We would like to thank all creditors who participated in our recent AMA dt 5-Jan-23.

For those who could not make it, please find the recording of the event here, you may also find our presentation during the event here.

1. Vauld Group Financial Position

2. Restructuring Process

3. Nexo

4. Fund Management (Restructuring Plan - Vauld Creditors Fund)

5. INR Balances

6. Committee of Creditors

7. Next Steps and Timelines

1. Vauld Group Financial Position:

1.1 What is the present financial situation of the Vauld Group?

The following is the updated financial position of Defi Payments as of 14 December 2022:

Overall, in the period from 1 August 2022 when we last provided an update of the financial position of the Company, the net deficit or ‘gap’ has increased from USD81m to USD98m. This is largely due to the following reasons:

1.2 What is the current status of our funds both INR and Crypto (are they safe / secure, where are they stored)?

Cryptocurrencies:

Stored in cold wallets which are in our custody. This includes all the tokens / coins we are able to withdraw from counterparties.

INR:

Remains frozen in the bank accounts in India.

1.3 Will Defi Payments allow a full entire historical audit of Vauld financial records to an independent, third party forensic accountant?

Defi Payments is required to conduct a statutory audit and we are fully committed to releasing audited accounts when available.

1.4 Who is referred to as Secured Creditor and Unsecured Creditors under Liabilities?

The Unsecured Creditors are Defi Payment’s customers while The Secured Creditor is Counterparty A.

1.5 Who is referred to as Third Party Receivables and Interco Receivables under Assets?

1.6 What is the status of the loan receivable from Counterparty A?

The loan to Counterparty A will mature in June 2023 subject to counterparty risks and any potential disputes that may arise.

1.7 What is the status of the loan receivable from CoinLoan?

We are pursuing legal actions to facilitate a quicker recovery compared to the current daily withdrawal limit set by CoinLoan.

2. Restructuring Process

2.1 What is the purpose of the restructuring?

To maximize recoveries to creditors within the constraints of Defi Payments’ liquidity profile and asset-liability mismatch. We will do this while ensuring that the risks associated with the target recoveries does not materially compromise creditors’ interests. It is also noted that an early liquidity opportunity is sought by creditors who are willing to exit early (subject to a discount). All creditors of DeFi Payments will be treated fairly and ensure that there is no preferential treatment based on the quantum of claim, geographic location or other criteria.

2.2 How are the restructuring options evaluated?

2.3 Will there be an open voting on Fund Manager options, Nexo deal, etc.?

Common misconception is that creditors will be able to vote on either the fund manager option, Nexo deal or managed wind-down. In the restructuring proposal, the Company will present the best option and creditors can only vote “yes” or “no”

2.4 How will the restructuring be carried out? How will the voting process be conducted?

a) DeFi Payments will present one Restructuring Plan to the Court in the form of an Explanatory Statement

b) DeFi Payments will provide an Explanatory Statement to all creditors, it will include a detailed explanation of all aspects of the Restructuring Plan so that creditors are able to make an informed decision

c) DeFi Payments will organize a Scheme meeting for creditors to vote on the Restructuring Plan. A successful Scheme vote requires:

d) The Court will hold a hearing to sanction the Scheme

e) The Scheme only takes effect when a successful Scheme vote is achieved and Court sanction is obtained

2.5 What is the process overview of the Restructuring Process to date?

Overview of Updates in the Restructuring Process:

Moratorium

Exploring options for restructuring

2.6 What is the estimated recovery under the contemplated Restructuring Plan?

Under the contemplated Restructuring Proposal (i.e. establishing a Vauld Creditors’ Fund run by a fund manager), recoveries are expected to range from 58% to 100%. This range of recovery is superior to that under a liquidation at a range of 16% to 29%.

2.7 Will there be a difference in treatment for stablecoin credit versus credit with other coins within this debt restructuring?

No. All creditors are treated equally.

2.8 Please allow partial withdrawal:

Partial withdrawal will be made available (subject to a discount) via a mechanism currently envisaged to be a Reverse Dutch Auction (“RDA”) under the proposed Vauld Creditors Fund.

2.9 When will the RDA process take place?

The RDA (or possible alternate early liquidity event) is expected to take place immediately upon the implementation of the contemplated Scheme, which requires a successful vote of creditors and sanction by the Court. We are targeting the implementation of the contemplated Scheme around mid- 2023.

