American court hearing recordings and interviews - FTX bankruptcy hearing 5/14/26 - court ruling granting objection to claim + motion hearing

Episode Date: May 16, 2026

For the agenda for the hearing, see the amended agenda filed the day of the hearing, docket number 35618 here:https://restructuring.ra.kroll.com/ftx/Home-DocketInfoThe court’s ruling granting the objection to the claim gets into the FTX fraud, how people lost savings, some their families’ life savings due to the FTX fraud for which Sam Bankman-Fried was convicted following trial by jury, and sentenced to a 25 year sentence. SBF has appealed his criminal conviction via counsel, seeking a new trial before a new trial judge.I believe Melamed is typically pronounced Me-LAH-med, not as it is pronounced by the court. The New York City based federal courts tend to do a better job with Jewish surnames than the Delaware federal courts. FTX’s bankruptcy proceedings are ongoing in Delaware. SBF is imprisoned in California.MATTERS GOING FORWARD at this May 14, per the amended court agenda:FTX Recovery Trust’s Objection to Proofs of Claim Filed by ELD Capital LLC [D.I. 34251, filed on January 2, 2026] Status: The Court will issue a bench ruling on the objection at the hearing.FTX Recovery Trust’s Motion to Enforce Prior Orders that Preclude Seth Melamed from Asserting New Claims in Arbitration [D.I. 35243, filed on April 2, 2026] Objection Deadline: April 9, 2026 at 4:00 p.m. (ET); extended to April 20, 2026 for Seth Melamed.

Good morning. How are you? Good morning, Your Honor. Matthew Pierce, with Landis Grafton Cobb on behalf of the FTX Recovery Trust. Your Honor, as noted on the amended agenda that was filed at docket 35168, there's two matters going forward this morning. The first is agenda item is number seven, which is the court's ruling with respect to the objection of the proofs of claim filed by ELT Capital. Agenda item two, the second matter going forward is the FTX Recovery's Trust motion to enforce the prior orders with respect to the new claims in arbitration with respect to self melamette yes I will do the oral

ruling first so that council or ELD can depart to the extent that they wish and then we'll move into argument on the Melamed motion I wanted to do an oral ruling because I know that the issue with ELD has been hang has been extant for for a long time I shouldn't say a long time that implies it's inappropriate but has been at issue since at least I took over the case and that ELD was anxious for a resolution of this so that they could receive a claims distribution. And so, of course, writing an opinion of this nature takes extremely, it takes a lot more time than preparing an oral rolling. So in an effort to be accommodating, I think it's just easier to do the oral ruling. So it may be a little, I shouldn't say too lengthy, but it's longer than a usual oral rolling on a motion.

So just bear with me. Before the court is the trust's objection to the amended proof of claim submitted by ELD Capital. ELD Capital's claim seeks the value of its digital assets on the FTX exchange as of the petition date plus damages for fraudulent inducement. The trust's objection to reduce and allow the claim for the scheduled value of the digital currency, ELD Capital had on the FTX Exchange as of the petition date and to disallow the amount sought by ELD Capital on account of the alleged fraud. The court held an evidentiary hearing on the claims objection on April 16, 2006. During the hearing, numerous exhibits were emitted into evidence.

Testimony of a representative of Alvarez and Marcel, the financial advisor to the trust, was emitted into evidence by declarations, and Mr. Dominic Kubik. principle of ELD Capital gave live testimony in addition to his declaration that was submitted into evidence. The court has considered the evidence and the arguments of counsel, and I conclude that it is appropriate to sustain the trust's objection for the reasons I will discuss. To meet its burden under Section 502A of the Bankruptcy Code for its fraudulent inducement claim, ELD Capital must show under Delaware law that the debtors made a fraudulent, a false representation, knew or believed the representation was false or made it with reckless indifference to

the truth. The debtor's false representation was intended to induce ELD Capital to act or refrain from acting. ELD Capital justifiably relied upon the representation and ELD Capital was damaged by such reliance. ELD Capital did not meet its burden to adequately show the satisfaction of these elements. ELD Capital's fraud claim rest, upon a November 10th, 2022 public announcement made by FTX. The announcement came when it was widely known, including to ELD Capital, that FTX was experiencing extreme liquidity issues and required rescue financing nearing $9 billion to avoid bankruptcy.

Given these issues, withdrawals of digital assets on the FTX exchange were halted. The announcement explained that Tron, another crypto exchange, would establish a special facility to allow holders of Tron tokens to swap assets from FTX to external wallets. The announcement states that the exact capacity of the Tron token facility will be determined weekly and future injections will occur at a specified future time. The amount to be deposited would depend on a number of facts, such as withdrawal demand and funding capacity to be provided by Tron. The only deposits will be the pre-announced deposits conducted weekly by the Tron team.

To that end, the announcement stated that $13 million of assets would initially be deployed to facilitate the swaps. Information on future capital injections would then be shared weekly. The announcement goes on to explain that the TRON token market may experience high levels of volatility and advised that customers should understand the details of the TRON arrangement and any associated risks before taking action and should reach out to the FTX with questions. Realizing that this was a way for ELD Capital to withdraw its digital assets frozen on the exchange, ELD Capital used its assets on the exchange to make a series of purchases of TRON tokens at a steep premium. Once obtained, ELD Capital tried twice to withdraw the tokens.

Each request was canceled by Mr. Kubit after he determined that the withdrawal attempt had failed. ELD Capital was never able to swap its TRON tokens off the exchange. FTX filed for bankruptcy on November 11th. The $13 million initial TRON facility was exhausted with swaps by customers to external wallets, but after the bankruptcy, no further capital injections by TRON were made. ELD Capital alleges that the announcement falsely represented that all relevant holders would be able to use the TRON facility to swap one for one, their TRON tokens, and that the debtors knew but omitted from the announcement that they would soon be filing for bankruptcy.

preventing further withdrawals. I cannot agree with ELD Capital's argument based on a review of the announcement and the evidence of the bankruptcy filing that the announcement was a false representation. The announcement was vague as to the procedure FTX customers were to use to swap their TRON tokens, but it was not a guarantee that all TRON token holders would be able to swap their tokens. The announcement does not include a promise or representation to that effect. It states that the total funding was unknown and that the facility was limited initially to only 13 million. Future capital injections were noted, but the announcement made clear that they depended on unknown future factors, including Tran's own ability to fund.

