For Terms and Conditions, please see https://crypto-ml.com/terms/
A Wyoming Limited Liability Company
Registered with the Commodity Futures Trading Commission
As a Commodity Trading Advisor
950 37TH AVE CT
GREELEY, CO 80634
Client Services Telephone: Tel: 970-673-7273
Email: [email protected]
THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF PARTICIPATING IN THIS TRADING PROGRAM NOR HAS THE COMMISSION PASSED ON THE ADEQUACY OR ACCURACY OF THIS DISCLOSURE DOCUMENT.
The information and opinions contained herein are subject to change or revision subsequent to the date of this Disclosure Document.
No person is authorized by Crypto-ML LLC, to give any information or to make any representations not contained in this Disclosure Document. The delivery of this Disclosure Document does not imply that the information contained herein is correct as of any time subsequent to the date set forth above.
The effective date of this Disclosure Document is May 22, 2019.
Risk Disclosure Statement:
THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. IN CONSIDERING WHETHER TO TRADE OR TO AUTHORIZE SOMEONE ELSE TO TRADE FOR YOU, YOU SHOULD BE AWARE OF THE FOLLOWING:
IF YOU PURCHASE A COMMODITY OPTION YOU MAY SUSTAIN A TOTAL LOSS OF THE PREMIUM AND OF ALL TRANSACTION COSTS.
IF YOU PURCHASE OR SELL A COMMODITY FUTURES CONTRACT OR SELL A COMMODITY OPTION OR ENGAGE IN OFF-EXCHANGE FOREIGN CURRENCY TRADING YOU MAY SUSTAIN A TOTAL LOSS OF THE INITIAL MARGIN FUNDS OR SECURITY DEPOSIT AND ANY ADDITIONAL FUNDS THAT YOU DEPOSIT WITH YOUR BROKER TO ESTABLISH OR MAINTAIN YOUR POSITION. IF THE MARKET MOVES AGAINST YOUR POSITION, YOU MAY BE CALLED UPON BY YOUR BROKER
TO DEPOSIT A SUBSTANTIAL AMOUNT OF ADDITIONAL MARGIN FUNDS, ON SHORT NOTICE, IN ORDER TO MAINTAIN YOUR POSITION. IF YOU DO NOT PROVIDE THE REQUESTED FUNDS WITHIN THE PRESCRIBED TIME, YOUR POSITION MAY BE LIQUIDATED AT A LOSS, AND YOU WILL BE LIABLE FOR ANY RESULTING DEFICIT IN YOUR ACCOUNT.
UNDER CERTAIN MARKET CONDITIONS, YOU MAY FIND IT DIFFICULT OR IMPOSSIBLE TO LIQUIDATE A POSITION. THIS CAN OCCUR, FOR EXAMPLE, WHEN THE MARKET MAKES A ‘‘LIMIT MOVE.’’
THE PLACEMENT OF CONTINGENT ORDERS BY YOU OR YOUR TRADING ADVISOR, SUCH AS A ‘‘STOP-LOSS’’ OR ‘‘STOP-LIMIT’’ ORDER, WILL NOT NECESSARILY LIMIT YOUR LOSSES TO THE INTENDED AMOUNTS, SINCE MARKET CONDITIONS MAY MAKE IT IMPOSSIBLE TO EXECUTE SUCH ORDERS.
A ‘‘SPREAD’’ POSITION MAY NOT BE LESS RISKY THAN A SIMPLE ‘‘LONG’’ OR ‘‘SHORT’’ POSITION.
THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN COMMODITY INTEREST TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS.
IN SOME CASES, MANAGED COMMODITY ACCOUNTS ARE SUBJECT TO SUBSTANTIAL CHARGES FOR MANAGEMENT AND ADVISORY FEES. IT MAY BE NECESSARY FOR THOSE ACCOUNTS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENT CONTAINS, LINK, A COMPLETE DESCRIPTION OF EACH FEE TO BE CHARGED TO YOUR ACCOUNT BY THE COMMODITY TRADING ADVISOR.
THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER SIGNIFICANT ASPECTS OF THE COMMODITY INTEREST MARKETS. YOU SHOULD THEREFORE CAREFULLY STUDY THIS DISCLOSURE DOCUMENT AND COMMODITY INTEREST TRADING BEFORE YOU TRADE, INCLUDING THE DESCRIPTION OF THE PRINCIPAL RISK FACTORS OF THIS INVESTMENT, LINK.
