American court hearing recordings and interviews - Listen to the FTX bankruptcy hearing held April 16, 2026

Episode Date: April 19, 2026

The hearing opens with counsel extending condolences to the Court following the passing of Judge Dorsey, the Judge who had presided over the FTX and Alameda bankruptcy proceedings after they were filed in Delaware in 2022: https://www.deb.uscourts.gov/news/passing-judge-john-t-dorsey

Okay, we're here for an evidentiary hearing. Ms. Brown, I'll let you leave us off. Good afternoon, Your Honor. Kim Brown from Landis Raffin Cobb, appearing today on behalf of the FTAX Recovery Trust. Your Honor, before turning today's hearing, we just wanted to offer our deepest condolences to the court on the passing of the Honorable John Dorsey.

It is a tremendous loss for the entire community, and our hearts are with the court and Joe Dorsey's family during this very difficult time. I appreciate that. Thank you very much. on behalf of all the court. Thank you, Your Honor. With respect to today's hearing,

as set forth in the original agenda, there were two matters that were scheduled to go forward. We are pleased to advise that, as set forth in the third amended agenda, which is the current operative one, the trust was able to engage with discussions with Mr. Livenko's counsel to resolve their concerns,

and that has resulted in the voluntary withdrawal of the motion to compel, so that's coming off the calendar. Great. And that leads us to the only matter that is proceeding before Your Honor today, which is item number seven on the agenda, which is the FTX recovery address objections to the claims filed by ELD Capital. Your Honor, unless you have any questions for me, I'll cede the podium over to our co-council,

Mr. Gluckstein will be handling the assistance. Great. I do not. Thank you, Your Honor. Thank you, Your Honor. Brian Glockstein, Sullivan and Cromwell for the FTC Recovery Trust. We are here today to address the trust's objections to the pending impulsive claims. filed by ELD Capital. If it pleases the court,

propose we address the evidentiary matters first and then turn to argument. In support of the objection, Your Honor, the trust has submitted the declarations of Kumanan Ramanathan and the supplemental declaration of Kumanan Ramon-Ramanathan filed at docket numbers 34252 and 35328 respectively. And we would respectively request that both of those declarations be admitted into evidence at this time as Mr. Romano's direct testimony. Okay. Does anyone object to the omission of the two declarations and the evidence? No objection, Your Honor. All right.

Thank you. Does anyone seek to cross-examine the witness on the substance of his testimony today? Yes, Mr. Ramonatham is in the courtroom today and present and available for cross-examination. Okay. Are we expecting my testimony today? Unless there's any direct examination by way of life. Okay, in addition, Your Honor, that is the testimony then that the trust is offering in support of the objection. In addition, Your Honor, we did submit exhibits, and we, in addition to Mr. Ramonathan's declarations, would request exhibits to FTX, 2, 7, 8, 9, 11, and 12 be part of the record in support of the objection.

Any objection? No objection, Your Honor. All right, they're omitted. That concludes our portion of the evidentiary presentation. I'll turn it over to Council for ELD with respect to their evidence. Before we begin, Mr. Burren, Barron. Barron, okay.

Mr. Barron, there's a declaration that you submitted as to facts. Correct. Are you intending to move that into evidence because under the ABA model rules, you may be disqualified for moving forward as counsel? My personal declaration? Correct. Yeah. Okay.

All right. Then let's move forward. Thank you, Your Honor. I think I begin in the same fashion as my friend on the other side just by addressing our documentary evidence. Okay. We do intend to call Mr. Quibitt as a live witness today. All right. But before doing so, we've identified a number of proposed exhibits as well.

The first one being Mr. Cupid's declaration, we had proposed. submitting that just to avoid duplicative testimony today okay does anyone object to the admission of mr. Kubits declaration into evidence it seems it will be subject to further direct and then your opportunity to cross-examine yeah no objection you're great it's omitted thank you your honor we also would seek to admit into evidence the amended proof of claim of ELD capital that's ELD 3 as well as the FTX recovery trust responses and objections to ELD Capital's request for production of documents, ELD 7,

as well as three documents produced by the trust, ELD 8, ELD 9, and ELD 10. Any objection? No objection, Your Honor, other than just a point of clarification with respect to ELD 3, which is the claimant's proof of claim. We obviously have no objections with being in the record, but there's many disputed facts in that proof of claim and would object to the extent they're often for the truth of matters, sir.

I would agree, but why don't you confirm that on the record? We understand that the proof of claim includes our allegations subject to today's hearing. Okay. All right, so those documents are omitted. Thank you, Your Honor. Thank you. I'd like to then call Mr. Dominic John Kubit to the stand. Okay, one moment before you do.

Mr. Gleckstein, can you say the numbers of the documents, again? that you moved into evidence? Yes, Your Honor. Exhibits 2, FTCS 2, 7, 8, 9, 11, and 12. Okay, thank you very much. Mr. Cupid, are you with us today, sir? And if so, please turn on your video and your audio. Okay.

Great. Before we begin to swear in, Mr. Cuvett, we need to move the parties that are appearing by Zoom only by phone into the waiting room. and when that is completed, then we will proceed to swear in Mr. Cupid. Thank you, Your Honor. Maybe it would be helpful if I just note for the record,

Mr. Cupid is joined on screen by Leona Sam and his wife and a co-principle of the ELD per your chamber's instructions. Okay, great. Good. Mr. Cupid, can you hear me, sir? Your Honor. Okay, you can hear me? Yes, Your Honor.

Okay, we are going to swear you in, as a witness. All right, so give us one moment. Please raise your right hand. Do you affirm that you will tell the truth, the whole truth, and nothing but the truth to the best of your knowledge and ability?

I do. Please state your full name and spell your last name for the record. Dominic John Kubut, C-U-B-I-T-T. Thank you. Council, before you begin, I have questions from Mr. Kubit.

Sure, Your Honor. Okay. Mr. Cubit, you can lower your hand, sir. Thank you. Mr. Kubi, you're appearing by Zoom to testify. You're not in the courtroom. I would like you to identify. I know your counsel just did, but you've been sworn in.

So please identify who is in the room with you today. My wife, Fiona, is sitting beside me. She's in the room. Okay. Is anyone else in the room with you today? Nobody else is in the room today. Okay. You understand, sir, that, well, if anyone enters the room, you'll stop your testimony and advise me.

Do you agree to that? I do. Okay. If anyone attempts to communicate to you during your testimony, do you agree that you'll stop the testimony and you'll let me know? Yes, I will. Okay. Do you have any other methods of communication open on the computer in front of you right now?

Like, for instance, email or a chat program? There's no running email and no running chat. But I do have a folder ready with all the exhibits. Okay. All right. Thank you very much. Like I said, if anyone attempts to communicate to you during the substance of the test, during your testimony regarding the scope of your testimony, you need to stop and you need to notify me.

Okay. Okay, I shall do that. All right. Thank you very much. With those caveats and understandings, let's move forward with the testimony. If at any point, Mr. Kubit, you cannot hear your counsel or anything that's being said in the courtroom, please stop and let us know. And we'll adjust the audio because we need to make sure that you can.

hear very clearly and that we can hear you. I will. So far it's loud and clear. Excellent. All right. Let's move forward then. Thank you very much, Your Honor. Mr. Kubit, can you just begin by briefly describing your personal background, please? I mean, I'm a husband and father. I'm essentially a software engineer, having graduated from Essex University with honors in software with artificial intelligence. with artificial intelligence. I spent many years in the software industry and that's about me.

Where do you reside? Currently I live in Spain. Did you live prior to Spain? In the UK, in England. Why did you relocate to Spain? I was starting a new project at the time and at that time Spain offered a much lower competition. of living. In practical terms, can you describe what ELD capital is? Here in Europe, at the time we were trading crypto with our life savings and doing okay, but the regulatory landscape became extremely uncertain, and as a result of that, we formed ELD capital as a little family company, indeed the name ELD.

stands for Ethan, our seven-year-old son, Leona and Dominic. It was started just with our capital. It's just us. Really, so that we had some regulatory certainty that we could proceed without falling foul of the regulator here in Europe. What is ELD capital source of funds? The life savings of myself and my wife.

Can you describe any outside investment? mid-ELD Capital has ever taken? There is none. It was just for us. Where does ELD Capital operate? It operates out of our family home, wherever we're living. Who's responsible for executing trades

on behalf of ELD Capital? I am. Was Ms. Salmon involved in the operations of ELD Capital? She was. The division of labor is broadly split between execution of trades, myself and the administrative capacity, my wife, my wife, Leona, would be responsible for things like the KYCAML for the exchange, these types of things.

