Risk Disclosure Statement

Prospective investors should give careful consideration to the following risk factors in evaluating the merits and suitability of an investment in Algoz SMA. The following does not purport to be a comprehensive summary of all of the risks associated with an investment in Algoz SMA. Rather, the following are only certain risks to which Algoz SMA is subject and that Algoz wants to encourage prospective investors to discuss in detail with their professional advisors.

Forks and Airdrops. The blockchain code for a Digital Asset may be split, resulting in two different Digital Assets: one that is unaltered and a second, new Digital Asset whose code is based on but differs from the original Digital Asset’s code (a “Hard Fork”). Further, new Digital Assets may be distributed via “airdrops” to holders of certain existing Digital Assets (an “Airdrop”). New Digital Assets provided via a Hard Fork or Airdrop are provided involuntarily and without consideration. A Hard Fork or Airdrop may affect the value of the original Digital Asset. Algoz in its sole discretion, may elect to claim the new Digital Asset created as a result of a Hard Fork or Airdrop. Further, various exchanges, custodians, wallets, or other storage solutions may not accommodate such Hard Forks or Airdrops or may only accommodate such Hard Forks or Airdrops after a significant period of time. Additionally, Algoz may not have any systems in place to monitor or participate in Hard Forks or Airdrops. Therefore, Algoz SMA may not receive any new Digital Assets created as a result of a Hard Fork or Airdrop, thus losing any potential value from such Digital Assets.

New Enterprise; Potential of Loss. Algoz is an enterprise with a relatively short operating history. Accordingly, an investment in Algoz SMA entails a high degree of risk. There can be no assurance that Algoz SMA will achieve its investment objective or that the strategies described herein will be successful. Given the factors that are described below, there exists a possibility that an investor could suffer a substantial or even a complete loss of his investment in Algoz SMA.

In-Kind Contributions.  Investors may fund their investments in Algoz SMA with In-Kind Contributions, including Digital Assets.  Algoz SMA intends to use the In-Kind Contributions in the form of Digital Assets contributed by the investors as collateral for margin provided to Algoz SMA, and Algoz SMA intends to use such margin as the primary capital in Algoz SMA’s strategy, which Algoz will implement as described herein. Due to this margin arrangement, investors will continue to maintain exposure to the assets they contributed as In-Kind Contributions to Algoz SMA in addition to the investment activities of Algoz. While Algoz reserves the right to sell the In-Kind Contributions, including as part of Algoz  investment strategy, Algoz intends to use such contributed assets primarily for the collateral purposes described above with the aim of not selling such contributed assets.  In addition, Digital Assets used as collateral for margin could be liquidated. A sale of these Digital Assets would cause the subscribing investor to recognize its share of built-in gains. Investors funding their investment in Algoz SMA in Digital Assets should consult with their tax advisors.

Reliance on Key Personnel. The success of Algoz SMA for the foreseeable future may depend largely upon the ability of the Algoz management and key individuals and other entities, and should any of them terminate its relationship with Algoz, or any of them or their key personnel become insolvent, die or become otherwise incapacitated for any period of time, and should the replacement (if any) for any of them not equal his or her predecessor’s performance, the profitability of Algoz SMA’s investments may suffer. There can be no assurance that Algoz will be successful in managing Algoz SMA’s assets.

Performance Fee. Algoz’s Performance Fee may create an incentive for Algoz to make investments that are riskier or more speculative than would be the case in the absence of a Performance Fee.

No Current Income. Algoz SMA’s investment policies should be considered speculative, as there can be no assurance that Algoz’s assessments of the short- term or long-term prospects of investments will generate a profit. Algoz SMA is not suitable for investors seeking current income for financial or tax planning purposes.

Risk of Early Losses. If Algoz SMA begins trading under market conditions which result in substantial early losses, the risk of Algoz SMA having to terminate its trading will be substantially increased. Algoz SMA could experience substantial cash flow difficulties were its assets to be depleted early. Algoz SMA may commence trading operations at an unpropitious time resulting in significant initial losses.

