Insolvency Policy

KEM BAHRAIN W.L.L.

INSOLVENCY & CLIENT ASSET PROTECTION POLICY

(CBB Volume 6 – Crypto-Asset Services)

1. Purpose

This Insolvency and Client Asset Protection Policy (“Policy”) sets out the framework governing the treatment of client crypto-assets and client monies in the event that Kem Bahrain W.L.L. (the “Company”) becomes insolvent, enters liquidation, administration, restructuring, bankruptcy proceedings, or is otherwise unable to continue operations.

This Policy is designed to ensure compliance with: • The laws of the Kingdom of Bahrain; • Bahrain Bankruptcy Law (Law No. 22 of 2018, as amended); • The Central Bank of Bahrain (“CBB”) Rulebook Volume 6 (including the CRA and AML Modules); and • Applicable client asset safeguarding requirements.

The objective of this Policy is to ensure that client assets are protected, segregated and returned in an orderly manner in the event of insolvency.

2. Legal and Regulatory Framework

The Company operates as a regulated crypto-asset service provider licensed by the CBB. In accordance with CBB requirements, the Company maintains strict segregation of client assets and does not treat client crypto-assets or client monies as its own property.

Under Bahraini insolvency law, assets held in custody for clients and properly segregated from the Company’s own assets are not considered part of the Company’s insolvency estate, subject to proper record keeping and legal classification.

This Policy forms part of the Company’s broader Client Asset Safeguarding Framework.

3. Custodial Structure and Segregation of Client Assets

3.1 Custodial Arrangement

The Company provides custodial crypto-asset wallet services. In this capacity, the Company safeguards crypto-assets on behalf of clients but does not acquire beneficial ownership of those assets.

The Company acts solely as custodian and service provider.

3.2 Segregation of Crypto-Assets

The Company maintains strict segregation between: • Client crypto-assets; and • The Company’s own proprietary assets.

Client crypto-assets are held in designated wallets that are operationally and logically separate from any wallet used for the Company’s corporate funds or operational purposes.

Under no circumstances does the Company intentionally commingle proprietary assets with client assets.

3.3 Client Money Segregation

Where the Company receives fiat funds from clients (for example, in connection with crypto purchases), such funds are held in designated client accounts separate from the Company’s own operating accounts, in accordance with CBB requirements.

Client money accounts are reconciled regularly and are not used for proprietary purposes.

3.4 Ledger and Record Segregation

The Company maintains detailed internal records reflecting: • Individual client balances; • Wallet allocations; • Transaction histories; • Reconciliation logs.

Client entitlements are clearly identifiable at all times through internal ledger systems. Regular reconciliations are performed to ensure that on-chain holdings correspond with recorded client balances.

3.5 No Rehypothecation or Use of Client Assets

The Company does not: • Lend client crypto-assets; • Pledge client crypto-assets as collateral; • Use client assets for proprietary trading; • Rehypothecate client assets for any purpose.

Client assets remain fully reserved and available for withdrawal, subject to operational procedures and legal constraints.

4. Legal Ownership of Client Assets

Legal and beneficial ownership of crypto-assets deposited into custodial wallets remains with the client at all times.

The Company does not obtain ownership rights over client assets and holds such assets solely for safekeeping and transactional facilitation.

In the event of insolvency, client assets that are properly segregated and identifiable do not form part of the Company’s general estate available to unsecured creditors, subject to applicable Bahraini insolvency law and judicial interpretation.

5. Insolvency Event and Administrator Responsibilities

In the event that the Company becomes subject to insolvency proceedings under Bahraini law, a court-appointed insolvency practitioner, liquidator or administrator will assume control of the Company’s operations.

The appointed insolvency official will be responsible for: • Securing all client wallets and client money accounts; • Verifying segregation and reconciliation records; • Confirming client entitlements based on internal records and blockchain data; • Preserving client assets pending distribution; • Overseeing the orderly return of client assets.

The insolvency practitioner will act in accordance with Bahraini law and under supervision of the competent court.

6. Return of Client Assets

Upon insolvency, the Company (through the insolvency practitioner) shall take reasonable steps to facilitate the return of client assets.

Clients may be required to:

• Submit a formal claim; • Provide identity verification; • Confirm wallet details for distribution.

Where technically feasible, crypto-assets may be transferred directly to client-designated wallets.

If immediate withdrawal is not technically possible due to security controls, system constraints or legal restrictions, the insolvency practitioner will implement an orderly distribution process consistent with applicable law.

7. Priority of Claims

Client crypto-assets and properly segregated client monies are not intended to form part of the Company’s distributable estate.

Subject to compliance with segregation requirements and applicable law: • Clients retain proprietary rights over their assets; • Client assets are not available to satisfy general unsecured creditor claims; • Administrative costs associated with asset return may be treated in accordance with insolvency law.

The ultimate treatment of assets remains subject to determination by the competent Bahraini court.

8. Operational Continuity Measures

The Company maintains business continuity and contingency arrangements designed to: • Protect access to client wallets; • Preserve private key security; • Ensure continuity of custody arrangements; • Enable orderly transfer of custody if required.

Key management procedures include secure key storage, multi-signature controls (where applicable) and access governance protocols.

9. Client Communication

In the event of insolvency, clients will be notified promptly through: • Email to registered addresses; • Official notice published on the Company’s website and platform; • Any additional communication channels deemed appropriate.

Communications will include: • Details of the insolvency event; • Contact information for the insolvency practitioner; • Instructions for submitting claims or withdrawal requests; • Deadlines and required documentation.

10. Dispute Resolution

Any dispute regarding entitlement to assets shall be resolved in accordance with: • Bahrain Bankruptcy Law; • Directions of the insolvency practitioner; • Orders of the competent Bahraini court.

Clients may seek recourse through the appropriate judicial channels.

11. Risk Disclosure

Clients are informed that: • Crypto-assets are not covered by deposit insurance schemes; • The Company is not a bank; • While segregation controls are maintained, insolvency processes may involve delays; • The treatment of digital assets in insolvency may be subject to court interpretation.

These disclosures are reflected in the Company’s Terms and Conditions and client agreements.

12. Governance and Oversight

The Board of Directors is responsible for ensuring: • Compliance with client asset safeguarding requirements; • Adequate systems for segregation and reconciliation; • Periodic review of custody arrangements; • Maintenance of this Policy.

The MLRO and Compliance function shall periodically review insolvency preparedness and client asset controls.

13. Governing Law

This Policy is governed by the laws of the Kingdom of Bahrain and shall be interpreted in accordance with Bahraini legislation and CBB regulations.