Commodity Trading Advisor and Its Principal
Crypto-ML LLC (“Manager” or “CTA”), is currently offering a trading program to sophisticated investors. Through its trading program, Crypto-ML LLC, engages predominantly in trading long or short positions in cryptocurrency thereon using proprietary computer generated systematic signals. Given that speculative trading in cryptocurrencies presents the risk of substantial losses, only persons with high incomes and the ability to absorb such losses should consider participating in this trading program. This Disclosure Document describes the trading management services offered by the CTA, its trading program and the risks associated therewith.
Crypto-ML LLC, is a Wyoming Limited Liability Company formed under the laws of the State of Wyoming on March 14, 2018. Since inception, the CTA’s primary business is to provide capital appreciation to a small number of institutional and retail client accounts by managing their accounts pursuant to the CTA’s trading programs. The CTA is owned by Justin Gesso and he is its sole trading principal. The CTA was registered as a Commodity Trading Advisor with the Commodity Futures Trading Commission (“CFTC”) and became a Member of the National Futures Association (“NFA”) on March 7, 2019, NFA ID No. 0518903. In addition, Mr. Gesso, Manager of the CTA, became registered as an Associated Person, and listed as a Principal, on March 5, 2019, NFA ID No. 0519491.
Neither the CTA’s registration with the CFTC nor its membership in the NFA should be taken as an indication that any such agency or regulatory body has recommended or approved the CTA. All business records are kept at the Manager’s principal place of business. The office of the CTA is located at 950 37th Ave. Court, Greeley, CO 80634. The telephone number of the CTA is (970)-673-7273.
The Principal and His Business Background:
The Principal has held a broad background in the statistics, technology, and financial domains. With a professional career beginning in banking, the Principal has held continued professional involvement in investing, math, and strategies designed to optimize financial performance. The masters-level degree emphasized statistics and business management, which was put into professional practice within technical departments globally using mathematical analysis to optimize operations, software delivery, and marketing programs. The Principal also maintains a real estate practice, primarily for the purposes of personal investments and to serve client investors.
Due to the continued involved with software engineering the Principal has maintained, exposure to machine learning, its overlay with statistics, and its application to investing, the Principal was able to establish a team to develop the Trading Program, which was utilized in a proprietary fashion beginning in 2017. As it was refined and enhanced, it was ultimately became the product/service of Crypto-ML LLC.
Relevant employment and education:
From FEBRUARY 2017
Position Held MANAGING PARTNER
From SEPTEMBER 2013
Name 52X MEDIA LLC
Position Held OWNER
From SEPTEMBER 2013
Name GESSO WEALTH CONSULTANTS LLC – LICENSED REAL ESTATE SERVICES
Position Held OWNER
From SEPTEMBER 2013
Position Held DIRECTOR
From JULY 2006
To SEPTEMBER 2013
Position Held and Reason for Leaving SENIOR MANAGER (DEVELOPMENT/PRODUCT MANAGEMENT) – VOLUNTARILY LEFT FOR SELF EMPLOYMENT.
From APRIL 2004
To JANUARY 2006
Location GOLDEN, CO
Position Held and Reason for Leaving PROJECT MANAGER – LEFT TO COMPLETE MBA
From AUGUST 2003
To DECEMBER 2006
Name UNIVERSITY OF COLORADO
Position Held MASTER OF BUSINESS ADMINISTRATION, STATISTICAL ANALYSIS
From AUGUST 1997
To DECEMBER 2001
Name UNIVERSITY OF COLORADO
Position Held BACHELOR OF ARTS
Past trading performance of the Advisor is located in this Disclosure Document (LINK).
There has never been any material administrative, civil, or criminal actions, pending or concluded, against the CTA or its principal.
Additional information about the CTA and its trading programs can be obtained by contacting the CTA at the address or telephone number appearing on the cover page of this document.
Trading Signal (Trader):
The trading program consists of mathematical models and algorithms that deliver signals to open and close positions. Machine learning is applied to continuously improve and adapt the models and underlying mathematical formulae and variables.
Trade alerts are delivered on the website, via email, and via mobile app notification. It is the responsibility of the Client to receive and act on the alerts. Trade alerts are comprised of position change (open/close), price, and time.
Auto Trading (Auto Trader):
The Client may optionally select the Auto Trade feature which allows the Trading Program to initiate trades in the Client account based on the open/close signals generated by the Trading Program.
The CTA will provide alerts regarding various cryptocurrencies. Specific selections will be made based primarily on trade volume and liquidity with the complete list published on the home page of Crypto-ML.com. While signals will be provided for each commodity within this list, the Client may select which to follow and thereby which signals to receive.