Staking Activites.  Algoz SMA may engage in staking activities, which could include but are not limited to in-protocol staking and/or out-of-protocol programmable staking (i.e., “re-staking”), in connection with its trading strategy. Staking generally requires that a staked Digital Asset be locked up for a minimum amount of time and there may be an “unstaking period” if the staked Digital Asset is un- staked. The length of this period varies. During these periods and through the various staking activities undertaken from time to time, Algoz SMA is generally unable to do anything with the staked assets, such as selling them, in turn exposing Algoz SMA to price movements in the staked assets, which may lead to any staking reward/interest earned on the staking scheme not being at par with the value of the staked assets. In addition to the price volatility aspect, there is also a risk associated with staking if Algoz or any third-party provider or the staking facilitator is subject to cyberattacks or any of the systems that facilitate staking and related activities are subject to IT failures and downtimes. In these instances, Algoz may not be able to protect itself against price movements in a timely manner if there is downtime in the relevant IT systems. Cyberattacks could also lead to assets that are or will be staked being irrevocable or lost. Algoz SMA’s staking activity also exposes Algoz SMA to “slashing”, as discussed below.

Trading Risks. The success of Algoz SMA’s investment activities will depend on Algoz’s ability to identify and exploit price discrepancies in financial instruments. Identification and exploitation of such opportunities involves uncertainty. No assurance can be given that Algoz will be able to locate investment opportunities or to correctly exploit price discrepancies in financial instruments. A reduction in the pricing inefficiency in which Algoz SMA will seek to invest will reduce the scope for Algoz SMA’s investment strategies. In the event that the perceived mispricing underlying Algoz SMA’s positions were to fail to converge toward, or were to diverge further from, relationships expected by Algoz, Algoz SMA may incur a loss.

Unforeseen events. Algoz SMA’s investment strategies will be designed to be relatively non-correlated with respect to the movements in equity markets in general. However, depending upon the investment strategies employed and market conditions, Algoz SMA may be adversely affected by unforeseen events involving such matters as political crises, pandemic outbreaks, changes in currency exchange rates, interest rates, forced redemptions of securities or acquisition proposals. Algoz believes that Algoz SMA’s investment program and risk management techniques developed by Algoz moderate these risks.

Changes to Investment Objective and Strategy. Each investor agrees by executing the SMA Agreement that if the investor is asked to consent to any proposed variation to the investment objective and strategy and written notice of such proposed variation is given to the investor in accordance with the notice provisions of the SMA agreement.

Trading Risks. There are risks in trading of securities, derivatives and ETFs; market movements can be volatile and can affect Algoz SMA value along with the liquidity of such markets. Recession, inflation, employment, international events, war, terrorism, pandemic outbreaks and other unpredicted events can also have significant impact upon the prices of the positions. Prices can be also influenced by, among other things exchange policies or errors, brokers mistakes and clearing houses. Such events, which can result market movements and volatile market conditions, may cause losses for Algoz SMA. The prices of securities, derivatives and ETFs may be highly volatile. Price movements in the positions of Algoz SMA can cause losses and create stop-loss orders that wouldn’t happen on regular curse of business. The computer infrastructure of Algoz may be vulnerable to the accuracy and performance of the customized automated trading platform, which evaluates and monitors the risks inherent as describe above. Algoz strategies are designed to automatically manage risk exposures on the positions.

Latencies or inaccuracies in the market data that Algoz uses to generate trading orders, or human error in managing risk parameters or other strategy inputs, may lead to unexpected and unprofitable trades, which may result in material trading losses and could have a material adverse effect on Algoz SMA.

Cryptocurrencies. Cryptocurrencies are not legal tender in the United States and many question whether they have intrinsic value. The price of many cryptocurrencies is based on the agreement of the parties to a transaction. Cryptocurrencies are loosely regulated and there is no central marketplace for currency exchange. Supply is determined by a computer code, not by a central bank, and prices have been extremely volatile. Cryptocurrencies exchanges have been closed due to fraud, failure or security breaches.  Any of Algoz SMA’s funds that reside on an exchange that shuts down may be lost. Several factors may affect the price of cryptocurrencies, including, but not limited to: supply and demand, investors’ expectations with respect to the rate of inflation, interest rates, currency exchange rates or future regulatory measures (if any) that restrict the trading of cryptocurrencies or the use of cryptocurrencies as a form of payment.  There is no assurance that cryptocurrencies will maintain their long-term value in terms of purchasing power in the future, or that acceptance of cryptocurrencies payments by mainstream retail merchants and commercial businesses will continue to grow.

