0:01
on August 9th this past Friday I filed with the court my proposed distribution
0:07
plan that is my proposal to set the framework for a number of things first
0:13
what will be included in a claim second how refunds to members will be
0:18
calculated and third a number of other issues that we need to put the proposed
0:24
plan into effect from a legal perspective in this town hall I'm going
0:30
to cover the key features of my proposed plan and then answer some questions we've
0:35
received first I'm going to discuss what's included in a member's claim
0:40
second I'm going to explain how we are calculating refunds to members referred to in the plan as
0:48
distributions we've had a number of questions about the timing of payments and how we are going to pay them I'll go
0:56
over my answers to those questions as well as some other questions we've received but before we get into the
1:03
substance I want to make it clear that my proposed plan is just that a proposal
1:08
the proposed plan is not final and is subject to change until the court makes a
1:14
decision I've already started going over the feedback we've received in the user portal and you have until August 26th to
1:22
submit that and you'll see a box to do that at the top of your user portal when you log in I'll submit that in the
1:30
aggregate to the court on September 10th with all your personal information removed so it's all going to be
1:36
anonymous and that's when the other response briefs are due from the CFTC and from Mr Alexander as well apply briefs are due
1:43
September 27 after which the court will have the plan fully submitted for
1:50
decision I just want to emphasize feedback is totally optional and won't
1:55
affect your distribution in any way critical feedback is perfectly fine 
2:00
and will remain anonymous other than removing personal information or inappropriate language we
2:07
will generally submit the feedback as is to the
2:12
court so let's now start with what makes up a member's claim we are looking at
2:19
actual money in and actual money out of EminiFX
2:24
sometimes that money was deposited as Bitcoin mostly using coin payments
2:30
sometimes that money was deposited as cash at a bank or wired to the
2:38
bank sometimes that money was given as actual cash currency to EminiFX
2:44
personnel and those are the kind of deposits that we're looking to validate and credit to
2:51
members we are also going to take withdrawals into account withdrawals
2:56
were paid from the large pool of money that was funded only with new deposits
3:02
from other members and so given that I'll explain exactly how withdrawals work with refunds a bit later in the
3:11
program what we are not including in the claim is the weekly ROI that number was set at between 5.00
3:20
and 9.99% every week by EminiFX and added to
3:25
members account balances the problem as I've explained in previous Town Halls that you can see
3:32
on this channel is that those so-called returns were not connected to any EminiFX
3:39
Investments EminiFX paid over $260 million in ROI by increasing account
3:47
balances but EminiFX's actual Investments lost over $50 million plus millions of
3:54
dollars in costs and so because the ROI was not real and because withdrawals of ROI were
4:02
paid only with new deposits from other members as in a Ponzi scheme that ROI is
4:08
not going to be part of a claim under my proposal we are also not including in a
4:16
claim the referral and sponsor bonuses now these bonuses were paid out in a
4:21
somewhat complex manner with names like immediate direct referral bonuses
4:26
immediate indirect referral bonuses profit pairing bonuses and so on because
4:31
these bonuses were part of the overall scheme and withdrawals of these bonuses were funded again only with new deposits
4:39
from other members as in a pyramid scheme those bonuses are also not going
4:44
to be part of the claim under my proposed plan what we're including and not
4:52
including in the claim is based on principles of fairness and equity and as a federal Equity receiver that is my job
5:00
and in my judgment it is simply not fair to all the members to pay some members
5:06
bonuses and fictitious profits when all members are only going to receive a partial refund of the deposits they made
5:13
in the proposed distribution plan now we've received a number of
5:19
questions on internal transfers and I'm going to cover that in detail later in the program as many people have noticed we
5:26
are generally not counting internal transfers between members but I want to make clear there were a number of cash
5:33
