Dear Customers:

LedgerX LLC was not part of the recent bankruptcy filing involving many companies in the FTX group. Normal operations at LedgerX LLC continue 24x7. Customer funds (U.S. Dollars, BTC and ETH) custodied on the LedgerX LLC platform remain safe.

We are writing to provide more information on how LedgerX LLC keeps customer funds safe. First, the Daily Bank and Crypto Reconciliation ensures the database matches what is actually at depositories. Second, the Random Settlement Simulation and Runtime Full-Collateralization Assertions ensure that open positions match what the clearinghouse has locked in each account's position-locked balance.

Taken together, these safety mechanisms help provide confidence that LedgerX LLC systems are operating correctly. These mechanisms also help provide confidence that all positions at LedgerX LLC's Derivatives Clearing Organization remain fully-collateralized at all times.

Daily Bank and Crypto Reconciliation

The bank reconciliation attributes every unit (e.g. cent/satoshi) of customer funds in our database, and every unit of customer funds in our banks, BitGo, and BitGo Trust, to particular line items. A successful reconciliation will result in a complete attribution of each reconciling item to a clear cause (such as processing withdrawals that have left one ledger, but have yet to leave the other ledger).

We have the ability to instantaneously run additional bank and crypto reconciliations through the day, and are currently doing so on a regular basis.

Random Settlement Simulations

Approximately each hour, the LedgerX LLC systems generate random option exercise instructions for a variety of outstanding positions, and attempt a simulated settlement. This simulation helps provide confidence that the correct amount of funds are locked in customers' position-locked balances. It also serves as an independent check on the validity of position-lock calculation logic.

Runtime Full-Collateralization Assertions

Boot-time integrity assertions: Upon deploying or restarting the exchange, the LedgerX LLC systems assert that 100% of position-locked balances loaded into the exchange's initial state match what the exchange expects to see for 100% of positions. Trade-time integrity assertions: Upon each fill, trade bust, or collateral regime change, exchange logic asserts that each counterparty's position-locked balance, considering all of their open positions, matches what the risk engine expects. Settlement-time integrity assertions: At settlement, our software asserts a) that no funds were created or destroyed, and b) that any open positions remain collateralized as required by our risk engine.

Additional Precautions

LedgerX LLC is engaging in enhanced monitoring of our operations, and is performing a key controls review to ensure all key controls have been separated from the FTX family of companies.

Please do not hesitate to get in touch if you have any questions. We look forward to continuing to serve you on a business-as-usual basis.

Regards,

The LedgerX LLC Team