The announcement noted that there were risks associated with the announced swap and directed customers to first understand the details before participating in it. It is also critical to note that the promise made in the Tron announcement that there would be a 13-1stance, million dollar initial facility to allow customers to exchange tron tokens to an external wallet was fully funded and utilized. FTX process requests one-to-one swaps until the facility was depleted. The theory advanced by Mr. Kubit on the stand that FTX limited participation in the facility to only insiders and bohemian customers was not fully explored by the parties are persuasively presented at trial. Moreover, unsure how the swap would work,

Mr. Cubit made withdrawal attempts, but canceled each one by choice, believing that the swap attempts failed. Maybe if the requests remained open, ELD Capital could have participated in the initial facility, but it remains unclear. Before ELD Capital could try again, or TRON could inject more capital,

FTX filed for bankruptcy. While ELD Capital argues that FTX should have disclosed the eminent bankruptcy. There is no persuasive evidence that FTX knew that it would file for bankruptcy when it made the announcement. The filing occurred under the direction of the new FTX management after Sam Bankman-Fried relinquished control, which occurred following the TORN announcement. Putting aside my conclusion that the TORN announcement was not a false representation, even if it was, I do not believe that ELD Capital justifiably relied on it to conclude that it was guaranteed to swap

its assets off the exchange into an external wallet. ELD Capital acted through Mr. Cupid, who is an experienced and knowledgeable crypto investor. At the time of the announcement, he was aware of the FTX extreme liquidity crisis, the shutdown of the exchange's withdrawals, its need for funding and the risk of bankruptcy. Under the circumstances, the Tron facility announcement itself was a confirmation of the crisis. And the demand to participate in it, as reflected in the extreme premiums paid, for the swappable Tron tokens, indicates that the demand could have likely outpaced Tron's funding capacity. With this knowledge, Mr. Cupid moved forward and tried to take advantage of the facility

in an attempt to get his digital assets, representing his family's life savings off of the FTX exchange. He admitted that it was a difficult decision and that he did not know how it would work. But he moved forward anyway without seeking help or answers from knowledgeable FTC's representatives, despite the directive to do so in the announcement. It is true that FTX website was inaccessible at this point, but emails from FTX support were still being generated and no attempts to contact them via email were made. Mr. Kubit plainly explained that he tried a small swap initially

as a withdrawal test, which indicates to me that he knew that there was a risk that the swap would not occur. That swap indeed proved unsuccessful, but Mr. Kubit still went ahead with a much larger second attempt. I make no judgment as to Mr. Kewitt's decision at this time of extreme uncertainty when he was faced with the likely loss of his life savings. But with respect to the matter at hand, the facts support the conclusion that known risks were ignored, and reliance on FTX's announcement was not justified. Finally, there is insufficient evidence to show that FTX had reason or motive to advance the alleged fraudulent statement. FTX needed billions of dollars to save itself, and there was no evidence to suggest that FTX could or did in fact obtain those billions as a result of the Tron facility.

Given the foregoing, there is no need to address the remaining fraud factors. Sadly, like so many, ELD Capital could not withdraw its assets from the exchange before the debtors collapse, but there is no evidence that suggests that the Tron announcement was fraudulent. ELD Capital is entitled to its claim for the value of its digital assets held as of the petition date, but no more. Therefore, I will enter the proposed order that was attached to the trust claim objection at docket item 34251, which sustains the objection advanced by the trust, and I will do so shortly after the conclusion of today's hearing. I thank you for all the time and attention you devoted to the matter and your appearance at the trial as well as today. Thank you very much.

So with that, let's move forward with Mr. Malamed's issue and the motion of the trust. Thank you very much, Your Honor. Brian Gluckstein, Sullivan and Cromwell for the FTX Recovery Trust. Your Honor, we are here this morning somewhat unfortunately because we were put in the position of needing to take more of the court's time with respect to the claims of Mr. Melamette, arising from FTX's acquisition of a liquid group. As the Court knows, Your Honor has spent significant time

carefully addressing Mr. Melamette's SPA claim number 3385, including considering and ruling on important threshold issues that Mr. Milamud sought but failed to avoid being decided. In July of last year, after substantial briefing and argument, the court issued rulings on those threshold issues. In doing so, the court first ruled that Mr. Malamond's claims related to unpaid cryptocurrency consideration should be valued pursuant to the confirmed plan and the court's estimation order, noting that section 4.4 of the plan provides that all claims, quote,

in respect of digital assets, end quote, must be calculated pursuant to the estimated values provided in the court's order. The court's second thoroughly held that the non-crypto consideration portions of the SPA claim should be subordinated pursuant to Section 510B of the bankruptcy code. Importantly, in issuing that ruling,

the court reasoned that these various claims all involved the purchase and sale of F.T.X. Stock, received from the sale of Mr. Melman's stock in liquid. The court and the parties understood at the time that these rulings were intended to streamline the adjudication and resolution of the SPA proof of claim. In the course of those hundreds of pages of briefing, an hours spent before your honor, Mr. Malamon's claims were examined, discussed, characterized, and explained by the parties.

At no time were the claims and theories of recoveries that are now asserted in the arbitration ever discussed. That is because they are not found in the SPA proof of claim. And certainly, Your Honor, the trust was not on notice of the claims that have now been asserted there. Mr. Malam had now focuses almost exclusively on the fact that in its decision, the Court also reserved judgment as to whether any indemnification claim, quote, on account of the SPA claim arising from the unpaid crypto consideration, end quote, will be subordinated or not. The court did address the indemnification claims in its July ruling, concluding that other than

the breach of contract claim for payment of crypto consideration, the SPA claims, including any indemnification claim, arise from the stock purchased and are subordinated. Mr. Malamit would now like us all to believe that that reservation somehow permits him to assert brand new, never articulated before, unsubordinated. claims that he describes in his filings with the arbitral tribunal as legally distinct relating to the sale of his liquid interests and purchase of FTX stock simply by calling them indemnification claims. Mr. Salama's SPA claim does not allege any breach of representation or warranty related to the

unpaid crypto consideration, which is the only portion of his indentification claim that has not been subordinated by the. this court. Furthermore, any indemnification claim relating to the crypto consideration is still a claim in respect of digital assets and subject to the estimation order. Well, any other flavor of indemnity has been subordinated by the court's ruling of last July. What is happening is Mr. Milamut is seeking to create a third path to recovery that we submit

does not exist. Any legitimate indemnity in this context must, mean recovery of legitimate costs incurred in pursuing the claim, not a backdoor to assert entirely new substantive claims under the guise of indemnity. What is laid bare by Mr. Malam's notice of arbitration is that instead of arbitrating the remaining issues put at issue in his SPA claim, he is seeking to assert brand new claims and theories of recovery that seem to be newly minted and designed to bypass the court's threshold rulings and we submit that is not permissible. Just as our confirmed plan ensures that no

creditor can go sue the trust on a claim or legal theory not preserved by its proof of claim outside of this court, Mr. Malamit cannot do so through his arbitration proceeding. This court's bar date orders, bankruptcy rule 2003 are clear that only those claims preserve by a timely proof of claim remain viable. Mr. Malamit's notice of arbitration does not try to hide his intention to formulate new claims and theories of recovery in an effort to avoid this court's prior rulings, telling the arbitral tribunal that his claims in arbitration are legally distinct from his SPA claim, based on distinct conduct and, quote, legally distinct harms, end quote. Somewhat amazingly, Mr. Malamette tells the tribunal precisely why he has done so in paragraphs 29 and 3.5.

30 of the notice of arbitration, writing that it is, quote, because the trust has already persuaded the bankruptcy court to make a preemptive declaration, end quote, as to subordination, and therefore, quote, requests that the arbitral tribunal ensure that any award in the claimant's favor explicitly confirms that any damage is awarded do not arise from the purchase of FTC's shares, end quote. said differently, Your Honor, Mr. Malamud is no longer pursuing his SPA claims at all. Only after the trust filed this motion in opposition, Mr. Malamud now argues that this court, to this court, that his legally distinct claims, his words to the tribunal, are really the same claims that are asserted in the SPA proof of claim. and we submit these positions, Your Honor, cannot be reconciled.

