WEBVTT 00:00:00.000 --> 00:00:04.540 Well, confusion. Indeed, just apologies. Not 00:00:04.540 --> 00:00:07.580 required. It happens. I just have a call at ten 00:00:07.580 --> 00:00:10.960 thirty, which makes which is why I had to move 00:00:10.960 --> 00:00:16.539 forward. I see your client. Good morning. All 00:00:16.539 --> 00:00:25.920 right. OK, this is the motion for reconsideration 00:00:25.920 --> 00:00:32.149 filed on behalf of. Mr. Van Tubergen, in the 00:00:32.149 --> 00:00:35.350 Block Five matter, let me have appearances please. 00:00:36.009 --> 00:00:37.829 Good morning, Your Honor. Joe Magolese, of Eckerd 00:00:37.829 --> 00:00:40.950 Siemens, on behalf of the creditor, John Van 00:00:40.950 --> 00:00:44.990 Tubergen. Good morning, Your Honor. Tristan Axelrod, 00:00:45.090 --> 00:00:47.250 Graham Rudnick, LOP, for the Block Five line 00:00:47.250 --> 00:00:50.710 down debtors. And it was 50 -50, and my apologies, 00:00:50.829 --> 00:00:54.070 I knew I mispronounced it, the hard G versus 00:00:54.070 --> 00:01:01.649 the soft G. All right. Needless to say that I 00:01:01.649 --> 00:01:04.909 know there was a supplemental filing on behalf 00:01:04.909 --> 00:01:08.670 of Mr. Ventubergen yesterday that the court had 00:01:08.670 --> 00:01:11.969 the opportunity to review and review the pleadings. 00:01:12.569 --> 00:01:15.489 This is not our first go around in this matter 00:01:15.489 --> 00:01:19.689 of these issues. So let me turn to Mr. Magaliz. 00:01:19.810 --> 00:01:22.950 Good morning. Thank you, Judge. What would you 00:01:22.950 --> 00:01:26.519 like to highlight or add? But I take it Your 00:01:26.519 --> 00:01:30.359 Honor had an opportunity to review my client's 00:01:30.359 --> 00:01:33.659 supplemental certification, Judge? I did. This 00:01:33.659 --> 00:01:36.459 court is obviously always on point with that, 00:01:36.579 --> 00:01:38.299 so I just wanted to make sure. Thank you, Judge. 00:01:39.900 --> 00:01:41.299 Judge, just generally speaking, first of all, 00:01:41.439 --> 00:01:43.780 thank you so much for your time, consideration, 00:01:44.060 --> 00:01:49.120 and courtesy. I believe this is the second or... 00:01:48.920 --> 00:01:50.879 third motion for reconsideration are followed 00:01:50.879 --> 00:01:52.739 before you're on this matter. And a lot of judges 00:01:52.739 --> 00:01:55.159 will be catancorous by now. So I just want to 00:01:55.159 --> 00:01:58.120 say on a human level, your good -natured spirit 00:01:58.120 --> 00:01:59.980 is very much appreciated, Judge. We're just getting 00:01:59.980 --> 00:02:01.879 better at it. That's the way I look at it. It's 00:02:01.879 --> 00:02:05.829 practice. And judge, you know, and by the way, 00:02:05.950 --> 00:02:08.289 I'm dealing with, in a moment of levity, if I 00:02:08.289 --> 00:02:10.870 may say, the gnarliest shaving cut I've ever 00:02:10.870 --> 00:02:14.590 had since I was a teenager. So just bear with 00:02:14.590 --> 00:02:16.629 me, gentlemen. It's quite all right, though. 00:02:16.810 --> 00:02:18.710 It happens. I'm glad you're not in court leading 00:02:18.710 --> 00:02:24.210 over our furniture. Yes. Yes. Judge, consistent 00:02:24.210 --> 00:02:26.669 with the directive on remand, we're just trying 00:02:26.669 --> 00:02:30.469 to get this issue of missing youth correct. These 00:02:30.469 --> 00:02:35.530 issues are... tricky, they're nuanced. We believe 00:02:35.530 --> 00:02:38.110 that we spotted a couple things in the court's 00:02:38.110 --> 00:02:45.949 reasoning that warrant further review. I do want 00:02:45.949 --> 00:02:48.810 to echo something my client said that has really 00:02:48.810 --> 00:02:51.389 resonated with me, which is, he said to me, Joe, 00:02:51.530 --> 00:02:53.050 I feel like I'm seeing these numbers for the 00:02:53.050 --> 00:02:57.509 first time. The court may agree or disagree with 00:02:57.509 --> 00:02:59.830 that. Mr. Axelrod will most likely disagree with 00:02:59.830 --> 00:03:03.550 that. Point being, the more we drill down, I 00:03:03.550 --> 00:03:06.930 think, the closer we get to the truth. Now, legally, 00:03:07.669 --> 00:03:10.949 we have stuck with our front line argument that 00:03:10.949 --> 00:03:17.669 the correct number is 895e. And I harken back 00:03:17.669 --> 00:03:20.530 to one of the original findings this court made 00:03:20.530 --> 00:03:24.949 in its first decision, which was that Mr. Van 00:03:24.949 --> 00:03:29.090 Tubergen's mathematical framework analysis of 00:03:29.210 --> 00:03:32.210 The subject loan that we're talking about it 00:03:32.210 --> 00:03:34.750 didn't make sense and judge by the