INVESTOR PRESENTATION 3Q.2018 © ProChain Capital LP 2018 / S T R I C T L Y C O N F I D E N T I A L DISCLAIMERS THIS DOCUMENT IS NOT AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY INTERESTS AND/OR SHARES IN PROCHAIN ONSHORE FUND LP AND/OR PROCHAIN OFFSHORE FUND LTD. (COLLECTIVELY, THE “FUND” ) OR ANY OTHER FUND OR ACCOUNT SPONSORED OR ADVISED BY PROCHAIN CAPITAL LP (“PROCHAIN”, THE “FIRM” OR “WE”) (OR AN AFFILIATE THEREOF) IN ANY JURISDICTION, INCLUDING ANY MEMBER STATES OF THE EUROPEAN ECONOMIC AREA (THE “EEA”). AN OFFERING OF INTERESTS OR SHARES WILL BE MADE ONLY BY MEANS OF A CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM (“MEMORANDUM”) AND ONLY TO QUALIFIED INVESTORS IN JURISDICTIONS WHERE PERMITTED BY LAW. An investment in the Fund is speculative and involves a high degree of risk. The Fund is not intended to be a complete investment program. The Fund has no operating history and intends to employ certain strategies and techniques, such as investing in crypto-assets (including digital currencies and “initial coin offerings”) and in securities and/or obligations of entities predicated on crypto-assets, which may increase the risk of investment loss. The Fund’s investment program involves substantial risk, including the loss of principal, and no assurance can be given that the Fund’s investment objectives will be achieved. As a result, the Fund’s performance may be volatile, and an investor could lose all or a substantial amount of his or her investment. The Fund’s fees and expenses may offset trading profits. There can be no assurances that the Fund will have a return on invested capital similar to the returns of other funds or accounts with which Justin Litchfield, Steve Azarbad, David Tawil or Nehemia Kramer (the “Principals”) were previously associated, due to differences in asset classes, investment policies, risk parameters, economic conditions, regulatory climate, portfolio size, leverage, fee structure and expenses. The fact that other funds or accounts managed by the Principals have realized gains in the past is not an indication that the Fund will realize any gains in the future. Past performance is not necessarily indicative or a guarantee of future results. The Fund will also have substantial limitations on investors’ ability to withdraw/redeem or transfer their shares or interests therein, and no secondary market for the Fund’s shares or interests exists or is expected to develop, so investors may not have access to capital when needed. All of these risks, and other important risks, are described in detail in the Fund’s Memorandum. Prospective investors are strongly urged to review the Fund’s Memorandum carefully and consult with their own financial, legal and tax advisors, before investing. The development of a research process and an investment strategy and philosophy and process, as well as a risk management framework, for the Fund is an ongoing process. The strategies, techniques and methods described herein, and the securities in which the Fund may invest, will therefore be modified by ProChain from time to time and over time without notice to or the consent of investors. Nothing in this document shall in any way be deemed to limit the research, investment or risk management strategies, techniques, methods or processes which ProChain may adopt for the Fund, the factors that ProChain may take into account in analyzing investments for the Fund, or the assets in which the Fund may invest. Depending on conditions and trends in markets and the economy generally, ProChain may pursue other objectives, or employ other strategies, techniques, methods or processes and/or invest in different types of asset classes, in each case that it considers appropriate and in the best interest of the Fund, without notice to or the consent of investors. Certain information contained in this investor presentation constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” or “believe,” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events, results or the actual performance of the Fund’s investments may differ materially from those reflected or contemplated in such forward-looking statements. Nothing contained in this investor presentation may be relied upon as a guarantee, promise, assurance or a representation as to the future. The information contained in this presentation is, to the best of ProChain’s knowledge, current as of the date listed on the cover page and is subject to change or amendment. The delivery of this investor presentation at any time does not imply that the information contained herein is correct at any time subsequent to such date. Certain information contained herein has been supplied to ProChain by outside sources. While ProChain believes such sources are reliable, it cannot guarantee the accuracy or completeness of any such information. The information presented herein is confidential and proprietary, and neither this document nor any portion thereof may be (i) used by, or on behalf of, you for any purpose other than evaluating an initial or continued investment in the Fund, or (ii) reproduced, copied, published, distributed or otherwise disclosed or made available to others by, or on behalf of, you, in each case except with the prior written consent of ProChain. This investor presentation does not constitute an offer of interests or shares in the Fund to investors domiciled or with a registered office in the EEA. None of the Fund, TX3 Capital or any of their respective affiliates currently intends to engage in any marketing (as defined in the Alternative Investment Fund Managers Directive) in the EEA with respect to interests or shares in the Fund. Receipt of this investor presentation by an EEA investor is solely in response to a request for information about the Fund which was initiated by such investor. Any other receipt of this investor presentation is in error and the recipient thereof shall immediately return to the Fund, or destroy, this investor presentation without any use, dissemination, distribution or copying of the information set forth in this investor presentation. STRICTLY CONFIDENTIAL 1 INTRODUCTION ProChain Capital presents a unique opportunity to investors: a multi-strategy Crypto-Asset fund, covering the entire ecosystem of what we believe is a burgeoning asset class. ProChain investors benefit from this ecosystem’s explosive growth by leveraging our combination of deep technological skill and comprehensive alternative asset-management experience. Crypto-Assets are still in the earlier stages of development and proliferation, gaining momentum as viable investments due to increasing security, resiliency, global demand and development breakthroughs The management team believes that it offers significant depth in all the elements necessary for a successful Crypto-Asset investment offering • The Fund’s blended portfolio of Crypto-Assets includes cryptocurrencies (large-cap and small-cap), Initial Coin Offerings (“ICOs”) and liquid investments in Blockchain-related businesses, and utilizes longterm investment and trading strategies • Through separately-managed accounts, ProChain also offers longer-term, venture-capital investments in Crypto-Asset related companies, such as, companies developing and utilizing Blockchain technology and Crypto-Asset miners • The team has over 6 years of collective experience of investing in the Crypto Ecosystem. Members of the team also have experience setting-up and managing cryptocurrency trading and mining operations • Members of the team have many years of experience in portfolio / asset management, risk control, and all related fund operations STRICTLY CONFIDENTIAL 2 PREEMINENT TEAM Justin Litchfield Chief Technology Officer • Software architect and engineer • Technical programmer and entrepreneur • Over 10 years’ experience building software and content for internet and FinTech businesses • Technical Founder at BTC Labs/CoinCart - a payment system utilized by ICO’s to collect and secure token investor funds • Founder/CEO of Obsidian Software a fully operational mobile-app centered bank (bitPESO) Steven Azarbad Chief Investment Officer • Financial-assets analyst and trader • Experienced and accomplished Chief Investments Officer • Skilled business builder • Chief Investment Officer of Maglan Capital, a catalyst-driven, restructuring-focused hedge fund with a concentrated portfolio of investments. Additional responsibilities include risk management, reporting and auditing • Has worked with Crypto-Assets since 2013 • Director in Credit Suisse’s Leveraged Finance Dept, part of a team responsible for creating and building the alternative-asset trading business, focusing on illiquid and off-the-run assets • PhD Chemistry (Stanford University); BS Chemistry (University of Utah) • Weil Gotshal, Skadden Arps (corporate restructuring, bankruptcy) • Consultant/Advisor to FinTech businesses • Operator of a cryptocurrency mining facility • JD (Brooklyn Law School); BS Accounting (Brooklyn College) David D. Tawil President • Hedge fund President • Deep experience with intricate and illiquid assets, which can exhibit pricing volatility • President of Maglan Capital, with responsibilities including portfolio management, developing relationships and communicating with activist investment targets, capital raising and investor and public communications • Deep investment management experience, including, complex legal and regulatorybased investments • Davis Polk, Skadden, Arps (corporate restructuring, bankruptcy) • JD (University of Michigan); BS Bus Mgmt (Yeshiva University) STRICTLY CONFIDENTIAL 3 I C O S T R AT E G Y T R A C K - R E C O R D Monthly Net Performance JAN FEB MAR APR MAY 2018 57.42% -3.13% 4.56% -10.98% 9.81% 2017 -0.17% -0.17% -10.25% 8.92% 53.50% 2016 JUN JUL AUG SEP OCT NOV DEC YTD 55.8% 167.78% 16.39% -8.57% 15.52% -13.89% -5.47% 9.82% 339.63% -0.17% -0.17% -0.17% -0.17% -0.67% Returns are unaudited performance of the Fund’s Chief Technology Officer pro-forma for 2% management fees and 20% performance fees, investing personal and external capital totaling up to $10mm in Crypto-Assets STRICTLY CONFIDENTIAL 4 C R Y P TO - A S S E T S : T H E C AT I S O U T O F T H E B A G With Bitcoin, Blockchain Technology was Launched Crypto-Assets can have Numerous Positive Characteristics • The technology is revolutionary; and we believe it will become indispensable as it continues to be refined and optimized • Fundamentally uncorrelated to the broader public, liquid investment markets, which provides portfolio diversification • Success in Crypto-Assets investing will be defined by selecting those assets that will endure and appreciate in value • Certain Crypto-Assets have particular asset scarcity and proven security • Crypto-Assets are a class of assets that investors cannot afford to ignore. Large investors are especially and absolutely underallocated to the asset class • Certain Crypto-Assets have demonstrated specific proven use-cases • Non-monetary assets - tokens • Anonymity - privacy coins The Opportunity • Crypto-Assets are open source, global and decentralized • Whether utilized and valued as an acceptable store of value and/or as a currency, Crypto-Assets and the surrounding ecosystem have significant room for growth • The current combined market cap of all Crypto-Assets is just ~$500B (of which, ~$200B is Bitcoin) • Investors, especially large institutions and governmental bodies, are greatly under-invested in the Crypto-Asset space − Regulated investment accounts in OECD countries hold $138T in assets. Adding even 2% exposure of Crypto-Assets into their portfolios implies dramatic capital flow to the Crypto-Asset space STRICTLY CONFIDENTIAL 5 C ATA LY S T S The gamut of Crypto-Asset applications have just started to be explored. Over time, we believe that we will witness some groundbreaking utility leading to wider adoption and increased investment interest in the asset class Proliferation • As stores of value, we believe that Crypto-Assets will always be embraced to mitigate against geo-political and financial disruption risks − As a decentralized medium of value, Crypto-Assets remove the risks of local currency relating to inflation and default. In addition, they could compete with precious metals as stores of value in institutional portfolios • As forms of identification, Crypto-Assets may have many more applications Ease of Trading, Holding and Use Regulation/Security Derivatives and Other Related Securities Growth & Decorrelation As Crypto-Assets become more user-friendly, we believe their valuation will increase • Eventually, some Crypto-Assets may become universally recognized currencies Worldwide developments with respect to Crypto-Asset regulation (including financial, securities, and tax), will enable broader adoption by institutions • The fund’s legal professionals are on the cutting edge of worldwide developments in Crypto-Asset regulation, and in some cases are involved in helping craft regulations As the Crypto-Asset market grows and gains legitimacy, additional derivative products with add avenues for further growth As they grow in value, Crypto-Assets will reduce their correlation with worldwide equities markets • Eventually, Crypto-Assets will decorrelate from each other STRICTLY CONFIDENTIAL 6 PORTFOLIO COMPOSITION Established Crypto-Assets and Long-Term Holdings Trading in Established Crypto-Assets • Bitcoin, Litecoin, Ether, Ripple, Zcash, Dash, Monero, NEO, etc • Source and monitor deep network of Crypto-Asset traders and trading flows • Constant research and analysis relating to viability and propagation based, in part, upon the “Catalysts” listed above • Utilizing proprietary machine learning algorithms to analyze historic technical and fundamental trading data and to trade thereon • Utilize risk parity and other portfolio balancing tools ICO Investing Investing and Trading in Liquid Securities of Blockchain-Related Companies • Believe that best returns lie at the earliest stage of asset evolution • Seek to source credible and committed development teams with accurate and clear white-papers and credible code • Comprise up to 20% of each investor’s NAV • Target annualized return 400-500% Limited utilization of leverage Cash • Analytics, infrastructure, and other related companies present opportunities to invest in companies with indirect exposure to Crypt-Asset growth • Long- and Short-positioned investments Tax efficiency is a priority Portfolio construction characteristics are provided for illustrative purposes only and do not reflect guaranteed portfolio construction characteristics. Prochain Capital will seek to manage the Fund’s portfolio in accordance with the portfolio construction characteristics set forth above under normal market conditions. However, ProChain will have broad discretion in managing the Fund’s portfolio and may, in its sole discretion, deviate from such targeted portfolio construction if it believes that it is advisable in order to advance the Fund’s investment objectives without notice to, or the consent of, investors. The Fund’s actual portfolio may, and likely will, at times deviate from such portfolio construction characteristics. Subject to certain exceptions described in the Memorandum. There is no guarantee or assurance that targeted returns will be achieved. Targets are objectives and should not be construed as providing any assurance or guarantee of performance STRICTLY CONFIDENTIAL 7 INVESTMENT RISK MANAGEMENT Market and Portfolio Risk • Monitor macro developments relating to Crypto-Assets through deep industry ties • Distinguish between macro-catalysts (affecting Crypto-Assets) and specific Crypto-Asset catalysts • Avoid leverage in the Fund’s investments • Seek to protect and realize profits (and limit losses) and create a record of lessons learned • Seek to ensure adequate liquidity Experienced Team • Team believes that it offers significant depth in all the elements necessary for a successful CryptoAsset investment offering • CTO has deep technical expertise and achievement • President and CIO have years of asset-management experience, including management of a long-biased, concentrated portfolio of event-driven investments, with potential for high levels of price volatility • Aware of and understand potential for volatility • Not necessary an accurate measure of risk • Part-and-parcel of the asset-class • Directional focus and the Fund’s concentrated portfolio potentially contribute to added volatility Position Level Risk • Identify and evaluate extraneous risks. Anticipate and capitalize on price movement Regulatory & Legal Risk • Measure and track the target investment’s performance, trading levels and trading activity/volume on an ongoing basis • Seek to position the Fund conservatively relative to unresolved legal and regulatory issues • Monitor developments against the investment thesis • Monitor legal and regulatory developments related to Crypto-Assets • Identify potential for an impairment of capital STRICTLY CONFIDENTIAL 8 O P E R AT I O N A L R I S K M A N A G E M E N T A N D T R A N S PA R E N C Y Asset Protection & Custody Enterprise Risk • Custody of the underlying assets is a chief concern of the fund's management • Utilize multiple methods of storage, including hosted wallets and cold storage • Custody risk is higher and of greater importance for Crypto-Assets than any other asset class • Retain minimal assets on exchanges • Require multiple levels of approval for transactions • Management takes steps to guard against these risks • Biometrics, Shamir's secret sharing, and permanently air-gapped computers protect different aspects of the fund's holdings Investor Communications & Transparency Crypto-Asset Experienced Service Providers • Open-door policy • The fund’s management carefully selected its service providers for their overall professionalism and for their knowledge of and experience with Crypto-Assets • Monthly performance and transparency report • Quarterly investor letters with commentary • Annual audited financial statements STRICTLY CONFIDENTIAL 9 INVESTMENT PROCESS (LARGE CAP HOLDINGS) Investment Universe Selection ProChain looks for the most favorable relative fundamentals among the large-capitalization Crypto-Assets Idea Generation A nimble, team-based approach seeks to ensure that the best ideas come to the forefront Research Constant consideration and weighing of a number of factors, quantitative and qualitative The development team’s composition The announcement thread (the chat room messages between developers and investors) The level of support from the Crypto-Asset community and media Blockchain statistics that point to proliferation of protocol usage Execution Security Risk Management Each Crypto-Asset’s exposure can be established to a maximum target weight Holdings are rebalanced to their target weights The development of an investment process is an ongoing process that is expected to change over time. There are no limitations on the factors that ProChain may consider or incorporate in its investment process in the future. Accordingly, the investment processes and approaches described herein should not be relied upon as being in effect at any point in time, and will vary over time STRICTLY CONFIDENTIAL 10 INVESTMENT PROCESS (ICOS) Investment Selection ProChain relies on its network of contacts within the Crypto-Asset community Idea Generation Generate leads on the next pre-sale ICOs that are expected to generate the greatest upside potential Research Deep fundamental analysis of each ICO, analyzing The ICO’s technology through published research and whitepapers The quality of the developers’ code The business development and the technological development teams’ compositions The announcement thread (the chat room messages between developers and investors) Support from the Crypto-Asset community and media Timing (“Is this a first mover?”) Execution Security Risk Management The development of an investment process