Mr. Malama cannot have it both ways. He cannot assert new legally distinct claims in the arbitration and then turn around and tell this court that they're the same claims to avoid being barred from asserting them at all. And from the presentation that we were provided yesterday, it now appears that the court's going to hear today from Mr. Malama's counsel that maybe the entire issue is premature because the notice of arbitration is still subject

to his more definitive statement of claim, suggesting to us that he may try to assert a still evolving and differing claims before all is said and done in the arbitration. And that is why, Your Honor, we unfortunately are here and are seeking the Court's guidance to enforce his prior orders and put an end to this. The notice of arbitration that has been submitted

to the arbitral tribunal describes three legally distinct claims arising from the court. liquid transaction. First, Mr. Malamondi asserts a new claim that F.TX fraudulently induced him to sell 20% of his liquid shares in exchange for nearly $9 million in cash. What is referred to as the cash consideration in the SPA claim alleged now to be far below fair market value. This claim directly contradicts the SPA claim, which excludes the cash consideration

from any claim and concedes that Mr. Malamman. received a fair price for those shares. Second, Mr. Malamud brings a new claim in the arbitration that FTX fraudulently induced him to allow FTX to retain the crypto consideration in exchange for another 20% of his liquid shares. Say that again? Mr. Malamit's second claim in the arbitration is that FtX fraudulently induced him

to allow FTX to retain the crypto consideration. The court will recall one of the issues here was that the crypto consideration, was not to be delivered to Mr. Malamad until dates out into the future. And the breach of contract claim that's asserted in his proof of claim is that we failed to deliver those cryptocurrencies to him. The claim of the arbitration now is very different. And we did do a side-by-side on this, Your Honor, in our reply brief on page 7 that shows

the most material, they're exemplary of where these differences occur. but the only claim that's preserved on this issue in his SPA claim relating to the crypto consideration alleges that FDX wrongly retained the crypto consideration at closing in violation of the SPA. The complete opposite of the claim that's now being asserted in the arbitration that he was induced to set up this structure in the first place in some sort of improper manner. This claim that FDX induced him to agree to this structure and the transaction contradicts what is clearly asserted on this point in the SPA claim. And third, Your Honor, Mr. Malamond claims in the arbitration

that F.TX induced him to sell 60% of his liquid shares in exchange for the FTX shares. This claim plainly would be subordinated within the scope of the SPA claim. Yet Mr. Malamit disclaims making any damages claim in the arbitration for any loss attributable to the share consideration. He's in fact asking the tribunal to a firm, fine that any damages this being awarded, including on account of this claim, is not on account of the shares and is therefore not subordinated. Again,

what is it on apparently on account of then? Because you are much more familiar with the notice of the arbitration. It's not clear from the face of the arbitration, Your Honor. I think what, what, what for the briefing on this motion is clear is that this is all supposed to fit within the rubric of indemnification. Okay. In issuing- How was that not really? under the plan. And I apologize. I've been running a lot and I haven't been able to focus. We certainly believe it is, Your Honor.

And I'll get to that in a moment. And that's part of the issue here, is that this is a moving target. Because if I recall, just from my memory, we just gave a ruling on a fraudulent inducement claim. But that was specifically carved from that, from the global release in the plan, correct? Wasn't that the issue with ELD was that they asked for a new card from the global release? that claim for fraudulent inducement?

Your Honor is 100% correct. Okay. That issue has come up on multiple claims, including the one that your 100 just fooled on. The only reason that claim went to your honor to be adjudicated was because they had an express car vow from that. ELD did at the time of confirmation. Everybody else is bound by that, and I'm happy to address that point now. This iteration of these claims, we have asserted, is barred by the global settlement releasing the plan.

And that is because the way this is now articulated in the notice of arbitration is that these fraud claims are based on these generalized allegations of FTX's fraud that are precisely the types of claims that could be asserted by nearly all creditors, which is what the global settlement is intended to resolve. And Your Honor has considered on multiple ever occasions. For example, in the notice of arbitration in paragraph 17A, the alleged representations about segregation of custody and reconciliation of customer assets not happening appropriately making arguments about preferential

treatment for Alameda with respect to lending activities these are the sort of generalized fraud that are covered for the global settlement in the opposition to this motion mr. Malamondon argues well we didn't raise this previously well we didn't your honor because the iteration of these claims that your honor considered last year didn't make these sorts of allegations It was not directly relevant because what was pled at the time was actually contained in the fore corners of the proof of claim are allegations having to do with the specific transaction and the sale of liquid and the shares that were received by Mr. Malambe. So we do believe that this iteration, which we maintain is completely separate and new, of claims would be barred by the global settlement as Your Honor is alluding to. And Your Honor will recall, in issuing the threshold of rulings last summer, this Court recognized that Mr. Malamit's entire SPA claim,

with the exception of the breach of contract claim with respect to the unpaid crypto consideration arise from his purchase of the FTX shares in exchange for the liquid shares. Mr. Malamit is not asserting in the arbitration either a breach of contract for unpaid crypto consideration or any remaining preserved claims relating to the FDX shares. We submit his arbitration claims are then by definition new. These are not the claims that we were here talking about last year, Your Honor. In addition, his brand new theories relating to cash consideration, which is an issue that was not even on the table, and is expressly disclaimed in the proof of claim, and the crypto consideration rely on new factual allegations.

This all matters, of course, Your Honor, because this court's bar-date orders and plan injunction prevent him from asserting new claims that are not preserved in the proof of claim. Mr. Malamit doesn't seriously dispute that an entirely new claim could not be asserted. Rather, Mr. Malamit argues that his new claims can be found somewhere in the SPA claim. We have not found them there. Mr. Malamit points to the generalized language referencing the types of claims in the SPA claims, such as the word fraud or misrepresentation, to say that the claims are the same.

But upon the examination, the superficial analysis, Mrs. DeMorke, as I suggested, Your Honor, we did include a chart on page 7 of our reply that highlights some of the key differences in the different categories of the SPA claim in terms of what's actually found in the proof of claim, juxtaposed what is found in the notice of arbitration.

This is anything, Your Honor, but a situation where the claimant is fleshing out the details of his proof of claim, which courts have acknowledged would be permissible. is a wholesale rewrite to assert new claims and theories in attempt to construct viable non-subordinated claims. This court and the parties are not looking at these claims on a blank slate. Given the extensive resources that have been invested over the course of two years to narrow the issues, Mr. Malam is now looking for a do-over that we believe is not available.