way I'll just 00:03:34.750 --> 00:03:37.210 say this very briefly at this point. That's why 00:03:37.210 --> 00:03:42.710 I think the 60 % versus 50 % LTV Discrepancy 00:03:42.710 --> 00:03:45.289 because the court found that it was consistent 00:03:45.289 --> 00:03:47.370 with traditional loans, but it was a unique loan 00:03:47.370 --> 00:03:50.909 that's relevant because You know, that's one 00:03:50.909 --> 00:03:53.330 of the things that mr. Van Tubergen's mathematical 00:03:53.330 --> 00:03:56.080 framework highlighted And so when this court 00:03:56.080 --> 00:03:59.139 said that this LTV was consistent, I just want 00:03:59.139 --> 00:04:02.360 to bring the court back to when it originally 00:04:02.360 --> 00:04:04.900 found that Mr. Van Tubergen's framework made 00:04:04.900 --> 00:04:10.639 some sense. And so we stuck with our front line 00:04:10.639 --> 00:04:13.879 argument that 895 ETH was owed. The district 00:04:13.879 --> 00:04:19.420 court raised the prospect of 245 ETH being owed. 00:04:20.220 --> 00:04:23.160 This court came out differently, came to zero. 00:04:23.470 --> 00:04:26.750 And on reconsideration, our point is, whatever 00:04:26.750 --> 00:04:30.589 the case may be, it can't be zero. And one of 00:04:30.589 --> 00:04:34.269 the points that we raised was that there is a 00:04:34.269 --> 00:04:37.589 portion of the ETH that they were credited as 00:04:37.589 --> 00:04:40.889 posting that seems to be unaccounted for. That 00:04:40.889 --> 00:04:47.350 is that 296 .571 amount, because the loan liquidation 00:04:47.350 --> 00:04:51.930 summary reflects a rollover amount available. 00:04:52.170 --> 00:04:58.850 of 1718 .358. And Mr. Van Tubergen's point is 00:04:58.850 --> 00:05:03.670 this is unaccounted for. And for us, this just 00:05:03.670 --> 00:05:06.750 raises a specter of a lack of confidence in the 00:05:06.750 --> 00:05:10.629 records that Blockfly has presented. And this 00:05:10.629 --> 00:05:12.910 gets back to what I led with, which is we just 00:05:12.910 --> 00:05:18.009 want to keep drilling down on the truth. And 00:05:18.009 --> 00:05:20.709 I go back to the case that's still on appeal, 00:05:21.350 --> 00:05:24.930 where One of our main arguments there is what 00:05:24.930 --> 00:05:27.230 was the pricing metric that was actually used 00:05:27.230 --> 00:05:28.990 because we believe we're the only ones that actually 00:05:28.990 --> 00:05:33.149 put it on the record. And so we don't we don't 00:05:33.149 --> 00:05:34.709 believe that black bodies should be entitled 00:05:34.709 --> 00:05:38.310 to deference on records. We really want them 00:05:38.310 --> 00:05:43.269 to be forced to prove every contention that they 00:05:43.269 --> 00:05:47.250 make in terms of the price like argument. The 00:05:47.250 --> 00:05:49.110 same the same thing, Judge. You know, I know 00:05:49.110 --> 00:05:51.810 that they're in their apply. They are trying 00:05:51.810 --> 00:05:57.410 to rely on the pricing that Mr. Van Tubergen 00:05:57.410 --> 00:06:04.149 set forth in the aforementioned mathematical 00:06:04.149 --> 00:06:11.209 framework analysis of the subject moment. I looked 00:06:11.209 --> 00:06:15.269 at the response, specifically paragraph 29, and 00:06:15.269 --> 00:06:21.709 I'm still not seeing a judge. We really think 00:06:21.709 --> 00:06:24.689 that they have not shown that the price went 00:06:24.689 --> 00:06:27.490 up in a way that would have trumped the district 00:06:27.490 --> 00:06:31.649 court's concern that the full portion of the 00:06:31.649 --> 00:06:35.149 ETH, even under their arguments, was not posted. 00:06:35.870 --> 00:06:40.670 And that delta would have been 245 ETH, I believe. 00:06:41.529 --> 00:06:44.009 And as to the Scrivener's error argument, Judge, 00:06:44.509 --> 00:06:47.889 you know, my client set forth a lot of points, 00:06:47.910 --> 00:06:51.009 both in our main... papers, and also the supplemental 00:06:51.009 --> 00:06:56.550 certification. It is a rather large difference, 00:06:56.689 --> 00:07:00.129 Judge, as we know. Your Honor still found that 00:07:00.129 --> 00:07:03.050 it was akin to a clerical error. But my point, 00:07:03.269 --> 00:07:05.410 Judge, is that, and I want to highlight now, 00:07:05.970 --> 00:07:09.269 is the who, what, when, and how the error has 00:07:09.269 --> 00:07:12.850 never been shown. Precisely, how did it occur? 00:07:13.910 --> 00:07:17.500 Who committed it? And what was the fallout of 00:07:17.500 --> 00:07:19.519 it? You know, was there anything contemporaneous 00:07:19.519 --> 00:07:23.220 at the time? The case law that Your Honor cited 00:07:23.220 --> 00:07:27.259 did feature specifics as to who, what, when, 00:07:27.300 --> 00:07:29.759 and how. Whereas here, we have something that 00:07:29.759 --> 00:07:32.720 wasn't even raised pre -bankruptcy. And to me, 00:07:32.779 --> 00:07:36.259 that suggests that it was a legal argument invoked 00:07:36.259 --> 00:07:39.740 by highly competent and skilled counsel rather 00:07:39.740 --> 00:07:42.699 than what actually happened as a matter of fact. 00:07:43.439 --> 00:07:47.519 And so, Judge, I'll end my opening here with 00:07:47.519 --> 00:07:49.879 this. As part of the supplemental proceedings 00:07:49.879 --> 00:07:52.800 that we're requesting, we do think it makes sense 00:07:52.800 --> 00:07:56.959 to force BlockFi to document the factual nature 00:07:56.959 --> 00:07:59.839 of the Scrivener's error, not just that, oh, 00:07:59.899 --> 00:08:02.800 whoopsie, right? But to tell us how, because 00:08:02.800 --> 00:08:06.240 as Mr. Van Tubergen went chapter and verse, there 00:08:06.240 --> 00:08:09.720 would be a lot of errors that, there have been 00:08:09.720 --> 00:08:12.100 many, a multitude of Scrivener's errors littered 00:08:12.100 --> 00:08:14.850 throughout. the document, including the truth 00:08:14.850 --> 00:08:18.230 and money statement. All right, fair enough. 00:08:18.410 --> 00:08:20.670 Thank you, Mr. Magulies. Mr. Axelrod. I'm going 00:08:20.670 --> 00:08:26.930 to get another paper towel. Thank you. Mr. Magulies 00:08:26.930 --> 00:08:30.230 has left the picture. Should I wait for him to 00:08:30.230 --> 00:08:33.210 return? I'm sure he can hear. He's just grabbing 00:08:33.210 --> 00:08:39.049 it. Thank you for your courtesy, sir. Yeah. All 00:08:39.049 --> 00:08:44.360 right. Thank you, Your Honor. We've now, as counsel 00:08:44.360 --> 00:08:46.659 referenced, been through the reconsideration 00:08:46.659 --> 00:08:49.740 drill a few times. Unfortunately, for reasons 00:08:49.740 --> 00:08:53.899 that I'll try not to beat on too much, we have 00:08:53.899 --> 00:08:56.860 to create a record today. So I just want to set 00:08:56.860 --> 00:09:01.639 forth, as we all know, the bankruptcy rules don't 00:09:01.639 --> 00:09:04.080 create a standard for reconsideration. It is 00:09:04.080 --> 00:09:08.080 understood that incorporated are rules 59E and 00:09:08.080 --> 00:09:10.879 60B of the Federal Rules of Civil Procedure. 00:09:11.120 --> 00:09:14.960 That's what we are here today to discuss. They 00:09:14.960 --> 00:09:18.659 set forth standards for reconsideration or relief 00:09:18.659 --> 00:09:22.419 from a judgment. And the standard is set forth 00:09:22.419 --> 00:09:24.940 in certain Your Honor's rulings. It's set forth 00:09:24.940 --> 00:09:27.940 in the papers. But basically there's four things 00:09:27.940 --> 00:09:30.039 that we might be looking for. There's clear legal 00:09:30.039 --> 00:09:33.580 error. There's manifest injustice. A change of 00:09:33.580 --> 00:09:36.220 controlling law or newly available evidence. 00:09:37.220 --> 00:09:39.120 There's been no change of controlling law. I 00:09:39.120 --> 00:09:42.529 don't think that's being argued. Notwithstanding 00:09:42.529 --> 00:09:47.710 that Mr. Van Tubergen may be seeing numbers for 00:09:47.710 --> 00:09:50.009 the first time, we're not talking today about 00:09:50.009 --> 00:09:52.070 newly available evidence. There actually was 00:09:52.070 --> 00:09:54.350 an argument about that earlier, which had to 00:09:54.350 --> 00:09:56.610 do with a document that was emailed to Mr. Van 00:09:56.610 --> 00:09:59.789 Tubergen six years ago, but we're not here today 00:09:59.789 --> 00:10:03.490 talking about that. So the standard that this 00:10:03.490 --> 00:10:06.789 court needs to address, I believe, is either 00:10:06.789 --> 00:10:11.100 clear legal error or manifest injustice. not 00:10:11.100 --> 00:10:14.720 merely re -arguing what has been argued about 00:10:14.720 --> 00:10:18.659 now for at least months, if not two and a half 00:10:18.659 --> 00:10:23.720 years, if not four years. This motion for reconsideration 00:10:23.720 --> 00:10:26.399 is re -argument of a lot of different points. 00:10:26.940 --> 00:10:30.179 It does not address the standard much as needed 00:10:30.179 --> 00:10:34.120 for reconsideration. And most of the arguments 00:10:34.120 --> 00:10:37.039 that we've heard are just not correct. And so 00:10:37.039 --> 00:10:42.990 we're going to walk through them. The first reconsideration 00:10:42.990 --> 00:10:45.690 argument has to do with what's been referred 00:10:45.690 --> 00:10:49.389 to as the rollover from the prior loan into the 00:10:49.389 --> 00:10:55.330 E -43 loan, the E -43 LSA, which is the operative 00:10:55.330 --> 00:10:57.750 contract concerning what we call the missing 00:10:57.750 --> 00:11:01.230 ETH. Mr. Van Tubergen says he's now looking at 00:11:01.230 --> 00:11:04.269 these numbers and the rollover should have been 00:11:04.269 --> 00:11:10.850 1 ,718 ETH instead of 2 ,014. Once you start 00:11:10.850 --> 00:11:13.470 out before we go to too deep into the woods on 00:11:13.470 --> 00:11:17.690 this By quoting from the holding that is seeking 00:11:17.690 --> 00:11:21.870 to be reconciled to be reconsidered here Nothing 00:11:21.870 --> 00:11:25.409 is from page 5 to your honor's pain Nothing in 00:11:25.409 --> 00:11:29.889 the agreement referring to the e43 LSA Suggests 00:11:29.889 --> 00:11:32.870 that BlockFi as lender was obligated to supply 00:11:32.870 --> 00:11:35.169 cryptocurrency collateral for the benefit of 00:11:35.169 --> 00:11:38.230 the borrower and Mr. Van Tubergen's position 00:11:38.409 --> 00:11:40.870 that Block 5 was required to post -collateral 00:11:40.870 --> 00:11:44.769 is not supported by the Operative Contract. Accordingly, 00:11:44.889 --> 00:11:47.029 regardless of the collateral amount referenced 00:11:47.029 --> 00:11:50.750 in the E -43 LSA, the obligation to post sufficient 00:11:50.750 --> 00:11:54.269 collateral rested at all times with Mr. Van Tubergen. 00:11:55.049 --> 00:11:57.309 So as we talk through these issues that surround 00:11:57.309 --> 00:11:59.730 how much collateral there was supposed to be, 00:12:00.610 --> 00:12:02.570 I think it's important to keep in mind that that 00:12:02.570 --> 00:12:05.429 is all about a secondary holding in Your Honor's 00:12:05.429 --> 00:12:09.110 opinion. that there is no part of the motion 00:12:09.110 --> 00:12:12.370 for reconsideration that seeks reconsideration 00:12:12.370 --> 00:12:15.570 of the holding, that if you look at the contract 00:12:15.570 --> 00:12:18.309 that Mr. Ventuberjian negotiated and executed, 00:12:18.990 --> 00:12:22.169 he was required to post collateral. He did not 00:12:22.169 --> 00:12:25.490 do that. There was an integration clause. And 00:12:25.490 --> 00:12:29.029 so if you read the contract in the most textualist 00:12:29.029 --> 00:12:31.049 manner possible, which is what Mr. Ventuberjian 00:12:31.049 --> 00:12:34.899 has asked for expressly. If you read the contract 00:12:34.899 --> 00:12:38.379 in the most textualist manner possible, then 00:12:38.379 --> 00:12:42.379 any award where he gets back some bit of collateral 00:12:42.379 --> 00:12:47.159 is a windfall. And in fact, he borrowed $5 .9 00:12:47.159 --> 00:12:50.980 million under this contract and collateral was 00:12:50.980 --> 00:12:54.860 liquidated on his behalf to satisfy, repay that 00:12:54.860 --> 00:12:58.320 obligation. And so if you interpret the operative 00:12:58.320 --> 00:13:00.899 contract, he's already gotten a windfall because 00:13:00.899 --> 00:13:03.730 he never posted collateral. But collateral was 00:13:03.730 --> 00:13:06.470 essentially sold and given to him on his behalf. 00:13:07.610 --> 00:13:11.490 So now let's come back to the proposed difference 00:13:11.490 --> 00:13:15.549 between 1700 and 2000 ETH that was part of the 00:13:15.549 --> 00:13:20.850 rollover. Docket number 1963, exhibit C. This 00:13:20.850 --> 00:13:25.250 is part of the emails that preceded the E -43 00:13:25.250 --> 00:13:27.929 LSA. And we've talked about if you have to look 00:13:27.929 --> 00:13:29.769 outside the contract, then you look at these 00:13:29.769 --> 00:13:34.940 emails. I'm looking at, it's the 45th page of 00:13:34.940 --> 00:13:41.120 the PDF in docket number 1963. It says, in an 00:13:41.120 --> 00:13:43.600 email from BlockFi to Mr. Van Tubergen on June 00:13:43.600 --> 00:13:50.360 29th, 2021, it refers to the existing 2014 .928 00:13:50.360 --> 00:13:53.159 ETH on the loan. That is the rollover amount. 00:13:53.720 --> 00:13:57.000 And Mr. Van Tubergen responds, below is confirmed. 00:13:58.039 --> 00:14:07.970 There's an exception to some... And so we have, 00:14:08.269 --> 00:14:11.029 starting in 2021, an agreement that the rollover 00:14:11.029 --> 00:14:15.990 was 2014 ETH, going through an agreement that 00:14:15.990 --> 00:14:20.850 then supersedes those emails, and then years 00:14:20.850 --> 00:14:23.490 of litigation around this. And this is the first 00:14:23.490 --> 00:14:26.590 time that we have heard, oh, it might be 1700 00:14:26.590 --> 00:14:30.750 ETH. There are multiple additional reasons that 00:14:30.750 --> 00:14:33.129 are stated in our papers why it does not make 00:14:33.129 --> 00:14:37.100 sense that this number would be 1718. But I want 00:14:37.100 --> 00:14:39.740 to stress here because the motion for reconsideration 00:14:39.740 --> 00:14:43.740 is about clear error or manifest injustice. We're 00:14:43.740 --> 00:14:46.879 not meeting that standard. He agreed to a number 00:14:46.879 --> 00:14:50.620 at the time. He signed a contract. This was never 00:14:50.620 --> 00:14:56.080 raised in four years. The second issue, Mr. Antubergen 00:14:56.080 --> 00:14:59.019 says that the court inaccurately found that the 00:14:59.019 --> 00:15:01.899 LTV ratio under this contract was 60 percent, 00:15:01.919 --> 00:15:04.399 which was the usual. And in fact, the usual may 00:15:04.399 --> 00:15:07.450 have been 50 percent again. This is not what 00:15:07.450 --> 00:15:09.250 the court's holding was about. I don't think 00:15:09.250 --> 00:15:12.169 there's any way you could argue that that observation 00:15:12.169 --> 00:15:15.769 of the court was important to any part of its 00:15:15.769 --> 00:15:19.429 holding. This is just not a missing each type 00:15:19.429 --> 00:15:22.730 of question. I do want to observe that those 00:15:22.730 --> 00:15:26.629 same emails, docket number 1963, exhibit C, they 00:15:26.629 --> 00:15:31.549 agree to an 80 % LTD. The E43 LSA then says 60%. 00:15:31.549 --> 00:15:34.860 That was negotiated. Now, read carefully, and 00:15:34.860 --> 00:15:37.820 I think counsel was clear about this. I mean, 00:15:37.840 --> 00:15:40.740 anything is being obfuscated. Their point is 00:15:40.740 --> 00:15:44.139 not that the contract should have said 50 percent 00:15:44.139 --> 00:15:46.879 or that it should be interpreted as 50 percent. 00:15:46.879 --> 00:15:48.960 What they're saying is that the court should 00:15:48.960 --> 00:15:51.240 have looked at all of the different LSAs and 00:15:51.240 --> 00:15:53.820 seen that actually the usual was 50 percent and 00:15:53.820 --> 00:15:57.639 that was change. I don't understand why that 00:15:57.639 --> 00:16:00.340 makes any difference to the court's holding whatsoever. 00:16:00.970 --> 00:16:04.230 But even if that's the case they they haven't 00:16:04.230 --> 00:16:07.269 cited enough to support that or shown why it 00:16:07.269 --> 00:16:10.629 matters except In the context of arguing there 00:16:10.629 --> 00:16:12.970 was no Scriveners error and I'm gonna get to 00:16:12.970 --> 00:16:16.970 that point in a bit The third argument that they 00:16:16.970 --> 00:16:20.230 make on reconsideration is and I will quote here 00:16:20.230 --> 00:16:25.110 from their motion at page 9 the court's finding 00:16:25.110 --> 00:16:27.850 they dispute the court's finding I'm quoting 00:16:28.169 --> 00:16:30.990 that the value of ETH rose during the course 00:16:30.990 --> 00:16:34.809 of negotiations. Here's what the court says in 00:16:34.809 --> 00:16:39.549 its opinion. Block 5 further explains that because 00:16:39.549 --> 00:16:42.649 the value of ETH rose during the course of negotiations, 00:16:42.970 --> 00:16:47.889 etc. So that's not a finding of the court. That 00:16:47.889 --> 00:16:50.669 is the court observing what was argued by the 00:16:50.669 --> 00:16:53.070 parties and supported by evidence of various 00:16:53.070 --> 00:16:56.049 parties. And it's employed to reach the finding 00:16:56.049 --> 00:16:57.929 that the court makes, so now quoting from the 00:16:57.929 --> 00:17:00.809 opinion of pages eight and nine, the documentary 00:17:00.809 --> 00:17:04.509 record, ellipsis, demonstrates that the collateral 00:17:04.509 --> 00:17:07.049 pledge was precisely that which the parties agreed 00:17:07.049 --> 00:17:09.849 would back the loan. So to be clear, there's 00:17:09.849 --> 00:17:14.490 no incorrect finding of fact as to what the price 00:17:14.490 --> 00:17:17.450 change was in ETH or what happened there. The 00:17:17.450 --> 00:17:20.369 court looked at the documentary record. It looked 00:17:20.369 --> 00:17:23.109 at explanations offered by the parties of that 00:17:23.109 --> 00:17:26.109 record. And being a fact -finder, the court made 00:17:26.109 --> 00:17:29.890 a fact -finding. That fact -finding is what the 00:17:29.890 --> 00:17:31.609 documentary record demonstrates, which is that 00:17:31.609 --> 00:17:34.470 the collateral pledge was precisely that which 00:17:34.470 --> 00:17:38.190 the parties agreed would back the loan. Once 00:17:38.190 --> 00:17:41.049 again, that is ancillary to the primary holding 00:17:41.049 --> 00:17:44.170 and the opinion that if you interpret the contract 00:17:44.170 --> 00:17:47.630 as it was negotiated, then what Mr. Van Tuberging 00:17:47.630 --> 00:17:51.430 is seeking is a windfall that violates what he 00:17:51.430 --> 00:17:57.210 agreed to. Even so, I don't think, and we get 00:17:57.210 --> 00:17:59.069 into this somewhat in our papers, I don't think 00:17:59.069 --> 00:18:03.210 it's correct that the price of ETH did not rise. 00:18:04.690 --> 00:18:06.710 I don't even know that we have a dispute about 00:18:06.710 --> 00:18:09.109 the movement of ETH at that time or how it affected 00:18:09.109 --> 00:18:11.670 what the parties were doing. If you look at the 00:18:11.670 --> 00:18:14.470 June 29th emails, you can actually see that Mr. 00:18:14.609 --> 00:18:18.109 Van Tubergen is acknowledging movements of ETH 00:18:18.109 --> 00:18:21.309 prices. He says, I... this offer does not expire 00:18:21.309 --> 00:18:23.150 today and will continue to be available until 00:18:23.150 --> 00:18:26.670 I identify a safe purchase price amount. So obviously 00:18:26.670 --> 00:18:28.529 the price was increasing, he was waiting for 00:18:28.529 --> 00:18:31.069 it to drop so that he wouldn't be at risk of 00:18:31.069 --> 00:18:34.490 an LTV default immediately when it was executed. 00:18:36.190 --> 00:18:39.670 Even so, the argument is just wrong about what 00:18:39.670 --> 00:18:42.589 the court was finding and even reading the motion 00:18:42.589 --> 00:18:45.190 to reconsider most charitably, this is just the 00:18:45.190 --> 00:18:47.650 second bite at the apple. It's just saying the 00:18:47.650 --> 00:18:50.630 court was maybe wrong about some little thing, 00:18:51.029 --> 00:18:53.410 and because of that, it has to reconsider every 00:18:53.410 --> 00:18:58.049 portion of what it ordered and why. Finally, 00:18:58.069 --> 00:19:00.529 we get to the argument about whether or not there 00:19:00.529 --> 00:19:02.710 was a scrivener's error and what that means. 00:19:03.250 --> 00:19:05.450 Once again, there's an integration clause. Mr. 00:19:05.569 --> 00:19:07.769 Ventuberjian argued the terms of the contract 00:19:07.769 --> 00:19:10.690 apply. He's not even seeking reconsideration 00:19:10.690 --> 00:19:13.650 of that, and the contract is binding. Under the 00:19:13.650 --> 00:19:16.029 terms of the contract, he had to post collateral. 00:19:16.309 --> 00:19:20.079 He didn't. So any collateral that was credited 00:19:20.079 --> 00:19:22.940 to him violated the contract and he's already 00:19:22.940 --> 00:19:25.400 gotten a windfall. Anything more is a greater 00:19:25.400 --> 00:19:27.720 windfall at the expense of Block 5's creditors. 00:19:28.200 --> 00:19:30.299 So I'm not sure that any of this really matters. 00:19:30.980 --> 00:19:33.700 But setting that aside, the court looked at the 00:19:33.700 --> 00:19:35.920 entire documentary record and held that Block 00:19:35.920 --> 00:19:40.460 5's explanation of how you get to the amount 00:19:40.460 --> 00:19:42.900 of ease that was pledged, whether you need to 00:19:42.900 --> 00:19:45.240 look at parole evidence and why, what that parole 00:19:45.240 --> 00:19:48.039 evidence suggests. The court found that Block 00:19:48.039 --> 00:19:51.039 5's explanation was more persuasive, and I would 00:19:51.039 --> 00:19:53.339 submit it's the only reasonable explanation. 00:19:55.299 --> 00:19:57.559 That only brings us back full circle to what 00:19:57.559 --> 00:20:01.059 was argued about and ruled on before. One of 00:20:01.059 --> 00:20:04.539 two things has to be true. Either the contract 00:20:04.539 --> 00:20:06.619 applies and you interpret the contract as it 00:20:06.619 --> 00:20:08.680 was written, in which case Mr. Van Tubergen is 00:20:08.680 --> 00:20:12.579 seeking a windfall, or you can look outside the 00:20:12.579 --> 00:20:14.160 contract and look at what the party's intended, 00:20:14.319 --> 00:20:17.559 and we've had a factual ruling looking at a lot 00:20:17.559 --> 00:20:21.819 of evidence about that and it shows that any 00:20:21.819 --> 00:20:24.859 additional theory on any additional collateral 00:20:24.859 --> 00:20:28.039 credited to Mr. Van Tubergen at this point is 00:20:28.039 --> 00:20:29.859 also a windfall to him because it's just not 00:20:29.859 --> 00:20:32.299 what they negotiated. It doesn't make any sense. 00:20:33.460 --> 00:20:37.099 Your Honor, I want to close again to make a record 00:20:37.099 --> 00:20:39.279 here and I'm going to sound like a broken record 00:20:39.279 --> 00:20:41.319 because BlockFi has now said this many times. 