transactions where actual money went into EminiFX and then there was an EminiFX
5:39
internal transfer to complete that transaction on the back end now if we
5:44
can see and validate actual cash coming into EminiFX we are working to
5:50
credit those transactions I will also say that the members interaction with the user portal has been tremendously
5:57
helpful for us in validating those types of
6:04
transactions let's turn now to how we calculate distributions this is a little complex
6:10
but I'm going to try to make it as simple as I can for this video but I encourage everyone to go to the website
6:15
at EminiFXreceivership.com there's a distribution plan page and there's a chart that has some examples that may
6:23
also be helpful for you to see but why don't we start with how we calculate the percentage so we start with an initial
6:30
distribution percentage and I'll set that sometime probably at the end of this year this is the rising tide percentage
6:38
that will increase over time then we take that distribution percentage and multiply it by the total deposits that
6:45
the user made and then we subtract any withdrawals so that's a lot but let's
6:51
start with the simplest calculation members with no withdrawals that's by far most
6:57
members we take the distribution percentage and multiply it by the total
7:03
deposits so if a member deposited $8,000 in January $2,000 in March they would
7:11
have a total of $10,000 in deposits and no withdrawals in this
7:16
example so if the distribution percentage is set at 30% at least to
7:21
start with that member to start with will get a $3,000 distribution under
7:27
their proposed plan because 30% of 10,000 is
7:34
3,000 now I expect that I will increase the distribution percentage from time to
7:39
time and I'll explain a little about why that is in a moment but that's what we
7:45
mean when we say rising tide is that is that it's rising the distribution percentage rises over time so to keep
7:55
going with this example if the percentage starts at 30% and goes up to
8:01
40% that's an additional 10% it's 10% more it's an increase and so the member
8:07
who deposited $10,000 and already received $3,000 will now get an additional
8:13
distribution of $1,000 and that's a total of $4,000 so the member in this case is
8:21
deposited 10,000 received 30% in the first distribution and 10% in the second
8:28
distribution that's 3,000 and 10,000 for a total of
8:34
4,000 and that's for members who only have deposits some users have also received
8:41
withdrawals I have proposed a rising tide plan which means withdrawals are treated like advances on
8:47
distributions so if we go back to the same example the user who made $10,000
8:53
in deposits let's say that member also actually did withdraw and they withdrew $2,000
8:59
so they deposited 10 but they withdrew 2,000 before EminiFX was shut
9:05
down if the distribution percentage is 30% that member should get a $3,000
9:11
refund but they already received $2,000 before the shutdown which means that to
9:17
get to 3,000 they need an additional $1,000 on top of the two they already
9:22
received to get to a total refund of $3,000
9:28
now that's a lot of numbers if you visit our website again at EminiFXreceivership.com and
9:34
you go to the distribution plan page we've got a chart that shows you how this works with a few
9:40
examples we considered and did not use a net investment plan as we explain this
9:46
in the distribution plan and on the website as well I'm not going to get too into those details because it gets very
9:52
technical but I can say that for users who do not have withdrawals and they get
9:58
that is again most users the distribution percentage under rising tide is higher than under net investment
10:06
and so what that means is under rising tide users who didn't withdraw any money before the rece- before EminiFX
10:13
was shut down and I was appointed they'll get more money under a rising tide plan if you didn't withdraw any
10:19
money before the shutdown again if you go to our website
10:24
you'll see more information about how that works
10:30
so we've talked about multiple distributions and that's part of the plan one question we've received is why
10:36
are we doing it in multiple distributions why not just do everything all at once and the reason is I need to
10:42
reserve funds so I need to set aside funds to make sure that the receivership can satisfy all of its obligations
10:49
there's two big buckets for reserves the first is disputed
10:55
transactions we're completing our review of the many thousands of disputed transactions we've been able to resolve
