Public Statement On Market-Making Loan To Alameda Research
In full transparency, it is important to us to publicly discuss Compendium’s relationship and contractual market-making agreements regarding our native CMFI token with Alameda Research.
The Compendium Foundation initiated a market-making contract with Alameda Research in which 40m CMFI tokens were initially delivered on loan to help in providing market-making services for several protocols and centralized exchanges that supported CMFI markets.
As with most market-making contracts, the tokens were given on loan for a period of 2 years, starting in April of 2022. The contract stated that at the end of the loan, or cancellation of the agreement, all 40m tokens became immediately due in return to The Compendium Foundation.
If Alameda Research was unable to immediately deliver the total amount of tokens owed in loan repayment, they were then contractually obligated to repay the difference in $USD at a set mark price.
Immediately as the recent events publicly unfolded, The Compendium Foundation reached out to our representative at Alameda Research to confirm whether they would be able to fulfill their obligations under the contract. After a day of reassurances and promises, we were informed by the representative that they would not be able to fulfill their obligations and we should contact their legal department. Immediately, we sent a formal legal notice to Alameda Research’s legal department officially terminating the agreement for breach of contract by Alameda and recalling the loan. These notices were delivered through official communication channels before the company declared Chapter 11 bankruptcy along with the FTX ecosystem.
As a secured creditor and providing formal notice even prior to the announcement of bankruptcy, The Compendium Foundation will have a priority claim to the bankruptcy estate assets and, including the CMFI that legally belongs to us, ahead of unsecured investors and customers. We are currently monitoring transactions as the liquidator pools remaining funds to start the process and we expect the tokens to be delivered back to the foundation along with any further $USD owed for tokens missing from the loan amount in due course.
We are currently exploring all options with our legal team and will keep in close contact with all involved parties and the community during this time to ensure minimal impact. The liquidator may be unfamiliar with the inner workings of the cryptocurrency ecosystem but does have a fiduciary duty to protect and maximize the bankruptcy estate’s assets for all stakeholders. If the tokens are not immediately returned, we expect them to become part of the estate. If this does become reality we fully expect the recovery to take several years to resolve and we should still receive the loan amount in full or pro rata shared amongst all secured creditors first and foremost before other stakeholders are considered.
The foundation has already approached and is working with trusted parties to initiate new market-making contracts and ensure the health of all CMFI markets on both DeFi protocols and centralized exchanges. We have continued to take one step forward and stay ahead of most obstacles during this time and remain confident in our ability to navigate the industry’s current troubles.
As previously mentioned, Compendium had no exposure to the FTX downfall in terms of treasury management and development runway. We employ strict risk management and always focus on self-custody of treasury funds to ensure counter-party risk remains absolutely minimal.
The core team consists of 5 extremely goal-oriented individuals who remain excited about delivering industry-changing products and services. Due to our small team size and protected treasury, we currently have several years of runway on hand.
It is also worth mentioning that our ecosystem of tools has remained profitable not only through the bull market but the recent bear market as well, helping us to further expand. New products present new opportunities during this time and we’re excited to capture further market share in several different segments.
Our new application was originally scheduled to launch the same day original FTX allegations and problems started to surface. We’ve taken several preemptive steps during this period to change a majority of the initial offerings and will be focusing on new exchange platforms that have provided proof-of-reserve data and reassurance. We will maintain this same mission during the integration of all new exchange platforms to both our tool suite and the PENDAX SDK.
Liquidity is king in this industry and the Compendium ecosystem of tools has helped to provide over $2 billion in real transactions to our exchange partners so far. Because our platform brings real transactions, real users, and real liquidity, several exchanges are extremely interested in partnerships and integration within our expanding tool suite. Our team is now verifying all new exchanges to ensure they meet customer safety requirements and several final-stage conversations are currently underway.
We look forward to the future together and the opportunity to provide simple and free trading tools to everyone. We will continue to keep the community updated with new revelations and are excited to share our new application with everyone.
