Protection of Client Funds & Crypto-Assets

Zero Hash Europe’s End Customer crypto assets are fully segregated from Zero Hash Europe’s proprietary assets and are otherwise protected by the Zero Hash Europe User Agreement, regulatory status, and operational procedures. Notably, Zero Hash Europe does not maintain a balance of proprietary crypto assets within the dedicated End Customer wallet infrastructure or with any cold storage wallet technology provider, such as Coinbase.

Segregation of Clients’ (Fiat) Funds

Fiat funds of ZHEU’s clients are held by a separate client money foundation (Stichting Derdengelden Zero Hash Europe), through its banking partners, to safeguard the ownership rights of clients (also in case of an insolvency) and prevent the use of the relevant client fiat funds by ZHEU for its own account. ZHEU and Stichting Derdengelden Zero Hash Europe will maintain separate accounts from one another, and Stichting Derdengelden Zero Hash Europe will maintain client fiat funds in an account, or accounts, designated for such clients.

Segregation of Clients’ Crypto Assets

Crypto-assets of ZHEU’s End Customers are held within the Stichting Derdengelden Zero Hash Europe Omnibus wallets (each an “SDZH Omnibus Wallet”). There will be at least one SDZH Omnibus Wallet per supported asset. As further noted below, ZHLS are End Customers of ZHEU.

In order to safeguard and track the (ownership) rights of End Customers in respect of their respective crypto-assets, ZHEU maintains two separate records, i.e (i) the internal ledger of customer balances vs. (ii) actual wallet balances held in ZH owned wallets. At the end of each day, the custody ledger record and the intra-day trading record are reconciliated/merged to ensure that each End Customer’s crypto-asset holding as set out in the custody ledger record administrative record is revised in line with any trades made during the day as administered in the intra-day trading record.

The administrative intra-day trading record does not reflect any actual on-chain movement of crypto-assets.

Role of ZHLS

Zero Hash Liquidity Services LLC (“ZHLS”) is a Zero Hash Europe affiliates that are engaged in the business of settlement provisioning for the Zero Hash Europe trading platform. ZHLS’s sole business activities involves aggregating several liquidity providers pricing and liquidity such that the Zero Hash for Zero Hash US companies may offer world-class execution services to End Customers and for Zero Hash Europe to act as settlement provider.ZHLS will maintain an End Customer account at Zero Hash Europe for the purpose of: settling crypto-assets on behalf of LPs that trade on the Zero Hash Europe Platform.

Conflict of Interest

As there may be a perceived conflict of interest when holding affiliated End Customer assets in the SDZH Omnibus Wallets and ZHLS when acting as settlement provider. ZHLS shall execute a subordination agreement with Zero Hash EU and Stichting Derdengelden Zero Hash Europe that will ensure that non-affiliated End Customers shall have first rights to all assets in the SDZH Omnibus Wallets in the case of Zero Hash Europe’s, ZHLS’s insolvency. The subordination of claims will ensure that End Customer assets are bankruptcy remote from Zero Hash Europe and its affiliates.

Segregation of Wallets

Zero Hash Europe’s customer crypto assets are fully segregated from Zero Hash Europe’s proprietary assets and are otherwise protected by the Zero Hash User Agreement, regulatory status, and operational procedures. Zero Hash Europe does not hold any proprietary crypto assets itself.

User Agreement

Zero Hash Europe’s User Agreement and operational treatment of customer assets establishes a proper custodial relationship with customers to protect assets in the case of bankruptcy. The following Zero Hash europe User Agreement provisions protect customer crypto assets in the case of Zero Hash Europe’s bankruptcy:

• Section 9.1: establishing that Stichting Derdengelden Zero Hash Europe is acting as a custodian holding customer assets on behalf of the customer.
• Section 9.3: establishing that all customer crypto assets held for the customer’s benefit.
• Section 9.3: establishing that title to crypto assets deposited or obtained from transactions remains with the customer and not with Zero Hash.