FAQ – Crypto Art
Investment terms

Standard investing conditions into the Crypto Art fund:
• 1 year is the minimum investment period;
• Investor receives 70% of profit;
• Asset management fee is 2%;
• The minimum investment amount is $ 10,000;
• Early exit fee is 5%.

Investor can also open a personal account with a fixed risk. The minimum investment amount is $ 50,000 in this case. You can learn more about this service by leaving a request with a note about a personal account.

The minimum investment period is 1 year.
What a long-term strategy provides to an investor in practice? It is the ability to determine and plan financial goals for many years to come, as well as the time to “recover” and earn profit after short-term declines.

Commission for successful investment management is 30%.
Distribution of income is beneficial to the client: 70/30. Investor receives 70%, and 30% of income is fund’s reward for successes.
Asset management fee is 2%.
2% commission must be paid once for a minimum period. It helps to cover the fund’s operating activities.

Our fund takes the asset management fee and profit fee only. There are no hidden fees.

On the 20th of each month we send a detailed report on news and results of our fund as well as the share price and portfolio structure to our investors. Besides, the development of improved investor’s personal account is currently in development. It will allow to track the fund’s activities at any suitable time. Besides, you can always ask any questions about fund’s activities by contacting our Customer care service.

Fund's strategy

We use several algorithmic strategies to regulate the fund’s functioning at the moment. Those are trend-followers, risk management strategies and high-frequency trading strategies, which are the Oxford’s recommendations to use by investment companies.
We calculate the perfect allocation of algorithms in the portfolio after their creation. We use the modern portfolio theory of the Nobel laureate Markowitz for this. Thus, we get a low correlation of the algorithms with each other and with the market. It reduces the risk of declining into the loss zone.
In order to ensure maximum portfolio profitability, we use an option strategy, new IEO projects and direct trading at OTC market in some cases.

The algorithm is a program of automatic actions for asset trading, aimed at autonomous fulfillment of certain actions in case corresponding signals emerge.

Among the many benefits of algorithm usage for trading, it is worth noting that they allow to increase the speed of decision making and deal making process massively, as well as exclude the possible human tardiness and emotions out of the trading process.

We test the algorithms on known historical data (“in sample” testing) after creation. This leads to learning the algorithm using 75% of the total data. 25% are for testing with unknown data (“out of sample”). The next step is to re-test the “out of sample” in an abnormally growing/declining market. The Sharpe ratio is used after each step to check the final effectiveness of the algorithm. This testing scheme is based on the Oxford recommendations.

In sample testing is testing of the algorithm using the historical data it does know.

During the in sample testing the algorithm “learns” up to 50%-70% of the known amount of historical data on price changes.
At that stage the algorithm uses data for no less than the last 3 years to choose it’s ideal parameters for purchase/sell signals in accordance to the built in economic logic.

The out of sample testing is testing of the algorithm using the historical data it doesn’t know.

It shows whether the algorithm can be used with real money.
The out of sample testing results are relevant only in case if the algorithm was tested using no less than 25% of historical data he was learning with.
The Sharpe ratio should not fluctuate more than 20% from the in sample testing results during the out of sample testing results evaluation.

This is a process aimed to reduce possible negative results and losses.
Crypto Art’s Risk Management Strategy strives to comply with the risk / reward ratio strictly. For example, the 1:3 ratio. This means that the maximum allowable loss level for any transaction is 1% of the deposit, and the minimum profit target is 3%. In this case, the transaction may be successful or unsuccessful. It leads to 3% profit or 1% loss. Thus, you can remain in the zone of profitability by following the rules of risk management. This is true even for those moments, when the number of loss-making transactions prevails over successful ones.
In our activity, the principles of risk management are in the basis of the created algorithms. They are observed automatically, excluding the factor of an emotional and erroneous human decision.

Money management process includes methods and techniques aimed to achieve maximum profit growth with a minimum level of risk.
Money management of Crypto Art is tightly integrated into the scheme of any algorithm we create. It always must be an integral part of our business.