Auto Trading works by the Client providing API-based “trade” access to the Client’s account. The Client is in control of the API and can turn access on or off at any time. The Client may also revoke permissions at any time.
Futures Commission Merchant/Introducing Broker
You must select a commodity broker which will carry your account and through which your trades will be cleared. Brokerage fees and other charges to such accounts by the commodity broker may vary significantly and are negotiated between you and your commodity broker.
You are free to choose the commodity broker (also called a “futures commission merchant” or “FCM”) of your choice. You are also free to choose an introducing broker to introduce your trades to a commodity broker, although the use of an introducing broker is not required to trade with the CTA. Please note that the broker or brokers that you do choose must be approved by the CTA.
In an effort to increase the efficiency and quality of execution of trades, the CTA may direct a trading order for your account to a specific broker other than the broker used by you to carry your account and clear your trades.
Principal Risk Factors of Trading Program
The trading program consists of mathematical models and algorithms that deliver signals to open and close positions. A select basket of cryptocurrencies are selected with favorable liquidity, but all commodity trading includes volatility, leverage, liquidity, and counterparty creditworthiness risk.
Particular to this trading program, alerts are only generated for entry and exit points, both long and short. Clients must determine if a particular entry or exit point is suitable for their personal portfolio and risk tolerance. Additionally, clients need to independently determine if stop-loss and/or stop-limit orders should be applied in addition to the trade open.
Further, as alerts may be generated at any time of day, time risk exists in terms of the delay between the time an alert is generated and the time the Client can take action on the alert. During delays, price slippage may occur delivering less or more favorable results to the Client.
Further, the trading program will generate both losing and winning trades. While the models and algorithms are optimized to minimize losses and maximize gains, Clients must be prepared to accept losses.
The Client may choose to utilize the broker or exchange of their choice. The CTA does not place any restrictions or limitations thereby.
Optionally, Clients may choose to utilize an Auto Trade feature which allows the Trading Program to initiate trades in the Client’s account on the Client’s behalf. The Client must determine funds available for the Auto Trade in accordance with their personal risk tolerance. Various unique risks are associated with the Auto Trade feature. If Client does not maintain current credentials, the Trading Program may not be able to open and/or close positions as expected. Additionally, lag or communication errors between the Trading Program and the Client-selected broker/exchange may occur, causing trades to execute incorrectly or not at all.
Computer Trading/Technical Trading: CTA utilizes a method of trading in which the CTA uses computer-generated information to determine trending markets. If CTA is incorrect in its interpretation of this technical information, the account may suffer a loss. Further, although steps are taken by the CTA to minimize such problems, be aware that in certain situations such as power failures, virus attacks, loss of hard drives, etc, computer systems can be vulnerable and that vulnerability could cause losses in your trading account.
Electronic Trading risks: You may experience losses due to systems failures. As with any financial transaction, you may experience losses if your orders cannot be executed normally due to systems failures on a regulated exchange or at the brokerage firm carrying your position. Your losses may be greater if the brokerage firm carrying your position does not have adequate back-up systems or procedures.
Commodity trading is speculative and volatile: Commodity interest prices are highly volatile. Price movements for commodity interests are influenced by, among other things, changing supply and demand relationships; weather; agricultural, trade, fiscal, monetary and exchange control programs and policies of governments; United States and foreign political and economic events and policies; changes in national and international interest rates and rates of inflation; currency devaluations and revaluations and emotions of the marketplace. None of these factors can be controlled by the CTA and no assurance can be given that the CTA advice will result in profitable trades for a participating customer or that a customer will not incur substantial losses.
Clients will pay a simple fee structure to receive trade alerts:
- $19 per month for trade alerts.
- $29 per month for trade alerts and auto-trading.
Fees collected are never based upon commission, profits, or net gains of any Client account holder.
Conflicts of Interest
Prospective clients should be aware that these, and other, potential conflicts of interests are frequently inherent in the position occupied by a CTA. The CTA, however, is obligated to treat each client with fairness, considering the client’s best interests. All efforts will be made to assure fair and equitable treatment of all accounts. Clients should be aware that normal marketplace factors might cause the results of various accounts to differ.
The CTA may trade for its own account. Additionally, the CTA’s principal may trade commodities and commodity interests for his own accounts. The trades in these accounts may compete with a client’s account for the same or similar positions in the commodity markets. The CTA expects to manage the commodity accounts of various clients. Neither the trading records of the CTA nor the principal’s proprietary accounts will be available for review or inspection.