It is implausible that all of these new theories were being asserted, yet never raised in the voluminous briefing, luminous briefing or hours of hearings before your honor leading up to the decision on the threshold rulings mr. Malam it cannot reinvent his claim in the arbitration as he has suggested he will continue to do in an attempt to create a claim that could be viable and unsubordinated in light of the courts prior rulings and of course your honor at no point here with this having been done through the notice of arbitration has mr. Malamette sought to amend claims in this court. Absent a proper amendment, Mr. Milamut is bound to his SPA claims,

including the factual allegations and theories of liability and damages as set forth in that proof of claim. We cite numerous cases in our briefing where, of course, reject attempts to recharacterize portions of its claim, a claimant to report, recharacterize portions of its claim without seeking leave and refusing to consider new theories of liability without seeking and obtaining leave to amend its claim. If Mr. Malamud wanted to assert new theories or claims in the arbitration, he needed to first obtain permission from this court and actually amend the bankruptcy claim to put the trust on notice of those claims to assert the theories that he now seeks to arbitrate. Mr. Malamud makes a half-hearted attempt in his opposition papers to seek amendment as some type of alternative response. While procedurally improper, it would also be meritless.

Whereas here the bar date has long passed, amendments to claims are closely reviewed to ensure they are not attempts to file a new claim and only permitted where, one, the initial claim provided the trust with reasonable notice of the new claims that are now being asserted, and two, that would be equitable to do so. The distinct claims Mr. Milamut seeks to assert in the arbitration could have been asserted before, but they weren't. Mr. Malamut is not citing to newly discover facts or circumstances for needing to amend the claim or assert different claims. To the contrary, the notice of arbitration candidly admits the new claims were developed and are being asserted to avoid this court's threshold rulings. Mr. Malamud's argument that he is merely fleshing out the claims are belied by the record, including the voluminous record considered by this court leading up to the issuance of the threshold rulings. The trust would be prejudiced by any amendment now because the parties in the court have devoted substantial time and resources to the SPA claim as it was pledged. Forcing the parties to start this litigation over would be inequitable and makes no sense. Of course, even if the court permitted amendment and the new claims were to be adjudicated in arbitration, any award of course would still be subject to the court's threshold rulings and the reasoning behind them, making the feudal in any event.

With that, Your Honor, I will pause and happy to answer any questions the Court has. Otherwise, I will reserve for rebuttal. I do not have any questions at this time. Thank you very much. Thank you very much, Your Honor. Mr. Adler, good to see you again. Good morning, Judge O'am, and it's David Adler from McClure in English on behalf of Seth Malamud. I'd like to – I sent yesterday a presentation that I think would be very helpful to sort of go

I want to make sure Your Honor has it. I do. Thank you. Because there's a lot of – Does opposing counsel have a copy of it as well? Yes, we do, Your Honor. Okay. We served it on them yesterday, but I think there's a lot of information that is not being accurately conveyed.

And I'm going to try and go through some of the history here that leads to – or that led to the notice of arbitration, I think there's just a, there is a miscommunication at best. They're not understanding what the purpose of that provision was. So with that, I'd like to begin on slide two, which is entitled Background, Claim 3385.

And what we've done, Your Honor, because we think documents speak louder than words, is we've tried to put documents in front of your court for ease of reference. In 3385, Malam had laid out the basis first claim. And I want to draw your attention to paragraph 4, which is on the right hand side and says claimant has been damaged, or claimant was damaged as approximate results of the following breaches and torts by FTX trading, from skipping to B, which says by multiple breaches of

warranties and representations contained in the SBA and elsewhere. C, failure to pay retain consideration as defined and promise in the SBA. D, failure to indemnify claimant for damages from breach of contract and breaches of warranty and representations provided in the SBA. So what when I hear that we haven't made claims about indemnity on account of the crypto consideration, or as we call it, the retained consideration. I don't understand it because that claim is directly laid out in paragraph four of the proof of claim. And further on in the proof of claim, it is stated with quite some particularity.

If you go to, it is paragraph 21 of the proof of claim. Debtor has failed to release a retained consideration. debtor is, and I'm skipping here, accordingly, debtor is responsible for all damages caused by claimant, and caused by debtor's breaches of warranties and representations, including fraudulent breaches, as well as fees and costs resulting from or arising from breaches, including court costs and attorney's fees, which cannot be ascertained at this time. So there's the indemnity provision straight in the proof of claim related to the crypto consideration. It's not new.

The claim for fraud is not new. It's laid out in detail in the proof of claim, and specifically paragraphs 22 through 29 of the proof of claim. It talks about the fraud claim here. And I think it just bears note here, and I say it later on in the slide, I'll skip it when I get to it. But Your Honor's ruling on July 31st did not disallow the claim. Mr. Malamican pursue his fraud claim all he wants.

It may not yield any recovery, but it wasn't disallowed by the court. So the point that I'm trying to make... Was it disallowed by the plan? That's very important that we need to discuss. Why would you say it's not? You've read the provision of the plan? Well, I assume. Can we actually come back to that?

No, when a judge asks, you got to address it. 5.2. You know what? Get to it in due course. I don't want to interrupt your argument. Okay, I mean, because I think that's... But let's put a pin in that. To me, it's a critical question.

Let's put a pin in it and come back to it because it is very, very important. So, Your Honor, we, we... Page 2 just does what, or just references, what I referenced in paragraphs. of the proof of claim on the indemnity and references section 9.3 of the SPA which is the indemnity provision for any breaches of representations and warranties made by the purchaser under clause 7.2 or covenants of the purchaser under the agreement now your honor I didn't go through this in great detail in our submission because I didn't want to

waste a lot of ink doing it but I want to draw your attention to if you go to in the notice of arbitration on paragraphs on paragraphs 20 20 21 there there is much more detail about the representations and warranties that were made by by FTX in connection with the sale. And if you look at paragraph 23, it says paragraph 7 and 8 of Schedule B make the following warranties. And there's one about information and there's one about completeness of disclosure. Now I'm going to put a pin in that one too because when we talk about claims being released under 5.2, as I understand it, that's if it's a general cause of action that all creditors

have that's vested in the estate. Obviously, the customer base did not have these types of representations and warranties that were made in the SPA, and the amount of information that was exchanged in this transaction obviously was substantial to get to the closing, and there are, you know, significant violations or breaches of the information and the completeness of the disclosure, which is not the case with the ordinary customer of FTX. I think this is the part that I really wanted to, because I think it explains a lot, on slide four, we put before your honor both the July 22nd bench,

ruling and paragraph three of the July 31st order. So in your honor's ruling on July 22, you state to the extent that Mr. Malamette asserts an indemnification claim on account of the SPA claim arising from the unpaid crypto consideration, I will reserve judgment as to whether that claim is subordinated until such claim is clearly defined. That is embodied. That is embodied in the order, in paragraph three last sentence, the court reserves judgment regarding the allowance, classification, and subordination of any indemnification claim from the crypto consideration. Now, why is this important?

Because this goes to the point of legally distinct. Let's suppose, Your Honor disallowed, or didn't, I'm sorry, can't use that word, Your Honor subordinated any claim for indemnity on account of the SBA relating to the FTA. TX shares in the July 31st ruling, but Your Honor did not subordinate an indemnity claim on account of the crypto consideration. So there's overlap. In other words, there may be a misrepresentation that applies both to the transaction and to the crypto consideration.