A striking feature of the cryptocurrency market is the high correlation of assets. The price of altcoins is just a derivative of the Bitcoin price. Their diversification has become ineffective, and if the market declines, it will lead to significant losses. Therefore, we pay attention to those assets that can be hedged. Bitcoin and Ethereum is the biggest part of our portfolio. If the market declines, a hedging strategy can reduce risks or even neutralize them.
However, altcoins still have an advantage over Bitcoin despite all their cons. We’re talking about incredibly high profitability during the “altseason”. This is a period when their growth is higher that Bitcoin results. Therefore, the Crypto Art portfolio also includes a small part of altcoins. Each of them undergone a deep fundamental analysis.

ICOs show mostly negative results today, so we work with them carefully. At this stage of the crypto industry development, our attention is mostly paid to IEO projects that have great investment attractiveness. Firstly, these projects are checked by team of an experts. The exchange has the only interest of launching truly promising projects, so experts thoroughly check the technical, material and legal basis of the project. This is an additional security guarantee for investors.
As before, we monitor cryptocurrency market actively to find the best new projects. So, if a crypto diamond will be born, we will not miss it.

An instant cryptocurrency market collapse is almost impossible now. The fact is that the principles of cryptocurrencies, such as anonymity and centralization, are very popular at the world markets. Therefore, this market will continue to grow, and its capitalization will increase.
Strong fluctuations of exchange rates are possible on the cryptocurrency market, but it always recovers after recessions.
We take into account the possibility of strong dropdowns in our investment portfolio. We distribute assets in a way to prevent problems with any cryptocurrency, even in combination with others. So such a situation can’t have an impact of the entire portfolio.
More information about the fund’s investment strategy, risk minimization and results can be found at:
//cryptoart.fund

Our algorithmic strategies are built on a long-term vision of market movements. It focused on minimizing risks and income stability.
Risk management strategies exclude the situations of losses in excess of the planned value. You can get profit even if an amount of successful transactions is only 30% of the total. The rules of money management within the algorithms reduce the trading volume during the series of losing trades, and also can increase the volume during the series of successful trades.
We also use risk hedging via option contracts. It helps to smooth out possible drawdowns when changing the market trend.
Algorithmization of trading processes solves the problem of the human factor. It increases our response in any situations, that also has a positive impact on secure issues.

Low algorithm correlation allows us to lessen the share volatility, increasing the average profitability and lowering risks.
The lower mutual algorithm correlation is, the more diversified our portfolio is. Furthermore, it increases the efficiency of covering losses from some algorithms activity with profit from others.

High frequency trading strategies are focused on opening and closing short-term positions with high volumes in order to get some small profit on each deal. At the core of such strategies lies the principle of market inefficiency — appearing of short-term difference in prices of correlating financial instruments. The main goal of HFT trader is to find and exploit this difference with maximum efficiency.

It is obvious, that the most effective way to implement these strategies would be with algorithmic trading, because algorithms discover market inefficiencies and exploit them within a minimum periods of time, unimaginable for human trader. Our fund uses just this kind of trading.

Sharpe ratio in this kind of trading is usually many times higher than with following long-term strategies like Buy&Hold.

Risk management strategies are based upon four main principles:

1. Maximal earnings

Out of all possible options of risky investments, the investor chooses the one that gives higher efficiency of economic results under minimal risks, acceptable for the investor.

2. Optimal result possibility

Out of all possible decision options, the investor chooses the one that gives acceptable probability of result, in other words — bearing maximal financial results.

3. Optimal result volatility

Out of all possible decision option, the investor chooses the one that gives a smallest gap between the possibility of winning and losing situations.

4. Optimality of correlation between gain and risk amounts.

The algorithm must evaluate the expected amount of gain and risk (losing) and make the decision to invest in options that would allow to get the expected level of gain and simultaneously avoid high risks.
Risk-management strategies we use eliminate the possibility to suffer losses over the planned amount and allow gaining profit even when successful deals make only 30% of the total amount.

Trend-following strategies are based upon the principle of detecting the trend using time sequences of the asset price via various technical analysis indicators, and, correspondingly, purchasing or selling the asset when the corresponding indicators appear.

Trend-following strategies can be used in almost any time frames, tick to month, however (because the profitability of these strategies depends on the amount of correct predictions on the further price movement), too big time frames are not recommended, because it takes too long to detect errors in them and they can lead to serious losses.

Efficiency of these strategies strongly depend on the instant liquidity of an instrument, because most deals are made with market requests on current costs of demand and supply.

Sharpe ratio is and indicator of efficiency for an investment portfolio (asset), which is calculated as a ratio of average risk premium to the average portfolio divergence.
Sharpe ratio is used to determine how effective does the asset’s profitability compensate the risk investor takes. When comparing two assets with similar expected income, an investment into the asset with higher Sharpe ratio would be less risky.

We use algorithmic strategies, created to get profits under any market conditions.
The essence of the process is to use market volatility. For example, our trend-following strategies which are the basis of these algorithmic strategies, are work in accordance with the principle of identifying a trend in the time series of the price values of the instrument. To do this, we use various indicators of technical analysis including buying or selling the instrument when the necessary signals appear. This is possible due to the algorithmization of trading processes. Our response time to changes and the speed of trade transactions allow us to act almost immediately after new information arrives. This concept also allows to synchronizes our activities with market fluctuations in the way we need.
High-frequency trading strategies used in our portfolio are focused on the opening and closing of short-term positions in large volumes. It is required to obtain a small profit on each transaction. Such strategies are based on the principle of market inefficiency when the short-term price differences of correlating financial instruments appear. The task of the HFT trader is to detect and use this difference quickly.
We also use the rebalancing algorithm called VPPI. It allows you to show better results over the long term.
In addition, we use risk and money management strategies that minimize losses. It affects the overall financial dynamics of the fund and always lead us to a positive balance.

General questions about the fund

Andrey Tonkolytko is Managing Partner of Crypto Art:
• Leading expert of the CIS countries on algorithmic trading;
• Quantitative portfolio manager at Crypto Art;
• Successful trading and investing experience at the traditional stock markets, such as NYSE, Nasdaq;
• Working experience with one of the largest US brokerage company (Hold Brothers);
• The speaker of the top conferences, who shared the stage with Ton Weiss and Roger Ver;
• Participator at thematic conferences and seminars around the world: New York, Tel Aviv, Bucharest, Tallinn, Singapore;
• A graduate of the Higher School of Business, one of the most respected business schools in Ukraine. His graduation project was: “High-risk investment fund”;
• He got the specialization of a portfolio manager at the University of Geneva according to UBS Asset Management standards;
• Graduate of Saïd Business School University of Oxford with a degree in Algorithmic Trading.

New investors join us all the time and our portfolio updates in a dynamic fashion. Therefore, the amount of funds in our management can be discussed only in the context of specific moment in time.

We provide these data to fund investors only, in our monthly report and on individual request.

We can name several reasons of why to work with us.
• Security: low funds’ correlation according to cryptocurrency market;
• Strategy. We use proven techniques and strategies with was used by companies that manage billions in the stock market;
• Experience. 6 years of experience in cryptocurrency investments’ niche;
• Leadership: we were the first fund who start using algo trading at the crypto market;
• Professionalism: we always rely on Nobel laureates and Oxford professors researches in asset management;
• Hedging risks with options;
• Competence: a team of practicing algorithmic traders.

There is no binding to a specific date, you can invest in our fund any day. If our client has purchased fund’s shares on 19th, he will receive his first report on 20th evening. Moreover, if the share price has grown in that time frame he would be able to withdraw his first profit. Even in case he invested on 20th in the morning and the evening report states a higher price, the profit can be withdrawn.

The promocode is an instrument for cooperation via partnership program. Relatively speaking, it is a mark that allows us to:

— Determine who did invite a specific investor in our fund (in order to accrue a corresponding reward to that partner).
— Record a client as a referral from a particular partner and provide the corresponding discount (each partner has a possibility to provide special discounts to his referrals).

We can name several reasons of why to work with us.
• Security: low funds’ correlation according to cryptocurrency market;
• Strategy. We use proven techniques and strategies with was used by companies that manage billions in the stock market;
• Experience. 6 years of experience in cryptocurrency investments’ niche;
• Leadership: we were the first fund who start using algo trading at the crypto market;
• Professionalism: we always rely on Nobel laureates and Oxford professors researches in asset management;
• Hedging risks with options;
• Competence: a team of practicing algorithmic traders.

