Last modified: 9.25.23
These OTC Terms and Conditions (“OTC Agreement” or “OTC Terms and Conditions”) is an addendum to both the General Terms and Conditions (“General Terms and Conditions”) between you and Paxos and the Trading Platform Terms and Conditions between you and Paxos, and this addendum governs the use of Paxos’ over-the-counter (“OTC”) trading services. “Paxos” has the meaning set forth in the General Terms and Conditions. References to “Paxos,” “we,” “our” or “us” are to Paxos, and references to “you” or “your” are to the User who is bound by these OTC Terms and Conditions. These OTC Terms and Conditions govern your use of the OTC services provided by Paxos, which are described in greater detail herein (“OTC Services”). These OTC Terms and Conditions addend and are incorporated into the General Terms and Conditions and the Trading Platform Terms and Conditions entered into by and between you and Paxos, and these OTC Terms and Conditions are a prerequisite for your access to the OTC Services. To the extent that there is an inconsistency between these OTC Terms and Conditions and either the General Terms and Conditions or the Trading Platform Terms and Conditions, the terms of these OTC Terms and Conditions will govern and control. Any capitalized term not defined herein shall have the meaning set forth in the General Terms and Conditions.
You agree that you have read, understood, and accepted all of these OTC Terms and Conditions contained herein and you confirm that you have read, understood and accepted all of the General Terms and Conditions and the Trading Platform Terms and Conditions, and the additional guidelines and rules incorporated by reference into the General Terms and Conditions or the Trading Platform Terms and Conditions. Your use of the OTC Services after having been notified of these OTC Terms and Conditions constitute your acceptance of these OTC Terms and Conditions. Paxos may amend or modify these OTC Terms and Conditions in accordance with the General Terms and Conditions.
THIS OTC AGREEMENT IS A LEGAL CONTRACT BETWEEN YOU AND PAXOS. YOU SHOULD TREAT IT AS ANY OTHER LEGAL CONTRACT BY READING ITS PROVISIONS CAREFULLY, AS THEY WILL AFFECT YOUR LEGAL RIGHTS. BY USING THE OTC SERVICES IN ANY MANNER, YOU ARE DEEMED TO HAVE READ, UNDERSTOOD AND AGREED TO BE BOUND BY ALL OF THE TERMS CONTAINED IN THIS AGREEMENT. YOU MAY NOT PICK AND CHOOSE WHICH TERMS APPLY TO YOU. IF YOU DO NOT AGREE WITH ALL OF THE TERMS IN THIS AGREEMENT, YOU MUST CEASE ALL ACCESS AND USE OF THE OTC SERVICES. NOTHING IN THIS AGREEMENT IS INTENDED TO CREATE ANY ENFORCEMENT RIGHTS BY THIRD PARTIES. IF YOU DO NOT UNDERSTAND ALL OF THE TERMS AND CONDITIONS IN THIS OTC AGREEMENT, YOU SHOULD CONSULT WITH A LAWYER BEFORE USING THE OTC SERVICES.
- Paxos OTC. You represent to Paxos that you invest in or otherwise acquire digital assets supported for trading by Paxos (“Digital Assets”) and desire to enter into OTC Digital Asset purchase and sale transactions (“Transactions”) without being subject to the rules of any established central limit order book trading platform such as itBit, the crypto asset trading platform owned and managed by Paxos.
- Paxos as Broker. On a periodic basis, you desire Paxos to broker, on a reasonable efforts basis, one or more Transactions between you and other Paxos Members (each an “OTC Counterparty”). Every OTC Counterparty must be a Member of Paxos or its affiliates. All OTC Counterparties are subject to the AML, KYC and similar requirements of the Paxos entity to which they have onboarded.
- Quotes. You agree that these OTC Terms and Conditions govern all (i) submissions of quotes (“Quotes”) by you to buy and/or sell Digital Assets to the OTC trading desk operated by Paxos (“OTC Desk”); and (ii) responses by you to Quotes from other Paxos Members to the OTC Desk. Paxos shall treat a Quote as a request provided to Paxos for Paxos, through its OTC Desk, to locate a counterparty for a Transaction in a supported Digital Asset. OTC Services include instant message conversations, oral communications, and other methods of communications used by Paxos to receive Quotes, request responses to Quotes, negotiate Transactions between you and OTC Counterparties, execute and confirm Transactions, and settle Transactions, among other things. Paxos shall communicate with each potential counterparty to a Transaction and act as an agent of each counterparty in negotiating the Transaction. You agree that Paxos may, in its sole and absolute discretion, determine whether to process or decline to process a Quote or any response to a Quote.