So when we talk about legally distinct, we are trying to – we are trying to – put it in the tranche of being in the crypto consideration indemnification part because if it's in the other part of the transaction, it's going to be subordinated, you know, per your honor, per your honor's July 31st ruling. So the whole argument over legally distinct is to deal with that issue of the two separate categories that were created with respect to the indemnification claim under the SPA. based on your honor's ruling. So that's the significance of the legally distinct language was to make sure that we don't come back here and they say, well, that was part of the indemnity for the SPA transaction.

It didn't relate specifically to the indemnification claim for the crypto, and we have a factual finding that it does. I mean, they may be overlapping, you know, because the fraud was so extensive, but that was a point. Well, the alleged fraud relates to the SPA. So a damage claim would need to be approximated based on the different tranches of damages that you are seeking.

And if some of those damages on account of a fraud relate to the subordinated portion, then those would be subordinated. Correct. You probably would have an overall figure of damage, and then it would have to be apportioned. Well, I – Because you couldn't put all of your damages into the crypto consideration piece. I agree 100%, Your Honor. To be clear. I agree.

I mean, maybe you could. I'm not adjudicating that, but that does not seem. I understand that, but I don't want to be faced with a situation down the road saying this is, let's say the easiest one, failure to deliver accurate financial statements. Okay, so FDX presents fraudulent financial statements. Well, that induced Mr. Malamid to go forward with the training. transaction, but it also induced him to keep the crypto consideration on the platform. So there are, you know, it applies to both. Now, I'm not saying that we can use that to say,

oh, no, Judge, we're entitled to, you know, the transaction damages under the SPA, right? It relates to the narrow category that you reserve judgment on. So, you know, frankly, because of the way the indemnity was split up in the July 31st order, that's why we, we sought the legal distinct issues. Moving along, I think from slide five, the rulings of the court, this is three things were essentially left open post July 31st. The subordinated portion of claim 33385, including any indemnity claim, and we put that in there specifically so your honor would see that, to a class 14 Section 510B, other equity claim, the allowed crypto consideration claim pursuant to 4.4 of the plan

and the reservation of judgment regarding the allowance classification and treatment of any indemnity claim arising from the crypto consideration. We say here that we reiterate that the court didn't disallow any claims, and we have to show misrepresentations and fraud, okay, to get to the point of having an indemnity for crypto consideration. Okay, so, you know, when we talk about fraud in the in the notice of arbitration, it's to show the misrepresentations to get to the point of the crypto consideration indemnity. So next slide, we're trying to move along faster here. You know, since, since your honor ruled on July 31st, counsel for the trust has just not acknowledged

that there, that the court made that reservation. And we specifically refer to the representations made before Syak, which is specifically quote, only two issues were to be addressed in arbitration as a result of the bankruptcy court rulings. Whether Malamud is entitled to the unpaid crypto consideration and the liquidated amount, if any, of Malamid's subordinated fraud claims. Same issue before this court. They stated that the two issues are whether Malamit is entitled to unpaid crypto consideration under the terms of the SPA and the value of the subordinated claims. So from our perspective, the July 31st ruling that that reservation has just been ignored.

Okay. And I mean, we can talk about it, you know, all we want, but I think that, you know, from our perspective, you know, it is, it's, it's, it's, it's. It's like it doesn't exist because I think that the trust is of the view that any indemnity claim is going to be in the bucket of the claims that the court subordinated. Slide six, Your Honor, I thought this was helpful to sort of provide the court with an update on the timeline of the proceedings in the CYAC arbitration. And I specifically want to draw your attention to these procedural orders that were issued on April 4th and April 20th and especially the April 20th one basically ruled that the

statement of claim and that is the operative document in the case so we put in the Allen declaration mr. Allen is counsel for mr. Malamit in Singapore he's an arbitration guru and what he says in that declaration is that the notice of arbitration is basically a commencement document and the statement of claim is the actual operative document in the arbitration so that is where the claim has to be detailed okay and laid out so when we say in the in the notice of arbitration that we estimate damages to preliminarily to be this amount that that doesn't really mean that much other than the fact that

it is a placeholder to be put in obviously when you get to the statement of claim where you have to quantify damages in a much greater degree I'm told so we're in this situation your honor where the statement of claim is to be filed three weeks after your honor rules and I think as we said in the papers what caused SIAC to do that was the fact that there were arguments being made over the jurisdiction of Syak over the proceedings so they basically put a pin in it or put it on hold put a stay on it to get a ruling from the court first now obviously the motion doesn't have much to do with

jurisdiction it has to do with enjoining okay the jurisdiction of Syak exists you know the question before the court today is whether the three orders that the trust references should in join him from pursuing these claims. Moving forward, and this is just a follow on from the slide – two slides before – is – I say this – that it appears to me that this motion to enforce is unripe and appears to be a disguised motion to reconsider. And I say that based on the fact that the indemnity for the crypto consideration,

has never been acknowledged by the trust even in the motion before this court and it appears to me to be a motion to attempt to get the court to reconsider the ruling in paragraph 3 the last sentence of the July 31st order we get to the response to point 1 and which is slide 9 and and and and and and and and Our position is that they're not new claims. They're essentially the same claims as stated in Claim 3385. We state a claim for fraud, we state a claim for the return of the crypto consideration. We state a claim for breaches of reps and warranties.

We state a claim for indemnity. Fraudulent inducement. All of those claims are in paragraph four of the proof of claim, and they're all in the, and it's very hard to read. I apologize, Your Honor, on the right-hand. inside which is the preliminary preliminary statement of relief requested in the notice of arbitration I'd also note your honor that we're being accused of changing the calculation for damages and I think this is important to

recall that last year it was their expert who came forward and said that With respect to a fraud claim, the damages would be that which is received against the value of which you gave up. And in connection with those statements, there were allegations that liquid, that the trust overpaid for liquid, I'm sorry, the debtors, not the trust, the debtors overpaid for liquid. I'm a little, well, I don't know whether that's true or not, Your Honor, but I don't think it's true, but I will say that it was injected into this proceeding by the debtors in connection with the briefing last year, the measure of damages. So that is what is in the notice of arbitration. in terms of the fraud claim, which, as I said, is a claim that has to be pursued

if for no other reason than it is an element for establishing the indemnity for the crypto consideration claim. I was going to say, Your Honor, that, you know, FTCS had interest in Anthropics, SpaceX, and a bunch of other companies, And, you know, it just seems to me that the investments were not all so terrible. On our response, on point two, which is that the amendment, their position that we should file an amendment, I think it's important, again, to reiterate that the statement of claim is the relevant document in the proceeding.

The notice of arbitration is, let's call it for lack of a better term, like, you know, the form 405 that you have to file with a proof of claim. It is just basically, you know, who the parties are, the tribunal, you know, all these other things. And from our standpoint, it is premature to put in an amendment until the statement of claim is filed. because if we put in an amendment, if we asked for leave to amend, excuse me, we're just going to have to do it again when the statement of claim is filed. Does that make sense? No, not really, because I'm the one that controls the claims in this case. And so you would need to submit to me and ask for permission to file an amended claim with the arbitrable tribunal.