11:02
many of disputes thousands of transactions and that usually means we've been able to validate a deposit
11:08
that a member added which means it'll be part of their claim now we still expect that about 10 to 15% of members will
11:16
still have disputed transactions that will need to be resolved and some of those may need to
11:22
be submitted to the court for resolution if we can't come to an agreement as part
11:27
of this process
11:33
the process of disputing transactions will only affect those members who
11:38
continue to have those disputed transactions so we're only going through dispute process if there are distra  
11:44
if there are those if there are transactions to dispute but if you're in the 85 to 90% of members who don't have any disputed
11:51
transactions then you will then you will be able to get a
11:57
distribution as soon as we can and in this process I don't want to to have the
12:03
10 to 15% who we still need to work out to hold up the 85 to 90% of members who
12:09
are ready for distribution now but what that means is I need to set aside money
12:14
for the 10 to 15% while we work those while we work those disputes out and
12:20
I have to account for the fact that the receiver the court might agree with me the court might agree with the member or
12:27
I might agree with a member if say the member gives additional documentation that that validates their their
12:32
transaction and as we go through that process I need to make sure we have enough money set aside to pay those disputing members too because they're
12:40
also eligible they will also become once the disputes are resolved eligible for distribution and we need to make sure
12:45
that they can get paid the same amount as everybody else under the under the proposed
12:56
plan we're going to have a separate Town Hall that's going to focus on claims and objections and disputed transactions in
13:02
early October we're going to use the portal to for users to be able to
13:08
interact with the disputes to see them to resolve them we're going to have a
13:13
we're also going to use the portal for methods and distribution and how you're going to put in your payment information and so that we're going to have a whole
13:19
town hall in a couple months once we release portal 2.0 and you get the chance to see it with all the data that we've been
13:26
able to put into there what you need to do and how you need to do it so there will be more on that this is just this town hall is
13:33
really just focused on the plan that we filed on Friday and getting the plan
13:38
approved so I mentioned disputed transactions is the one big bucket in
13:44
making sure we have enough for everyone even the one users who we're working out their their transactions but the
13:51
second big bucket for reserves is taxes we've got a lot of questions and confusion about this there's only so
13:57
much I'm really permitted to say publicly but I'm going to do my best right now to
14:03
to explain what I can because under federal law I have an obligation to pay
14:08
taxes of both EminiFX and the receivership and they have priority and
14:13
that's again that's a matter of federal law it's not something that we choose many of you have asked why we would have any
14:20
potential liability if EminiFX did not invest your money or if those Investments That did exist actually lost
14:27
money that's because of the way the EminiFX was structured all of the contributions
14:34
hundreds of millions of dollars that members made as deposits could be treated as Revenue by the IRS again
14:42
that's related to EminiFX's pre-receivership corporate structure and that's what's causing the potential tax
14:50
liability so we're trying to use the investment losses as well as the
14:56
conversion to the settlement fund when I was appointed remember too technical but basically we're trying to take all that
15:03
revenue and see if we can offset it with things like investment losses and the creation of the settlement fund because
15:10
so much of the EminiFX because so many of these losses happened
15:15
because of the change in value in the coin payments account in the in the Bitcoin in the coin payments account
15:21
between really January and May of 2022 we have to make sure that the IRS
15:27
will let us use those tens of millions of dollars of losses to eliminate as much of the tax liability as we can but
15:34
until then we have to set aside enough money to pay taxes if we end up owing
15:40
them depending on what the decision is we have been working as I've said in some of our status reports with the IRS