2.10 Will our investments be returned in the form of INR or Crypto?

Under a restructuring of DeFi Payments, your claims will remain in-kind and not subject to any form of conversion. If you are owed BTC, your recoveries will be repaid in BTC. INR claims are claims against Flipvolt Technologies and do not fall under the restructuring of DeFi Payments. Presently we envisage that INR claims will be fully paid out of the asset balances of Flipvolt Technologies subject to the successful implementation of a DeFi Payments’ restructuring.

2.11 Could a significant upturn in the markets mean that Vauld's position turns positive? If the price of BTC increases to $30,000 or $40,000, would this remove the need to liquidate/restructure?

Given the mismatch in asset – liability composition and the current liquidity timeline on the Third Party and Interco Receivables, a significant upturn in the markets may serve to reduce or extinguish the asset-liability deficit but would not remove the need for a restructuring which will still be required to align asset liquidity profiles with timing of redemptions.

2.12 Will there be an exit option within the 3 years after agreeing to the Restructuring Plan (Vauld Creditors Fund)?

Yes, as set out in slide 30 of the AMA presentation, the indicative terms which we are discussing with the fund managers include a 25% distribution of assets (principal and returns) per year at the end of Years 1 and 2, with the remaining balance at the end of Year 3, this is subject to finally agreed parameters of terms.

2.13 Why is a Moratorium extension required?

An extension of the existing moratorium will be required considering the time that is needed:

To approve a Moratorium extension, the Court will require progress on the Restructuring and evidence of creditor support. Without an extension of the Moratorium, the remaining option will be Liquidation.

2.14 What happens if the moratorium extension is not granted?

Defi Payments will not be protected from legal claims (including claims from creditors who may commence winding-up / liquidation proceedings).

2.15 Why are we still earning a yield on some assets?

We have not put a freeze / halt of interest accrual on our platform. Therefore, while it may appear that you are still earning yield on some of your account balances, the contemplated position on the Restructuring Plan involves capturing only interest accrued up to the freezing of customer activities on 4 July 2022. This point will be addressed in the Scheme documents.

3. Nexo

3.1 Can you please address Nexo's allegations Vauld was deliberately delaying the process amongst other allegations raised in the letter? Please share the timelines of discussions with Nexo.

Please refer to slides 9 – 11 of the AMA presentation for a timeline of discussions with Nexo.

3.2 Why not Nexo (based on Nexo’s Final Proposal)? What are the pros and cons?

Please refer to slides 12 – 16 of the AMA presentation for the pros and cons of Nexo’s Final Proposal.

3.3 Will the Nexo Final Proposal secure the necessary creditor votes (i.e. more than 50% by number of creditors AND at least 75% by value of claims)?

The Final Nexo Proposal is unlikely to pass a vote of the creditors due to remaining significant limiting factors as follows:

3.4 Has a split approach (i.e. allowing US customers to go for a fund manager option, and non-US customers for the Nexo option) been considered?

A split approach is not viable due to the minimum Assets Under Management required by the fund managers to effectively run the fund. Without the U.S.-based customers which make up 45% of claims value, the quantum of available AUM will fall under the minimum amount required to set up a fund.

4. Fund Management (Restructuring Plan - Vauld Creditors Fund)

4.1 Why is Vauld proposing a Vauld Creditors’ Fund?

4.2 What is the Proposed structure of a Vauld Creditors’ Fund?

Here is the currently contemplated process of setting up and operating the Vauld Creditors’ Fund:

4.3 What are the indicative terms of the contemplated Restructuring Plan (Vauld Creditor’s Fund)?

Discussions are ongoing with fund managers with the following indicative terms:

4.4 What is the role of a fund manager in Restructuring?

A fund manager manages financial assets to achieve investment gains – the shortlisted potential fund managers have an established track record in investing in crypto assets.

A fund manager will not take ownership of assets under management – DeFi Payments retains ownership of FundCo including the assets of FundCo.

DeFi Payments sets the terms that govern the investment mandate – including investment strategy, target returns, risk weighting and redemption profile with ongoing oversight.

Vauld will activate withdrawals function to facilitate distribution – you will continue to see the balance of your account in the Vauld app and withdraw funds subject to release by the fund manager as defined in the mandate.

Likely key indicative terms of the Vauld Creditors’ Fund mandate:

4.5 How are we evaluating the fund managers and have we shortlisted any?

We looked into the profiles of six potential fund managers, who were reputable subject matter experts in managing digital assets, from Singapore, Australia, USA and the UK. At a COC meeting on 14 December 2022, we presented the four potential fund manager proposals received . Following the initial shortlist of four potential fund managers, we further shortlisted two potential candidates, who already have made initial presentations to the COC as well as an informal group comprising a number of top unsecured creditors by value. Based on these discussions, we expanded our outreach to two further potential fund managers. We are currently working with these four candidates, in consultation with Kroll, the COC and some of our creditors, to develop a strategy which will hopefully be finalized as terms.