Cryptocurrencies are created, issued, transmitted, and stored according to protocols run by computers in the cryptocurrency network. It is possible these protocols have undiscovered flaws which could result in the loss of some or all assets held by Algoz SMA.  There may also be network scale attacks against these protocols which result in the loss of some or all of assets held by Algoz SMA. Some assets held by Algoz SMA may be created, issued, or transmitted using experimental cryptography which could have underlying flaws.  Advancements in quantum computing could break the cryptographic rules of protocols which support the assets held by Algoz SMA.  Algoz SMA makes no guarantees about the reliability of the cryptography used to create, issue, or transmit assets held by Algoz SMA.

Market Uncertainty.  Cryptocurrencies represent a speculative investment and involve a high degree of risk.  Cryptocurrencies are part of a new and rapidly evolving industry.  The growth of this industry is subject to a high degree of uncertainty.  The factors affecting the further development of this industry include: (a) government and quasi-government regulation of Cryptocurrencies and their use, or restrictions on, or regulation of access to, and operation of related trading systems; (b) continued worldwide growth in the adoption and use of Cryptocurrencies; (c) the maintenance and development of the open-source software protocol of the Cryptocurrency networks; (d) changes in consumer demographics and public preferences, including negative consumer or public perception of Cryptocurrencies; (e) the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies; (f) the use of the networks supporting Cryptocurrencies for developing smart contracts and distributed applications; and (g) general economic conditions and the regulatory environment relating to Cryptocurrency trading systems.

Opaque Spot Market. Cryptocurrency balances are generally maintained as an address on the blockchain and are accessed through private keys, which may be held by a market participant or a custodian. Although cryptocurrency transactions are typically publicly available on a blockchain or distributed ledger, the public address does not identify the controller, owner or holder of the private key.  Unlike bank and brokerage accounts, cryptocurrency exchanges and custodians that hold cryptocurrencies do not always identify the owner. The opaque underlying or spot market poses asset verification challenges for market participants, regulators and auditors and gives rise to an increased risk of manipulation and fraud, including the potential for Ponzi schemes, bucket shops and pump and dump schemes.

Risk Management System. Algoz will use in-house risk management system. Algoz will manage its risks according to predetermined parameters. The risk system has an automated braking machine which stops the system once an abnormal negative/positive profit or loss occurs for any reason. Other sophisticated measures against operational risk exposure as well as connectivity latencies are enabled within the system. Moreover, Algoz, defines risk limitations ceasing all trading in case exceeding the pre-defined limitations. Additionally, there are controls in place monitoring the trading during all trading hours.

Computer systems and in house software. Algoz relies on its computer systems and developed software to receive and properly process internal and external market data and utilize such data to generate orders. A disruption or corruption of the proper functioning of the computer systems or software could cause erroneous trades, which could result in material losses. Algoz’s computer systems and software may fail or be subject to bugs or other errors. If any of these risks materialize, it could have an adverse effect on Algoz SMA’s business, financial condition and results. Algoz will rely on certain third-party software, third-party computer systems and third-party service providers, including, exchange systems, alternate trading systems, internet service providers, communications facilities, data centre services and dedicated fiber optic, wireless communication infrastructure. Any interruption in these third-party services or software, deterioration in their performance, or other improper operation could interfere with Algoz SMA’s trading activities, cause losses due to erroneous or delayed responses. This could also have a material adverse effect on Algoz SMA’s business, financial condition and results.

Foreign Exchange. Algoz SMA may have exposure to fluctuation of foreign currencies through investments in derivative instruments such as options, futures, forwards, interest rate swaps, both for investment purposes and also to hedge the positions of Algoz SMA against changes of the certain currencies against U.S. dollar. For a variety of reasons, Algoz may not establish a perfect correlation between such hedging instruments and the portfolio holdings of Algoz SMA. Therefore, some positions of Algoz SMA can be affected by changes in certain currencies or the hedging may not be possible at all times.

Competition. The securities industry, and the algorithmic trading business in particular, is extremely competitive. Algoz competes with firms, including many of the larger hedge funds and market makers, which have substantially greater financial resources than does Algoz and substantially greater resources.

