# Your funds, your control

> How FalconLend.ai reduces risk through self-custody and over-collateralization, and the risks that remain.

- URL: https://falconlend.ai/en/security/
- Updated: 2026-10-16

We explain security by describing the mechanism, not by making guarantees. Here is how FalconLend.ai reduces risk — and the risks that remain.

## You keep custody

Your funds stay in your own Bitfinex account throughout. FalconLend.ai only holds the access needed to help execute lending, and **cannot withdraw or move your funds**.

## Over-collateralized lending

In the Bitfinex funding market, borrowers must post **collateral worth more than the loan**. When collateral falls short, the system force-liquidates to repay the loan, reducing the risk of loss from default.

**This is not zero risk** — in extreme conditions, collateral may still be insufficient to fully repay.

## How it works

Your funds → lent to borrowers → borrowers post excess collateral → principal and interest repaid at maturity

## Risks you should know

Lending is not risk-free. Floating rates, crypto price volatility, and exchange risk can all affect your funds. Returns and principal are not guaranteed, and this content is informational, not investment advice. See the full risk disclosure below.

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## Risk Disclosure

1. **Rate volatility**: Funding rates float with market supply and demand; there is no fixed or guaranteed return. You can set a "minimum lending rate," but setting it too high may leave funds idle and unlent, lowering your effective APR.
2. **Exchange / platform risk**: Your funds are held at a third-party exchange (e.g., Bitfinex). Insolvency, hacks, frozen withdrawals, or regulatory changes could cause loss or make funds unrecoverable — outside this platform’s control.
3. **Crypto price volatility**: If collateral value drops sharply, default losses can still occur under extreme conditions.
4. **Liquidity risk**: In quiet markets, funds may not be lent out or may not be redeemable immediately.
5. **Smart contract / technical risk**: System errors, downtime, and operational mistakes can occur.
6. **Regulatory risk**: Crypto regulation in Taiwan and the US continues to evolve and may affect the service or your taxes.
7. **Tax responsibility**: Reporting lending income is your own responsibility.
8. **Platform service risk**: The platform only helps execute lending; if the service is interrupted, you must manage your positions yourself.

**Important:**

This site is for informational purposes only and is **not investment or financial advice**. Lending **does not guarantee principal or returns**; it is not a deposit and is not insured, and past performance does not indicate future results. 

Please read Bitfinex’s public disclosures and assess the risks yourself before lending, or consult a professional. 

We make a good-faith effort to keep information up to date, but markets change quickly; if anything differs from a third-party platform’s announcements, the third-party platform prevails. 

FalconLend’s official social accounts are for sharing information only. We will never message you first, or ask for your API keys, passwords, or any transfer. Beware of impersonators.

Full page: https://falconlend.ai/en/risk/