When the migration is completed, our customers receive a compensation balance that they can use to rebate platform fees, and the Vigiler platform itself makes quarterly payments from the reserve fund to the affected customers. The Vigiler platform displays the compensation balances as “Fee Credit”.
However, it is important to note that under the agreement between Inlock (UAB) and the Vigiler platform (IP), customers with completed migrations are also entitled to pro-rata compensation up to the limit of their compensation balance in the Inlock damage settlement, as detailed in the following two sections of the “Public offer for the conditional assumption of customer claims” notice below:
- 8. Compensation from Inlock’s compensation
- 9. Compensation from Inlock’s surplus assets
The aim of the present communication is to describe in detail the practical process of settling claims on the Inlock platform for customers with a compensation balance (Fee Credit) on the Vigiler platform and to answer any practical questions that may arise.
A partial description of the claims settlement process is provided in the Inlock Platform’s Communication “Claims settlement process in case of partial compensation“. The “value of assets at the time of the claim” in the Communication can be calculated for Inlock customers migrated to Vigiler by multiplying the number of assets migrated by the exchange rates at the time of the claim:
BTC: 16905.06 USDC, ETH: 1256.83 USDC, LTC: 57.34 USDC, USDC: 1 USDC, USDT: 1 USDC, BNB: 280.1 USDC, LINK: 6.278 USDC, ADA: 0.3323 USDC, SOL: 14.11 USDC
As an example, if the customer had 2 BTC and 10,000 USDC at the time of the loss, the value of the customer’s assets at the time of the loss is $43810.12. This value is compared to the value of the assets of all other customers still waiting for compensation and the customer’s entitlement to compensation is determined. The process is illustrated below using this example client.
Customers with a completed migration are entitled to claim up to the limit of their compensation balance at the time of settlement, which will be released by releasing the compensation balance. In the following, we will try to provide all the necessary information in the form of questions and answers:
Q: How much of my compensation is expected to be released?
Claims are settled on a pro-rata basis for each client, based on the value of the assets at the time of the claim. Currently, clients participating in the Scheduled Release program on Inlock have an asset value at the time of loss of $3,211,931. And the assets migrated to Vigiler have an asset value at the time of loss of $16,011,667. So the entitlement base for all clients is $19,223,598. The client in the example above is entitled to 0.2278% of the total compensation based on the value of its assets at the time of loss of $43810.12.
If Inlock’s compensation is $7 million, the client in the example would receive 0.2278% of that amount against his free compensation. In this particular case, this would mean a compensation release of $15946.
Q: So Inlock will receive $7 million in compensation?
This is the theoretical minimum amount we can get, but the legal team is seeking a higher amount in the legal process.
Q: So my entitlement is calculated as a proportion of the total value of the claim. Can this figure of around €19.2 million still change?
Yes, it can change. We are currently working on alternative options that may allow some customers to opt out of the settlement of claims, and the total value at the time of the claim may be reduced by compensation that has been paid out in the meantime. The value can no longer increase, but may decrease over the remaining time. A further decrease in the aggregate value at the time of the claim has a positive impact on the settlement of claims, as the payout per client increases proportionally.
Q: Based on the example above, approximately 36% of the value of the assets at the time of the loss is released. Since 50% of my balance has been frozen as compensation, can I plan on approximately 4/5 of my compensation being released?
Compensations are locked at present value at the end of the migration. So it is relevant how much compensation is also locked. Based on the example above, if the migration happens at a bitcoin exchange rate of $25,000, ~$30,000 of compensation is accrued at the end of the migration. However, if the migration was completed at a Bitcoin exchange rate of $73,000 for the customer in the example, then $78,000 in compensation would be unlocked. However, in both cases, regardless of the completion of the migration, the value of the assets at the time of the loss is $43810.12 and therefore in both cases the client will have $15946 in compensation released. Thus, 53% of the compensation balance is released in the former case and 20% in the latter case.
Q: In the case of Inlock Scheduled Release or compensation from Vigiler pending migrations, only about 20% of the balance is affected by the partial settlement, the rest is fully recovered. For migrations, why then does partial compensation apply to the full compensation?
