Risk Considerations

Pool-specific risk disclosures are in each pool’s documentation. For the live vault, see PrimeTel Vault. Contract details: Smart Contracts · Audits: Security Audits.

Business performance risk

Profit distributions depend on whether the borrower’s buyers settle their invoices on time and in full. A shortfall in settlement reduces or eliminates the profit share for that period. Capital is not guaranteed.

Liquidity risk

Vault redemptions are asynchronous. When capital is deployed into the credit line, your redemption queues until liquidity returns from borrower repayments or new deposits. For PrimeTel, this ties to invoice cycles running on 15-day payment terms. A Kodiak AMM secondary exit is planned but not yet live; no duPRT pool exists today, so vault redemption is currently the only exit.

Counterparty risk

If the borrower defaults, depositors bear the loss proportional to their pool share. SukukFi’s credit assessment process and on-chain settlement verification reduce but cannot eliminate this risk. See Business Risk Assessment.

Before any legal action, SukukFi has a non-judicial recovery route it uses first: netting balances against another obligor within the telecom interconnection network, rather than collecting from the defaulting obligor directly. This is estimated to recover 66.66% to 75% of the amount owed, over roughly the same 30 days as a normal settlement cycle for PrimeTel. This is SukukFi’s own recovery methodology, not an independently audited or externally published figure.

Legal action is a fallback, pursued only if the netting route is unavailable or unsuccessful. Taking a claim to court can push the obligor into formal insolvency proceedings, and at that point recovery is no longer within SukukFi’s control: a liquidator or insolvency practitioner decides what gets repaid and in what order, following legal priority rules. SukukFi’s claim through assigned receivables is not a secured position, so recovery through the courts is uncertain and could be zero.

Smart contract risk

The vault contracts on Berachain have been audited. Audit reports are at Security Audits. No audit eliminates all smart contract risk.

Payment processor risk

SukukFi uses a regulated payment processor (Fuze Finance, the trading name of the Switch Pay group) as the fiat banking layer for the carrier. The obligor pays into the carrier’s dedicated IBAN, and the processor converts the receipt to stablecoin and credits the carrier’s own wallet. Repayment is first-party: the protocol reclaims the owed amount from the carrier’s wallet on-chain, outside the processor’s rail. The processor never pays the vault or any SukukFi account. LP capital is held in on-chain vault contracts and is not custodied by the processor. LP exposure is therefore operational, whether the carrier’s payment can be collected, converted and moved on schedule, not whether LP capital is at risk with the processor.

Under the executed Technology Services Agreement between SukukFi and Switch Pay Limited, and the current draft carrier-facing End-User Services Terms: carrier fiat is safeguarded on a for-benefit-of (FBO) basis in segregated accounts with the processor’s regulated banking partner, held in the processor’s name for the carrier’s benefit. This is the standard, insolvency-remote structure used for USD custody by regulated payment firms and neobanks, and is the strongest part of the arrangement. Carrier stablecoin is held segregated and is not lent, pledged, or rehypothecated. In an insolvency these balances are intended to be identifiable and returned in priority to general creditors, subject to the applicable insolvency regime.

What the agreement does not provide: there is no fixed settlement-time SLA, and no contractual freeze notice or maximum hold period. The processor may hold, delay or freeze a balance at its discretion for AML, sanctions or regulatory reasons, with no maximum duration and, where tipping-off rules apply, without notice. Its contractual liability is capped at fees received in the prior quarter, not transaction principal.

SukukFi reconciles expected settlement against CommTrade invoice and carrier data, escalates sustained delays under the financing agreement with the carrier, and maintains a processor substitution contingency plan within the 60-day termination notice window.