Vauld – Track Election and One-Time Conversion FAQs dated 19 July 2023

Track Election

1. What is the difference between staying on the Variable Recoveries Track and the Pro-Rated Track?

Variable Recoveries Track creditors may choose to participate in RDAs and exit the Restructuring. Creditors that remain in the Restructuring will also derive upside in the form of higher percentage recoveries from assets distributed after the Initial RDA due to some Variable Recoveries Track creditors exiting the restructuring at RDAs. At the same time, they take on Illiquid Asset realization risk at the cost of potentially getting lower recoveries in the event of impairments to Illiquid Asset realizations.

Pro-Rated Track creditors will not participate in or have exposure to any RDA and will only receive distributions based on their percentage of their Approved Claims in relation to the Aggregated Approved Claims of the Pro-Rated Track creditors as at the date prior to distribution.

2. Which track is better for creditors?

This depends on each Scheme Creditor's preference and personal circumstances. Pro-Rated Track is better for creditors who want to avoid any exposure to RDAs whilst continuing to receive token price-driven upside. Variable Recoveries Track is better for creditors who want to participate in RDAs or derive upside from the extinguished claims of exiting creditors in addition to token price-driven upside.

3. Can I elect to participate in the Variable Recoveries Track for half my Approved Claim and Pro-Rated Track for the remaining half?

You can only elect for your full claim (not partial claim) to be under the Variable Recoveries Track or Pro-Rated Track for the duration of the restructuring.

4. How do overall recoveries between the Pro-Rated Track and Variable Recoveries Track compare?

As set out in the Explanatory Statement, forecast recoveries for a Pro-Rated Track creditor are between 36% and 93% depending on the realization of Illiquid Assets.

A Variable Recoveries Track creditor could expect to achieve recoveries of between 28% and 217% depending on Initial RDA Discount Bids and timing of exit via RDAs. A Variable Recoveries Track creditor has a wider range of expected recoveries as he is exposed to the upside and downside as set out in question 1 above.

5. What is the expected timeline to a payout under the Pro-Rated Track and Variable Recoveries Track?

On the assumption that the Company obtains sanction from the Court in respect of Scheme on 4 August 2023, set out below is the expected timeline to a payout to Creditors:

One-Time Conversion

6. What does the One-Time Conversion mean?

Creditors will be able to elect to receive the Net Liquid Asset recoveries in the token of their choice, limited to BTC, ETH, XRP and USDC.

For Creditor’s balances on the Vauld Platform that are not held in BTC, ETH, XRP or USDC, if they do not elect a token choice in the One-Time Conversion, the distribution of the Net Liquid Assets to them would be made in USDC, unless elected for in BTC, ETH or XRP.

7. The One-Time Conversion Form lists all non-BTC, non-ETH, non-XRP and non-USDC tokens as “Others”. The Others tokens can only be converted to one of the 4 supported tokens. Will creditors be allowed to convert the Others token into more than one options such as 50% BTC and 50% ETH?

Creditors are only allowed one option of either BTC, ETH, XRP or USDC in respect of the Others token conversion choice.

8. When is the Conversion Date and what is the price used?

The conversion date will be determined after the sanction and implementation of the Scheme, at the point where the Company initiates transactions to rebalance the Liquid Asset portfolio to the token proportions per the Creditors’ One-Time Conversion choices.

A Creditor’s proportionate claim to the value of Liquid Assets will be converted at the price on the Conversion Date to the desired token of choice for the purposes of distribution.

9. If a Creditor chooses to convert the tokens he will receives in to BTC, what happens if BTC price increases to USD45,000 at the Conversion Date?

The Creditor’s proportionate claim to the value of Liquid Assets will be converted at USD45,000/BTC at the Conversion Date. This will be subject to price movements of BTC from the Conversion Date to the date of distribution. If BTC price continues to appreciate, the Creditor will benefit from a higher USD value. On the contrary, if BTC prices depreciates, the Creditor will make a loss in terms of USD value.

10. What will be the fees charged in the One-Time Conversion?

Vauld will not charge any fees for the One-Time Conversion. However, the transaction of Liquid Assets to rebalance the portfolio per Creditors choice after the One-Time Conversion will incur transaction costs and constitute part of the conversion price.

11. Why does Vauld need to transact at market prices after the One-Time Conversion?

Depending on the choice of token denominations Scheme Creditors would like to receive their Liquid Asset recoveries in, tokens will need to be purchased or sold at current market prices to rebalance the Liquid Assets against the new token denominations.

12. Is the token conversion for 36% which is the proportion of Liquid assets or the entire claims of the creditors?

The One-Time Conversion will only apply to the distribution of Liquid Assets (i.e. 36% of total assets) and not for the distribution of the Illiquid Assets.

13. Can I make the conversion choice now and be allowed to change the decision at the time of conversion? What if there are price fluctuations?

Once the Track Election and One-Time Conversion Form is submitted or upon the end of the Track Election and One-Time Conversion Period (if a Creditor did not submit the Form), Creditors will not be allowed to amend their choice / default choice. Any upside or downside in terms of USD value due to price fluctuations will be borne by the Creditor.