In a completed migration, 50% of the client’s balance value is converted into a compensation balance. In practice, during the conversion to compensation, the original assets are burned off the books, thereby increasing the coverage level of the whole system. The aim of the migration programme was to normalise the coverage level behind the most damaged asset (USDC) in the event of a loss and thus enable us to continue to provide services to our clients during the transition period. Compensation balances are entirely unsecured assets.
Q: So, people with Inlock Scheduled Release or Vigiler Pending Migrations better off because they start from a higher coverage level, which is essentially boosted by completed migrations?
No and those are not comparable in that way. The two groups of clients indicated have not had access to their assets for a year and a half now because they are partially or fully isolated. Although they are feeling the positive effects of the increase in the real value of the exchange rate, in their case the partial settlement will be made with a loss write-off. In contrast, clients with completed migrations have been able to use their assets for more than a year, work off their compensation, actively participate in the favourable exchange rate movements of the past year, earn interest on their assets and use Vigiler’s innovative services (Superposition, Dualswap, etc.) to significantly increase the value of their assets and their value. In addition, for clients with a completed migration, the Vigiler platform will fully assume the release of compensation from the reserve fund, even if the platform is passive, provided that the migration is completed by 31 Dec 2024 at the latest.
Q: What happens if I no longer have the compensation balance I am entitled to release?
All customers with completed migrations are entitled to a release of their compensation balance up to the amount of their compensation balance. If the client has in the meantime worked off or sold most of his/her compensation, he/she will only be entitled to a release under the right of redress up to the amount of his/her remaining compensation.
Q: What happens to the money that I can’t draw down in the claims process because I have a lower compensation balance?
Under the pro-rata principle, the client concerned waives the remainder for the benefit of the other injured parties, thereby increasing their maximum available settlement.
Q: I sold my compensation at a significant discount in the Fee Credit auction. Can I get the settlement I am entitled to and recover the difference in the discounted value?
No. Customers with a completed migration have already received their compensation through the compensation balance in advance, which they can work off in part or in full, or even sell. According to point 8 (Compensation from Inlock’s compensation) of the “Public offer for the conditional assumption of customer claims” notice, customers with completed migrations can receive compensation through the release of their own compensation balance. If the customer does not already have a compensation balance, we will not be able to unblock the customer’s compensation balance under this point and the customer will not be entitled to any other payment.
Q: I have already release or sold my compensation balance, how can I still get the settlement value I am entitled to?
To do this, you need to have a compensation balance again before you settle the claim. The easiest way to do this is to use the Fee Credit auction system, where you can get your compensation balances for sale at a significant discount!
Q. How can I calculate the minimum compensation balance I need to have to reach the maximum compensation I can get?
The example above should help. Calculate the value of your own assets at the time of the claim, which you need to divide by the total number of clients with a claim entitlement base. The resulting percentage will give you an idea of how much of the settlement you will be entitled to.
Q: How can I calculate the value of my assets at the time of the claim?
When you started the migration, you received a message from Inlock saying “Your migration has been started!” or “Your migration has started!” The letter contains the number of your assets that were moved during the migration. You need to multiply these by the exchange rates at the time of the damage listed above and add them together.
Q: When will the compensation be credited to the compensation claim?
At this stage we cannot give a specific time estimate. What we do know is that the payments to be made in the FTX bankruptcy proceedings related to the claim are expected to start before the end of 2024. This means that the compensation of the Inlock platform will most likely be paid in the first half of 2025. However, we cannot make a concrete commitment at this stage, as the Inlock platform will not be indemnified directly by FTX, but by an intermediary OTC partner.
Q: I don’t want to receive a claim settlement because I want to keep my Fee Credit for the long term to maintain my Premium account level. Can I waive this?
There is no way to do that. All customers will receive a pro-rata claim settlement. However, you can use the USDC you receive for claims settlement to buy up a compensation balance, which you can do at a significant discount in light of the offer.
Q: What if my compensation is in a Fee Credit auction when I settle a claim? Do I lose my eligibility to settle the claim?
No such option should arise. As soon as we receive positive news about FTX payments, we will stop Fee Credit auctions with a maturity of more than 3 days. And during the isolation period prior to the settlement (which will last for about a week), we will completely eliminate Fee Credit auctions, so that there will be no guaranteed transactions in the auction system when the settlement is paid.
Did we fail to answer all your questions? Email Vigiler Support at [email protected] with any further questions.