Yeah, sure, we do have a partnership program for interested clients. If you want to be our partner, please, contact our fund’s manager who will tell you all the information you need and discuss specific details of cooperation with you: support@cryptoart.fund

Financial questions

Clause 3.3 of the Agreement describes the rules of getting profit of our fund. Profit is formed on the basis of unit value changes and the number of units you owned.
Profit distribution proportion is: 70% to investor, 30% to fund.
What you can do with profit?
• You can withdraw it. Profit can be withdrawn monthly. The profit is only subject to the total income achieved during the last month. The number of shares decreases in this case.
• You also can reinvest the income. If you decide not to withdraw profit, it will be added to the body of the investment at the next reporting period. The value of the share will increase.
Withdraw is the selling of shares to the fund for the amount of the withdrawn profit. The procedure is as follows:
• Within 48 hours after receiving the monthly report, you need to make a request to support@cryptoart.fund email address;
• The fund processes the application (up to 48 hours) and transfers the corresponding amount (in BTC) to your balance in the system. Then you can withdraw funds to wallets in any convenient moment.
According to the terms of the offer agreement, the operating unit is USDT. BTC acts as a virtual asset required to purchase tokens and withdraw income.

Bitcoin has been a kind of market indicator for a long time. It is either growing or declining, and that’s the reason why the whole market is feels uncomfortable at the same time.
One of the main risks is: “If Bitcoin collapses, the assets of our investors will go into a deep minus.” We consider Bitcoin only as one of the tools of getting profit at the market. In this case, the share price consists of the value of all assets and does not depend only on BTC exchange rate. Therefore, USDT was chosen as the universal unit of account.
It is also important to note one thing. If you use the personal account service with investments over $50,000, you can choose the yield between three main currencies: BTC, ETH, USDT.

If you decide not to withdraw the monthly profit, it’ll be saved in the body of the investment. The next month’s profit calculation will take into account the total amount.
You can withdraw profits of the last month. If you missed several months, the profit received during this period will not be lost. You can withdraw it at the time of withdrawal of the investment later.
How it works?
For example, you invested $ 5,000 with a $ 10 share value. In this case, you get 500 shares of the fund.
Suppose that in a month the return on the assets was 20%, and the share price rose to $ 12 accordingly. The value of your assets will be $ 6,000, and $1000 here is considered profit.
According to the terms of cooperation, 30% of the profit is an income for our fund, and other 70% ($700 in this case) is your profit as an investor.
There’s two options of what to do with money received.
1. Withdraw it. You can sell the shares to the fund in amount of the profit. In this example, it is $ 1000. You save fewer shares, but the body of the investment remains the same ($5000).
2. Leave in the fund. In this case, all the profits will be added to the body of the investment. It will increase on a monthly basis, if you do not withdraw income for several reporting periods. It corresponds to the unit value increase.
Here’s how it works. For example, you invested $ 5000 and the profitability of the first month was 20%, 15% during the second one, and the percentage of the third month was 25%.
If you did not withdraw profit before the end of the 3rd month, the results will be as follows:
• 1st month – $ 5000 x 120% = $ 6000;
• 2nd month – $ 6000 x 115% = $ 6900;
• 3rd month – $ 6900 x 125% = $ 8625.

The share price is calculated using the following formula: P=S/N

P stands for share price, S for total asset cost and N is for the amount of shares in circulation.

This way, the share price depends on the asset cost, which is in turn formed on the basis of portfolio structure and trading deals results.

The minimal term of investment in Crypto Art is 1 year. The profit can be withdrawn each month.

You have the right to withdraw your investments from the fund before the contract term expires. In this case the fund keeps 5% of the current amount of your assets. The percentage of profit is not taken in this case.

During the premature money withdrawal, the fund will need to take the required amount of tokens out of operations and then undertake an unscheduled portfolio rebalancing. The forfeit sum covers operational expenses for these procedures.

The cryptocurrency market has become less volatile but still is quite risky. In these circumstances it would be unprofessional to give any guarantees of sure income.
We orient our clients towards 50% of year income, doing everything we can to surpass this indicator.

The fund’s strategy is aimed at maximal balance between minimizing these risks and gaining profit.

Deposit and withdrawal of funds is available via BTC only (by using BTC-USDT current rate). You can check the current rate at:
//blockchain.com

Cryptocurrencies are not subjected to taxes in most legislations, but if you wish to pay taxes in your own legal frame, it is your right. We advise to contact the Revenue Department of your state.