00:20:42.119 --> 00:20:46.019 Mr. Van Tubergen made risky bets. he lost an 00:20:46.019 --> 00:20:48.720 unbelievable amount of money betting on the price 00:20:48.720 --> 00:20:51.920 of Ethereum tokens. And this litigation is the 00:20:51.920 --> 00:20:54.940 only way that he gets it back. So he's holding 00:20:54.940 --> 00:20:58.400 up a massive process. He's denying recoveries 00:20:58.400 --> 00:21:02.079 to creditors of Block 5, making purported settlement 00:21:02.079 --> 00:21:04.980 demands that we can't even engage with consistent 00:21:04.980 --> 00:21:09.279 with our fiduciary duties. The arguments we're 00:21:09.279 --> 00:21:11.980 hearing broadly contradict all the evidence. 00:21:12.279 --> 00:21:15.119 They're just an appeal of what's been said before. 00:21:15.380 --> 00:21:17.720 The fact that Mr. Van Tubergen is seeing numbers 00:21:17.720 --> 00:21:21.079 in a new light is not relevant to any legal standard 00:21:21.079 --> 00:21:24.319 here. Mr. Van Tubergen could even win on all 00:21:24.319 --> 00:21:26.339 of the arguments he makes in the motion to reconsider 00:21:26.339 --> 00:21:29.940 and he would still lose because he hasn't even 00:21:29.940 --> 00:21:32.099 addressed the primary holding of the opinion 00:21:32.099 --> 00:21:35.759 as to whether the text of the contract that he 00:21:35.759 --> 00:21:39.599 negotiated should control. Nothing that we were 00:21:39.599 --> 00:21:42.509 talking about today supports a finding that this 00:21:42.509 --> 00:21:45.390 court made any error, let alone a clear legal 00:21:45.390 --> 00:21:48.849 error that that creates manifest injustice. The 00:21:48.849 --> 00:21:51.089 court looked at a lot of evidence that made a 00:21:51.089 --> 00:21:54.890 fact -finding that's how this works. And Mr. 00:21:55.029 --> 00:21:57.569 Van Tubergen will surely appeal that that's what 00:21:57.569 --> 00:22:00.529 you need to do here. We will entertain settlement 00:22:00.529 --> 00:22:03.470 offers. I can tell you there's been nothing that 00:22:03.470 --> 00:22:05.809 that any of our stakeholders, the planning administrator, 00:22:05.890 --> 00:22:08.930 the oversight committee, predators are allowing 00:22:08.930 --> 00:22:13.420 us to even entertain at all. But there's a standard 00:22:13.420 --> 00:22:15.500 for reconsideration. That is what we're here 00:22:15.500 --> 00:22:18.019 for today, and he's not even close to meeting 00:22:18.019 --> 00:22:21.859 him. All right. Thank you, Mr. Axelrod. Back 00:22:21.859 --> 00:22:25.539 to you, Mr. Magelese. Judge, I just want to make 00:22:25.539 --> 00:22:30.059 two points in reply. I'll be brief. So we're 00:22:30.059 --> 00:22:32.380 not here on a case in chief, we're here on remand, 00:22:32.519 --> 00:22:34.680 and the district court made a finding that it 00:22:34.680 --> 00:22:37.799 was not my client's obligation to post a collab. 00:22:38.670 --> 00:22:41.630 And so that's one of the directives we're working 00:22:41.630 --> 00:22:47.589 on, working under. And so the court's original 00:22:47.589 --> 00:22:52.690 finding that, you know, when you read the contract, 00:22:52.829 --> 00:22:56.289 there was nothing in there saying that Blockfly 00:22:56.289 --> 00:22:58.549 had to post a collateral. That's been undone, 00:22:58.690 --> 00:23:02.029 I believe, Judge. And so the exercise is to find 00:23:02.029 --> 00:23:06.750 how much was Blockfly obligated to post. Also, 00:23:06.930 --> 00:23:14.970 Judge, My fellow member of the bar is an excellent 00:23:14.970 --> 00:23:20.710 oral presenter, but the price spike argument 00:23:20.710 --> 00:23:23.789 is still not fleshed out. I don't know what it 00:23:23.789 --> 00:23:26.029 means that parties were acknowledging the movement 00:23:26.029 --> 00:23:29.869 of pricing. What I didn't hear is a specific 00:23:29.869 --> 00:23:35.230 explanation as to why the 245 ETH Delta, the 00:23:35.230 --> 00:23:38.660 discord itself, identified how that goes away. 00:23:39.480 --> 00:23:43.880 So I do believe that a further record is required 00:23:43.880 --> 00:23:48.039 on that issue. All right. Thank you, counsel. 00:23:49.579 --> 00:23:55.619 Let me address this motion. The district court 00:23:55.619 --> 00:23:58.480 in remanding the issue back to this court was 00:23:58.480 --> 00:24:05.500 unclear as to the proper, we'll call it disposition. 00:24:05.849 --> 00:24:16.470 of 245 shares, 245 ETH, and was unclear that 00:24:16.470 --> 00:24:20.549 a proper record had been established addressing 00:24:20.549 --> 00:24:27.930 the loss of ETH claim. That's what the court 00:24:27.930 --> 00:24:32.289 remanded back to this court, and this court addressed 00:24:32.289 --> 00:24:35.500 in its opinion. In fact, it was the district 00:24:35.500 --> 00:24:37.720 court that raised the integration issue in a 00:24:37.720 --> 00:24:44.420 footnote towards the conclusion of its opinion. 