, private and/or public investment stages and before the Virtual Currencies are listed on virtual currency exchanges.
There may be situations where after the Company has invested its own funds alongside Client’s funds into the same Virtual Currency, the Company becomes aware of new circumstances that may significantly increase expected revenue on investment in comparison to initial expectations. In this case, there is a risk that the Company may partially or fully cancel the Client’s investment and use it for its own benefit. This approach will lead to a situation when the Company gains additional benefits instead of the Client.
The same is applicable in case the Company becomes aware of circumstances that may significantly decrease expected revenue on investment or even bring losses to the company in comparison to initial expectations. In this case, there is a risk that the Company may partially or fully cancel its own investment and treat it as it was initially made for the Client and at the Client’s expense. This approach will lead to a situation when the Client bears losses instead of the Company.
There may be a situation where the Company already holds its own funds in a Virtual Currency and wishes to buy the same Virtual Currency for the Client. In this case, there is a risk that the Company may sell its own holding of that Virtual Currency for the price that is favorable for the Client. In this sense, the Company may increase its own benefits by creating a risk of losses for the Client.
There may be a situation where the Company holds a significant allocation in a Virtual Currency and this allocation makes the Company of the major Virtual Currency investors that can significantly affect the market price of the Virtual Currency by selling it. At the same moment, the Company holds the same Virtual Currency but in smaller amounts for the Client. In this case, there is a risk that the Company may fix its position and sell its significant allocation in a short period of time which may cause a crucial decrease in value of this Virtual Currency and, as a consequence, losses for the Client.
The same risks may also apply to transactions of the Company’s employees and independent contractors.
Applicable measures
In order to prevent this the Company develops and coordinates investment strategy with the Client before starting providing Services. Additionally, the Company implements and maintains clear flow and structure Client’s funds management system. Upon Client’s request, the Company may provide him with the status of the Client’s investments, balance of the account, Virtual Currencies purchased for the Client and conditions of the purchase.
Fees and Commission
There is a risk that the Company may increase Client’s investment in a Virtual Currency in order to receive higher fees or commission on the concluded deal.
Applicable Measures
The Company introduced a clear fee charging system. Thus, the Company generates most of the benefits from relationships with the Client from the Performance Fee that constitutes 20% from the gained positive returns on the Client’s Virtual Currency funds.
Performance Fee is charged annually in accordance with High Water Mark principle. High Water Mark principle ensures that if the Client’s Virtual Currency funds managed by the Company falls from one investment period (1 months) to the next, the Client will not pay Performance Fee until the Client’s Virtual Currency funds managed by the Company value exceeds its previous greatest point.
Performance Fee is charged after each investment period (1 months).
Investments in affiliates
Possible conflicts of interest may arise when the Company purchases for the Client Virtual Currencies of an affiliated entity or invests Client’s Virtual Currency into an affiliated start-up at an inappropriate price.
Applicable measures
In order to prevent this the Company develops and coordinates investment strategy with the Client before starting providing Services and implements clear controlling mechanisms, described in the sections above.
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