In re Bit Digital, Inc. Securities Litigation — Entry #85: MOTION for Disbursement of Funds

UNITED STATES DISTRICT COURT
                   SOUTHERN DISTRICT OF NEW YORK


IN RE: BIT DIGITAL, INC. SECURITIES
LITIGATION                            Lead Case No. 1:21-cv-00515-ALC


LEAD PLAINTIFF’S MOTION FOR DISTRIBUTION OF NET SETTLEMENT FUND


         Lead Plaintiff, Joseph Franklin Monkam Nitcheu, moves the Court for an Order (a)

approving the administrative determinations of the Court-appointed Claims Administrator,

Kroll Settlement Administration LLC (“Kroll”) concerning the acceptance and rejection of the

Claims submitted as recommended in the Distribution Declaration of Robert Cormio In Support

of Motion for Class Distribution Order (the “Kroll Declaration” or “Kroll Decl.”), and (b)

directing payment of the Net Settlement Fund to the Authorized Claimants.1

    I.      Introduction

    On October 24, 2022, the Parties entered into a Stipulation to settle and resolve all claims

asserted in the Action. (ECF 68-1).

    On November 22, 2022, the Court entered the Order Preliminarily Approving Settlement and

Authorizing Dissemination of Notice to the Class (the “Preliminary Approval Order”) (ECF No.

69).

    On March 7, 2023, the Court held a Final Approval Hearing, following which, the Court

granted Final Approval of the Settlement and issued its Order and Final Judgment (the “Final

Approval Order”) (ECF Nos. 82 and 84).

    Class Counsel has been advised by the Claims Administrator, Kroll, that it has completed all

analyses and accounting procedures concerning the Proofs of Claim forms submitted by

persons who responded to the Notice and has determined which Claimants are Authorized

Claimants. There are no outstanding requests for Court review of the administrative

determinations. Kroll Decl. ¶ 25.

         All that remains to complete the Settlement Process is to distribute the Net Settlement


1
 All terms with initial capitalization not otherwise defined herein shall have the meanings
ascribed to them in the Stipulation of Settlement, dated October 24, 2022 (the “Stipulation”)
(ECF No. 68-1), and/or the Kroll Declaration.


Fund to the Authorized Claimants. Class Counsel requests that such distribution is permitted.

    II.      Kroll’s Determination of Proofs of Claim

    Kroll received 2,192 Proofs of Claim through March 21, 2024.2 Kroll Decl. ¶ 6. After

processing and analyzing those claims, Kroll determined there were deficiencies in some of those

Claims. Kroll Decl. ¶ 19, 23. Kroll notified Claimants of these deficiencies and allowed

Claimants to correct or amend their Claim Forms. Kroll Decl. ¶ 21, 23. Kroll then analyzed all

submitted corrected Proof of Claim Forms to determine their eligibility. Kroll Decl. ¶ 22, 24. If

the response corrected the defect(s) or affected the Claim’s status, Kroll updated the database to

reflect the change in status of the Claim. Kroll Decl. ¶ 22, 24. Through March 21, 2024, Kroll

received three (3) requests for Court Review, all of which were resolved and/or withdrawn by the

Claimant. Kroll Decl. ¶ 25. Therefore, there are no outstanding requests for Court review of the

administrative determinations. Kroll Decl. ¶ 25.

          Ultimately, Kroll found that of the 2,192 claims that were received through March 21,

2024, 660 Claims were acceptable in whole or in part and were eligible to recover losses per the

Plan of Allocation. Kroll Decl. ¶ 34. Of Proofs of Claim submitted, 1,532 claims were rejected


