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.

One risk that is often present in receivables finance does not apply here. Capital is only applied against traffic CommTrade has already metered and rated from call detail records, so no amount is advanced against a forecast or a commitment of future volume, and no later reconciliation can reveal that the underlying activity fell short of what was funded. The receivable exists before the capital moves. What remains is the risk that the obligor does not pay for what it has taken, covered under Counterparty risk below.

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

The live vault’s obligor is in receivership, and you should understand why. PrimeTel defaulted on a loan from Signal Capital Partners in July 2023 and was placed into receivership. Signal had been both a shareholder and its primary lender for five years, and announced it would acquire the company outright through the receivership by converting debt to equity. The acquisition is still in process: the Cyprus registry continues to show a receiver in office, and no annual return has been filed since September 2020.

Read that as a creditor taking ownership of an asset it wants performing, not as an operator drifting toward failure. Trade invoice payments to suppliers continued uninterrupted throughout. It is still a real risk factor, and it is why obligor credit quality is rated Medium while the risk of total loss on a specific short-dated receivable is rated Low. Both ratings and the reasoning are on the PrimeTel Vault page.

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.

Operator control

Capital movements in the settlement layer are gated by SukukFi rather than executed automatically. A carrier cannot withdraw without a platform-issued permit, and a settlement is credited to a vault by a privileged action, not by funds arriving on-chain.

That gate is a control, not an oversight. It is what allows a contested amount to be held while a dispute or compliance check is resolved. It also means LPs depend on SukukFi operating those roles correctly, which is a real dependency and is stated here rather than obscured. Allocation between LPs remains rule-based and pro rata once a settlement is recorded.

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 settles it to the vault’s settlement contract. Settlement is to the assignee: the receivable is assigned to SukukFi Ltd before any capital is applied, so the processor pays the owner of the receivable. LP deposits are held in on-chain vault contracts and are never custodied by the processor. The obligor’s settlement payment reaches the vault through an account in the carrier’s name, which the processor operates and from which the carrier cannot move funds itself. Because the receivable was assigned before funding, amounts credited to that account are held on trust for the vault rather than belonging to the carrier. Stablecoin is held segregated and not rehypothecated. LP exposure is therefore operational, whether that payment can be collected, converted and settled on schedule, rather than a custody risk to deposited capital.

Under the executed Technology Services Agreement between SukukFi and Switch Pay Limited, and the current draft carrier-facing End-User Services Terms: the collection account is held in the carrier’s name and operated by the processor, with the balance held in segregated accounts at the processor’s regulated banking partner. Carrier stablecoin is held segregated and is not lent, pledged, or rehypothecated.

Two limitations LPs should weigh. First, the exact basis on which the processor safeguards the fiat, and the regime under which it does so, is a matter for the processor and is not something SukukFi can warrant. Second, and more importantly, the processor is not currently a party to the assignment. The instruction directing settlement to the vault binds the carrier, not the processor, so on a carrier insolvency an officeholder could instruct the processor to stop and the processor would owe SukukFi no contractual duty to refuse. SukukFi is finalising a tripartite Payment Services Protocol and Liability Acknowledgement — the carrier, its processor and SukukFi Ltd — part of the legal pack, to close that gap. Until it is signed, this is a real exposure and not a theoretical one.

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.