15:48
to attempt to resolve this but that can be a very lengthy process and I cannot promise any one outcome I hope that the
15:55
IRS agrees with us and that we can get taxes as low or even eliminate it especially pre-receivership and even
16:02
for the settlement fund for the 2023 tax year and if we can do that we'll be able
16:08
to take the money we set aside to pay taxes and distribute that money to EminiFX members that's again my hope and I want
16:17
to hope my hope is to get as much money to members as I can but either way
16:22
whatever result we receive with the IRS that's going to be reported in a public filing with the court so we can't right
16:30
now say right now I can tell you what's appropriate to tell you right now which
16:36
is that we're going through the process but there are taxpayer privacy issues that we need to respect but once we have
16:41
an actual result and we know what the answer is that is going to be posted in a public filing with the court to be
16:48
able to see what result we achieved and then if we have reserves to release we'll release reserves and I'll send
16:54
money additional money back to members if I can
17:01
I want to turn now to the convenience class we've had some people ask questions about what this is and how
17:07
this works so we have a lot of members who deposited $1,000 or less there's a
17:12
lot of members but if you look at the total deposits it's actually only less than 5 thou 5% of the total deposits and
17:20
so we're talking about a lot a lot of members but not a lot of money relative
17:25
to most of the other members who deposited the other 95 plus % of the
17:32
deposits there is an administrative cost to distributions and so I really want to minimize the number of distributions
17:39
we're making on these smaller claims in order to save administrative
17:45
costs under the proposed plan I'll make a one-time distribution to those members
17:51
so instead of multiple distributions over time but in order to balance the fairness the distribution percentage
17:57
will be higher for those folks for the convenience class folks than the other
18:03
members but that's because they only receive one distribution but on the flip side my
18:09
expectation is that that percentage will be lower than the total percentage that everyone else will receive but that's to
18:16
account for the fact that they get money earlier than others and that's the that's the balance that we're striking
18:21
with the convenience class this group will affect a large
18:27
percentage of the members but again it really is a very small amount of total deposits so it doesn't really
18:33
affect the the amount we have available to distribute very much by having this convenience
18:42
class the most common question we received is on the timing of distributions which I of course
18:49
understand and the proposed plan all responses to the plan including the members responses on the portal that will
18:55
aggregate Mr Alexander's response CFTC's response all that's fully submitted to the court on September
19:02
27 the court will then need some time to review the proposed plan including all the legal briefs so that the judge can
19:09
decide the motion to approve it now I cannot and I will not predict the outcome or the timing of the Court's
19:16
decision I also cannot and will not predict whether Mr Alexander will oppose the plan or will attempt to appeal any
19:24
decision the court makes I mentioned earlier that I'm planning to post the scheduled disputed
19:30
transactions in October in your individual portals most members will not have disputes and we'll be able to set
19:37
their claims soon thereafter it is my hope that we will be able to begin distributions before the end of the
19:43
year but to members with fully verified claims and then we'll continue into next
19:49
year as we resolve the members with disputed claims and are able to distribute money to them as
19:55
well for those members who have disputes we we will continue to have town halls
20:00
and we'll have instructions for how to resolve those disputes how objections will work and how they will all work with the updated portal that we'll
20:07
release in October the other question that
20:13
affects everyone is how we are going to make the payments so we're we're going to have a number
20:19
of electronic payment options like Venmo PayPal Zelle ACH and that's going to be our
20:24
preferred method of payment because it generally means quicker processing especially for international
20:30
claimants we will have the ability to send a paper check via the mail to U.S.