4.6 Can we expect 100% of our money back if we opt for the Fund Manager option?

The target recovery under the Restructuring Plan (Vauld Creditor’s Fund) is 100% where Counterparty A receivables are assumed to be recovered.

4.7 How is the Fund Manager option better than Liquidation? How early can the funds be accessed? What are the possible recoveries?

Comparison of possible recoveries:

Following is a comparison of the estimated recoveries under the Restructuring Proposal as compared to liquidation:

The Restructuring Proposal provides superior outcomes to liquidation, subject to:

Early Access to Funds:

Following is a comparison of the potential availability of funds to creditors under these scenarios:.

The Restructuring Proposal provides earlier access to funds than under a Liquidation scenario.

4.8 How will the returns be allocated among Vauld creditors?

Customer token balances are to be crystallized (i.e. the value will be fixed / pegged) as at the date of suspension of customer account activities on 4 July 2022. The distribution of returns will be allocated on a pro-rata and in-kind basis of each creditor’s claim.

4.9 If I own 10 BTC, 10 XRP, 10 USDC as of July 4, 2022, after the 3-year Restructuring Plan assuming 100% recovery, what do I get? Do I get 10 BTC, 10 XRP, & 10 USDC back regardless of the fiat value?

Yes, you will receive 10 BTC, 10 XRP, & 10 USDC regardless of the fiat value.

4.10 What are the target year-over-year gains the fund manager has to achieve to achieve a 100% recovery for creditors?

11% year-over-year as set out in slide 31 of the AMA presentation subject to: (i) full recovery of loan receivable from Counterparty A, (ii) successful RDA at 70% discount, with 25% distribution of the funds per year at the end of Year 1 and 2 and the remaining 50% at the end of Year 3

5. INR Balances

5.1 Do creditors holding crypto have the same priority with creditors holding INR balance in respect to withdrawals?

INR claims are claims against Flipvolt Technologies and do not fall under the restructuring of DeFi Payments. Presently we envisage that INR claims will be fully paid out of the asset balances of Flipvolt Technologies subject to the successful implementation of a DeFi Payments restructuring.

5.2 Will the RDA be available for creditors with INR balance (i.e. Flipvolt creditors)?

No, the RDA (or alternate early liquidity event) would only be available for creditors of Defi Payments.

5.3 Please provide us with an update on the ED ban and when can we receive our INR?

The enforcement directorate (“ED”) has put a freeze order on some of our capital. We are in the process of resolving this matter with the ED. We have a hearing sometime in January 2023. We expect that this process will take some time to resolve.

5.4 Will our investments be returned in the form of INR or Crypto?

Your claims against Defi Payments are currently contemplated to remain in-kind (i.e. coins or tokens) and not subject to any form of conversion. For example, if you are owed BTC, your recoveries would be repaid in BTC.

INR claims are against Flipvolt Technologies and do not fall under the restructuring of Defi Payments. Presently we envisage that as a gesture of goodwill, INR claims are currently contemplated to be fully paid out of the asset balances of Flipvolt Technologies subject to the successful implementation of a Defi Payments restructuring.

6. Committee of Creditors:

6.1 What was the process for choosing members of the COC? Did any of the people chosen have any level of connection to anyone within the Vauld business?

6.2 Why did the COC make a suggestion to withdraw from the Nexo discussion?

The COC indicated that further discussions with the Nexo proposal should not be entered into unless certain threshold questions including the treatment of US-based customers and questions of Nexo solvency could be satisfactorily addressed. As the only alternative to a failed scheme vote is a liquidation, the COC was acting in the best interest of the general body of creditors in holding this position in favor of an alternate viable plan.

7. Next Steps and Timelines:

7.1 What are the next steps?

Restructuring Proposal:

Vauld, together with Kroll as their advisors will consult further with the COC regarding options and if the fund manager option is preferred:

Moratorium:

An extension of the existing moratorium will be required considering the time that is needed:

To approve a Moratorium extension, the Court will require progress on the Restructuring and evidence of creditor support. Without an extension of the Moratorium, the remaining option will be Liquidation.

7.2 Do we have timelines for the next steps associated?

Set out below is an estimated timeline for the next steps in the proposed restructuring as set out in Darshan’s 8th Affidavit dated 9 January 2023: