EFTA00797613.pdf

Information Memorandum — Alphabit Digital Currency Fund Opportunity to invest in a Cryptocurrency Fund September, 2017 5 BIT EFTA00797613 Offering Overview EFTA00797614 About the Fund Alphabit Digital Currency fund is an actively managed cryptocurrency fund aimed at professional investors OUR MISSION To be the best performing asset manager in the Digital Currency space O 'M I OUR INVESTMENT OBJECTIVE jr a OUR INVESTMENT STRATEGY To deliver consistent capital appreciation over a To outperform Bitcoin with considerably less risk, short - medium term horizon by generating higher returns with through actively managing a portfolio of lower volatility than Bitcoin Digital Currency -0 2 EFTA00797615 Alphabit Digital Currency Fund Terms The fund is domiciled in the Cayman Islands, and is registered with the Cayman Islands Monetary Authority. The fund has been added to Dalma Capitals Alternative Investment Management Global Platform (AIM9P), with Alphabit acting as discretionary investment advisors to the fund FUND STRUCTURE KEY FACTS Registered Cayman Corporate Centre. 27 Hospital Road. George Office Town. Grand Cayman KY1-9008 Type of fund Open Ended Participating Shares (.$ 100.000 investor) $50.000 divided into 4.999.900 Participating share Authorized 4 Share Capital par value $0.01 each & 100 Management shares par value $0.01 each Fund Minimum Initial a t 5 ALPHABIT DIGITAL CURRENCY FUND Auditors Subscription Target Fund $100000 per investor ($100*1000) $300Mn Grant Thornton Size Dalma Capital Management Limited Cayman Islands Investment To deliver consistent capital appreciation through Strategy actively managing a portfolio of Digital Currency NAV Pricing Daily Administrator Management Fee: 2.5% of NAV Legal Advisers Fee Structure Performance Fee: 45% . of the relative Apex Fund Services Walkers (Dubai) LLP outperformance of the Fund (Dubai) Ltd. (mailers of Cayman Islands law only) Andrew Ivison Investment Advisor Directors Liam Robertson Saeed Al Darmaki Alphabit Ltd Fund memorandum is not subject to any form of regulation or approval by DFSA. However the Fund Regulation Administrator & Fund Manager are regulated by DFSA 3 EFTA00797616 Alphabit Digital Currency Fund Partner Directory Ob A 17 P HA B,I T Alphabit Digital Currency Fund The Fund Address: Walkers Corporate Limited, Cayman Corporate Centre, 27 Hospital Road. George Town, Grand Cayman KY1-9008. Cayman Islands Dalma Dalma Capital Management Investment Address: Gate Village 5. Level 1 Dubai International Financial Centre. PO Box 9361. Dubai. Capital Limited Manager United Arab Emirates co ALPHASITid Alphabit Ltd. Investment Advisor Address: Walkers Corporate Limited. Cayman Corporate Centre, 27 Hospital Road. George Town, Grand Cayman KY1-9008. Cayman Islands A Apex Fund Services Address: 101. Level 1. Gate Village, Building 5, Dubai International Financial Centre. PO Box Administrator AY N (Dubai) Ltd 506534, Dubai, United Arab Emirates Outsourced 3rd MA Moody's Analytics Knowledge Party Research Address: 267, Udyog Vihar Phase-II. Gurgaon 122015. India Services KS Services Provider Legal Advisers Walkers (as to matters of Address: Filth Floor. The Exchange Building. Dubai International Financial Centre. PO Box III WALKERS (Dubai) LLP Cayman Islands 506513, Dubai, United Arab Emirates law only) Grant Thornton Address: 5th Floor Bermuda House, Dr Roy% Drive, PO Box 1044, Grand Cayman. KY1-1102 , 0 GrantThornton Cayman Islands Auditors Cayman Islands EFTA00797617 Investment Techniques Adopted to Implement Fund Strategy INITIAL COIN OFFERINGS Up to 50% of the Funds assets may be allocated into Fund has (or will) deployed 3rd party automated Fund has taken part (or will) in specific initial coin (or retained as) cash. so when Bitcoin is on a bearish traders. & manual traders who trade alternative digital offerings ("ICOC) at very early stages spiral the Fund will outperform relative to a falling currencies As the coins float. the Fund intends to either exit at a Bitcoin price Both can shun all aspects of any market they are very healthy retum or hold on to the coins. depending involved in at any time, offering downside protection on