Ondo Stocks Risk Disclosure

Ondo Stocks Risk Disclosure

 

This disclosure must be read together with the DigiFinex Terms of Use, TradFi Product Rules, and the Sales Terms, offering documents, eligibility rules, and other legal documents provided by Ondo Global Markets (BVI) Limited. The risks described below are not exhaustive.

 

1. Product and Issuer

 

Ondo Stocks are tokenized financial products issued by Ondo Global Markets (BVI) Limited, a special purpose company established in the British Virgin Islands.

 

According to the issuer, Ondo Stocks are legally structured as structured notes or debt instruments. The amount payable under each product is linked to the performance of a specified stock, ETF, or other publicly traded security. All rights and obligations are subject to the applicable offering documents and Sales Terms.

 

DigiFinex is not the issuer of Ondo Stocks or of the underlying stocks and ETFs.

 

2. No Direct Ownership of the Underlying Shares

 

Holding Ondo Stocks does not mean that you directly own the underlying stock or ETF. The underlying securities are generally held by or for the issuer through its broker and custody arrangements and are not registered in your name on the underlying company’s shareholder register.

 

You generally do not receive:

 

• Voting rights in the underlying company;

• Direct shareholder information or corporate communication rights;

• The right to participate directly in shareholder meetings;

• A direct claim for dividends or other distributions from the underlying company;

• A direct claim against the residual assets of the underlying company upon liquidation.

 

You receive contractual rights linked to the performance of the underlying asset as provided in the offering documents, rather than direct ownership of the shares.

 

3. Total-Return Tracking and Unit Differences

 

Ondo Stocks use a total-return tracking mechanism designed to reflect the price performance of the underlying asset and the economic effect of reinvesting dividends after applicable taxes.

 

Accordingly:

 

• One Ondo Stock token may not always represent the value of one underlying share;

• The token price may not be identical to the price of one underlying share;

• Token quantities, multipliers, displayed balances, or prices may be adjusted following dividends or corporate actions;

• Different blockchains, wallets, or interfaces may display quantities and prices differently;

• The return from holding an Ondo Stock may differ from the return from directly holding the underlying security.

 

4. Market Price, Off-Hours, and Liquidity Risk

 

Ondo Stocks may be affected by movements in the underlying security, market supply and demand, market-maker quotations, trading hours, exchange rates, taxes, fees, and general market conditions.

 

When the primary U.S. securities market is closed but trading in an Ondo Stock remains available:

 

• Available liquidity may be lower;

• Bid-ask spreads may be wider;

• Maximum trade sizes may be reduced;

• Quotations may be rejected or suspended;

• The token price may diverge materially from the last price of the underlying security;

• The underlying security may open at a materially different price when its primary market reopens.

 

Neither the issuer nor DigiFinex guarantees that a secondary market will continue to exist or that you will be able to sell or close a position at the expected price.

 

5. Collateral and Security-Interest Risk

 

The issuer states that Ondo Stocks are generally backed by corresponding underlying securities and cash in transit, together with an additional buffer, and that a third-party security agent may hold a security interest for tokenholders.

 

These arrangements are intended to reduce risk but cannot eliminate:

 

• Insolvency or financial distress of the issuer;

• Default by a custodial broker, bank, or other counterparty;

• Custody, reconciliation, settlement, or valuation errors;

• Delays or failures in enforcing security interests;

• Price declines or insufficient liquidity when collateral is sold;

• Delays caused by litigation or cross-border enforcement;

• The possibility that holders do not recover their funds immediately or in full.

 

Asset backing, independent governance, asset segregation, and a security agent do not make the product risk-free or principal-protected.

 

6. Issuer and Counterparty Risk

 

An Ondo Stock is a contractual financial instrument issued by the issuer. Its value depends not only on the underlying stock but also on the issuer’s creditworthiness, solvency, operational capacity, information systems, and regulatory compliance.

 

A default, insolvency, shutdown, asset freeze, or technology failure involving a broker, custodian, bank, stablecoin issuer, verification agent, security agent, or other service provider may result in loss or delay.

 

7. Redemption and KYC Risk

 

Subject to the issuer’s rules, Ondo Stocks may be redeemable with the issuer for the corresponding value in cash or stablecoins. DigiFinex may not provide or facilitate direct issuer redemption.

 

Direct redemption may require:

 

• Identity verification and customer due diligence;

• Sanctions and wallet-address screening;

• Location and investor-eligibility verification;

• Source-of-funds or other compliance information;

• Minimum amounts, timing requirements, and other product conditions.

 

The issuer may reject, suspend, or delay redemption for legal, regulatory, internal-policy, or suspicious-transaction reasons. Acquiring tokens on a secondary market does not mean that you will qualify for direct issuer redemption.

 

8. Corporate Actions and Tax Treatment

 

Dividends, stock splits, reverse splits, mergers, acquisitions, spin-offs, rights offerings, delistings, and other corporate actions may be reflected through changes to the token price, multiplier, quantity, or another mechanism.

 

The result may be affected by:

 

• Withholding taxes;

• Issuer, broker, or custody costs;

• Market prices and execution timing;

• Rounding and minimum units;

• Tax rules in different jurisdictions;

• Discretion permitted under the offering documents.

 

The treatment and economic result may differ from those received by a direct shareholder.

 

9. Blockchain, Smart-Contract, and DeFi Risk

 

Ondo Stocks may be transferable on supported blockchains and may be integrated with third-party wallets, exchanges, bridges, and DeFi protocols.

 

Using on-chain or DeFi services may expose you to:

 

• Smart-contract vulnerabilities or attacks;

• Network congestion, forks, or network failures;

• Bridge, oracle, or third-party protocol failures;

• Liquidation, collateral-haircut, and leverage risk;

• Loss of private keys or wallet compromise;

• Fake tokens, incorrect contract addresses, or scams;

• Failure of third-party protocols to support corporate-action or multiplier adjustments;

• Inability to recover tokens from a third-party protocol.

 

The issuer and DigiFinex do not guarantee third-party applications or protocols that they do not control.

 

10. Transfer and Jurisdictional Restrictions

 

On-chain transferability does not mean that Ondo Stocks may legally be transferred to every person.

 

The products may be subject to securities, sanctions, anti-money laundering, counter-terrorist-financing, and investor-eligibility restrictions. Prohibited or restricted persons must not purchase, acquire, hold, transfer, or redeem the products.

 

Restricted jurisdictions and eligibility requirements may change. The latest rules published by the issuer and DigiFinex will apply.

 

11. Role of DigiFinex

 

DigiFinex provides relevant trading, custody, deposit, withdrawal, or technical services in accordance with its platform rules. DigiFinex:

 

• Is not the issuer of Ondo Stocks or of the underlying securities;

• Is not the broker, director, or agent of the underlying listed company;

• Does not guarantee performance by the issuer, security agent, or custodian;

• Does not guarantee any secondary market, price, liquidity, or redemption service;

• May restrict services, adjust parameters, suspend trading, or delist a product for regulatory, risk-management, liquidity, technical, or operational reasons.

 

12. Acknowledgment and Acceptance

 

By trading or holding Ondo Stocks, you confirm that:

 

• You understand that the product is a structured financial instrument linked to an underlying asset;

• You do not directly own the underlying stock or ETF;

• You understand total-return tracking, price divergence, and issuer-credit risk;

• You may lose some or all of your invested funds;

• You satisfy all applicable location, status, and investor-eligibility requirements;

• You accept all risks relating to trading, holding, transferring, on-chain use, and redemption.

 

This document does not constitute investment, legal, or tax advice. You should obtain independent professional advice where appropriate.