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Risk Warning - Notice to UK Users  

Estimated reading time: 2 mins

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

1.You could lose all the money you invest

The performance of most cryptoassets can be highly volatile, with their value dropping as quickly as it can rise. You should be prepared to lose all the money you invest in crypto assets.

The crypto asset market is largely unregulated. There is a risk of losing money or any cryptoassets you purchase due to risks such as cyber-attacks, financial crime and firm failure.

2.You should not expect to be protected if something goes wrong

The Financial Services Compensation Scheme (FSCS) doesn’t protect this type of investment because it’s not a ‘specified investment’ under the UK regulatory regime – in other words, this type of investment isn’t recognised as the sort of investment that the FSCS can protect. Learn more by using the FSCS investment protection checker here.

The Financial Ombudsman Service (FOS) will not be able to consider complaints related to this firm. Learn more about FOS protection here.

3.You may not be able to sell your investment when you want to

There is no guarantee that investments in crypto assets can be easily sold at any given time. The ability to sell a crypto asset depends on various factors, including the supply and demand in the market at that time.

Operational failings such as technology outages, cyber-attacks and comingling of funds could cause unwanted delay and you may be unable to sell your crypto assets at the time you want.

4.Cryptoasset investments can be complex

Investments in crypto assets can be complex, making it difficult to understand the risks associated with the investment.

You should do your own research before investing. If something sounds too good to be true, itprobably is.

5.Don’t put all your eggs in one basket

Putting all your money into a single type of investment is risky. Spreading your money across different investments makes you less dependent on any one to do well.

A good rule of thumb is not to invest more than 10% of your money in high-risk investments. Learn more here.

If you are interested in learning more about how to protect yourself, visit the FCA’s website here.

For further information about cryptoassets, visit the FCA’s website here.

What is a crypto airdrop?

As we set out to explain what is a crypto airdrop, we will also touch on the powerful benefits that airdrops can bring to investors.

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You might be familiar with buying and selling cryptocurrencies, but have you tapped into the world of crypto airdrops? Airdrops are essentially marketing strategies that are designed to build awareness and interest in a blockchain-based crypto project. As we set out to provide more information and explain what these are we will also touch on the powerful benefits that airdrops can bring to investors. 

What Is A Crypto Airdrop?

A crypto airdrop is when a project gives out its native coins for free as a marketing tool to generate hype, grow its network and gain wider adoption, essentially providing free money. On occasion, the coins require small tasks such as following social media pages, and other times they are entirely free of engagements. 

These coins are then transferred to current or potential users' wallets for free in the hopes of drawing in more business. Airdrops rose to fame in the ICO boom of 2017 and are still used today. While handed out for free, airdrops can increase in value over time, becoming potentially lucrative to the receivers.

Through distributing coins, projects increase their number of holders (a positive metric for up and coming projects) as well as increase their decentralisation (due to increased token ownership). 

How Do Cryptocurrency Airdrops Work?

An airdrop is typically outlined in a project's roadmap and will commence once certain criteria have been met. While airdrops can range from project to project, they typically involve small amounts of cryptocurrencies, often built on Ethereum or other smart chain, being distributed to several wallets.

These coins are usually distributed for free, however, on occasion users will need to perform small tasks related to marketing (like engaging on social media or subscribing to a newsletter) or hold a certain number of coins in their wallet. A successful airdrop will see its recipients promoting the project and generating hype before being listed on an exchange.

What Is The Difference Between An ICO And An Airdrop?

While both are related to new digital currency projects, the major difference between the two is that airdrops are when tokens are distributed for free while ICOs require participants to purchase the project's tokens with an outlined purchase price. ICOs are a source of crowdfunding while airdrops are marketing strategies.

What Are The Different Types Of Airdrops?

As mentioned above there are several different types of airdrops; exclusive, bounty and holder. 

Exclusive Airdrops

These airdrops are centered around active members of the community or early adopters. In exclusive airdrops, coins are only sent to designated wallets. Uniswap is a classic example of this, distributing 400 UNI to each wallet that had engaged in the platform before a certain date. The governance token allowed holders to vote on the project's future developments.

Bounty Airdrops

Bounty airdrops are when users need to engage in the platform in order to claim their tokens. This typically involves activities related to social media (liking a post, joining a Telegram channel, tagging friends, etc.) and the project might ask to see proof before distributing the coins. 

Holder Airdrops

This type of airdrop is for users already holding the project's token to thank them for their loyalty. Typically the project's team will take a snapshot of the wallet balances at a certain time and reward all the wallets that meet the minimum criteria. 

When creating holder airdrops, projects might use other more established cryptocurrencies in the hopes of tapping into their networks. For example, in 2016 Stellar (XLM) airdropped 3 billion XLM to users on the Bitcoin network, granting them free access to the Stellar network. 

The Downside To Airdrops

Naturally, there are ill actors out there who take advantage and have created airdrop scams. These scams might involve a "project" airdropping tokens into a wallet but when the holder attempts to move these tokens their wallet is drained. 

Another example of an airdrop scam is a project enticing you to sign up for the airdrop by connecting your wallet only to take your wallet details and gain access to your account. These are typically conducted through websites and fake Twitter and Telegram accounts that look very similar to the real deal but are in fact phishing scams. 

It's important to DYOR ( do your own research ) when engaging in an airdrop, and know that a project will never require you to send funds in order to "unlock" tokens or require you to provide a seed phrase or private key. 

Another downside to airdrops is that projects can create an incorrect impression of growth. If thousands of coins are distributed to thousands of wallets this might cause the project to look busier and more adopted than it actually is. When judging a project by this metric ensure that it has an active trading volume that reflects the number of wallet holders, if there are plenty holders and minimal activity consider this a big red flag. 


This article is for general information purposes only and is not intended to constitute legal or other professional advice or a recommendation of any kind whatsoever and should not be relied upon or treated as a substitute for specific advice relevant to particular circumstances. We make no warranties, representations or undertakings about any of the content of this article (including, without limitation, as to the quality, accuracy, completeness or fitness for any particular purpose of such content), or any content of any other material referred to or accessed by hyperlinks through this article. We make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up-to-date.


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