Okay. That is how bankruptcy, in my opinion, works. So they don't have the authority to make a decision with respect to that. I didn't say that they did. Right. And you would not be able to go forward and seek that claim because it would be inviolative of the bar date order. Okay. Right.

And we can discuss your argument on that if you would wish, but I think that I am the controller of what claims get pursued against the debtor for pre-petition claims. Right. and the bar date order has the bar date is passed and so if you were going to seek an amendment you would need to first do so with me with the way that everything works under our various orders and how it's intended to work so would I find you in contempt you know that's a different story but do I think that you could proceed on that statement of claim without further proceedings before me is let me let me let me rephrase what I I said, I think that the statement of claim should be filed and then we should seek a motion

for leave to amend before the claim goes forward. So in other words, the claim itself is detailed. We ask permission from the court for leave to amend and nothing goes forward in Syak until that ruling takes place. And I fully agree with Your Honor that I didn't mean to suggest that Syak somehow has the ability to amend your claims in your court. I'm going to skip point four for a minute. Now I'm going to come to the plan stuff.

This was news to me. We had Mr. Blockstein likes to say we litigated. We filed six briefs last year on this issue, and none of these issues were raised that were supposedly raising. If we were considering threshold issues last year, why didn't we consider the threshold issue of whether Malamid's fraud claim was compromised under 5.2 of the plan? Because that seems to me to be, you know, an overwhelming point. You know, putting that aside, I just want to point that out because they say that we did it.

I don't think that – again, I think this sort of misses the mark. If I'm understanding it correctly, the fraud claim under 5.2, and we put sections in our objection about where they indicated that the intention was not to just allow claims of particular entities that have specified claims for fraud. And we were referred to the confirmation brief that was filed in this case. We referred to, I think it's in the response to the U.S. trustee. We referred to that provision. But regardless of whether the claim is compromised or not, it's missing the mark because there's an indemnity claim. So there may be fraud of a general.

nature, just assume that there's fraud that is a general nature, that fraud is a trigger, or the misrepresentations are the trigger for the indemnity claim. If you were to rule that somehow 5.2 compromised his section, his indemnity claim for crypto consideration. I don't think that that makes sense because that is an individual claim that he has, that he bargained for in connection with the SPA, an indemnity claim, and if there's fraud claims, false financials, everything, Alameda, all the other stuff, he still has the right under the contract to get indemnity for those misrepresentations. Right, but you have to have an underlying claim in which you've experienced the loss.

You have to have a loss, I think. Well, the loss is – and a misrepresentation. From a claim. An intended claim doesn't stand alone. It has to have a triggering claim that would cause a loss. Well, it's based on misrepresentations and warranties, breaches of warranty made by the debtor. Because of their fraud.

That's the cause of action. I'm referencing the statements, the misrepresentations themselves that give the trigger to the cause of action. to the indemnity claim. So the cause of action is the fraud. Right. I mean, I think that obviously you have a separate cause of action for fraud, separate cause of action for indemnity. There are fraud claims that overlap both of those.

But if I enjoin your ability to bring the fraud claim, what would be left? We would still assert the... Well, I shouldn't say we would still. I think that we could still assert the misrepresentations that were made as misrepresentations and breaches of warranty under the agreement and that therefore we have a claim for indemnity. The 5.2 didn't preclude you from asserting misrepresentations or breaches of warranties. And I can't think of anything that is more specific than having, you know,

contracted for that provision of having an indemnity on account of misrepresentations that were made. No other – I mean, the general customer base in this case did not have these contractual protection provisions of indemnity. We have that. We contracted for that, and we should be allowed to pursue that. Your Honor might say that the fraud claim, you cannot recover on a fraud claim, but those representations, misrepresentations and breach of warranty serve as the basis for the indemnity claim for the crypto consideration. Moving forward, Your Honor, we get to the... Should I give any weight to Section K that says N all causes of action relating to any of the foregoing?

I'm sorry? Should we just ignore subsection K of the... settlement that says and it releases all causes of action relating to any of the foregoing. So I'm under 5.2. Your Honor, I am struggling with the fact that a global settlement could remove a contractual provision that a party has. But you were there at the confirmation hearing. Actually, I was not.

You were there, right, correct? Your client was there. You were objecting. I understand. You peeled the confirmation order, and it went forward on that basis. This is an important part of the plan, in my understanding, because it would be difficult to prosecute all of these types of allegations and claims, given the facts of the case.

And it would have been to the detriment of the claimants to have allowed others to pursue such difficult claims. Right. I thought that that was, and I could be wrong, but that was my. understanding of the necessity for the settlement my I mean mr. Gluckstein is the expert on this I will say that from the start but my understanding is that this was a a settlement between the customer class and the debtors and really had to do with you know the claims that were made about tracing and it provided a way to sort of you have a proof of claim that says, I'm owed 10 Bitcoin.

And you also have a, and that proof of claim says, by the way, they also defrauded me. So in order, and I might be wrong, this is from other crypto cases, but in order to sort of get that claim to the amount of 10 Bitcoin, you're basically coming to a compromise where they're giving up their non-crypto-related claims in exchange for their crypto claims. I don't under I I don't see how the ad hoc group of of customers Could reach a settlement or reach a deal that addressed a specific contractual claim of my client okay without you know Without anything more and well you had you were given notice and an opportunity to object That's how that's how that would work in that in a plan confirmation hearing and your client And your claimant, your client was present at the confirmation hearing.

But, but I mean, in fairness, judge, it is the confirmation brief that says that they are not, that it is a global settlement between customers. Okay, it doesn't say with respect to other claimants or people who have contracts. And while I'm talking about this, I want to refer to 10.9 of the plan, which, which I think, and this is in my declaration, yeah, yeah, because the confirmation order. I have the plan in front of me. 10.9 essentially says that, you know, which I had, which I remember, it essentially says that any documents

that, that no claims are being compromised, you know that are embodied in documents you know and I read that to mean that if you have a specific provision that gives you a cause of action that claim is not being compromised and or released okay so moving forward we point to text the section I'm sorry yeah 10.8 of the plan which is the plan injunction now I I was there and we did object at the time to the debtor receiving a discharge which was originally in section 10 was removed so this the liquidating debtors of FTX did not receive a discharge and what is left is an injunction provision

which normally would kick in under 524 for after a dis, after confirmation of a plan and a discharge, you would get a discharge in an injunction. And it doesn't say that the injunction stands by itself. It says that the injunction is to the fullest extent authorized or provided by the bankruptcy code. If there is no discharge and there is no injunction under 524, I don't know how there can be a plan injunction that references that it extends to the fullest extent authorized or provided by the bankruptcy code. Now, I understand there have been recent decisions by Judge Goldblatt where he did provide. a plan injunction, but it was limited in time and scope. But without the discharge, you don't have 524.

And if you don't have 524, the plan injunction probably needs to say specifically or not reference the bankruptcy code and ascribe its scope. So, Your Honor, I mean, I think that it's a – it's an issue here. I frankly am not seeking to get a ruling on 10.8. I think, Your Honor, could deal with the 5.2 part and determine that Malamud's contractual claim for indemnity was not compromised or released by the ad hoc group of customers. Just to finish up here, the last point that they argue is point four, which essentially is your July 31st order put the claims in or referred to arbitration, the claims in 3385, and because this is, quote, a new claim, which I think we've addressed in the earlier slides, it wasn't included in your order. I think for the reasons that I stated before that it's not a new claim, the July 31st order doesn't provide a basis.