What research methods did you use when trading on behalf of ELD capital? For ELD, broadly speaking, it was a macroeconomic thesis, looking at the cyclicality of the crypto market and the business cycle, the broader business cycle. It wasn't a high-speed trading thing. It was an investment, long-term investment vehicle. So we weren't trading per se. We were more investing. What proprietary research methods, if any, did ELD use? No proprietary methods, particularly other than, you know, I would follow macroeconomic commentators that I felt were interesting and accurate to an extent within the industry. What trading tools did you use when trading on behalf of the ELD Capital?

The FTX platform was all that we used. We never connected to the API. We never used any automated trading. It was just occasional manual execution required for long-term investment. Are you familiar with any trading tools from other applications throughout your life for professional experience? Yes, many. Can you just briefly summarize, please? Well, in a former lifetime before ELD and before I was married, I built a by-side platform that consisted of tick database and complex event processor.

in order to host a number of different algorithmic trades. That was at the time that was on foreign exchange. And try to various different approaches, some were momentum-based, mean reversion. So I've got some history with automated trading, but that was not the nature of the game for ELD. What asset classes did ELD trade using the FTX platform? Just high cap crypto. So top five by capitalization, cryptocurrency, so mainly Bitcoin, Ethereum. I wanted to take a position in Solana toward the end of just before FTX collapse.

How did you determine which asset classes yield you would trade? We really looked at the market capitalization, and we only went for, high caps with high liquidity. Yeah. Why did you take that approach? Well, it was our life savings and that's a considerable trade when you place a trade, maybe $100,000. If it's something very small, you can move the market.

There isn't sufficient liquidity to support easy entry and exit. And these coins are sort of quite referred to in a vulgar way, really we sought to keep to the main high capitalization coins that were stable and that they would be there next year. Did you rely on the assets in your FTX account for short-term capital needs? Yes, I mean, at the time of its collapse, we had an large cash position. Essentially, it was for us more or less, not quite a current account, but it was a bank account. We kept a lot of money there, and we used it for our capital needs.

What was your assessment of the risks of keeping all your assets in your FTCS account? Well, I felt that FTCS is a really strong exchange. It was very well publicized, advertised on the stadium. It seemed like on the front of time magazine, all of this type of thing, seemed like a very solid exchange. We'll get to the Toronto announcement that's the subject of your claim in a moment. But for now, do you recall that that announcement was made on November 10th, 2022? Yes.

What did you know about FTX's financial condition at or before the time of the Tron announcement on November 10th, 2022? I was aware that it was suffering a liquidity crisis. What did you understand a liquidity crisis to be in that context? They'd been a run on the bank in inverted commerce, and obviously it's not a bank, but there'd been a run. And there was a shortfall of immediate capital that they needed servicing. How did you come to the understanding that FTX was experiencing a liquidity crisis? It was widely reported in the media.

for example, Reuters Bloomberg, this is the sort of news outlet that I would monitor. Did you engage in any trades when you determined that FTX might be experiencing a liquidity crisis? Yes. Can you describe those trades, please? Initially, having attempted a number of withdrawals all unsuccessfully, I purchased a very small amount of AVEX, which was a very unusual coin, not something that we would ordinarily consider purchasing, but it was a very small amount. The idea there was to probe to see whether the withdrawal had been closed for all coins or whether it was just certain coins that it was closed for. It was unclear at the time to me.

Later after that, we attempted to take advantage of the advertised Tron facility and perform the necessary trades to liquidate our current positions and purchase TRX and various other Tron-related tokens. Before we move on to the Tron announcement, just speaking about the earlier trades, the Avex one, for example, what was the result of the withdrawal attempt that you made? Every single withdrawal attempt silently filed. When you say silently failed, what was your user experience around that? Normally when you place a withdrawal, you get a notification that it's pending, it's being processed. The sense that something is happening, even though it may take a few months. minutes. In this case, nothing, nothing at all. No feedback was provided whatsoever. No, as well,

often you would get a link to something on the blockchain, a transaction on the block chain, that you'd have to, that you could see that your transaction was occurring if it had got that farm. Again, nothing, nothing at all, just nothing. What conclusion did you draw from that? Having tried odd little coins, a bit of a bit of Avax, concluded that withdrawals were blocked or paused or, yeah. What was your view about the possible duration of the liquidity crisis you referenced? I'm sorry, could you repeat the question?

Of course. What was your view of the possible duration of the liquidity crisis you referenced? Yes, I understand. me I thought that there were various different participants that would participate in a bailout of some sort, there would be some arrangement to be made, and I really thought that it was going to go on for a bit, I mean, months, I suspected. But I did expect a deal to be struck. There was noise of sovereign wealth funds being interested, other exchanges. understanding about whether there was a possibility that FTX would declare bankruptcy?

Well, there was speculation in the media at the time, at that time, that possibly it could go bankrupt. But again, there was a lot of speculation, but equally there was a lot of stuff in the media that perhaps it would be bailed out by one other exchange or another. various different opportunities were arising or sovereign wealth funds, as I said. So there's a real mix of stuff in the media. Now, moving on to the Tron announcement, can you describe how you became aware of the Tron announcement? It was on the front page of the FTX website. Do you recall what date you viewed the Tron announcement? I'm sorry, could you repeat the question?

Of course. Do you recall the date on which you viewed the Tron announcement? Not the exact date, no, but around about November 8, 9, something like this. And how did you access the announcement itself? Well, whilst the announcement was present on the front page of the website, it was also on the support area of the website, FTX website, it was on their official Twitter. it was well reported in Reuters Bloomberg as a sort of lifeline for customers that had funds stuck on FTX. What was your reaction to the announcement? Well, I mean, for us, we were in a very financially vulnerable position, and we looked at the announcement with interest, and ultimately, you know, we took an extremely,

painful decision to try to avail of the facility. Was there a certain part of the announcement that most caught your attention? Yes, part of the announcement that told us essentially that we could obtain immediate liquidity, albeit at an extremely high cost. Do you recall seeing the announcement anywhere other than on the FTX website? Yes, it was echoed by just, just a very much of the, Justin Sun, his social media and the Hubey Exchange also echoed the announcement. This was to be expected as it was a deal with Tron, and Justin Sun was the guy who owned, I guess,

Tron. Do you recall reviewing any media reports concerning the announcement? Sure. I mean, Reuters reported it as a lifeline. Bloomberg, Justin Sun was on Bloomberg. Yeah. At the time of the announcement, what did you know about Tron? At the time of the announcement, not a whole lot.

And as such, I sought to find out a little bit about the blockchain itself and read the white paper. What was the significance of reading the white paper? The white paper is a technical document that details the specifics of how they're, blockchain functions. So for example, whether it be proof of work, proof of stake, the underlying functionality for me to understand that will be whether or not it was safe to put our funds into the trom token or into the trom blockchain. What did you understand about the limits, if any, of the Tron special facility? Well, the announcement did indicate an initial liquidity injection of 13 million, but also the point that was made with and the announcement was that there would be weekly deposits or weekly injections of liquidity.

So it was an ongoing thing. What did you ultimately do in response to the Tron announcement? We liquidated our entire portfolio and bought and bought Tron and various other Tron-related tokens, mainly TRX, because it had the highest liquidity and cascading down from that some other lower liquidity coins that offered a slightly better value for money, shall I say. these coins were trading at a tremendous premium on FTX relative to market price. What, if anything, did you understand about why the Tron tokens were trading at a premium to the market price? Well, the depositing of Tron tokens was closed, and as such, there was really only one market maker, and that would have been FTX or Al-Mada. And when you've only got one seller, they can kind of name their price.

Did you understand when you were purchasing the Tron tokens that you'd be purchasing at a premium? Yes. And why did you ultimately go forward with the purchases? We didn't really have a choice, to be brutally honest. We were in a very vulnerable financial position, as I said, and our need for liquidity was paramount, even if that meant decimating our life savings. We had no choice. I apologize for interrupting.

Did you attempt to withdraw the Tron tokens you purchased? I did. What happened when you tried to do so? Again, literally nothing. I left the withdrawal going over, overnight at one stage, in excess of 12 hours. But nothing happened. Didn't go anywhere. How, if at all, did that differ from other withdrawal attempts you were accustomed to making on the FTA?

At the time, it made, it was identical to all other withdrawal attempts. Every single one silently filed in that it offered no feedback, it just nothing happens. But obviously prior to the liquidity crisis, you know, withdrawal operated very differently. How did it operate prior to the liquidity crisis? When you place the withdrawal within a, within a few few moments you get some you get an email for a start you get a status and you get some kind of activity on the on the user interface that would indicate that something is happening like a status saying ending or processing after a little while you get a link showing you where on the blockchain your transaction is occurring

and it takes some time depending upon the chain for that to be confirmed so a number of other blocks must be minted after that in order to in order for that to be considered solid if you like and then you would receive confirmation. Coming back to your withdrawal attempts of the tron coins after you made the withdrawal attempts and nothing happened what did you do? I cancelled all of the withdrawal attempts as the wording of the announcement was really focused on something called a swap, a one-to-one swap, and it referred to a special facility. And whilst I had anything in the status of attempting to withdraw it, those funds were not available. It was that they were tied up. So in order to free up all of the asset classes, all of the tokens, I canceled every single withdrawal.