20:35
addresses so when we launch the portal the revised updated portal user portal
20:42
in October we're going to have a section right near the top where members are going to be able to enter their payment
20:49
information which will include again those options for Venmo PayPal Zelle ACH or
20:54
an option for a paper check for U.S. addresses and you'll be able to validate your payment information on on that user
21:01
portal we'll send everyone an email with instruction with instructions for how to do that we'll post information on the
21:08
website I'll do another town hall explainer we might have an explainer video we'll we'll do as much as we can to
21:14
really make sure this process is clear and open for you because we will need you to do that so that you'll be able to
21:20
then get a distribution by telling us how you want it but we're going to have some options for you and hopefully those
21:26
electronic options will mean that once we're ready to make a distribution it will happen fairly quickly
21:34
thereafter now I mentioned at the beginning of the Town Hall about our internal transfers and we have received
21:41
a number of questions and some concerns about that especially why we're not counting internal transfers from one
21:46
member to another member and again that's because we're looking for actual money into EminiFX and
21:53
actual money out of EminiFX
22:00
so if a person deposited cash directly into EminiFX and that cash came into the
22:08
system those transactions are generally allowed even if that transaction was
22:14
completed by EminiFX using the internal transfer
22:19
system and we're looking case by case to make sure that the cash deposited
22:25
actually came into the EminiFX system for those members and for many members we are able to find those cash
22:31
deposits and we will be able to credit them when we release the updated portal in
22:37
October but we can't do is double count so if an internal transfer is simply
22:43
between two EminiFX members but there is no actual money going into the system we
22:49
cannot credit that as an internal transfer because we'd be assigning the same transaction the same deposit to two
22:57
members and essentially double counting it a related question is we've received
23:05
is what happens when someone gave money to their upline or another member to deposit into EminiFX well that member
23:12
didn't put the money into EminiFX as often does appear to be the case then
23:18
there's no money into EminiFX that we can count as a
23:23
deposit now that said if the other member did put the money into EminiFX then
23:29
that deposit will be part of their transaction log and so it's up to them that member to reassign all their all or
23:37
part of the deposit to you because you gave them part of that money and we had the add member function in Portal 1.0 and
23:45
we have been using that because we had a lot of responses people really did use that to reassign the transactions we
23:51
requested and you'll see that when we update the portal in October now let's say the other member
23:58
did put your money into the system but didn't add you as a member back when we had the initial portal submissions we
24:06
are going to have an option for a brief period because we need to get done with the distribution so it's going to be
24:12
brief but at the beginning of the revised portal it's going to allow the other member to request request that we
24:20
reassign the transaction to you to resolve the dispute that's going to be
24:25
up to the other member because in general we are not trying to resolve disputes between
24:31
members and we will have to approve that request we want to make sure that
24:36
somebody's move is requesting that part of the deposit go from them to somebody else in order to resolve a dispute about
24:44
an added transaction and we'll have more about how that will work when we launch the revised portal in
24:55
October one question members have asked us is how they will know if they're eligible for
25:01
distribution and that I've mentioned a few times is in going to be in the updated user portal which we're going to
25:08
update around October and that's going to indicate if members have any disputed transactions or if their account is
25:15
ready for distribution when I announce the rising tide percentage assuming the
25:20
proposed plan is approved by the court have to wait for that to happen too you'll see that on your user portal now
25:28
at that point we'll be able to distribute to members who are eligible and who have
25:34
given us valid payment information which they'll be able again to do on the revised user portal that we're going to
25:41
launch around October there will be some members whose
25:46
transactions are all resolved but because of withdrawals they withdrew more money and their distribution would
25:53
be under the initial rising tide percentage now if I increase rising tide
25:59
and that member becomes eligible because the withdrawals are now less that member
26:04
becomes eligible for distribution in the second round using the
26:09
formula if you go to the uh the website under the distribution plan we've
26:15
got our table you'll see an example for how this
26:20
works a small number of members may have a hold placed on their account this might be because that member was an
26:26 
Insider or has a second account that is a net winner which I'll discuss in a bit or uh who we are otherwise
26:34
investigating that member this will not affect the vast majority of members and
26:39
if there is a hold that information will be placed on the updated portal in October and and we will be working with
26:46
the folks who have holds but again that's not going to affect many people we've been asked questions about
26:53