So, you know, in conclusion, Your Honor, we think that all three orders don't provide a basis to enjoin Malamud from pursuing these claims. Now, I should have said this at the beginning, that we recognize, and we set in court, that we are not getting a distribution in this case until we come back here, okay? That your honor is the gatekeeper, okay? And so whatever happens in Syak, we're coming back here. And if you determine that the claim is 510B, well, that's, I guess, the end of the story. And so the litigation should move forward. What I would suggest is that we put in the statement of claim.

claim, we tell the SiAC court that we need permission from the court for leave to amend, if it really is an amendment, but I'm going to ask you anyway. Well, let me ask you, can I make that decision now then? Because it sounds like you are going to reframe the claims? So how can I make the decision whether it's an amendment today? I don't think you can. Okay. I would say that the course of action is to say go ahead and file your statement of claim

come back here you're gonna you know just defer the motion and at that time we will consider whether this is an amendment whether there's leave to amend and you know we'll figure it out at that point with yet another hearing sorry your honor okay well I could do it on the papers right okay I think I understand your your arguments and I appreciate that I don't think I have any further questions if you're back you're all right your honor pro-ing blessing for the trust where we just ended that discussion about we should let the litigation proceed we can consider this all later these are the arguments did

mr. Adler stood here and made to the court last year in trying to avoid the court considering the threshold issues in the first place They want to go litigate, whatever they want to litigate in the arbitration, and then figure it out later whether they have a claim. And that was why we briefed and argued and Your Honor agreed with the trust that there was benefit to everybody to narrowing these issues and getting clarity around what we were actually going to arbitrate and whether the parties could then consider whether that arbitration frankly made economic sense given what was left in the claim.

And we're hearing that again. And what we're hearing now is even more remarkable that appeared in these slides that were given to us yesterday. That now we should say, and this is the theme that was risen in this declaration from their lawyer, their arbitration lawyer, that was dumped on the docket. He's, of course, not here.

That somehow we should just now wait until they file a statement of claim because that will be the determinative document in the arbitration. That is the termitive document. but this notice of arbitration was not just some form that was filled out, as it's being suggested. They needed to articulate their claims to the tribunal, and what they have done is manufacture entirely new claims. When Mr. Adler set forth in his slides here in slide three, he excerpts paragraph four of the proof of claim.

And as I said in my opening remarks, he talks very generally about the claims that we are asserting, fraud, misrepresentation, DEMNification. He shows the indemnification provision as an example because we know he's very focused on, Mr. Milamut is very focused on identification. Paragraph 21 of the proof of claim covers indemnification. The first sentence

of that paragraph says the debtor has failed to release the retained consideration to the claimant. That's the context in which we've been talking for two years about the crypto consideration. The retention of that consideration by the debtor. What's pledding

in the notice of arbitration is the polar opposite, that they were induced to this structure as a result of fraud and misrepresentations by the debtor. And we could go paragraph by paragraph, Your Honor, through the proof of claim. With each of

the claims that they've asserted in the proof of claim, they assert a theory of recovery. They assert facts that they're relying on in the proof of claim. We have the benefit, Your Honor, of not simply the proof of claim. This claims litigation has been pending for a long time. There's extensive briefing before the court.

There was extensive briefing before the court leading up to the threshold rulings. Where the parties explained their position, Mr. Malame put in briefs, he explained his fraud claim, he explained his misrepresentation claim. The trust responded to those claims. On the basis of those arguments, which presumably is what the parties understood the claims that actually were asserted and preserved in the proof of claim to be about, it is that record that the court decided, considered and decided the threshold issues. What is presented in the notice of arbitration is completely different. Mr. Adler completely glossed over that this morning.

There's a slide in here that says that the same claims, again, referring just to these generalizations about the type of claim, the cause of action. But the case law is clear, Your Honor, that if you come forward with a new theory that's based on different facts, that the debtor is not on notice of, That is an amended claim. That's not the new, that's not the same claim.

And at various points in the colloquy this morning, Mr. Adler seemed to concede that after they're going to file this, this statement of claim, that then they'll come and ask for an amendment. It sounds like maybe we actually are saying now they need an amendment. We certainly think that they would. And we certainly argued and we'll, if we ever get to that point, we'll and we have to we'll we'll brief it as to why certainly at this stage no amendment should be granted given the history particularly given the history of this case and your honor

made a comment that i certainly agree with that i think is very important here and i want to respond to this suggestion that we have been ignoring the fact that your honor was deferring on the subordination question as to indemnity that is not the case i addressed this morning we addressed it in our papers. But we certainly agree with your honor's observation that indemnity claim does not stand alone. And what we believe is happening here is that in the face of the threshold rulings, subordinating the substantial majority of the SPA claim, but for the crypto consideration, which there's a fixed number associated with it now pursuant to the estimation order. We know what Mr. Malamit is entitled to on that claim. We could agree to that

today and move on. They don't want to do that, of course. What they want to do is repackage these claims as indemnity on a standalone basis. So they want to take their fraud claim. They want to take their SPA claims and say, well, I am not asking the tribunal to award me damages on account of the SPA claim because Your Honor has already decided that that is subordinated. Please instead award it as indemnity and make an express finding that it is not on account of the SPA. So therefore, we can get around your honor's order and we submit that that is not proper here the there was quite a bit in the in the argument this morning your honor about this question of the plan provisions and I I don't want to belabor it there is a plan

injunction in the plan in section 10.8 the debtor did not receive a discharge despite Mr. Adder apparently wanting to read the plan injunction out of the plan it's there it was approved by Judge Dorsey it's not part of his objection as I as if I can recall at the time that somehow it should be removed in his entirety and the reason why we cited in this motion is we believe it does provide a basis for your honor to prevent the insertion of new claims outside of this court which is what a plan does to ensure that all adjudication of claims occur before your honor the only reason this arbitration is proceeding at all is because your honor issued an order of permitting that limited scope to go forward in the arbitration and what we're doing here now what mr. Malam is doing here from our perspective is assert new claims and once we assert those claims was apparently going to just be perfectly fine going to litigate those claims in the arbitration without ever coming to

this court the only reason we're having any discussion now about potential amendment of claims is because we've raised this motion that's before your honor today I don't the more we talk about this the less it sounds like there's serious argument that these are in fact the same claims and as I said I would just observe that if we go side by side we did put that excerpt in our reply brief of key points there are others if we go side by side from what's in the proof of claim and importantly what's in their own briefing in this claim of objection before Your Honor in connection with the prior motions.