How long did you wait before you canceled the withdrawal attempts? A varying amount, but, you know, as I said, I left the TRX one going for over 12 hours. I don't recall specifically how long it was before I canceled the others. Why did you cancel the transactions? I'm sorry, could you repeat? Yes, why did you cancel the transactions? Because when a transaction is in this state of sort of nothingness, it ties up the capital or the asset.

So, for example, if you had, let's say, all of your money in a withdrawal, it would debit your account of the dollars, let's say. But they weren't going anywhere. So I didn't want the account to be tied up in a sense. I wanted it to be free such that the swap activity could occur. What, if anything, did the failure of this attempted withdrawals tell you about the Tron facility at the time? At the time, to me, it was confirmation that a withdrawal was not the appropriate mechanism, as kind of alluded to and indicated in the announcement.

and it was a special facility in a swap. Did you review any instructions regarding the appropriate way to utilize the Tron special facility? Sure. To us, it looked as though we had to open up an account with the other side of the equation, which was the Who-Bee Exchange that Justin Sun was involved with. There was also a Google form that you had to fill out honestly to say, you know, what tokens you had, what TRX. And this form indicated, again,

it was a further statement that Trom was committed to conducting this swap into perpetuity. And that this was the mechanism. We had to go through the KYCAML process for opening up the

account with the Whobe Exchange, which we did. And we carried on like that. How did you attempt to participate in the special facility through Hubei? By opening up an account and by filling out the form indicating that we wanted to avail of the swap. And as we were opening up the account, when we, in the email correspondence, we stated that the reason for us opening the account was to the veil of the swap facility. What efforts did you make to reach out to FTX support during this time? Well, the FTX website went dark and it didn't exist anymore. So we had no basis to communicate with with FTX all of a sudden, but we did, we have extensive communication with Hubey.

What was the value of your account before you purchased Tron Tocans on November 20th? on November 10th? A little under $600,000. What was the value of your account after you purchased Tron tokens on November 10th? More or less $100,000. Why did you decide to accept such a significant reduction in the value of the assets in your account?

We had no real choice. We needed the liquidity. We needed, we operated, whilst we have current accounts, So our main source of capital was FTX and we needed the money for newborn child. We had no choice. We needed the liquidity. We recognized that the cost was tremendous to us at the time, but we absolutely needed that. What was the value you sought to realize when purchasing Tron tokens pursuant to the

announcement. Well, we wanted to receive the tokens so that we could sell them and gain immediate liquidity. We paid a very high price for immediate liquidity. Do you have any understanding of what FTX did begin from offering the facility? Sure. I mean, if you look at the discrepancy between the market value of the Tron tokens and the value of which they were sold on the FTX exchange, Everybody that participated, ourselves included, decimated the value of their account and reduced the debt burden for FTX. Before concluding, I just want to direct your attention and introduce an exhibit. I believe you have a folder of exhibits available to you on your desktop. Is that right?

I do. That includes both exhibits. The ELD Capital has designated as well as that FTX is designated, or the trust has designated. Correct? Exactly, yeah, I've got all of the exhibits. Have you reviewed the documents that FTX has produced, the trust I should say, is produced in this contested matter? Yes. Has the trust produced computer code among the documents it produced?

Yes, it produced a lengthy Python file. Have you reviewed that computer code? I have. Can you describe what, if any, experience you have reading or writing Python? I've been using Python for about 10 years. Python before 10 years ago was around, but it wasn't, its rise in popularity was coincidence to, coincident to the rise of data science and in particular artificial intelligence. Have you used Python in connection with your work in the computer? science area? Yes, absolutely. I've written a portfolio management tool, fully automated portfolio management tool using Python. When reading a piece of code in Python, would you generally

have an operational understanding of it? Yes. If you could open up the exhibit that's been marked ELD 10 and let me know when you have that open, I would appreciate it. I had it open. Can you please turn to the Bates stamp page F-TX ELD Capital 62? Yep, I'm on page 62. I just want to direct your attention further to the line of code in essentially the fifth paragraph that begins if coin. I don't want to read further because this has been marked highly confidential and discussed that we'll just describe it generally. I'm there, yeah. Can you explain what that piece of code does?

I mean, the broader piece of code is surrounding the FTX withdrawal process. This particular line of code looks to see what asset you're trying to withdraw, whether it be TRX, BTT, JST, Sun or HT. and if it is one of those that you're trying to withdraw, it suggests that it tells it to use the hot wallet TRX2. How do you understand this to relate to the TRN special facility announcement? Well, now I understand that there would have been 13 million worth of Tron put into the TRX2 hot wallet. And this was the means by which people extracted their, their funds.

Can I direct your attention now to the Bates stamp page FTX, ELD Capital, 107? Okay, I'm on 107. Okay, just direct your attention to the bottom most paragraph that begins DEF process withdrawal. Do you see that? Yes. And you can take the time that you need to review this. But my question will just be, can you explain what this piece of code does?

There's two pathways. One pathway is kind of a jump-through if you're using the TRX2 Hot Wallet previously mentioned, you fall through this piece of code and carry on to validate the withdrawal, the crypto, or validate Canada, process crypto withdrawal, as it says. There's another pathway, if you're not trying to withdraw TRX tokens, that checks your jurisdiction. If you're in the Bahamas, you can continue, otherwise it will silently file. Do you understand there to be any relationship between FTX and the Bahamas? FTX was based in the Bahamas. Let's direct your attention now to the page FTX ELD Capital 104. Okay, yep, I'm on 104.

About two-thirds of the way down the page, there's a line of... of code that begins if we'll read us. Do you see that? Yes. Does that piece of code span a few lines? It does, yep. Can you explain what this piece of code does? This piece of code checks to see if there's a global pause on withdrawal processing and exempt from that as if you're in the Bahamas jurisdiction, but with an additional checks that you're also connecting from a Bahamas IP. Further, there's a fall through that if you're using the TRX2 Hot Bullitt, you'd continue as well. What would happen to your understanding if a user tried to withdraw TRX from outside the Bahamas, pursuit to this code?

I'm sorry, could you repeat the question? I lost the beginning. Of course. To your understanding, what would happen if a user tried to withdraw TRX or the Tron tokens from outside the Bahamas. It would fall through and continue. So in this case, there's a special carve-out for, it finally says, and not TRX2, so it would continue. If you were withdrawing any token, but you happen to be in the Bahamas,

and you happen to have a Bahamas IP, you could withdraw anything you liked. the only jurisdictional exemption is for TRX2 could you look up to about one third of the way down that same page to the piece of code beginning if not super admin

yeah does that piece of code run the number of lines yes it does you explain what this piece of code does two very critical pieces of code in here that it It does a global financial health check on the exchange. So there's a negative insurance fund check.

And there's also another check. Can you explain what a global health check is? Well, we know that the state of the exchange was that it was in a liquidity crisis. There's an additional check in here to make sure that there aren't too many negative balances. and given that the FTT token had collapsed and the FTT token was largely used for collateralising other trades, many, many, many balances would have been negative. And obviously, the insurance fund, these are broad financial health checks,

all of which obviously at the time, it would file. To your understanding, what would have happened when a user attempted to withdraw TRX or Tron tokens pursued to this piece of code? It would never attempt to, it would never get to the point of attempting to because the global financial health check would file. Do you turn to page FTX, ELD Capital 112, please? Yep, on that.

Do you see about one-third of the way down the page there's a piece of code beginning, if not, if not wallet? Do you see that? Yes. Does that piece of code run several lines? It does, yeah. Do you explain your understanding of what this piece of code does? Broadly speaking, this initiates the transaction for withdrawal process allocating a transaction ID, but within the context of a 90-second timeout. elaborate on what you mean by 90-second timeout? Sure. It tries to run the transaction that would create a transaction ID.

If the 90-second timeout is breached, it goes into an error pathway where you get the withdrawal status have failed, and this would notify the user that the withdrawal has not worked. Just one final piece to look at. If you could turn to page FTX, ELD Capital 113, please. Just the next page. Yep. You see the final paragraph on that page begins Deaf Process BTC?