Risks of Special Techniques Used by Algoz SMA. Algoz may invest using special investment techniques that may subject Algoz SMA’s investments to certain risks. Certain, but not all, of these techniques and the risks that they entail are summarised herein. Algoz SMA, in any event, is not designed to correlate to the broad equity market, and should be viewed as an alternative to instead of a substitute for equity investments.

Concentration of Investments. From time to time a significant portion of Algoz SMA’s capital may be concentrated in a particular security, industry, market or country. Should such security, industry, market or country become subject to adverse financial conditions, Algoz SMA’s capital shall not be afforded the protection otherwise available through greater diversification of its investments.

Short Selling and Leverage. Algoz SMA’s investment program may include investment techniques such as short selling and leverage which can, in certain circumstances, maximise the adverse impact to which Algoz SMA’s investments may be subject. Algoz SMA may sell short securities, derivatives or ETFs in the expectation of covering the short sale with securities purchased in the open market at a price lower than that received in the short sale. If the price of the securities, derivatives or ETFs declines, Algoz SMA may then cover the short position with securities, derivatives or ETFs purchased in the market. The profit realised on a short sale will be the difference between the price received in the sale and the cost of the securities, derivatives or ETFs purchased to cover the sale, less applicable transaction costs. The possible losses from selling short a security, derivatives or ETFs differ from losses that could be incurred from a cash investment in the security, derivatives or ETFs; the former may be unlimited, whereas the latter can only equal the total amount of the cash investment. Short selling activities are also subject to restrictions imposed by applicable securities laws and the various national and regional securities exchanges, which restrictions could limit Algoz SMA’s investment activities. There can be no assurance that securities, derivatives or ETFs necessary to cover a short position will be available for purchase.

Algoz SMA expects to use leverage in its investment program when deemed appropriate by Algoz and the investor and subject to applicable regulations. At times, the amount of such leverage may be substantial. When deemed appropriate by Algoz, Algoz SMA may employ borrowing and/or leverage for a variety of purposes, including for managing liquidity, paying expenses, making investments, hedging exposure to market and credit risk, and/or implementing the investment objective and strategies. Where leverage is employed, Algoz SMA may borrow funds from exchnages and other financial institutions. Leverage may also be obtained through the use of derivatives and other non-fully funded instruments. In each case, leverage may be obtained on an unsecured or secured/collateralised basis. The total level of leverage in Algoz SMA may, exceed x1 of Algoz SMA’s assets under management (AUM). Leverage creates an opportunity for greater yield and total return, but at the same time increases exposure to capital risk and higher current expenses. If Algoz SMA purchases securities, derivatives or ETFs on margin and the value of those securities falls, Algoz SMA may be obligated to pay down the margin loans to avoid liquidation of the securities, derivatives or ETFs. If loans to Algoz SMA are collateralised with portfolio securities, derivatives or ETFs that decrease in value, Algoz SMA may be obligated to provide additional collateral to the lender in the form of cash or securities to avoid liquidation of the pledged securities, derivatives or ETFs. Any such liquidation could result in substantial losses. Moreover, counterparties of Algoz SMA, in their sole discretion, may change the leverage limits that they extend to Algoz SMA.

Investments. The investment monies paid by an investor will accordingly be subject to investment risk in Algoz SMA from the relevant investment date.

Effect of Termination. Where a termination request is accepted, the invetment will be treated as having been terminated with effect from the relevant termination date. Accordingly, on and from the relevant termination date, investors will not be entitled to or be capable of exercising any rights arising under the SMA agreement.

Institutional Risk and Custodial Risks. The institutions, including exchanges and custodians, with which Algoz SMA (directly or indirectly) does business, or to which securities have been entrusted for custodial and prime brokerage purposes, may encounter financial difficulties that impair the operational capabilities or the capital position of Algoz SMA.

Litigation and Claims. Algoz may be subject to lawsuits or proceedings by government entities or private parties. Except in the event of a lawsuit or proceeding arising from a Director’s wilful neglect or default in the performance of its duties, expenses or liabilities of Algoz SMA arising from any suit shall be borne by Algoz SMA.

Conflicts of Interest. Algoz may be subject to various conflicts of interest.