At times, the CTA and/or its principal may test new trading concepts and techniques in their own accounts. As such, trading in these accounts may be more aggressive than client accounts, and trading in these accounts may involve trades which are opposite to clients’ trades.
The CTA intends to continue to actively solicit and manage other client accounts. In conducting such activities, the CTA may have conflicts of interest in allocating management and advisory time, services, and other functions.
Mr. Gesso will engage in other business activities unrelated to the CTA’s advisory business. As a result, this may involve a potential conflict of interest with respect to his commitment of time and resources to the CTA. Mr. Gesso, however, intends to devote sufficient time and resources to operate and manage the CTA’s advisory business in a manner consistent with his fiduciary duties and obligations. Currently, Mr. Gesso owns Invest-ML LLC, a commodity trading advisor business.
Trading for its own Account:
The CTA and/or principal may utilize the trading program for its own benefit, however, the CTA and/or principal has no trading advantage over any other program user nor does it have access to information that would allow the CTA and/or principal to obtain an advantage over other program users in any other form.
Acknowledgement of Receipt of Disclosure Document:
Clients will be required to acknowledge in writing that they have received a copy of this Commodity Trading Advisor Disclosure Document (during sign up process).
Required Performance Disclosures:
NEITHER THIS TRADING ADVISOR NOR ANY OF ITS TRADING PRINCIPALS HAVE PREVIOUSLY DIRECTED ANY ACCOUNTS
Performance of Offered Trading Program:
Name of CTA: Crypto-ML LLC
Name of Trading Program: Trader
Inception of Trading by CTA: February 5, 2018
Inception of Trading in Offered Program: February 5, 2018
# of accounts currently traded pursuant to the program: 0
Total nominal assets under management: NA
Total nominal assets traded pursuant to the program: NA
Largest monthly draw-down: 38.5% (December 2018, Bitcoin Cash)
Worst peak-to-vally draw-down: 45.55% (May 2018 to November 2018, Ethereum)
Number of profitable accounts that have been opened and closed: NA
Range of returns experienced by profitable accounts: NA
Number of losing accounts that have opened and closed: NA
Range of returns experienced by unprofitable accounts: NA
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
How to Open an Account
In order for the CTA to manage the account of a Client, the Client must:
1) Open a commodity trading account with a commodity brokerage firm (also called a “futures commission merchant” or “FCM”). The client is free to choose however, for Auto Trading, such FCM must be approved by the CTA.
2) Sign and return to the CTA the original Advisory Agreement.
3) Sign and return to the CTA an Acknowledgment of Receipt of the CTA’s Disclosure Document (Appendix A).
4) Deposit funds with the FCM and grant the CTA power of attorney (via API) over the account at the FCM.
950 37TH AVE CT
GREELEY, CO 80634 UNITED STATES
Client Services Telephone: Tel: 970-673-7273
Email: [email protected]
Crypto-ML LLC has a policy of confidentiality with respect to all Client information which it holds. The sole receiver of client statements, in addition to the clients themselves, are certain third party service providers, who are responsible for keeping accurate individual account statements for each client.
We do not disclose nonpublic personal information about you except as permitted by law including disclosures made with your consent, or as necessary to process and service your account, to protect against fraud or to protect the security or confidentiality of our records.
CRYPTO-ML LLC IS A MEMBER OF NFA AND IS SUBJECT TO NFA’S REGULATORY OVERSIGHT ANDEXAMINATIONS. CRYPTO-ML LLC HAS ENGAGED OR MAY ENGAGE IN UNDERLYING OR SPOT VIRTUAL CURRENCY TRANSACTIONS IN A MANAGED ACCOUNT PROGRAM. ALTHOUGH NFA HAS JURISDICTION OVER CRYPTO-ML LLC AND ITS MANAGED ACCOUNT PROGRAM, YOU SHOULD BE AWARE THAT NFA DOES NOT HAVE REGULATORY OVERSIGHT AUTHORITY FOR UNDERLYING OR SPOT MARKET VIRTUAL CURRENCY PRODUCTS OR TRANSACTIONS OR VIRTUAL CURRENCY EXCHANGES, CUSTODIANS OR MARKETS. YOU SHOULD ALSO BE AWARE THAT GIVEN CERTAIN MATERIAL CHARACTERISTICS OF THESE PRODUCTS, INCLUDING LACK OF A CENTRALIZED PRICING SOURCE AND THE OPAQUE NATURE OF THE VIRTUAL CURRENCY MARKET, THERE CURRENTLY IS NO SOUND OR ACCEPTABLE PRACTICE FOR NFA TO ADEQUATELY VERIFY THE OWNERSHIP AND CONTROL OF A VIRTUAL CURRENCY OR THE VALUATION ATTRIBUTED TO A VIRTUAL CURRENCY BY CRYPTO-ML LLC.