Yes. Can you explain your understanding of what this piece of code does? This is related to the batching of Bitcoin withdrawals. And often, Bitcoin is quite expensive to shift around, so batching often makes sense, economic sense. What this piece of code does is silently remove any transaction or any withdrawal whose account jurisdiction isn't in the Bahamas. What does that mean practically?

That means that if you're in the Bahamas, you can withdraw Bitcoin. If you're anywhere else from the Bahamas, you'll silently file. Considering all the pieces of code that we just reviewed, what is your understanding of whether ELD transactions after the TRON announcement could have processed? My understanding of this code would indicate that there's no possibility that the withdrawal could ever occur because the global financial health checks would all fail. The only way that it could ever go through is with a super admin override. Mr. Kubit, I have no further questions for you at this time. Thank you. Thanks.

Yes, you may. Thank you. Good afternoon, Mr. Kubit. Hi, then. My name is Brian Gluckstein with Sullivan and Cromwell, and I represent the FTX Recovery Trust. I'll be asking a few questions this afternoon. Mr. Kubit, you graduated from Essex University in England with a degree in computer science, correct? Computer science with artificial intelligence, yes. And after graduating university, you worked as a software engineer, correct? Sure, many years. And actually in 2005, you co-founded a company called Endstance, correct?

Sure. An end stance was started to produce in order to produce a mobile trading solution for proprietary and institutional traders, correct? Correct. And your work with end stance ended in approximately 2009, correct? Yeah, shortly after the collapse of the global financial systems, the 2008 collapse. And from 2009 until 2020, you worked at a company you founded called Algo Platform, correct? Sure. And you work there as a quantitative trader, correct?

Yeah. you eventually transitioned into cryptocurrency trading correct yes you formed ELD capital on or about November 20th of 2020 correct yes and initially ELD capital traded on the finance exchange for some period of time correct correct and I think as you've testified today you kept most of your assets on the exchange account at FtX.com that you subsequently opened, correct? Yes. And in fact, you used your FtX.com account like a bank account, correct?

In many ways, that's true. You did not have any significant money in a checking or other bank account in November of 2022, correct? Correct. And it was your decision to put your life savings, as you call it, into cryptocurrency in 2022, correct? Yes. And there's risks inherent in any currency trading, correct? Correct.

And there are certainly risks associated with cryptocurrency trading, correct? Correct. And you assume those risks by putting your assets into the FTX exchange, correct? Well, there's two different types of risks there. We were quite successful in investing in cryptocurrency. But you assume the risk of your assets being deposited onto the FTX.com exchange, correct? Correct. And as the trader for ELD Capital, you monitored news about the cryptocurrency markets in 2022, correct?

Yes. And you monitored news using Bloomberg and Voiders, correct? Correct? Yeah, those two were my favorites. You also from time to time reviewed social media with respect to cryptocurrency, correct? To an extent, although not in a traditional way, and I tended to follow macroeconomic commentators. Before FTX filed for bankruptcy in November of 2022, you knew there were substantial and well-publicized concerns about FTX's ability to operate as you go in concern, correct?

Yes, I was aware that there was a liquidity crisis, exactly. And in fact, you saw news articles in November of 2022 prior to purchasing any Tron tokens that FTX might file for bankruptcy, correct? There were many articles speculating. And you saw those articles in November. of 2022 that FTX might file for bankruptcy, correct? Presumably, yeah. And you were aware at that time that FTX needed billions of dollars in funding to avoid bankruptcy,

correct? Yes. In fact, you saw news articles that made clear that FTX needed approximately $8 billion in liquidity to continue operations, correct? That's correct. You were also aware that because of the United States, of liquidity issues that FtX.com had generally frozen withdrawals by November 8th of 2022, correct? Yes.

And that withdrawal freeze was a problem for you because of your assets being tied up on the FtX.com exchange, correct? Yes. And you made several attempts to withdraw assets on November 8th and 9th of 2022, correct? Yes. On November 8th of 2022, you attempted to withdraw 200 Ethereum tokens from your account, correct? At the time, you wanted to move those assets to another exchange, correct? Yes. And as of November 8th, 2022, those 200 Ethereum represented approximately half of ELD's assets on the FTX.com exchange, correct?

Yes. And you weren't able to actually withdraw the 200th because of the patrol. freeze correct yes and as you testified on direct that same day you bought a small amount of a Vax tokens on the FTCs exchange correct correct and you bought those AVAX tokens to test whether you'd be able to withdraw them correct correct and you were not able to withdraw those Avax tokens correct that's right and it's your testimony that ELD Capital participated in the TORN credit facility because of FTX's announcement that you saw of that facility, correct?

Yes. And that announcement is reproduced in paragraph 11 of your declaration, correct? Well, I don't have that exactly in front of me, but I'm sure you're correct. Let's put it up. We can put it up on the screen, and if you have it with you, but it should be on your screen. It's FTX Exhibit 1. Put it up here. Are you able to see that, sir?

Yep, I can see that pretty clearly. Okay, and if we look at paragraph 11 of your declaration here, which has been marked as FTX, Exhibit 1, there's some testimony, and then there's a block quote following the word announcement. Do you see that? This is the announcement that you have testified that you saw in November of 2022

that caused you to try to participate in the TRON credit facility, correct? Yes. And you read this announcement regarding the Tron Credit Facility on the FTX website, correct? Yes, that's right. Okay, and on the fourth line of this announcement, as it's reproduced in your declaration, there's a sentence there that says the exact capacity of the Tron token facility will be determined weekly. Do you see that? Can you tell me which line it is all?

It starts on the fourth line. Yes, I can see that. The exact capacity? Yep, I can see that. And you read that language at the time when you read the entirety of this announcement, correct? Yes. Okay, and about a little more than halfway down, this reproduction of the announcement, there's a sentence that says, initially $13 million of assets will be deployed to facilitate such swaps.

Do you see that? I do. You understood at the time, based on reading this announcement, that only $13 million of assets would be available at the time that the Tron facility opened, correct? 13 million of Tron at market value is very different from 13 million of Tron, but FTX value. This announcement says $13 million of assets would be deployed to facilitate such swaps. Do you see that, sir? I do, yeah.

do, yeah. Did you have an understanding as to what that $13 million of assets was referring to at that time? Yes. I'm sorry, so the record is clear, sir, because you broke up. You answered the question, yes? I answered the question, yes. Thank you. Do you want me to elaborate?

The $13 million of assets being deployed to facilitate such swaps referred to the commitment by Tron of Tron tokens, correct? Yes. You understood there was a chance that Tron token holders would not be able to immediately utilize the facility, correct? I mean, it says weekly and feature injections, so yes. When you first read this announcement, sir, you did not know how the swap transaction contemplated by this announcement

was supposed to work, correct? Not exactly, but as I said to you, we did understand that the process was the other side of the swap would be the who be the who be exchange and the process by which was to fill out the form and once everything was established that the swap would occur there's nothing in this announcement sir that describes how the swap was to occur correct correct and there's no other documents or information provided by FTX at the time that you reviewed that described how the swap transaction was to occur, correct?

Correct. If you look down towards the bottom of this paragraph of the announcement, second to last sentence says, please ensure you understand the details of disarrangement and any associated risks before taking any actions. Do you see that? I do. And you read that language at the time you read the announcement in November of 2022, correct? Yes.

You never reached out or contacted FTX support with respect to this announcement, correct? FTX went dark. You did not take any steps to reach out to FTX support after, as you describe it, the FTX website. website went dark, correct? Exactly. There was nothing to get in touch with. You didn't explore whether there were other means to get in touch with anybody at XDX, correct? No, the MX records were deleted and the A-name records had gone as well, so no email could get through and the website didn't exist anymore.

The Tron facility, the announcement that we're looking at here. in this paragraph in the sentence immediately prior to the one we were just looking at says please note these markets uh TRX BTT JST SUN and H T may experience high levels of volatility. Do you see that? I do. And you read that morning at the time you read the announcement November of 2022, correct? Correct. And you understood that after the announcement was was made,

was made the prices of tron sponsored tokens on the ftx exchange were higher than that of the same tokens on other exchanges correct yes i apologize this is the court again your response was muffled was the answer yes correct yes thank you and that's that meant that if you bought tron sponsored tokens on the ftx dot com exchange in order to move them off the exchange you knew you were suffering a loss in the overall account value correct Exactly, yes. We played a deep price for liquidity. And in fact, I believe you testified on direct examination that you understood you were accepting approximately an 80% loss at the time, even if the swap transaction had been completed, correct? I'm sorry, I didn't quite understand the caveat.

If the swap transaction for Tron tokens had been completed, you would have lost approximately 80% of your account. value, the $100,000 value of Tron tokens as opposed to the $600,000 of Ethereum that you had previously, correct? Yes, but we would have had the liquidity. Correct, but that liquidity would have totaled approximately $100,000, correct? Correct, yeah. Okay, sir, and as has been set out, and I believe as you testified to some extent on direct, on November 10th of 2022, you purchased 33,691 TRX tokens on the FTX exchange, correct? Yes.

