Figure Markets Works with Shareholder of Ionic Digital to Investigate Potential Board Misconduct

San Francisco, September 5, 2024 — Figure Markets today announced that, together with Veton Vejseli, a shareholder of Ionic Digital, it has requested access to certain company records under Section 220 of the Delaware General Corporation Law. This request seeks information to investigate potential misconduct by the Board of Directors and assess their performance of fiduciary duties.

Figure Markets and Mr. Vejseli believe access to these records (the “Books and Records”) is crucial for protecting shareholder interests. This request arises from concerns about potential self-dealing behavior by board members and actions that may have disadvantaged shareholders. Specific areas of investigation include:

• Agreements with Hut 8 Corp: The approval of and entry into certain agreements, including a Management Services Agreement, with Hut 8 Corp., an owner of bitcoin mining operations that operates as a direct competitor to the Company and whose CEO Asher Genoot, despite this conflict, also serves on the Company’s board of directors (the “Board”);

• High Board compensation packages: The determination of Board compensation, pursuant to which, based on Ionic’s public filings, members of Ionic’s Board will receive annual compensation of $240,000, $75,000 of which will be paid in cash and $165,000 of which will be paid in Company equity incentives, with additional compensation of up to $180,000 (in cash or equity, at the election of the Board member) for membership on committees of the Board, with the result that a director could therefore receive total annual compensation from the Company of as much as $420,000 per year, of which as much as $255,000 could be paid out in cash;

• Restrictions on trading Ionic stock: The decision to direct the Company’s transfer agent to refuse to process any trades of the Company’s Class A Common Stock, par value $0.00001 per share (the “Class A Common Stock”), which appears to have been undertaken with the intent and effect of preventing any shareholder of the Company from accumulating a large position in the Class A Common Stock that could allow it to challenge the Board and hold directors accountable for the Company’s performance, and which has also cut off any available liquidity to the Company’s shareholders; and

• Delays in registering the company’s Class A Common Stock: The filing and amendment of the Company’s registration statement on Form 10 with the Securities and Exchange Commission, which was first filed over eight months ago, despite which the Class A Common Stock remains unregistered and unlisted, leaving shareholders with no liquidity and no path to unlocking any of the Company’s value.

Based on interactions with the Board, information included in the Company’s public filings, and other publicly available information, Figure Markets and Mr. Vejseli believe this Books and Records request is critical to protect shareholders’ best interests. We are concerned that the Board may be acting to entrench itself to the detriment of the Company’s shareholders and believe the Books and Records request will help us to investigate potential fiduciary wrongdoing and evaluate potential corrective measures and appropriate actions in the event certain directors or others did not properly discharge their fiduciary duties, which may include but are not limited to removal of directors for cause.

To date, we have witnessed a pattern of apparently self-dealing behavior by current members of the Board during their service on the Committee, described in detail in the Books and Records demand and evidenced by: 

1. rejection of the multiple proposals from Figure Market during the Chapter 11 process pursuant to which the Company acquired its bitcoin mining assets, which proposals offered a solution to the management of the Company’s assets and a path to liquidity for shareholders;
2. the approval of the transactions with Hut 8, which appear to have been structured to circumvent the SEC’s rejection of a prior proposal with an affiliate of Hut 8 and to avoid a shareholder vote on the merits of the deal with Hut 8;
3. the self-appointment of many decision-makers in the Chapter 11 process, including co-chairs of the Unsecured Creditors’ Committee (the “Committee”) Thomas DiFiore and Scott Duffy and lead advisor to the Committee Emmanuel Aidoo;
4. self-dealing by board members of substantial cash and stock compensation packages; and
5. serious and unreasonable delay in the consummation of the listing and registration of the Class A Common Stock.

“Having been involved in the Celsius bankruptcy from the beginning, it’s unfortunate how creditors have been treated,” said Mike Cagney, CEO of Figure Markets. “We hope by forcing a special shareholder meeting to improve the management, governance and strategy of Ionic, we can salvage value for shareholders.”

We are concerned that the recent actions taken by the Board may have been undertaken with interests other than those of the Company’s shareholders in mind, and we believe that the actions of members of the Board may constitute gross negligence and provide cause for removal. Even more, we are concerned that members of the Board acted, during and after the Chapter 11 proceedings, to deprive the shareholders of the Company of a say in the Company’s governance, and we believe that this Books and Records request is an important first step towards a restoration of shareholder democracy at Ionic, where investors can speak directly to the Board without intermediation.

Accordingly, the Books and Records request will allow Figure Markets and Mr. Vejseli to investigate potential misconduct and assess individual directors’ independence, performance of the Board and/or management’s fiduciary duties, and the potential for conduct rising to the level of gross negligence and constituting cause for removal of directors. We urge them to act with urgency and finally work with us in good faith to address shareholders’ concerns.

The full text of the Books and Records demand can be found here.