2
  The deadline to submit a Claim Form was March 21, 2023. Kroll Decl. ¶ 6. Through March 21,
2024, Kroll received 43 Claims that were postmarked or received after March 21, 2023, deadline.
Kroll Decl. ¶ 26. 8 of those Proofs of Claim were found to be otherwise eligible in whole or in
part. Kroll Decl. ¶ 26. Kroll has not rejected any claim for arriving late, but requests that the cut-
off date for the receipt of any Proof of Claim be March 21, 2024. Kroll Decl. ¶ 27. Because the
Net Settlement Amount was fixed, there is no prejudice to Defendants in accepting late claims,
and there has been no delay in the administration. See Stipulation (ECF No. 68-1 at 52) (“Neither
Defendants nor any other person or entity that paid any portion of the Settlement Amount on
their behalf are entitled to receive back any portion of the Settlement Fund once the Court’s
order or judgment approving the Settlement becomes Final.”); see also Kroll Decl. ¶26 (“[Kroll]
believes no delay has resulted from the provisional acceptance of this Late But Otherwise
Eligible Claims.”).


for ineligibility, deficiencies, or because the claimant had no Recognized Loss. Kroll Decl. ¶ 34.

For each eligible Claim, Kroll has calculated the eligible Recognized Loss for each Authorized

Claimant as defined by the Plan of Allocation described in the Notice. Kroll Decl. ¶36. This

Recognized Loss figure will be used to make the pro-rata distribution of the Net Settlement Fund

to Class Members. Kroll Decl. ¶36.

    III.    Distribution of the Net Settlement Fund

    Kroll will distribute 100% of the available balance of the Net Settlement Fund—after

deducting any Notice and Administration Costs, Taxes, and Tax Expenses—to Authorized

Claimants who would receive at least $10.00 based on their Recognized Loss Amount compared

to the total Recognized Loss Amounts of all Authorized Claimants. Kroll Decl. ¶ 38(a)(i)-(iii).

Recipients will be encouraged to promptly cash their checks within 60 days. Kroll Decl.

¶ 38(a)(iv). Kroll will attempt to locate recipients whose checks are initially uncashed, either

because they are returned to Kroll as undeliverable or because the Authorized Claimants simply

did not cash the check after time elapses. Kroll Decl. ¶ 38(a)(iv), n.2. No earlier than nine

months after the Initial Distribution, any funds still available in the Net Settlement Fund

(because of uncashed or undeliverable checks), shall, if Class Counsel, in consultation with

Kroll, determine it to be cost-effective to do so, be used in the following fashion: (a) first, to pay

any amounts mistakenly omitted from the Initial Distribution;3 (b) second, to pay any additional

settlement administration fees, costs, and expenses, as may be approved by the Court; and (c)

finally, to make a second distribution to claimants who cashed their checks from the Initial

Distribution and who would receive at least $10.00, after payment of the estimated costs,


3
  Class Counsel and Kroll do not believe there will be any amounts mistakenly omitted from the
Initial Distribution.


expenses, or fees to be incurred in administering the Net Settlement Fund and in making this

second distribution. Kroll Decl. ¶ 38(b).

         If there are not enough funds to make a second distribution economically viable, if

sufficient funds remain to warrant the processing of Claims received after March 21, 2024, such

Claims will be processed, and any such Claims that are otherwise valid as well as any earlier

received Claims for which an adjustment was received after March 21, 2024, which resulted in

an increased Recognized Claim will be paid in accordance with paragraph 38(d) of the Kroll

Declaration. The remainder of the Net Settlement Fund after payment of such late or late

adjusted Claims, shall be donated to non-sectarian, not-for-profit organization(s), to be

recommended by Lead Counsel and approved by the Court. Kroll Decl. ¶ 38(c).

   IV.      Conclusion

         Lead Plaintiff respectfully requests that the Court approve and enter the [Proposed] Order

for Distribution of Net Settlement Fund.

April 24, 2024                                        Respectfully submitted,

                                                      /s/ Jeffrey C. Block
                                                      Jeffrey C. Block
                                                      Jacob A. Walker, pro hac vice
                                                      Sarah E. Delaney
                                                      BLOCK & LEVITON LLP
                                                      260 Franklin Street, Suite 1860
                                                      Boston, MA 02110
                                                      (617) 398-5600 phone
                                                      (617) 507-6020 fax
                                                      jeff@blockleviton.com
                                                      jake@blockleviton.com
                                                      sarah@blockleviton.com