Those tokens were purchased on the exchange, not from FTX, correct? Well, the only person selling them was FTX. There's nothing in the announcement or otherwise to suggest that FTX itself was selling the tokens on the exchange, correct? Well, Al-Mada was FTX's liquid was FTC's market maker. So in essence, it is only FTX. The fact of the matter was that nobody could deposit tron tokens. FTX had a stranglehold on the market. You're not suggesting that other users on the FTX exchange were unable to sell their

tron tokens at this time, are you? No. Okay, and you purchased that initial, quantity of TRX tokens with cash you had in your FTX.com account, correct? Correct. And you then attempted to withdraw the TRX you had purchased shortly thereafter, correct? Yes. And you tried to withdraw it because you wanted to probe whether you could take the TRX off the exchange by withdrawing it, correct?

Yes. And your withdrawal was not immediately processed, correct? No, I left it for 12 hours. Okay. And you suggested on your direct examination that, quote, nothing happened, end quote, correct? Yes. Okay. But in fact, you've received an email from FTCS support with respect to the requested withdrawal, correct?

That's true. All right. Can we look at that? Let me look at FTX Exhibit 8. Okay. And so, can you see this in front of you, sir? Yes, I can. Okay, so this email is dated November 10th, 2022 at 145 p.m. UTC.

You see that? Yeah. And in the two line, there's an email address, ELD.capital at Protonmail.c. Do you see that? I'm sorry, could you repeat that? I'm looking at the email address that's in the two line that starts ELD. Yeah, the capital.

Yes. And that's the email address that ELD capital utilized on the FTCPAT. X dot com exchange correct yes and this email acknowledges that Ft X had received a request to withdraw 33,691 TRX correct he broke up a bit but I get the sense that the answer is yes and I'm sorry let me repeat the questions to make sure that you understood my question sir okay my question was that The first line of the email states from FTX.com that we have received a request to withdraw 33,691 TRX from your FTX account to a different wallet. Do you see that?

Yes. Okay. And then below that, there's a sentence that says withdrawals are processed within a few hours. Do you see that? Yes. Okay. And then as you testified earlier, you took. chose to cancel this withdrawal request, correct?

After over 12 hours, yes. Okay. And you decided to cancel it despite receiving the email confirmation that the withdrawal transaction had been received, correct? Exactly. There was just nothing going on on the UI that you would expect to see. Can you clarify what you mean by UI? The user interface of FTX when you place a withdrawal gives you visual feedback and a withdrawal ID. It tells you the status. It's being processed. It gives you a link to a transaction on a blockchain. None of those things occurred. Sometimes it can take quite a while, but you do get indication from the UI that something is happening.

in all of that 12 hours, there was no indication that anything was happening. And as I now know, nothing was happening. It had silently filed, like every single other one of my withdrawal attempts. Okay, sir, after you canceled that first TRX withdrawal transaction, you then voluntarily began converting the remainder of ELD capital's assets into Tron token, on November 11th, 2022, correct? Exactly, yeah. I liquidated the any other asset type

and put everything into TRX. And you did that after the prior withdrawals that were not completed that we've been discussing, correct? Exactly. For me, it was a confirmation that withdrawal was not the path and that it was a swap that's what I thought at the time. Okay, but nonetheless, you did try to withdraw all of the ELD Capital Tron tokens after that larger purchase, correct? Sure, it would have been daft to have not at least tried.

Okay. If it was just a simple withdrawal and it would have worked, it would have been happy. And when you made that second larger withdrawal, you again received an email from FTX, confirming that you had initiated the withdrawal transaction, correct? Yes, of course. Well, let's look at that, and that's FTX Exhibit 11. And again, sir, this is an email that ELD capital received from FTX on November 11th. You recognize this email, sir.

Yeah, it's more or less identical to the previous one, except the amount is different. The amount is different and reflects your request to withdraw the much larger quantity of TRX tokens, correct? Yep And the email again says As we saw in the earlier one Withdrawals are processed within a few hours Do you see that? Yep

But again you decided to cancel this withdrawal attempt Correct Correct And in fact you did so after only five minutes After making the withdrawal request Correct Exactly once again Nothing that would normally happen

on the UI happened at all. It just literally nothing happened. And as we know now, it had silently filed. Sir, you do not know whether the withdrawal attempt would have ever been completed because you canceled it, correct? It could never have gone through. We've reviewed the code.

We'll come to that. But you do not know having canceled the withdrawal attempt at that time whether the withdrawal, request would have been completed, correct? At the time, I didn't believe anything was happening. As there was no feedback from the UI. It wasn't in a processing state.

Nothing was happening. So again, for me, it was just make sure that it isn't a simple withdrawal. It's indication that there's a swap facility. At the time, that was my thought. And you did not know at the time, in November of 2022, whether any other customers were able to use the Tron Credit

facility successfully while it was open, correct? Well, I'm not aware of any. And do you now know that other customers did, in fact, use the Tron credit facility successfully during this time in November of

2022? I mean, it's been reported that certain insiders were able to get their money out. if they had access to administrators that would give them the super admin override. Sir, have you reviewed Mr. Romanovon's declarations that is evidence in this case before this court in connection with your testimony today? To an extent, I mean, that one of the documents was about 193 pages largely of snippets from the internet can we look at FtX exhibit five

to Qibet what you see on the screen here FTX exhibit five is entitled the supplemental declaration Puman on Ramanathan in support of the FTX recovery trust objection to the proofs of claim filed by ELD Capital have you ever reviewed this document sir yes okay if we look at paragraph seven of this document mr. Ramanathan states in paragraph 7 in testimony that is now in evidence before this court that in the second sentence unless canceled by the customer these withdrawal orders were successfully processed until the relevant supply of tron tokens in the tron wallet was effectively depleted during this

time some customer withdrawals of tron tokens experienced processing delays lasting several hours do you see that what do you see it okay and so you are now aware of that other users were able to successfully use the Tron credit facility during this time, correct? I disagree with the mechanism of action. Do you elaborate what you mean by the mechanism of action? It implied with this is that there was no additional help from an administrator of FTX to force the super admin override. I did not believe that without that anything could have occurred,

because the global health check for the exchange would have failed on November 10th. As you said, there was a whole of $8 billion. And it's widely reported that it was only insiders that could get their money out. So when I say I disagree with the mechanism of action implied within this statement is that it was accessible to all users. I don't think that's the case. And, sir, you've taken. testified a lot now about your reading of the excerpt of Python code that was produced by the FTX recovery trust, correct?

Yes. Okay. And you have access only to that excerpt and not to the remainder of the FTX.com exchange Python code, correct? Correct. Okay. And you've talked about your interpretation of needing a super admin override for these transactions, correct? Yes, it's consistent with what is later reported in the press. But you do not know whether any sort of override was in fact implemented to allow transactions to be processed under the Tron facility, correct?

I see no other way that the transaction could have occurred because of the global health check for the exchange. As he said, $8 billion in the whole. But given the announcement of the Tron facility, you do not know whether FTX, in fact, did override as necessary to allow those transactions to be completed, correct? No, I'm sorry, I just agree. There's no pathway for the Trom 2 hot wallet to jump that global health check. It is your testimony that notwithstanding the fact that these transactions did in fact occur, as we now see from Mr. Ramanathan, that it was impossible for these transactions to incur. That's your testimony, sir?

without the aid of an insider to give it the super admin override and again as it says there ordinarily it wouldn't take several hours the reason it did took several hours is that somebody had to manually go in and do the super admin override that's that's my understanding and you have no idea one way or the other whether any necessary actions that needed to be taken by FTX would have been taken with respect to your withdrawal request has you not canceled it, correct? I'm sorry, I didn't understand the question. You do not know, sir, one way or the other,

whether any necessary actions by FTX would have been taken to complete your withdrawal request if you had not canceled it, correct? Well, the global health check, there was no way of skipping that. So you just, you're suggesting that somebody, sorry, go ahead. Are you suggesting that somebody from FTX would have located my transaction and given it the super admin override? What I'm suggesting is you do not know whether that or some other action by FTX would have been taken to facilitate the usage of the Tron Credit facility.

as suggested it would be done, correct? You're right. I can't. I can't know that somebody would have left it. Somebody to give it the insider's treatment or the VIP treatment as it's referred. I'm sorry. I need you to repeat your testimony because it was it was garbled by the internet. And also, can we take down the screen?

sharing so I can see the witness. Yes, sir. Yes. All right, I'm sorry, Mr. Qibbe. Can you repeat that answer? I caught some of it, but not all of it. I'm terribly sorry, Your Honor. Could the question be repeated? To the extent Mr. Gluckstein, you're able to repeat your question. I think the question was that you don't know whether your, you don't know whether your request would have been processed as no. I mean, I can only speculate. about that because some it's possible for somebody within ftx to have found it and decided to give it the super admin override or otherwise known as this we now know as the bip treatment sir you also testified that i believe that you testified that you reviewed some sort of instructions

that led you to believe you needed to open an account on the holy exchange correct Yes. No such instructions were provided by anybody at FTX to you, correct? I don't think I made that claim. And in fact, in the announcement that we were just looking at that's reproduced in your declaration, there is no mention at all to the Holby exchange, correct? That's true, but there is mention of Tron and Justin Sun, was Tron and he was also connected with the Hubey Exchange.