interest and inflation adjustments um especially for those who borrowed money to invest
26:58
the short answer is no we are not going to make interest or inflation adjustments EminiFX operated on relatively
27:06
short time scale we're refunding a percentage deposits only and so as a
27:12
result there's really no interest or inflation we're just trying to get back as high a percentage of the actual
27:18
deposits as we can now I've been asked a lot how I'll
27:23
be setting the distribution percentage so I'm going to start with a conservative number that make sure we have enough money set
27:30
aside to pay all our obligations in the worst case scenarios but as we resolve those issues or if we recover additional
27:37
funds I will continue to increase the distribution percentage and then at the
27:42
end once we're ready to close the case I will calculate an amount for a final distribution based on how much money we
27:48
have left at that point a related question we've received
27:55
is about transparency generally and in related to the distribution percentage and the plan generally so when I set the
28:02
distribution percentage I will file a notice with the court and I'll put that percentage on the website and if I
28:09
increase that percentage I'll do the same thing we'll also continue to file quarterly reports and other reports on our
28:16
activities all those will be posted on our website at EminiFXreceivership.com
28:21
our receivership finance page on the website also contains a ledger of every receivership transaction and various
28:28
financial reports I did want to add that I really appreciate the
28:35
questions on transparency on our website at the bottom of the Town Hall page we have a
28:42
link to the SEC's investor.gov pages uh there's one on Ponzi schemes there's one
28:48
on pyramid schemes and I've I've mentioned them before on town halls and I want to again encourage everyone to review those
28:55
and I want to encourage everyone to ask about transparency when considering new investments the
29:01
investor.gov website warns about investments with very high returns very little risk and secretive
29:08
complex strategies so again I encourage everyone to to read those web pages especially when thinking about new
29:14
investments and they're linked to on our Town Halls page we've been asked what kind of
29:21
feedback we're looking for on on the distribution plan uh in general it's really about the plan itself so I
29:28
think that is where the feedback is probably going to be the most useful but that said I am not going to tell people
29:34
what they should write in the feedback that's really up to each member who chooses to submit feedback this is
29:40
intended as a way for members to provide feedback to the plan in a way that can be read by the court and organized
29:46
and sent to the court but this is totally optional and whether you submit feedback or whether you submit positive
29:53
or negative feedback doesn't matter not that will not affect my treatment of your
29:58
claim the one thing I would ask though is please don't ask questions in the
30:04
feedback if you have a question please email EminiFX@stretto.com because that's how we
30:11
that's the only way we can answer you directly the feedback is anonymous and so we really can't answer questions that
30:16
are submitted in the feedback so if you have a question email EminiFX@stretto.com
30:25
a couple more questions um that we've received and I want to talk about one more issue so first
30:32
claims we've been asked what members should do if they haven't received an update of their claim on the
30:37
portal or via email that's totally normal and that's what's to be expected
30:43
instead of doing a piece meal we're going to revise all members transaction logs at the same time when we update the
30:50
portal hopefully in sometime in October and so please make sure to check your email and the website around that and
30:57
you'll be able to log on and you'll be able to see your revised transaction log at the same time as all the other tens
31:03
of thousands of EminiFX members now we've also been asked what
31:09
we're going to do about people who withdrew more money than they put in now I do have Authority under the existing
31:15
order to bring lawsuits to recover from what are called net winners that's people withdrew more than they put
31:20
in I've asked in the distribution plan order for authority to settle those
31:25
claims where we asked people to give back some about 50% of what they of the
31:31
excess of how much more they put in they withdrew than they put in, in exchange for a release so the court has to rule on
31:40
that framework first but if the court approves it we will use the revised portal to handle logistics for those for
31:47
those users then finally I've been asked what to do if you can't log on so if you go
31:54
to our website at EminiFXreceivership.com and then you click on user portal you'll
31:59
see a password reset link and you can click on that and follow the instructions there now if that still
32:05
doesn't work then then email EminiFX@stretto.com and explain that you cannot log on to
32:11
the portal that you tried to reset and uh the Stretto claims administration folks
32:16
will take it from there I just want to thank everyone for
32:22
listening to this presentation for taking the time we are mindful that this process does
32:28
take time and my team and I are going to remain focused on trying to get as much
32:33
money as we can to at least to members to at least partially refund the deposits the deposits that those members
32:40
made into EminiFX  if you have any general questions please look at the distribution page on
32:47
our website at EminiFXreceivership.com or again you can email EminiFX@stretto.com thank you
32:54
and have a good evening