is an ongoing process that is expected to change over time. There are no limitations on the factors that ProChain may consider or incorporate in its investment process in the future. Accordingly, the investment processes and approaches described herein should not be relied upon as being in effect at any point in time, and will vary over time STRICTLY CONFIDENTIAL 11 TEAM Steven Azarbad is Co-founder of ProChain Capital and serves as its Chief Investment Officer. In addition, Steven is a Co-Founder of Maglan Capital and has served as Chief Investment Officer since its founding in 2009. Prior to founding Maglan Capital, he was an investment banker with Credit Suisse, where he served as Director of Leveraged Finance and co-managed the fixed-income alternative asset trading business, focusing on sourcing and trading illiquid high-yield and distressed debt. Before joining Credit Suisse, Steven was an attorney with Weil, Gotshal & Manges, specializing in bankruptcy and restructuring. Before joining Weil, Gotshal & Manges, he clerked for The Honorable Mary F. Walrath, in the United States Bankruptcy Court for the District of Delaware. He began his legal career as an associate at Skadden, Arps. Steven earned a BS in Accounting from Brooklyn College of the City University of New York, and he earned a JD from Brooklyn Law School. Nehemia Kramer is a Senior Advisor to ProChain Capital. Nehemia is one of the most acknowledged and authoritative professionals in the blockchain industry. Currently Nehemia Kramer is an advisor and an early-stage investor in several large FinTech and blockchain projects, including, MicroMoney, BankEx, as well as blockchain Business Development Advisor at Web3 Foundation. Kramer’s industry involvement began at the dawn of the blockchain era in 2014, when he was involved in IBM’s Blockchain and Artificial Intelligence groups as well as collaborated with the founders of Ethereum. Nehemia studied law at Saint Petersburg State University. Nehemia has fluency in 9 languages, including, Japanese, Russian, German and Arabic. Justin Litchfield is a Co-founder of ProChain Capital and serves as its Chief Technology Officer. Prior to founding ProChain, Justin was the Technical Founder at BTC Labs / CoinCart, a payment system utilized by ICO’s to collect and secure token investor funds. In addition, he served as a software architect and technical programmer to FinTech and blockchain ventures and to financial asset trading enterprises. Justin has been closely involved with Crypto-Assets since 2013. Earlier in his career, Justin was the CEO of Obsidian Software, where he was responsible for developing a fully operational mobile-app centered bank (bitPESO). Justin earned a BS in Chemistry from the University of Utah, and he earned a PhD in Chemistry from Stanford University. David D. Tawil is Co-founder of ProChain Capital and serves as its President. In addition, David is a Co-Founder of Maglan Capital and has served as President since its founding in 2009. Maglan is an event-driven, corporate turnaround-focused fund, with a concentration on small-cap, activist positions. The fund has been operating for over 6 years and the principals have very deep experience in bankruptcy, turnaround and restructuring. David is a frequent contributor to the Wall Street Journal, The Financial Times, Bloomberg, the New York Times, Reuters, CNBC, Bloomberg, and Fox Business. In addition, David has served as an expert witness in securities-related trials. Prior to founding Maglan Capital in 2011, David was an investment banker with Credit Suisse, where he served as Director of Leveraged Finance and co-managed the fixed-income alternative asset trading business, focusing on sourcing and trading illiquid high-yield and distressed debt. Before joining Credit Suisse, David was an attorney with Davis Polk & Wardwell, specializing in workouts and bankruptcies. He began his legal career as an associate at Skadden, Arps. David earned a BS degree in Business Management, graduating magna cum laude, from Yeshiva University, and he earned a JD degree from the University of Michigan Law School. STRICTLY CONFIDENTIAL 12 TERMS & SERVICE PROVIDERS 2% management fee; 20% performance fee, subject to a high water-mark Fees Founders’ Share Class investment of $1mm+, prior to Dec 31, 2018; 1.5%/15% Anchor Share Class 3-year lock-up of $1mm+; 1.5%/15% Lock-Up One year Minimum Investment $500,000; subscriptions can be made in-kind Separately Managed Accounts $5,000,000 OR Illiquid, VC-type investments (e.g. mining operations, Crypto-Asset exchanges, etc.) Withdrawals Quarterly, 65 days’ notice; 50% investor-level gates Side-Pocket Investments Yes; up to 20% of investor’s NAV may be allocated to ICOs, which will be side-pocketed Auditor Cohen & Company Administrator Trident Fund Services, Inc. Legal Counsel Kleinberg, Kaplan, Wolff & Cohen, P.C. (domestic) Maples & Calder (Cayman Islands) Subject to certain exceptions described in the Memorandum STRICTLY CONFIDENTIAL 13