So it was kind of a natural connection. The Hobi Exchange existed and still exists independently of FTX, correct? Yeah, it's now called HTX. There's been a, well, horrendous rebranding, but yeah. Nobody at FTX through that announcement that we reviewed or otherwise suggested that you set up a account at Wobie on November 11th of 2022, correct?

No, I never asserted that. Nothing in the Tron announcement that we reviewed says anything about a Wobie account being the way to swap Tron tokens off of FDX.com, correct? That's true. I have no further questions wrong.

Okay, thank you very much. Would we like redirect? All right, thank you. Mr. Cupid, thank you very much for your time and attention to testifying today. your release from our virtual witness box. Thank you very much. Thank you, Your Honor. If you wish, you can take your audio down

and just watch as you prefer. Otherwise, feel free to stay on the screen. Would we like to take a break before we go into art? Well, let me ask you, are you finished with your testimony, proffered, your testimony today? Yes, Your Honor. Okay.

Is there any other evidence that I need to take into the record? Okay, we'll close the evidentiary portion of today's hearing. Why don't we take a short break, 10 minutes, and I'll come back on at quarter of, and we'll proceed to closings. Thank you, Your Honor. All right, thank you. Good afternoon again, Your Honor, Brian Gluckstein for the Trust. I think we are ready to proceed to closings, if Your Honor is ready.

I am here. Thank you. Your Honor, ELD Capital has a customer claim in this case of 98,000. $960.39. We are very sympathetic to the circumstances that Mr. Cubit and ELD was facing in November of 2022. There were thousands upon thousands of people who were harmed by FTX's collapse in very serious ways. But what ELD is doing today is seeking six times its customer claim amount

in an effort to have the FTX Recovery Trust's other creditors pay for its increasingly reckless attempts to create liquidity at a time when the FTCS.com exchange was collapsing. ELD Capital's efforts in November 2022 to withdraw its assets were part the run on the bank that caused FTCS's collapse following the revelation of a massive $8 billion hole in FTCS trading's balance sheet, due to the actions of Sam Bankman-Fried and his co-conspirators.

As that run on the bank unfolded over the first 10 days of November of 2022, FTX generally stopped withdrawals from the FTX.com exchange while seeking injections of capital from other sources. It was widely reported at the time, especially following reports of the failed bailout attempt from Binance on November 9th, that FTX was on the brink of bankruptcy. While this was unfolding, FtX announced via Twitter and its website that it had received a small $13 million facility from Tron that would be offered by Tron to allow FtX.com exchange customers to withdraw tokens native to the Tron blockchain. That announcement on November 10th in part made clear that only $13 million of liquidity was committed by Tron to support the facility and that as a

As a result, TRON tokens, quote, may experience high levels of volatility, end quote, and urge FTCS customers to, quote, please ensure you understand the details of this arrangement and any associated risk before taking any actions, end quote. The $13 million was a drop in the bucket as compared to the $8 billion liquidity hole facing the FTX.com exchange. As a result, as reflected in the public reports about this announcement that were referred to in Mr. Ramon's declaration, there were no guarantees that users would be able to withdraw their funds even if they bought Tron tokens at the inflated prices on which they were trading. Mr. Cupid, after purchasing Tron tokens and unsuccessfully trying to withdraw them from the exchange, chose to double down and sell all of his remaining customer account assets and use the proceeds to purchase TRON tokens that constitute his existing customer account entitlement.

Nonetheless, on the basis of the FTX announcement, and this announcement alone, ELD Capital has asserted a fraud claim. This claim, which would otherwise be released to the Plan Global Settlement Agreement, was expressly preserved for resolution by the court. ELD Capital has now had every opportunity to take discovery, present evidence of fraud to this court.

It offers none. In relying solely on the testimony of Mr. Cupid of ELD Capital, much of which is speculation refuted by the unrebutted evidence presented by Mr. Ramon it does not come close to proving the necessary elements of fraud, with admissible evidence. Certainly, the fact that Mr. Cuban, with knowledge of having been unable to withdraw Tron tokens, decided to plow all of ELD's remaining account value

into Tron tokens, does not constitute a fraud claim without much, much more. Your Honor, under Delaware law, to prevail on a fraud claim, ELD Capital, has the burden to prove by a preponderance of the evidence, each of five elements. One, that the FTX made a false representation.

Two, that FTX acknowledged it was false. Three, that it acted with Sienter in intending to induce ELD to act. Four, that ELD justifiably relied upon that representation. And five, that ELD capital suffered damages. Fraud and Delaware, as Your Honor knows, is a very high bar. an ELD capital has satisfied none of these elements, let it know alone all of them, as would be required. Rather, what the evidentiary record now establishes includes that, one, there was no false representation. The forward-looking statements in the Tron announcement are not actionable.

There was no guarantee that the Tron facility would be available to ELD Capital on demand, especially given the clear disclosure that there was only a $13 million commitment from Tron at the time the facility was to be made available. Possibly recognizing that its claim fails out of the gate, ELD Capital resorts to a fraud-by-hine hindsight theory, arguing that it couldn't use the facility, thus it must be fraudulent. But such a theory is an impermissible way to prove fraud under Delaware law when we cite cases that affect in our papers. Of course, the undisputed record now is clear that whether ELD could ultimately have used the Tron facility is unknowable because Mr. Kubit canceled the withdrawal orders were not immediately fulfilled. The second one, representing the significant portion of his account value, was voluntarily canceled after only five minutes. ELD separately argues in his papers an additional omission theory of fraud based on the unsubstantiated allegations that either FTX had already to do.

termed the file bankruptcy when the trauma facility was announced, or B, that regulatory action had already occurred and was not disclosed. Neither of those alone would be actionable, but the unrefuted record now before the court, as buttressed by Mr. Cupid's own testimony today, is both that the omnibus authority transferring control of the FTX group to John Ray, who is the person who authorized the bankruptcy filing, and actions by the Bahamas Securities Commission, both occurred after the Tron announcement. We also know, as Mr. Hubert testified today,

that he saw, he understood the wide reporting that was going on that FTX might need to file for bankruptcy, given its $8 billion liquidity shortfall. To your honor, there was no knowledge that any statement was false, nor was there any evidence in the record of Cienter at the time of the statement. ELD Capital offers nothing that FTX knew its TRON announcement was false or that it made the announcement intending to commit fraud. The heart of ELD's argument is that the TRON facility was fraudulent from inception. Mr. Kubit testified that he concluded it didn't work when his withdrawal request didn't immediately clear

and then voluntarily canceled those requests. Mr. Ramon in paragraph 6 and 7 of his supplemental declaration provides unrefuted testimony based on FtX.com exchange data that the Tron facility was in fact opened and operated as announced and that customer withdrawal orders were in fact successfully processed until the relevant supply of Tron tokens, the $13 million worth that were placed into the Tron wallet, were depleted. We submit that that conclusively defeats ELD's knowledge and intent theories. But in addition, ELD deposits, again with no evidentiary support, that FTX was somehow incentivized by the trading fees

or the increased price of the Tron tokens on the exchange at the time. The entire $13 million offering was a relatively diminutive amount of liquidity compared to the $8 billion hole that FTX was facing, and certainly any fees, a tiny fraction of that. But Mr. Ramanathan, again, offers evidence, not speculation, but evidence from FTAX's exchange records that is unrefuted. That evidence is that FTX made approximately $90,000

in fees from trades involving Tron tokens during the entire month of November, and another $95,000. That's it, not the $100 million that suggested in Mr. Cupid's, declaration that he speculates about $95,000 from sales of the Alameda held tokens at increased prices. Of course, FTEX was operating in exchange. It was not selling the tokens to Mr. Cupid or any other user in most instances. That hardly provides any evidence of intent to offer the Tron facility for the purpose of making money. Fourth, Your Honor, there is unquestionably no

reasonable reliance by Mr. Kubit and ELD Capital on the announcement, even if any of these other elements had been satisfied. ELD Capital needs to prove that it justifiably relied on the TRON announcement, and it clearly has not done so. In fact, the record is starkly opposite. First, the TRON announcement presented obvious risk that the facility might be unavailable due to its limited initial capacity of $13 million. ALD cannot simply point to the fact that FTX made a statement and that it appeared on its website to support reliance. Case law in Delaware is clear that more is required.

