Weaknesses

We do recognise that users must trust the Synfy business entity and therefore this does not create a fully trust less cryptocurrency ecosystem. However, note all cryptocurrency exchanges, wallets and legacy banking institutions all suffer from those very same weaknesses.

Synfy recognises:

● Synfy could go bankrupt or insolvent.

● Synfy’s custodian bank could freeze Synfy’s funds

● Synfy could take flight with the reserve funds

● Synfy’s custodian bank could go insolvent

● Negative portfolio return

However, all digital currencies, exchanges, banks and wallets face all the above weaknesses. Cryptocurrency is subject to all the same risks.

Addressing weaknesses

● Synfy could go bankrupt or insolvent.

It is likely in this scenario the business entity Synfy would go bankrupt but the client funds are ring fenced and would be safe. All syUSD remains redeemable as there is a fully funded FIAT reserve.

● Synfy’s custodian bank could freeze Synfy’s funds

Synfy’s custodian banks would need to be made aware of what Synfy does, to allow them to pre-risk assessed the business. Synfy must be fully compliant, and therefore as long as Synfy remains compliant the scenario would not arise.

● Synfy could take flight with the reserve funds

Synfy’s corporation is public - business owners, names, offices and locations. Synfy will also have regulatory oversight by Synfy’s custodian bank.

● Synfy’s custodian bank could go insolvent

This is a risk faced by everyone in the world technically using the legacy financial system. Synfy would have various banking partners across the world diversifying Synfy fund risk

● Negative portfolio return

This could happen, where the syUSD return period is negative - drawdowns are common if a portfolio approach is used.

This is a risk also faced by any bank, investment manager or property owner. There is always the risk the value of a given asset could fall.

In Synfy’s case, the solution is simple - during periods of high interest rates – Synfy can keep cash balances and yield 2-4% risk free return. In periods of lower rates, Synfy can generate return by using the safest possible method (market neutral) to eliminate much of the risks inherent in per say just purchasing a property or investment naked outright.