Need for Independent Advice. Algoz consulted with counsel, accountants and other experts regarding the formation of Algoz SMA structure. Each prospective investor should consult his own legal, tax and financial advisors regarding the desirability of an investment in Algoz SMA.

Registration. The Company is not registered as an investment company under the US Investment Company Act of 1940, as amended, (or any similar state laws). Investors, therefore, will not be accorded the protective measures provided by such legislation.

Variety of Business Terms. Algoz may enter into different agreements with different investors pursuant to which they may give one or more investors different fee terms and access to more frequent and/or more detailed information regarding Algoz SMA’s securities positions, performance and finances. In addition, pursuant to such agreements, Algoz may give certain investors the right to terminate all or a portion of their investments from Algoz SMA on shorter notice and/or with more frequency, unless Algoz Directors conclude that the other investors will be materially prejudiced. As a result, certain investors may be better able to assess the prospects and performance of Algoz SMA than other investors, and may be able to terminate their invetsments at times when other investors may not. Subject to applicable law, Algoz does not intend to disclose the terms of agreements and does not intend to disclose the identities of the investors that have entered into such agreements with Algoz.

Investors Loss. No investor will be liable for losses or debts of Algoz SMA beyond that invstro’s investment.

Legal, Regulatory and Fiscal Compliance. Algoz SMA must comply with various legal requirements, including requirements imposed by applicable securities laws, tax laws and pension laws in various jurisdictions. Should any of those laws change over the scheduled term of Algoz SMA, the legal requirements to which Algoz SMA may be subject could differ materially from current requirements. Legal, tax and regulatory changes during the term of Algoz SMA may adversely affect it. They may also adversely affect its ability to obtain the leverage it might otherwise have obtained or to pursue its trading strategies. The effect of any future regulatory change on Algoz SMA could be substantial and advers

Economic and Business Conditions. General economic and business conditions may affect Algoz SMA’s activities. Interest rates, the prices of securities and financial instruments and participation by other investors in the financial markets may affect the value of securities purchased by Algoz SMA. Unexpected volatility or liquidity in the markets in which Algoz SMA directly or indirectly holds positions could impair Algoz SMA’s ability to carry out its business and could cause it to incur losses.

Access to Information; Enhanced Liquidity. Algoz will generally provide investors with regular unaudited information regarding Algoz SMA’s performance. To the extent permitted by applicable laws, Algoz, however, may give one or more investors access to more frequent and/or more detailed information regarding Algoz SMA’s financial instruments positions, performance and finances than it provides to all investors generally. In addition, Algoz SMA may give certain investors (including those given such additional information) the right to terminate all or a portion of their investments on shorter notice and/or with more frequency. As a result, certain investors may be better able to assess the prospects and performance of Algoz SMA than other investors, and may be able to terminate their investments at times when other investors may not. Algoz may enter into separate agreements with particular investors in respect of any such matters.

GDPR. Under the GDPR, data controllers are subject to additional obligations including, amongst others, accountability and transparency requirements whereby the data controller is responsible for, and must be able to demonstrate compliance with the rules set down in the GDPR relating to data processing and must provide data subjects with more detailed information regarding the processing of their personal data. Other obligations imposed on data controllers include more enhanced data consent requirements and the obligation to report any personal data breach to the relevant supervisory authority without undue delay. Under the GDPR, data subjects are afforded additional rights, including the right to rectify inaccurate personal information, the right to have personal data held by a data controller erased in certain circumstances and the right to restrict or object to processing in a number of circumstances. Further, there is a risk that the measures will not be implemented correctly by Algoz or its service providers. If there are breaches of these measures by Algoz or any of its service providers, Algoz or its service providers could face significant administrative fines and/or be required to compensate any data subject who has suffered material or non-material damage as a result as well as Algoz suffering reputational damage which may have a material adverse effect on its operations and financial conditions.

THE FOREGOING LIST OF RISK FACTORS DOES NOT PURPORT TO BE A COMPLETE ENUMERATION OR EXPLANATION OF THE RISKS INVOVLED IN AN INVESTMENT IN ALGOZ SMA. PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR ADVISERS BEFORE DECIDING TO INVEST IN ALGOZ SMA.