In addition, while the warning signs would preclude a claim by any small retail investor, Mr. Cupid held himself out to be sophisticated and an experienced investor who has spent years as a self-employed builder of trading systems and trading in cryptocurrencies. Second, ELD Capital had knowledge of the well-publicized concerns about the FTX Group's ability to continue operating without billions and billions of dollars in new capital. Third, ELD knew of its own unsuccessful attempts to withdraw other assets prior to selling its cryptocurrency entitlement, in favor of TRON tokens. Despite purchasing and unsuccessfully withdrawing

a relatively small amount of TRON tokens on November 10th, Mr. Cupid inexplicably made the conscious decision to double down and liquidate the entire remainder of the ELD Capital account assets to purchase TRON tokens on November 11th. Once he was unsuccessful in utilizing the TRON facility the first time, it was certainly unjustifiable to choose to try again with a substantially larger amount of money, and then immediately canceled that withdrawal attempt.

Nor did ELD Capital do anything to get a better understanding or seek help from FTX. We saw that he received emails from FDX support, confirming the withdrawal requests. He did not contact via email or any other means FDX support to discuss this facility or ask any questions about how the swap transaction that was reflected in the announcement was to proceed.

Instead, without any understanding of how the swap of tokens worked, Mr. Cupid on his own attempted to engage with the third-party Hwobie exchange that is not controlled by or connected to the FTX group. Nowhere in the Tron announcement or anywhere else did FTX advise Mr. Cupid to deal with Wobie. And he acknowledges much on the stand today. Last, ELD has no answer whatsoever to the express non-reliance clause that exists in the dot-com terms of service that govern ELD's customer account. We discussed that in our papers.

Section 2.1 of the dot-com terms of service is clear that customers cannot rely upon statements by FDX as investment advice or as a recommendation to transact. Despite a half-hearted attempt to argue in his papers that the Tron announcement was not investment advice, the extent that ELD was relying on it in the manner that ELD claims it was, That is what caused it to take the series of steps we've been discussing today. It could only be interpreted as such advice in that context. And finally, Your Honor, EOD Capital has provided no evidence that it suffered any damages whatsoever. Even if the withdrawal of the Tron to the external Tron wallet had been successful,

ELD Capital, by its own admission, would have suffered an enormous loss of approximately 80% of of the value of those tokens from what it had prior to the sale of its Ethereum and purchase of Tron and would have realized virtually the precise amount of its petition date customer claim that it holds today. There is simply no causation attributive to FDX. Once this litigation is resolved, if the objection is sustained, ELD Capital will still get the benefit of those holdings plus interest under the terms of the confirmed Chapter 11 plan, that interest being provided to all creditors due to the passage of time and the inability to access that liquidity. Your Honor, ELD Capital made the decision to purchase TRON tokens from third parties and hold them.

We did not attempt to sell them to other third parties on the exchange in the days of the collapse. At the end of the day, ELD Capital made a serious. series of what turned out to be imprudent, speculative decisions that did not succeed. While that is undoubtedly regrettable, its efforts to pass their costs onto the trust of other creditors must be we submit rejected. The LD Capital has not provided with admissible evidence anything to prove each and every element of fraud. And again, Your Honor, it's fraud that's being a sort of the hearing's the claim, and its claim we submit must be reduced to the

petition date value of its account holdings. I'm happy to answer any questions the court has. Otherwise, that concludes my remarks. All right, nothing further at this time. Thank you, Your Honor. Your Honor, may it please the court once again, Alec Barron on behalf of ELD Capital LLC. I think it's helpful just to reorient ourselves

in the actual language of the announcement here. That was to create a quote special facility to enable customers holding TRON tokens to transfer their tokens on a one-to-one basis off the FTX platform. The announcement trumpeted that this special facility would quote, allow holders of the five TRON sponsor tokens to swap assets from FTX one to external wallets.

Moreover, the announcement stated that its exact capacity would be determined weekly. And the announcement referenced future injections. To be sure, there was a generic reference to risk, but this announcement was unmistakably designed to induce customers to purchase Tron tokens. I think it's also relevant to remember that the announcement was made the day before the petition is filed. Shortly after the announcement was made, Mr. Quibut and Ms. Salmon logged on to FtX.com and saw a banner displayed prominently at the top of the homepage, advertising the announcement. They followed the link in that banner to the full announcement.

After reviewing the details of the announcement, which were amplified by popular and financial news sources, and researching the mechanics of Tron tokens, they made an admittedly difficult decision to purchase Tron tokens using the assets in their FTX account. The decision was not difficult because Mr. Kewit and Ms. Salmon were fully apprised of the risks, and as the evidence shows certainty,

that they would not be able to realize the value, of the liquidity they were purchasing along with the Tron tokens. The decision was difficult because it involved trading their life savings of nearly $570,000, or its equivalent, held in assets on the FTX platform for Tron tokens with the then-market value of approximately $98,000, plus the ability to use the special facility to access their savings. That bargain involved obtaining liquidity. That was an essential element of the deal they struck.

ELD did exactly what FTX sought when the announcement was made. Its actions were not heedless, they were not reckless, as the trust accuses. Mr. Cupid's testimony more than demonstrates that. They reviewed the Tron white paper to make sure they understood the mechanics of the tokens. They checked the prices of the various tokens and made a determination of which would be suitable for purposes. of using the facility. They left a withdrawal attempt open for 12 hours, not the five minutes that we keep hearing about.

Sure, they made another attempt that they left open for a shorter period of time, as with their other attempts, but they attempted to use the facility and kept that open for 12 hours, and there's still no explanation other than Mr. Kewitt's understanding of the code that you heard from him today for the reasons that that didn't process. ELD's amended proof of claim does plead a fraud claim against FTX, and the evidence proves that claim. We agree with the trust largely on the elements of a fraud claim. I think with the caveat, we point out in our papers that there is an equitable fraud claim in Delaware that has a difference CENTER requirement. We submit that the elements of both claims are met.

But the evidence shows that FTX made the announcement at a time it knew, or should have known that it would be unable to fulfill ELD's attempts to use the special facility. Indeed, the omnibus corporate authority, although signed in the very early hours of November 11, 2022, was dated on November 10th, 2022, the day of the announcement. That's in the record at ELD 9, I think among other places. Moreover, the code produced by the trust shows that it would not have been possible for ELD in similar situated customers to utilize that special facility. We would submit that Mr. Ramanthan's declaration does not prove otherwise.

It identifies no customers that were able to use the facility. It doesn't attempt to explain why the 12-hour attempt to withdraw failed. We submit that ELD's reliance on the announcement was reasonable. The trust represented in its discovery responses that 8,541 unique user accounts, on the FTX.com Exchange purchased Tron tokens between the time the announcement was made and the time the debtors filed for bankruptcy. That's ELD 7 at page 10.

The fact that 8,541 other users purchased Tron tokens in the roughly one day following the announcement confirms that ELD's reliance was reasonable. Moreover, although FTX was experiencing a liquidity crisis at the time of the announcement, none of the public reporting indicates nearly a certainty that FTX would go bankrupt or the time frame when it might. Delaware law establishes that reasonable reliance is a context-specific judgment.