- Requests for Quotes. In response to a Quote, Paxos may request Quotes from one or more potential OTC Counterparties. We will always be truthful to you in any statement that we make by using clear and unambiguous language regarding pricing.
- Negotiation and Execution. Each OTC Counterparty shall, on an anonymous basis, agree upon the specific terms of any Transaction through the OTC Desk, by communicating directly with Paxos as agent. OTC Counterparties may, with Paxos’ consent to communication method, negotiate Transactions using electronic, written, or oral communications with Paxos; however as set out below in this Paragraph 5, execution may only occur by written email communication. As soon as practicable following Paxos believing that all OTC Counterparties have indicated to Paxos that they agree to the terms of a proposed Transaction (including asset, quantity, price, settlement time, and transaction fees), Paxos will provide to the OTC Counterparties an email setting out those terms (the “Confirmation Email”) and once all OTC Counterparties have confirmed those terms by sending to Paxos a written email response to the Confirmation Email, the Transaction becomes binding and final (the “Execution”). A Transaction for which Execution has occurred is an “Executed Transaction” and may not be unwound unless all OTC Counterparties agree in writing otherwise. However, if Paxos determines that a Quote communicated by it to an OTC Counterparty contained an obvious error with respect to the price or amount of Digital Assets set forth in that Quote, Paxos shall have the right to cancel the Executed Transaction by delivering notice of the cancellation to both OTC Counterparties at any time prior to Settlement (as defined below in Paragraph 6). In the absence of such an obvious error, the terms of a Confirmation Email confirmed by email response by all OTC Counterparties shall be conclusive. You agree that, for the avoidance of doubt, Paxos may, in its sole and absolute discretion, accept statements similar or analogous to the following as your indication of agreement to the terms of a proposed Transaction: “done,” “I buy,” “bought,” “I sell,” or “sold”; however, as set out above, the proposed Transaction does not become binding and final, i.e., an Execution, until all OTC Counterparties have confirmed the terms of the proposed Transaction by sending to Paxos a written email response to the Confirmation Email. Upon Execution, the terms of the Executed Transaction shall constitute a binding contract between you and the other relevant OTC Counterparty. For the avoidance of doubt, Paxos has sole and absolute discretion whether to accept or reject any Quotes or other orders.
- Pre-Funded Trading. Except for Transactions where you are afforded delayed settlement terms pursuant to Paragraph 7 of these OTC Terms and Conditions, you agree that you must deposit with Paxos the full amount of relevant Digital Assets and/or fiat currency before Execution. If Execution occurs prior to noon Eastern Time on a Business Day, on that Business Day, and if Execution occurs at or after noon Eastern Time on a Business Day, on or before the next following Business Day, Paxos will settle an Executed Transaction by delivering to each OTC Counterparty the Digital Assets and/or fiat currencies owed to that OTC Counterparty under the Executed Transaction to that OTC Counterparty’s Digital Asset wallet and/or fiat wallet at Paxos (“Settlement”). You shall not withdraw, attempt to withdraw, transfer, alienate or provide a lien to any third party on any Digital Asset or fiat currency held by Paxos to satisfy your obligation under any Executed Transaction. For the purposes of this OTC Agreement, “Business Day” shall mean times between 9:00:00 am and 5:00:00 pm Eastern Time Monday through Friday, excluding U.S. Federal holidays or days when Paxos’ New York City office is closed due to weather or other emergencies. Paxos will not be responsible for any failure to settle in accordance with the timing set out above as a result of technological failures such as the internet going down and being unavailable.
- Post-Execution Funding and Delayed Settlement. A prospective OTC Counterparty may make a request to Paxos that a proposed Transaction be subject to post-Execution funding pursuant to this Paragraph 7. With Paxos’ written or verbal consent, made in its sole and absolute discretion, funding of such Transaction by one or more OTC Counterparties and Settlement may be delayed for up to a further Business Day after Execution. The timing of post-Execution funding and Settlement shall be a material term of a proposed Transaction that both OTC Counterparties must agree to through the OTC Desk prior to Execution. Any OTC Counterparty afforded delayed settlement must deposit in their Paxos wallet(s) assets sufficient to satisfy their obligations under an Executed Transaction within the time period specified at Execution. You agree not to withdraw, transfer, alienate, or provide a lien to any third party on any assets held by Paxos to satisfy a delayed settlement Transaction. For the avoidance of doubt, Paxos, in its sole and absolute discretion, may permit only one OTC Counterparty to a Transaction to delay funding; in such event, the OTC Counterparty not afforded delayed funding must prefund the Transaction pursuant to Paragraph 6 of these OTC Terms and Conditions.