the economic viewpoint held by the Fund and/or the Investment Advisor of the relevant coins Manual trading Trading bitcoin against both USD and other liquid cryptocurrencies to I Through. partner Elation Capital. fund deploys an automated strategy capitalize on buy low / sell high opportunities programmed around volatility & inertia, and operating on escrowed th bitcoin denominated accounts on the IG platform I I I Utilization of exchange lending facilities to loan coins to margin The bitcoin on this platform trades only EUR/LISD (the most liquid and - traders and generate lending fees volatile fiat pair) with 1000x leverage • A manual trading team who manage portfolios of smaller cap alternative coins I I Fund also uses fiat denominated algorithmic strategies which trade contracts-for-difference (CFD's) on bitcoin. using up to 7.5x leverage • • • • • • • • • • • Ta The fund generates broad exposure to the market by holding long only positions that the investment team deem to be critical to outperforming bitcoin when looking at a longer time horizon EFTA00797618 Investments Restrictions No more than 50% of NAV of the Fund can be invested at any time in ICOs No more than 20% of NAV of the Fund can be invested at any time in any one ICO Other than cash. the Fund shall hold assets of no asset class other than the following: Digital Currency based investments: Blockchain Protocols: Base Layer Services; and Decentralised Services No more than 50% of NAV of the Fund can be invested at any time in any one Digital Currency, apart from investments by the Fund in Bitcoin, which shall not be subject to any such restrictions No more than 50% of NAV of the Fund can be invested at any time in Blockchain Protocols, Base Layer Services and/or Decentralised Services 6 EFTA00797619 Risk Management and Security Asset Allocation Asset allocation is carefully managed to ensure that the fund is never over exposed to one particular product or asset within the sector The correlation between the different strategies is less than one which reduces the overall volatility of the fund when blended together Secure Exchanges All of the exchanges used for the trading of blockchain assets are extremely security driven The systems are constantly upgraded and tested to ensure they exceed industry standards Accounts are protected by multiple layers of authentication Bank-Grade Digital Vaults O • When not being actively traded. all blockchain assets are held using bank-grade digital vaults • The vaults, together with other specialist security solutions and intelligence services, are subject to rigorous testing by world leading security experts on continual basis Assets spread Across Multiple Exchanges • To further mitigate risk to the assets of the portfolio, all assets are spread across a wide range of different accounts and exchanges EFTA00797620 Alphabit's Technology :9•eess.r5:71,14. Clients are provided with login The systems and performance details to a customized web are updated in real-time to our portal which enables them to clients. a model which keep track of their investments promotes transparency and whenever they choose encourages trust -. _•-••=,.. .; 7,;6c,.•-c ....ii - Z cr- \443. .--1-•-•,;•:,:,:a ..--. 4-.:....-":-aar_f -",;:..... • y i t • For Alphabit's algorithms, we We harness the power of 4 .11 4/ ••.0 • I " 4: work with a London based proprietary deep-learning and - 3f company called Elation Capital. artificial intelligence systems to -.rt...CI, — ••“: • They specialize in low-risk aid in pattern recognition as )rf • ---c, se-4.; • ..- algorithmic trading strategies, market dynamics change which are then applied to a k• e variety of asset classes 2.. - - • *444 .4•79.0r7 A T fytrstc_. 4. 1 -,--t• 4 • %- <re - •. S;.7 Zee 8 EFTA00797621 What are Cryptocurrencies? EFTA00797622 Cryptocurrencies are set to Revolutionize Financial Transactions... Cryptocurrency is an encrypted and decentralized digital medium of exchange that has eliminated the need of intermediaries such as banks & financial institutions for facilitating and verifying financial transactions WHAT is it? KEY FACTS TRADITIONAL CURRENCY CRYPTOCURRENCY Launched in 2009, BITCOIN was the first cryptocurrency, currently there are >1,000 CRYPTOCURRENCIES WORLDWIDE Cryptocurrencies use a mechanism called BLOCKCHAIN — which is a public ledger of all transactions across P2P network that is TRUSTED, SECURED & SHARED Produced by Technical System Issued by Government based on cryptographic algorithm Total Market Cap of all Cryptocurrencies: -$156Bn(I) (on Aug 27, 2017) 0 Low Cross Border Portability High Cross Border Portability ( 0 to - Total No. of transactions processed: —250MD(3) (till Aug 27. 2017) O Unlimited Supply; Government can produce as needed • Controlled Supply: dictated by coded schedule a Transactions processed per day: 262KM (on Aug 27, 2017) Centralized: controlled & Decentralized no central control, regulated by government rrr no central point of failure - Total bitcoin mining revenues in 2016: $563MD(2) Value determined by the Demand, Supply & Govt Regulation 411 Value is determined by Demand & Supply Employs —1,876(2) people full-time in the cryptocurrency space Sources: (I) Coinmarkeicap: (2) Global Crypiocurrency Benchmarking Study by Cambridge Centre for Alternative Finance as of April 2017: (3) Blockchain.into EFTA00797623 ..And Have Gained Wide Acceptance due to their Unique Features Cryptocurrencies are designed in such a manner that they are encrypted. controlled by code and rely on peer-to-peer networks. with no single entity capable of manipulating the value of the currency — features that have attracted investor attention in the financial industry • IRREVERSIBLE PSEUDONYMOUS • Digital currency transaction cannot be reversed In crypto market. owners identification is stored after a transaction has been confirmed in an encrypted address controlled by them- it is not attached to a person's identity • SECURE FAST AND GLOBAL • The funds are stored in a public key Transactions are propagated nearly cryptography system accessible by instantly in the network and are only the owner of the private key confirmed in a couple of minutes • DECENTRALISED CONTROLLED SUPPLY • Currency supply and value is controlled by the A cryptocurrency's supply is controlled by a activities of users and highly complex protocols schedule written in the code. allowing estimation built into the currency codes rather than any banks of supply at any point in the future or other regulatory authorities II EFTA00797624 Blockchain - The Technology behind Cryptocurrencies Blockchain is an open distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way; It has potential to disrupt a wide variety of transactions processing systems Blockchain - is a public ledger of all transactions across a P2P network that no individual or company owns or controls. Primary Benefits: WHAT IS IT9 Immutability 4. Improved security • 2. Elimination of Intermediaries 5. Transparency with lower costs 3. Ease in verification of transactions 6. Decentralization Transaction Requested Authentication Users with wallets request transactions The network of nodes operated by 0-0 Wallets are files with access to multiple miners validate the transaction using cryptographic hash functions a bitcoin addresses that are in the form of alphanumeric characters New Transaction Block Verified Transaction Verified transaction can involve HOW IT WORKS 9• 'Vs Miners bundle transactions within a fixed time interval into new blocks. E.g.. in the case of Bitcoin past 10 min cryptocurrency. contracts, records, or other information transactions are bundled into one block Addition to Blockchain Transaction Complete The new block is then added to the •• Once the new block is added to the existing blockchain 0 Blockchain the transaction is complete For addition of each new block a miner is rewarded 12.5 Bitcoins • EFTA00797625 From its Launch in 2009, Cryptocurrency Market has Evolved Considerably The speed of development and adoption of cryptocurrency technology has been phenomenal, dispelling concerns over its legitimacy and at the same time resulting in the sector becoming mainstream • • • • • • • Oct-2006: Oct-2009: Nov-2010: Jun-2011: Nov-2012: Nov-2013: Dec-2014: Aug-2015: Apr-2017 A pseudonymous First Bitcoin Sitcom Market Wkisaks begins Wordpress Bitcoin price Microsoft begins Barclays Sitcom value rises figure or grow Exchange New Cap crosses accepting accepts bilcoin reaches $1000 to accept Bitccin announces that over $1Bn as called Satoshi Ubeny Standard $1Mn mark anonymous they would Japan. Russia Nakamoto launched. Wh an Bitcoin donations JS-2014: become the test mare to legitimize Jun-2012: Oct-2013: publishes the initial exchange Founded by Vitalik UK high street cryptocurrency Jul-2010: Coinbase. a FBI shuts down Bacon white rate of 1.309.03 Feb-2011: Buren Ethereum bank to start The MtOak Bitccin bilcoin wallet and Silkroad paper 13TC to $1 Bitcoin reaches Foca-dation raises accepting titcoin currency platform. is Mar-2017 exchange market parity with US founded in San around 31.500 30 banks, tech Apr-2013: Jan-2009: is established claw Francisco. Bitcoin through giants. and other Sitcom price Very first Bitcan California pre sale of 60Mn organizations— reaches $100 transaction ETH including Jan-2011: between Satoshi Feb-2010: Silkroad. the Morgan Chase. and Hal Finney. a First real world Mar-2013: Apr-2014: Microsoft. and infamous drugs developer and titcoin transaction Sitcom market The first ICC was Intel kern marketplace cryptographic takes place when capitalization held by Enterprise begins operating activist a programmer reaches 318n Karmacoin lor Ethereum Alliance pays 10.000 Karmashares Bitcoins for a project pizza worth $25 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 0 0 BTC LTC xnp DASH MIR NEAT ETH ETC NEO SWAT IOTA BCH 13 EFTA00797626 Cryptocurrency Regulatory Landscape Large scale adoption of cryptocurrencies and blockchain technology is forcing countries worldwide to do away with their restrictive stance and draw up regulations allowing trade and use of cryptocurrencies Global Cryptocurrency Standpoint 2015 - The Commcdily Futures Trading Commission classified bitcoin as a commodity IRS considers virtual currency as properly for federal taxation c 4.1 2017 - SEC ruled that ICOs and Token Sales are Sale of Securities & participants will be subject to federal securities law Panel tasked to examine & regulate the cryptocurrency framework, submitted its typal in Aug 2017 China banned ICOs in Sep 2017 in an effort to regulate the ICO market in the mainland that was rife with scams In Apr 2017 Japan recognized cryptocurrencies including Elkton as a legal method of payment & not a legally.recognized currency For tax purposes Sitcoin is treated as an asset Exchanges will also be subject to - capital requirements. cybersecurity and operational stipulations. AML & KYC requirements. annual audits etc. 0 Euro ean Union • of Countries by Stance In Jun 2017. European Union changed laws A S Hosiiie: regulating cryptocurrencies, allowing only NYC Contentious approved users to transact and hold i Permissive: cryptocurrencies Ia —. Unknown: Each counhy in the EU has different laws pertaining to the treatment of cryptocurrencies Sources: Bitlegalio 1,1 EFTA00797627 Overview of the Cryptocurrency Market EFTA00797628 Crypto Market Cap Reached $156Bn, Representing a 10x Growth since Jan'17 Driven by strong positive sentiment around Cryptocurrencies, market capitalization crossed $100Bn mark in June'17, though the market saw a correction in mid July'17, the pace of growth has again picked up, dismissing concerns by analysts upon its existence in the long term Cryptocurrency Market Capitalization ($Bn) $13 $89 L$156 Since Jan 2015 the 494 552 578 683 ) 1 981 3 (1028j no. of cryptocun'encies in the market has grown $84 $0.8 >2x from 494 in the beginning of the period to 1028 as on Aug 27n, 2017 Jan•15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Aug-170/ a Bitcoin Other Cryptocurrencies Total Market Cap ($Bn) WI No. of Currencies Growth (2) 2 Year Growth 22x 132x 39x V.041 Growth 8x 38x 14x r YID Growth 5x 42x 10x Sources: Commarkelcap 16 Note:11) Alt data as of Aug 27. 2017, (2) Grath YTD : Joni]. Aug '17. Y.o.Y: Aug'16 — Aug'17, 2 year growth: Aug'15— Aug17 EFTA00797629 Driven by Rising Popularity & Adoption of Cryptocurrencies Leading cryptocurrencies have garnered significant interest from individuals and insti