Despite the trust's attempts to paint ELD as an institution, the testimony today demonstrates otherwise. There were no special trading methods, special research methods, high-frequency trading, arbitrage, swing trading, any of the other characteristics that an institution, might use to trade on FTX's platform. In fact, ELD Capital never plugged in to the API that would have given an ability to do so on the FTX platform. In terms of the debtor's center, the Omnibus Corporate Authority,

again, although signed on November 11th, was dated November 10th. The letter of intent between Tron and FTX dated on November 10th, 2022, indicated that Tron shall quote, of quote, structure and fund a withdrawal facility to support all TRON related tokens existing on the FTX platform. That's ELD8 at Article 2, Section Romanette 2. That's what Tron understood about the offer. FTX had a different understanding

at the time that it made the announcement. We submit the omnibus corporate authority is evidence of when bankruptcy was being contemplated and in fact being carried out. I want to address the dot-com terms of service argument we heard from our friends. The dot-com terms of service at Article 3, excuse me, at Article 30.1, dot 2 indicates, quote, nothing in the terms shall limit or exclude a party's liability for fraud, or fraudulent misrepresentation. I apologize if that wasn't clear in our objection papers, but we submit that the dot-com terms of service do not.

extinguish this claim and of course the confirmation of the plan doesn't extinguish the claim because we negotiated a carve-out from the release the trust acknowledges in its papers that ELD accepted a liquidity discount ELD never received the liquidity for which it paid a premium in terms of the the losses of ELD I do want to address that rescission is a remedy for fraud under Delaware law that is something we raised in our objection that was not a addressed at all in the trust's reply. We raise points in authority explaining that rescission is available, so there's no mystery

as to what remedy ELD might be entitled to should the court find FTX and the trust liable for fraud. Simply put, the court has authority to order rescission here, which would place ELD in the position it was before it made these transactions the day before the petition was filed. bottom the trust is really saying that it was unreasonable for ELD to rely on an offer that FTX itself made we submit that the evidence establishes that ELD's reliance is reasonable and the answer can't simply be that the trust can make an offer the former debtors can make an offer not hold up its end of a bargain and simply be exculpated by hindsight

I think there are a number of false equivalencies that have been raised, including ELD's purported expertise as an institution or Mr. Kubitz's expertise in computer sciences and finance. That does not equate, bless you, Your Honor. Thank you. That does not equate with knowledge sufficient to detect fraud. As you heard, Mr. Kibet certainly has a long history and professional experience in this area, but he didn't have access to the facts sufficient to know the fraud. The idea that Mr. Quibit and ELD assumed the risk of putting assets on the FTX exchange likewise is not equal to an assumption of risk for fraud, and we don't think that's a defense that applies in any event. The announcement that we read has a risk disclosure noting that Tron tokens were likely to experience volatility. Mr. Quibet was aware of that.

He accepted the liquidity discount in exchange for the tokens. and what he believed to be the liquidity he would obtain. And so the notion that there's a disclosure of potential volatility, and that's a full disclosure that customers like YLD wouldn't be able to use the facility, we think just doesn't answer the call. The emails that we reviewed that Mr. Gluckstein asked Mr. Cupid about in terms of what he saw when he placed these withdrawal attempts are not a complete picture, As we also heard from Mr. Kibut's testimony, there was no transaction idea signed.

There was no notation that there was a transaction pending. None of the normal indicators on the user interface of FtX.com that ordinarily would have pertained to a transaction were present. Again, that supports the reasonableness of Yield these actions and not reckless heedless activity. I also think, as you heard today, Mr. Kewbiz, and Ms. Salmon are not seeking to have other creditors bear the cost of their own reckless decisions as the trust puts it. They're simply asking to be restored to the position that they would have been in had

they not been exposed to an offer that could never been delivered. We think all the elements of fraud are established for the reasons discussed in our papers and further outlined today. We would rest on our presentation thus far unless the court has any other questions. I do not. Thank you. Thank you, Your Honor. Just briefly, Brian Glockstein for the trust. Council represents that the announcement that we've been talking about today was designed to induce the purchase of Tron tokens. There's nothing in this announcement we would submit that suggests that at all.

In fact, we continue to seemingly be talking past each other. Mr. Cupid alluded to it earlier with his suggestion and his declaration. $100 million or something of profit that could have been made by FTX. Other than with respect to Alameda, who had an account on FTX and traded as any other customer did, and that's the source of the $95,000 that Mr. Manan talks about in his declaration. The purchases of these tokens at whatever heightened price

the market drove them up to on the FTX exchange, was between ELD Capital and the seller of that token. That's no different than any other transaction on the exchange. And so the suggestion that this was designed to purchase tokens, we submit, is completely opposite of what's happening here. What is obvious from the record is that as ELD Capital was suffering from, customers had withdrawals generally frozen during this time due to the run on the budget. bank and the $8 billion hole that was disclosed or became public and FTX through this and

other means was attempting to work with third parties to help customers in a time of need this facility the 13 million dollars was being funded by TRON not FTX the $13 million in tokens was put in what we was discussed in the papers at the Tron wallet which was outside of the FTX exchange environment and was going to be made available to allow customers to utilize it and what we have in the record is testimony from FTX saying that based on the exchange data that those withdrawal offers were in fact successfully processed until the entire relevant supply of tokens was depleted that $13 million was used yes we did identify

8,154 users who purchased tokens during the relevant period. ELD is the only one here, asserting fraud. This facility operated. The suggestion by Mr. Cubitz piecemeal and partial review of coat is an incomplete, an incorrect picture, certainly incomplete, as he acknowledged, across examination. He does not have access to the entirety of the FDX code base. A snippet of code was produced in response to a particular discovery request.

Mr. Kubit shows up today for the first time trying to interpret it. That is not dispositive in anything. The evidence is before the court that is dispositive is that withdrawal orders were successfully processed during this period of time. And we do not know. Despite Mr. Cupid saying that he did not see signs that he had seen in the past, of trades being processed. That is not evidence of anything.

We don't have any testimony from FTX. It was not developed by ELD as to what normal, quote, normal indicators are. What we know is that withdrawal orders were in fact successfully processed. The entire premise of this fraud claim is that ELD could not have used this facility because the trades did not clear in their usual almost a means, period of time despite the disclaimer saying that there could be delays. We do not know whether ELD's trades would have in fact closed or not.

Would they have gotten into the 13 million? Maybe they would have, maybe they would not have. We do not know because those trades were canceled. The question around sophistication, Your Honor, is not a question. We are not suggesting that ELD capital is an institutional trader in the sense of large-scale institutional traders. It is important, Your Honor, though, when we talk about sophistication and knowledge. Mr. Cupid's here today purporting to offer testimony about Python code.

He testified about his experience in trading in cryptocurrencies. This is a full-time job for him. He's not working outside of this endeavor at ELD Capital. It goes to the element of fraud that needs to be established of justifiable reliance. And we submit, Your Honor, that given the reference, that given the reference, that's before the court. We can agree to disagree about the initial steps that were taken by ELD Capital and Mr. Cupid and their justifiable reliance of the initial purchase of Tron tokens. But we submit that once that trade did not clear and Mr. Cupid voluntarily canceled that withdrawal request, it is absolutely not justifiable.

that he doubled down and took a much larger amount of money based on that same announcement and did the exact same thing. If he believed it was not going to work, it makes no sense that he did it again. We certainly understand, Your Honor, that rescission could be a remedy here. That's not the argument that we're making. The question is, is there a fraud claim in the first place? And to establish a fraud claim, the claimant needs to establish as an element of that fraud claim damages. So it's not a question about what remedy could the court impose if a fraud claim is found to exist.

The question is what damages, if any, did ELD capital suffer? And we submit that they suffered no damages because they understood at the time that the totality of the liquidity that they would have gotten was going to be reduced their claim amount by about 80%. We heard that today from Mr. Cupid. That is the $98,000 or so that existed on the petition date. of course claims are being valued in this case as of the petition date is virtually an identical amount of money if he had taken it off and that transaction had closed on November 11th we of course the plan in this case provides for interest for the recognition that that liquidity has been tied up since the petition date so we submit your honor that there is there's no evidence in the record whatsoever of damages amongst all the other infirmities that we've been discussed just one quick and final word, Your Honor, since it was raised in the remarks with respect to the omnibus authority, because we otherwise didn't discuss that today.

The omnibus authority that's at issue does not provide for the filing of bankruptcy. What that document does is it transfers control of the FTX group from Mr. Bankman-Free to Mr. John Ray. And what we now know, despite the speculation that existed in the... claimants papers that despite that document being dated the 10th of November we produced the information that shows precisely when that document was signed and it was in the early morning hours of November 11th a number of hours after the Tron facility announcement that Mr. Cupid reviewed was made public this is actually an easier situation in certain situations where

It isn't entirely clear when a company made a decision to file for bankruptcy. Here we know no decision could have been made to file for bankruptcy prior to Mr. Ray being hired and installed at FTCS, which we know did not happen until after the Tron facility had been opened and was being utilized by customers. So it is 100% certainty that any decision, when the decision was made to file for bankruptcy, happened after the execution of the island of his corporate authority, which we know itself was not signed by Mr. Bankman-Fried until after the facility was open. So the sequencing and the theories that are posited in the papers of the claimant are not borne out by the evidence that's now before the court.

So we would submit, Your Honor, in sum, for all the reasons that we've been discussing today and in our papers, ELD Capital does not come close to satisfying each and every eligible. of fraud as required to have such a claim here in Delaware. We again request that that portion of their claim be denied and that ELD Capital's customer claim be reduced to his petition date balance as set forth in our papers. Thank you. All right.

Thank you all very much. I have no further questions. I will take this matter on advisement and will promptly. Thank you all very much. We'll stand adjourned unless there's something else we need to discuss today. Thank you.