Hey Hey Celsius creditors & Ionic shareholders,

As we prepare for the next crypto distribution in 2025 and continue to monitor the ongoing developments at Ionic Digital, I’ve asked the Bnk To The Future team to provide an November update for both Celsius creditors and Ionic Digital shareholders. Today, I’ll share four key updates on our additional Celsius recoveries:

• Update 1: Litigation Administrator’s Quarterly Report & Next Distribution. A summary of the latest report by the Litigation Administrators detailing the targeted next distribution, the status of their finances and of all the actions undertaken and in progress so far.
• Update 2: Mining Performance Update. A summary of the latest update & spaces on Ionic Digital’s mining operations. Find out more about Ionics Mining, Cedarvale and what it means for progressing towards a listing
• Update 3: Ionic Shareholder Update. A press release announcing a new Chairperson for Ionic Digital was released & summarised below. I also share the latest updates on Mike Cagney's initiative to call a shareholder meeting as well as a link to Mike’s responses to Ionic’s FAQ.
• Update 4: Court Hearing Update. A summary of the recent court hearing held on October 9, 2024. Key decisions and implications are covered to keep you informed.

Update 1: Litigation Administrator’s Quarterly Report & Next Distribution.

1. Summary of the Litigation Administrators’ Quarterly Report filed on 31 October 2024 on the court docket at doc. 7781.

a. Financial Update: (see table below):

i. Litigation Administrators’ have blown through their budget: they have spent $44.971 million in pursuit of recoveries of the $40 million set aside ($55 million less $15 million Administrators’ fees) for the purpose and they have a long way to still as is detailed in the report

ii. Total recoveries to date stands at $241 million.

b. Administrative update: the LOC discussed the potential distribution of recovered amounts in Q4 2024. 

c. Status of Litigation Actions:

d. Illiquid Crypto: the ARM has recovered $4.2 million from illiquid cryptocurrency assets

e. Institutional Loans: the ARM has recovered $33 million from institutional loan assets

f. Securities: the ARM has generated $86.5 million from management of the estate’s securities and investments.

g. Other matters:

i. Objections to litigation Administrators’ proceedings - 250 claims will be heard at the omnibus court hearing on 13 November 2024

ii. Claims against insiders:

1. Versus Mashinsky and other insiders: stayed until after Mashinsky’s criminal trial due to begin on 28 January 2025

2. Versus other former Celsius executives:

a. 5 fraudulent transfer actions against former executives

b. Tolling agreements with various former executives with respect to OTC sales etc.

Update 2: Mining Performance Update

Above is a video recording of a Space hosted by Hut8 and shareholders, discussing the latest progress on Ionic Bitcoin Mining operations.

Below is an AI-generated summary from the recorded Space too.

Summary of video recording of a X Space hosted by Hut8 and shareholders.

Asher Genoot from Hut8 shared an update on Ionic Digital's Bitcoin mining operations. Initially, Ionic Digital emerged from Celsius's bankruptcy, where the choice was made to retain mining assets rather than liquidate, as their operational value was seen as higher. Key assets include a 250 MW site, Cedarville, adding to the initial 87 MW capacity. They have grown to 140 MW operationally and aim for 190 MW by the year's end, with penalties in place if certain timelines aren’t met.

Asher discussed Hut 8’s role in managing Ionic's facilities through a managed services agreement, allowing Ionic to leverage Hut8's infrastructure and keep operating costs low. As part of the agreement, Hut8 has implemented various operational efficiencies, including cost caps and curtailment strategies. Cedarville benefits from renewable energy sources in West Texas, where curtailment strategies are used to reduce power costs further.

Looking forward, Ionic aims to achieve liquidity, with potential plans for a public listing. Asher emphasized the company’s priority to stay transparent and receptive to community concerns, although data sharing is limited by confidentiality obligations.

It’s absurd that updates for shareholders have to come from the manager of our mining contract, rather than directly from the board selected by the UCC—including board members themselves. That’s the update from Hut8; now let’s review the communication (or lack thereof) from the board, which continues to show no accountability to their approximately 80,000 involuntary shareholders…

Update 3: Ionic Shareholder Update.

Ionic Digital shared a new press release here.

Ionic Digital has appointed Elizabeth LaPuma as the new Chair of its Board of Directors. LaPuma, stating that “with her extensive background in strategic leadership and digital innovation, is expected to play a significant role in guiding the company’s future growth and direction”. 

They state that “the appointment reflects Ionic Digital’s commitment to strengthening its leadership team to enhance its market position and continue driving forward in the digital space.”

We shall see. 

Tony V and Mike Cagney initiative to overhaul the board through a shareholder meeting continues and we had a couple of updates on Twitter. 

Here are the last two Mike Cagney updates:

“I'd like Ionic Digital to be the first public equity to pay dividends in BTC.  

We're making progress - we'll soon be reaching out to all of you who have pledged your support to capture some incremental information we need to call for the board meeting.  

Let's get liquidity!” Original Tweet here. 

“I want to keep everyone updated on our efforts to bring value and liquidity to Ionic Digital shareholders. The company did respond to the demand letter. They seem to be amenable to handing over the shareholder registry but are resisting the other information requests.We will continue the fight here. The most important thing is to pledge your shares to force the special board meeting, if you haven’t already. Outside of the demand letter, in the next week we’ll submit to the company a plan to fix governance and get liquidity for the stock.The Ionic board does not care about its shareholders and never has. It’s time for the board to step down gracefully or face the public with full visibility of their actions.” Original tweet here. 

Here is a follow-up Space recording from Friday, October 18th, providing an update on the effort to call a shareholder meeting.

Following the meeting, Ionic released an update covering the appointment of a new auditor, financial position, and developments in our Bitcoin mining operation.

Here is the original X post. 

A meeting was booked in for Monday 28th October and right before the meeting Ionic made a public release about the meeting here:

“Ionic Digital is expected to meet with a shareholder and other parties that participated in the Celsius chapter 11 auction process later today. Read more at”

Here is the tweet. 

This was followed up by a public message from the last remaining board observer Joe Lehr. 

“Path 1- Continue on the current path of value destruction

Path 2- Ionic to consider in good faith alternate plans for liquidity that fully value the assets & community

Helpful hint: Allow Observers to participate in the process even if their views don’t always align with the BOD”

Tweet Here. 

After the meeting Ionic posted a further update here:

Link to tweet

After this response to the meeting Tony expressed his dissatisfaction here;

"

"I am extremely disappointed with this response from @IonicDigital and would like to set the record straight on the events of my meeting with Ionic yesterday. 

The board’s behavior in reluctance to even name me as the shareholder is, frankly, strange, and strengthens my argument that this board is unwilling to face accountability from its shareholders. 

They would like shareholders and outside observers to believe this meeting involved disgruntled ch11 bankruptcy participants instead of what it actually was: a highly concerned shareholder acting on behalf of thousands of other concerned shareholders disillusioned with the corporate governance of this company.

I asked several basic questions, yet even with the entire board, CEO, and GC in attendance, the company was unable or unwilling to answer a single of the following:

1. I am a shareholder and have filed a 220 demand letter, but I have not received any information nearly two months after my original filing. Why?

2. None of your public releases have discussed expenses. Why?

3. Why are shares restricted from trading when compliance with Blue Sky laws can be coded in only minutes at minimal cost?

4. What is your EBITDA?

5. How much shareholder money have you spent on legal fees defending your poor performance?

6. How do you plan to replenish your fleet?

7. What is the expected ROIC on Cedarvale? What assumptions are used regarding the price of bitcoin, global hash rate, and efficiency to reach those ROIC expectations?

8. Why are the board members paying themselves hundreds of thousands of dollars in mostly cash compensation each per year when shareholders are blocked from accessing any liquidity from their shares?

9. Did you hire an independent compensation consultant to review the board’s compensation? Why is board compensation well above that of S&P 500 companies?