- Fees. You agree to pay transaction fees for any Executed Transactions as agreed between you and Paxos before Execution. Agreement on fees may be oral or written.
- No Name Disclosure. Trading through the OTC Desk will be anonymous, and Paxos has policies and procedures reasonably designed to prevent the disclosure to any other OTC Counterparty of the identity of one OTC Counterparty (or any person acting on its behalf) submitting or responding to a Quote. However, if ever Paxos or an affiliate of Paxos is the OTC Counterparty in a Transaction, disclosure that Paxos is acting as a principal in the Transaction will be made to you.
- Default by Your OTC Counterparty. Paxos will make commercially reasonable attempts to contact all OTC Counterparties to an Executed Transaction to effect Settlement. In the event that your OTC Counterparty fails to settle an Executed Transaction, Paxos may stand in as your OTC Counterparty with the same terms as agreed between you and the defaulting OTC Counterparty, with the exception that Paxos shall have an additional Business Day to settle any such Transaction. When this occurs and Paxos is acting as principal in a Transaction, disclosure that Paxos is acting as principal will be made to you.
- Default by You. If you fail to effect Settlement of an Executed Transaction by, among other things, failing to consent to the transfer of assets by Paxos, you shall be considered in default (“Default”). You hereby grant Paxos a secured interest pursuant to the New York Uniform Commercial Code in all of your assets, including fiat currency and Digital Assets, held by Paxos or its affiliates up to the value of any Executed Transactions on which you are in Default. You also hereby grant to Paxos a security interest pursuant to the New York Uniform Commercial Code in any assets held by Paxos or its affiliates to the extent of any liability you have to Paxos due to a Default.
- Effect of Default. In the event you are in Default, Paxos may in its sole and absolute discretion:
- stand in as the counterparty on your behalf and settle such Executed Transaction with the OTC Counterparty;
- cancel and/or terminate all of your Quotes and responses to Quotes, and liquidate, close out, net, cancel and/or terminate pending Transactions; liquidate any and all of your assets and positions held at Paxos or its affiliates to cover any losses incurred by the nondefaulting OTC Counterparty as a result of your Default, and in connection with any such liquidation, Paxos expressly disclaims responsibility for any loss incurred in the liquidation of your assets and positions held at Paxos or its affiliates due to price slippage, market timing and similar matters;
- refuse to accept from you Quotes or responses to Quotes or require all future Transactions involving you be instantaneously settled under Paragraph 7 notwithstanding any other agreements; and/or
- terminate, with or without prior notice, this OTC Agreement.
13. Damages. In the event that an Executed Transaction is not settled because of your Default, you shall be liable to Paxos for losses incurred as a result of the failure to settle the Executed Transaction; provided, however, that under no circumstances shall you or any other defaulting OTC Counterparty be liable to Paxos or the non-defaulting OTC Counterparty for indirect, special, punitive, or incidental losses or damages of any character. Any net proceeds obtained from the liquidation of assets held by Paxos shall be applied to discharge any and all of your obligations to Paxos.
14. Representations and Warranties. You acknowledge and agree that when entering Transactions, you will be transacting for your own account, and in an arm’s-length role in relation to Paxos.
15. You acknowledge and agree that Paxos will not generally be exercising discretionary trading authority on your behalf or providing any advisory services to you; however when Paxos is given any discretion by you, you will be made aware of how that discretion will be exercised and Paxos will exercise that discretion reasonably, fairly, and in a way that is not designed or intended to disadvantage you. You acknowledge and agree that Paxos will work on a reasonable efforts basis to broker Transactions based on parameters (including quantity and price) provided by you. You also acknowledge and agree that while Paxos will attempt to broker your Transactions, there may be occasions when Paxos or a Paxos affiliate will be the principal to a Transaction with you and, in such circumstances, disclosure that Paxos or its affiliate is acting as principal will be made to you. Neither Paxos nor any Paxos affiliate operates a Principal Trading Desk and does not currently have any intention to do so; any principal trading by Paxos or a Paxos affiliate will be for the sole purpose of providing liquidity and satisfying Member goals, and will not be intended to earn a profit for Paxos or any Paxos affiliate. Paxos will not execute for its own account or benefit or that of a Paxos affiliate a Transaction in a Digital Asset while Paxos is in possession of specific confidential information regarding the trading interest of our Members in such Digital Asset or in a manner that is designed or intended to disadvantage you.