And then we look at what's in this notice of arbitration, the theories of recovery, the calculation of damages, the theory of damages, how they're getting to those damages number. The facts that they're relying on are completely different. And so, therefore, this is a new claim. Lastly, Your Honor, I will just comment on this question that Your Honor is talking about, which we certainly agree with, and 5.2 of the plan and the Global Settlement. We talked about it earlier. Again, this idea that we didn't raise it earlier,

the claims that were asserted, the fraud theory that's asserted in the proof of claim, is extremely different than what is asserted now. And the reason why we, as I alluded to earlier, the reason why we believe this is now plainly barred by Section 5.2 in the form that is enumerated in the notice of arbitration is that the facts

that they are relying on are facts that exist broadly. They're trying to say that, Mr. Adler is saying, we're trying to rely on contractual misrepresentations, but they're not. They're arguing the facts that are supporting these arguments now have morphed from bilateral negotiations to things like you did not protect cryptocurrency in customer wallets as was expected,

and therefore we had, We now learned that our cryptocurrency that was allocated to us was not properly protected. These are the very sort of global arguments that are not limited simply to customers, that are discussed and that were the impetus for Section 5.2 to say any sort of generalized harm where creditors at large could assert that Mr. Bankman-Fried and his associates defrauded people. those claims were not going to be litigated. So whether you had a customer claim, whether you have a breach of contract claim,

and you want to tack on arguments to say, I should have additional damages on account of the FTX fraud, the FTX fraud, capital P, those claims were being compromised for the terms of the plan so that the estate was not litigating on a creditor-by-creditor basis, the fact that everybody was harmed by Mr. Bankman-free's actions.

At this point, that is a, everybody can stipulate to that fact, but it's not going to be a basis for additional recoveries in this case. I do agree, Your Honor, that the language in Section 5.2 covers any such

claims of that nature as well as any cause of action related to the foregoing. So again, this comes back, it becomes this circular discussion that we continue to have around this indentedy claim, And whether this indemnity claim is some savior to Mr. Malamit, that notwithstanding the fact that he's asserting claims that we now,

in the form he's assuring them the arbitration, are barred by Section 5.2, the fact that he's asserting claims that all arise under the SPA, that Your Honor has previously ruled are subordinated, that we can just repackage them under new theories, call them indemnity and somehow on account of the crypto consideration, and therefore ask the tribunal to adjudicate those claims and make findings. So when they come back to Your Honor, they want to waive the piece of paper from the tribunal that says the tribunal found, this all relates to crypto consideration, Your Honor, because we didn't even ask them to enter any damages with respect to the SPA claim.

So they're trying to, again, from our perspective, this looks like an end run around the decisions. What we want to do, Your Honor, and what we always wanted to do, which is why we brought the questions to the court and have taken so much of the court's time on this, is to try to actually narrow the issues to what is a viable claim for Mr. Milamud, the issues that are in dispute between the parties, and see if those could be resolved. And if there's a portion of those within the buckets that Your Honor identified that are appropriately arbitrated, we are off in the arbitration proceeding trying to liquidate those. But what we are now facing is a completely new set of facts, circumstances, and claims. And that we submit is not permissible. And we do ask, Your Honor, based on the sufficient authority that exists, to stop this, and to refocus Mr. Malamit on the categories of claims subject that are at actually pending before this court in the proof of claim that were subject to the order last

year and allow the parties to proceed as appropriate I will note as we see it none of those claims are actually being asserted currently in the arbitration so that's where we don't really know why we're there but not withstanding I must admit that I must admit I thought that this would be finished following my ruling because I thought we did And I want to look at the record and make sure I understood what was happening and there's a good chance that maybe I wasn't fully understanding what was being presented to me at the time. But I really thought that the ruling on the threshold issues finalized the disputes between the parties in a sufficient manner that we would be able to conclude the claim. Because I agree with you. I thought I really wasn't focused on a fraud claim.

But I am going to look – I don't want to cut you off. I'm going to look at everything again because, you know, this is – I need more time with it and I haven't spent adequate time with it. So I'm not going to be able to make a ruling today on it. And I want to look at the record and I want to look at the claims in the arbitration very carefully as compared to the proof of claim that was submitted because it does say fraud and it does say inducement. And there are paragraphs discussing the theory of the fraud. We appreciate that, Your Honor.

And I would certainly observe, I do believe, and I agree with Your Honor's observations. We left that hearing believing that this was going to be very streamlined. We thought your Honor's ruling was very clear. And in fact, in reviewing the record, I would point your honor to the court's comments on pages 127 and 128 of your ruling at the July hearing, where you discuss the question, the second threshold question of the 510 visa coordination claims. And in issuing that ruling, the court talks about the fact that it is from the stock. purchase and the sale of the claim and the sale of the business that Mr. Malamit's claims for breach of warranty, misrepresentation, fraud, and indemnification arise. All of the categories of

claims that we're talking about now were before the court and carefully considered by your honor in making the subordination ruling. What has changed is that Mr. Malamud has gone and developed new theories on how to try to prosecute these claims in a way. that perhaps brings them somewhere that is not within the subordination ruling and we would submit that you can't have it both ways if these are the same claims they're subject to that ruling if these are new claims they can't just go assert them in the arbitration and start this litigation anew they could have asserted some of these theories and factual predicates in the proof of claim

they could have raised them with your honor last year and your honor could have considered them in connection with the threshold of rulings that did not happen and we certainly don't have a desire to restart this litigation again okay thank you all right well thank you as I said I'm not able to to fully rule today so I will take it under advisement I was just gonna say can I say just one please but to the podium but we can pick you up on the transcript I want to reiterate two things your honor which is mr. Glockstein's reference to pages 127 and one 28. When you get past everything, that's when Your Honor issues the reservation on the indemnity for the cryptocurrency.

Well, and to be fair, I did not know what your claim was on that. That's why I had to reserve. I think it was. Because I had no idea what the category, what you were going to claim was a crypto consideration indemnification claim. That's fair. And so how would I determine whether it was appropriately subordinated or not? Right. Right.

Right, right, right. To be, I mean. Yeah, no, no, no, I didn't mean to suggest otherwise. But when you, the discussion was on the FTX shares and then there was this separate discussion or paragraph on the indemnity. And I just want to say that, again, that it is from that ruling where you have the indemnity on that being subordinated on the shares and then the indemnity on the crypto being reserved that created sort of this issue about legally distinct and everything and the need to put that within the context

or to focus our efforts on the indemnity for the crypto consideration. We discussed that length in nature of the claim prior. Do you feel like you should have been more forthright on what the crypto consideration claim was? I think if you look at the transcript from June 25th of last year, I think I discuss it. Okay. I will go ahead and review the transcript. And I think I even – I hate to say this, but it is a year ago – It probably was clear, you'll say.

It is a year ago today, Your Honor, that we were here for the first time, May 14th. Sure. And I looked at that transcript, and I think it's actually mentioned in that transcript as well. Okay. So I will pull those transcripts. Now, I understand. I mean, it's, you know, it's very difficult stuff, right? I mean, like where you're dealing with indemnities for, you know, a transaction,

but then there's a separate component, and let's recall that they're the ones who broke it down into these separate components in the amended claim objection. So we're responding to that. But I think we addressed it in both hearings. Okay. All right. Thank you all very much. this it's always nice to hear everyone in person and to crystallize the

arguments I will take it under advisement and hopefully can roll the next hearing but we will contact you and let you know okay all right thank you all very much we'll stand adjourn take care thank you your honor