10. What is the purpose of the emergence committee and why are all 6 board members on this committee? Likewise, why is this particular committee’s compensation $180,000 per member while all other committee compensation is much less?

11. Why are Emmanuel Aidoo, Scott Duffy, and Thomas Difiore on this board? What board experience do they bring to the table? Shareholders deserve answers to these questions, and Ionic’s silence at yesterday’s meeting was deafening."

"

And here is the latest response from Tony.

Ionic recently released a set of FAQ’s attempting to answer many of the questions and dissatisfactions raised, and Tony V, Figure (Mike Cagney) and GXD Labs then released a comprehensive response to them - see a news article on this here, and the group’s rebuttal of Ionic’s FAQs here.

Aaron Bennett released an interview with Mike and Tony on their next plans here

Here is an AI generated summary of the video:

In this interview, Aaron Bennett discusses Figure's proposal to help Celsius creditors gain liquidity for their shares with Mike Cagney (CEO of Figure) and Tony V, a Celsius creditor. The conversation covers the challenges of the current Celsius bankruptcy plan, involving Celsius' mining assets and Ionic Digital Corp. Mike and Tony criticize the Fahrenheit deal, which many creditors opposed, and claim the deal led to excessive funding requirements for the mining operations, ultimately reducing creditor payouts. Here are the key points:

1. Bankruptcy Process and Mining Issues: Tony highlights that the mining assets are outdated and inefficient. Many mining machines, bought at market highs, are now obsolete due to increased Bitcoin mining difficulty. This has led to decreased profitability, adding to creditor frustrations about missed opportunities to liquidate or convert assets as Bitcoin prices have risen.

2. Management Concerns: Mike criticizes Ionic’s management, claiming the board lacks the necessary expertise and transparency. He explains that Ionic’s decision-making and cash compensation policies appear misaligned with shareholder interests, with board members taking cash rather than equity, signaling doubts about the company’s potential.

3. Liquidity and Capital Strategy: Figure’s proposed solution would involve creating an alternative trading platform to avoid issues with a full NASDAQ listing. They propose listing Ionic shares on a private trading system, managed with adequate buyer demand to prevent a sharp sell-off. Mike emphasizes the need for an attractive "story" to draw investors, including potential value-added services like a carbon credit marketplace or a decentralized pool operator for miners.

4. Board Changes and Shareholder Advocacy: Mike and Tony call for new board members who understand public markets and can raise capital effectively. Figure wants at least three board seats to guide Ionic’s turnaround, raising necessary funds, and improving mining assets and business direction. They also mention a push to access company financials and shareholder support to compel board meetings, with options to escalate through Delaware court processes if Ionic’s board resists change.

5. Figure’s Long-Term Vision: Mike discusses Figure’s broader goal of advancing blockchain-based public equity to align with DeFi principles. He stresses that their involvement with Ionic aims to empower creditors by facilitating liquidity options, not a hostile takeover.

To support Figure’s proposals, creditors are encouraged to pledge shares to advocate for a shareholder meeting, pushing for necessary transparency and decisions to protect and potentially increase creditor value in Ionic.

I only have two words for you - It’s a "SHIT SHOW." 💩

Hut8 might still be planning to swoop in with an acquisition. Ionic must keep things competitive if this is the chosen path while Mike and Tony push for the shareholder meeting.

Let's look at the last court hearing now…

Update 4: Court Hearing Update - 8 October 2024

Here is a summary from the latest Celsius Chapter 11 court hearing:

1. Distribution Update - Published on the court docket (7737)

h. 96% of liquid crypto has been distributed.

i. $160 million crypto is still to be distributed.

j. Additionally, $262 million in assets are held back as disputed claims and unliquidated reserves

k. There are a further $80 million holdbacks as per the Plan

l. Remember: Funds not distributed by end January 2025 will be distributed to all creditors.

2. The next Omnibus Court Hearing is scheduled for Wednesday 13 November at 10am ET.

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