16. For the term of this OTC Agreement, and subject to your compliance with these OTC Terms and Conditions, the General Terms and Conditions and the Trading Platform Terms and Conditions, Paxos grants to you a limited, nonexclusive, nontransferable, nonassignable, right to access and use the OTC Desk exclusively for the purposes described in this OTC Agreement. All copyright, trademark, trade secret, and other intellectual property rights in, to, and related to the OTC Desk or any of its components (including feedback or suggestions provided by you regarding Paxos’ business), or any data submitted to or generated by Paxos, are the sole and exclusive property of Paxos, and you shall not obtain any such rights, except as explicitly specified in this Paragraph 16.
17. You agree that it is your sole responsibility to control, monitor, and restrict the methods you use to access communication to Paxos at its OTC Desk (“Access Methods”), including without limitation, all passwords and security devices. You shall be bound by all instructions communicated to the OTC Desk using your Access Methods and usual communication methods, and Paxos shall have no obligation to verify whether any such instruction has been duly authorized. If you learn that your Access Methods and usual communication methods may have been compromised, you shall immediately notify Paxos pursuant to the notice provisions of the General Terms and Conditions. You shall be responsible for any instructions sent using your Access Methods and usual communication methods until you notify Paxos and Paxos has disabled the compromised Access Methods or agreed not to accept that usual communication method.
18. You agree that you are solely responsible for (a) any computer systems, applications, communications software, telecommunications equipment, and other equipment and software (“Equipment”) used by you to access or communicate to the OTC Services; and (b) any telecommunications services, Internet service, or other communications services used by you to connect to or communicate to the OTC Desk (“Connectivity”). Any Paxos assistance with your Equipment or Connectivity is provided without warranty as described further below.
19. Paxos reserves the right, at any time, with or without cause or prior notice, to limit, suspend, or terminate all or part of the OTC Services or your access to the OTC Desk. For the avoidance of doubt, Paxos shall not have any obligation to send any price Quote received by the OTC Desk to prospective OTC Counterparties. You understand that you are solely responsible for maintaining any alternative arrangements that may be needed or desirable if any or all of the OTC Services becomes unavailable or disrupted.
20. FOR THE AVOIDANCE OF DOUBT, THE DISCLAIMERS OF WARRANTY, LIMITATION OF LIABILITY AND INDEMNIFICATION AND RELEASES SET OUT IN THE GENERAL TERMS AND CONDITIONS SHALL COVER THE OTC SERVICES, AND THESE OTC TERMS AND CONDITIONS AND THE GENERAL TERMS AND CONDITIONS SHALL BE INTERPRETED ACCORDINGLY.
21. You agree that either party may terminate this OTC Agreement at any time for any reason by providing written notice to the other party. Termination of the OTC Agreement shall not excuse performance of either party’s outstanding obligations under the OTC Agreement (or the General Terms and Conditions) at the time of termination. For the avoidance of doubt, while you are in Default and even if Paxos is not making the OTC Services available to you as a result, you will remain subject to the terms of this OTC Agreement.
22. Incorporation by Reference. You agree that, except as otherwise provided in these OTC Terms and Conditions, all provisions of the General Terms and Conditions and the Trading Platform Terms and Conditions are hereby incorporated into this OTC Agreement by reference, including but not limited to limitations of liability, disclaimers of warranty, indemnification and releases, confidentiality and compliance with legal process, choice of law, arbitration, statute of limitations, notice, assignment and severability.
23. You agree that these OTC Terms and Conditions, including their incorporation of the General Terms and Conditions and the Trading Platform Terms and Conditions by reference, sets forth the entire agreement and understanding between the parties relating to the subject matter herein and supersedes all prior agreements, discussions, understandings, or representations, either oral or in writing, solely to the extent as they relate to the subject matter of this OTC Agreement.