Investment process

In order to invest in our fund you must first purchase a required amount of Bitcoin and then purchase fund’s shares with them.

In order to become our fund’s investor, you must purchase it’s shares. You can make a new investment any time.

The new investment will be subjected to terms of cooperation you have chosen for it, just as with your initial investment.

It’s quite simple, really. We have prepared several guides for you which will help you to do it step-by-step in a very short time:
//docs.google.com/document/d/1zF96SOaVhAe6TxyFroervgup76yvBs6RoZs1A_X4k2E/edit
//docs.google.com/document/d/16fHpR1LZYSef7f_VtXcbvvqgCEBCI85PolnC8ujV2Xk/edit

The period of asset trust management is 1 year. You always can stay at the fund or withdraw the body of the investment after that period.
You need to sell all the shares to exit the fund. You can make a request via support@cryptoart.fund
The operation can be completed within 48 hours after the close of the reporting period related to the end of your investments’ terms. Processing the request takes up to 48 hours. Then the money will be added to your account.
We will inform you about the approaching expiration of the investment term by a special letter in which we describe the possible scenarios for closing the investment.
In addition, you can close your account before the appointed time. In this case, the fund withholds additional 5% of the amount of digital assets during withdraw.

We usually recommend to refill fund’s wallet with your own Bitcoin wallet, but you can do it using a cryptocurrency exchange service. To do that, you have to specify the number of wallet that you will get from us during the withdrawal of funds from the exchange service.

Please note, that there can be complications out of our power during the withdrawal of funds from an exchange service. For example, the transaction can take a significant amount of time, or transaction hash can get lost.

You can complete transfer in parts. In order to make an investment, you need to purchase fund shares with only one transaction. In you transfer the funds in some different intervals, the purchase of units will be registered at the exchange rate at the time of the last transfer.
Currently, the minimum investment amount is $ 10,000. You can deposit bitcoins to us in parts and in smaller amounts, but you can buy shares only when the required amount is reached.

Not much — as soon as you contact fund’s manager, you would need about half an hour to solve all the questions and finalize the investment process.

In order to become Crypto Art investor, you must purchase shares of our fund. To do that you must have Bitcoins on your personal wallet, which you will use to transfer funds.
If you have dollars in your possession, you can enter the via online exchange service, for example — Kuna. We can send you a step-by-step guide for that process if you’d like. Please, send us a request at support@cryptoart.fund

Legal questions

The Crypto Art fund offers several guarantees to it’s investors: formal offer contract, settlement of disputes in Stockholm arbitration court.

We are trying to make our fund’s activity as transparent as possible for our investors, send out reports on a regular basis and publish news about fund’s events.

That being said, we thoroughly warn our investors about all the risks of investing into the cryptomarket and protect them from inappropriate expenditures.
We do everything in our power to make every fund’s participant understand all the existing risks and take measured and conscious decision about investing.

Chares credited to your account are the actual confirmation of the money transfer. Shares guarantee receiving the profit, and also return of assets at the end of the investment period.

If the share price has decreased in accordance to the accounting period results, investors would not be able to withdraw profits for that period.

This situation is possible, but we lower it’s probability and possible losses with a balanced investment strategy. That goes in accordance with the minimal investment periods of 6 month and 1 year — it is an optimal term, demonstrating the effectiveness of our strategy.

We orient our clients towards 50% of year income, doing everything we can to surpass this indicator.

All the relations between the fund and investors are regulated by the Agreement, which is, essentially, a public offer contract. The Agreement is created in accordance to the European legislation norms and covers all the interactions between parties.

You can get acquainted with the Agreement at [link]

The Crypto Art is registered as a legal body in the Republic of Estonia:
Cryptoart OÜ
14298546
Estonia, Harjumaa, Tallinn, Pärnumnt.
141-59, 11314

Estonia is an EU country with good legislative base and open databases. Registration in this country allows the regulation between the fund and investors in accordance to the European legislation.

The company has an account in following banks: Swiss Bank, Rietumu Banka, RIB Bank.

In accordance to the formal offer contract, an investor has the right to invite third parties or organizations to perform external audit.