- Unique Features of Virtual Currencies. Virtual currencies are not legal tender in the United States and many question whether they have intrinsic value. The price of many virtual currencies is based on the agreement of the parties to a transaction, which is cause for inherent risk and instability in pricing.
- Price Volatility. The price of a virtual currency is based on the perceived value of the virtual currency and subject to changes in sentiment, which make these products highly volatile. Certain virtual currencies have experienced daily price volatility of more than 20%. Risks of virtual currencies include extreme price volatility and the possibility of rapid and substantial price movements, which could result in significant losses.
- Valuation and Liquidity. Virtual currencies can be traded through privately negotiated transactions and through numerous virtual currency exchanges and intermediaries around the world. The lack of a centralized pricing source poses a variety of valuation challenges. In addition, the dispersed liquidity may pose challenges for market participants trying to exit a position, particularly during periods of stress. NFA generally expects the policies and procedures for valuing virtual currency products implemented by CPOs and CTAs to take into account their access to liquidity and the volatility of these markets. Crypto-ML LLC utilizes Coinbase Pro as its source of data for valuation and liquidity.
- Cybersecurity. The cybersecurity risks of virtual currencies and related “wallets” or spot exchanges include hacking vulnerabilities and a risk that publicly distributed ledgers may not be immutable. A cybersecurity event could result in a substantial, immediate and irreversible loss for market participants that trade virtual currencies. Even a minor cybersecurity event in a virtual currency is likely to result in downward price pressure on that product and potentially other virtual currencies.
- Opaque Spot Market. Virtual currency 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 virtual currency 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, virtual currency exchanges and custodians that hold virtual currencies 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.
- Virtual Currency Exchanges, Intermediaries and Custodians. Virtual currency exchanges, as well as other intermediaries, custodians and vendors used to facilitate virtual currency transactions, are relatively new and largely unregulated in both the United States and many foreign jurisdictions. Virtual currency exchanges generally purchase virtual currencies for their own account on the public ledger and allocate positions to customers through internal bookkeeping entries while maintaining exclusive control of the private keys. Under this structure, virtual currency exchanges collect large amounts of customer funds for the purpose of buying and holding virtual currencies on behalf of their customers. The opaque underlying spot market and lack of regulatory oversight creates a risk that a virtual currency exchange may not hold sufficient virtual currencies and funds to satisfy its obligations and that such deficiency may not be easily identified or discovered. In addition, many virtual currency exchanges have experienced significant outages, downtime and transaction processing delays and may have a higher level of operational risk than regulated futures or securities exchanges.
- Regulatory Landscape. Virtual currencies currently face an uncertain regulatory landscape in the United States and many foreign jurisdictions. In the United States, virtual currencies are not subject to federal regulatory oversight but may be regulated by one or more state regulatory bodies. In addition, many virtual currency derivatives are regulated by the CFTC, and the SEC has cautioned that many initial coin offerings are likely to fall within the definition of a security and subject to U.S. securities laws. One or more jurisdictions may, in the future, adopt laws, regulations or directives that affect virtual currency networks and their users. Such laws, regulations or directives may impact the price of virtual currencies and their acceptance by users, merchants and service providers.
- Technology. The relatively new and rapidly evolving technology underlying virtual currencies introduces unique risks. For example, a unique private key is required to access, use or transfer a virtual currency on a blockchain or distributed ledger. The loss, theft or destruction of a private key may result in an irreversible loss. The ability to participate in forks could also have implications for investors. For example, a market participant holding a virtual currency position through a virtual currency exchange may be adversely impacted if the exchange does not allow its customers to participate in a fork that creates a new product.
- Transaction Fees. Many virtual currencies allow market participants to offer miners (i.e., parties that process transactions and record them on a blockchain or distributed ledger) a fee. While not mandatory, a fee is generally necessary to ensure that a transaction is promptly recorded on a blockchain or distributed ledger. The amounts of these fees are subject to market forces and it is possible that the fees could increase substantially during a period of stress. In addition, virtual currency exchanges, wallet providers and other custodians may charge high fees relative to custodians in many other financial markets.