00:24:46.319 --> 00:24:50.339 When this court issued its opinion on September 00:24:50.339 --> 00:24:56.500 11th in addressing the remand issues, the court 00:24:56.500 --> 00:25:06.140 essentially addressed two primary issues. Simple 00:25:06.140 --> 00:25:11.119 issues. We thought it was simple. Which party 00:25:11.119 --> 00:25:18.200 under the loan transaction in which $5 ,928 ,830 00:25:18.200 --> 00:25:22.960 .21 was borrowed, which party was required to 00:25:22.960 --> 00:25:28.880 post the collateral? And number two, how much 00:25:28.880 --> 00:25:32.539 collateral had to be posted? That in essence 00:25:32.539 --> 00:25:37.099 is the primary focus. of the September 11th opinion, 00:25:38.259 --> 00:25:40.680 and it remains the primary focus in front of 00:25:40.680 --> 00:25:42.539 this court. Other issues are before the district 00:25:42.539 --> 00:25:44.680 court on appeal, and this court doesn't have 00:25:44.680 --> 00:25:47.920 the jurisdiction and authority to address them. 00:25:49.240 --> 00:25:56.660 Well, as argued by the wind down debtor, this 00:25:56.660 --> 00:26:01.980 court finds that there's been no showing under 00:26:01.980 --> 00:26:06.329 rules 59 or 60. taking into consideration 502 00:26:06.329 --> 00:26:11.269 J. That the court has made either a clear error 00:26:11.269 --> 00:26:15.869 or that there's a manifest injustice. We go back 00:26:15.869 --> 00:26:19.910 and look at the initial question as to who was 00:26:19.910 --> 00:26:25.509 required to post the collateral. If the court 00:26:25.509 --> 00:26:28.269 accepts the suggestion of the district court 00:26:28.269 --> 00:26:31.049 that there was an integration clause at play 00:26:31.049 --> 00:26:34.019 and of the parties. and end of the movement, 00:26:36.220 --> 00:26:40.640 the inquiry stops because it's clear that this 00:26:40.640 --> 00:26:42.920 loan transaction is consistent with virtually 00:26:42.920 --> 00:26:46.200 every loan transaction. There's an obligation 00:26:46.200 --> 00:26:50.140 of the borrower to post a collateral. And that's 00:26:50.140 --> 00:26:58.299 clear from the language of LSA E -43. If the 00:26:58.299 --> 00:27:02.259 court looks beyond and this was reflected in 00:27:02.259 --> 00:27:05.180 my opinion, prior opinion, but the court looks 00:27:05.180 --> 00:27:12.500 beyond the four corners of LSA E43 and takes 00:27:12.500 --> 00:27:16.119 into account the available parole evidence and 00:27:16.119 --> 00:27:21.759 other documentation. There's no change in the 00:27:21.759 --> 00:27:26.539 conclusion that the borrower is responsible for 00:27:26.539 --> 00:27:38.059 posting the collateral. The court observes that 00:27:38.059 --> 00:27:44.380 no documentation pointed to, blocked by responsibility, 00:27:45.059 --> 00:27:49.700 to ultimately post the collateral that secured 00:27:49.700 --> 00:27:52.799 a loan that it was making to Mr. Van Tubergen. 00:27:53.319 --> 00:27:57.980 That's not how lending works. Lenders don't. 00:27:58.119 --> 00:28:02.000 Provide the collateral they provide the funding 00:28:02.000 --> 00:28:06.559 possibly in here to acquire the collateral But 00:28:06.559 --> 00:28:08.539 going beyond that then if we go to the second 00:28:08.539 --> 00:28:11.420 question the parole evidence confirmed for this 00:28:11.420 --> 00:28:15.400 court as it found That the amount of the collateral 00:28:15.400 --> 00:28:21.440 That was agreed to be posted was in an amount 00:28:21.440 --> 00:28:28.170 that took into account The rollover collateral 00:28:28.170 --> 00:28:35.829 from LSA 785 and required an additional posting 00:28:35.829 --> 00:28:52.009 by the borrower of $1 ,320 for a total collateral 00:28:52.009 --> 00:28:59.950 base of $3 ,334 .93. That's what the parole evidence 00:28:59.950 --> 00:29:06.190 informed the court. And again, the other issues 00:29:06.190 --> 00:29:12.690 that have been raised today do not detract from 00:29:12.690 --> 00:29:16.890 those findings. So the court is not prepared 00:29:16.890 --> 00:29:21.250 to find either clear error or manifest injustice 00:29:21.250 --> 00:29:24.390 or any of the other requirements under rules 00:29:24.390 --> 00:29:29.460 59 or 60 have been satisfied unless The court 00:29:29.460 --> 00:29:32.420 will leave the parties to their appellate rights. 00:29:33.380 --> 00:29:36.059 I'll ask Block Finders to submit a form of order. 00:29:37.720 --> 00:29:40.759 Thank you counsel. Have a good day everyone. 00:29:42.640 --> 00:29:43.940 Take care. Be well.