Leaked Audio Exposes Alameda Research Misuse of FTX User Funds
Summary:
A clandestine 75-minute audio tape of Caroline Ellison unveils the moment when 15 ex-Alameda Research personnel learned about the misappropriation of FTX user funds by the firm. The audio replayed during a court trial reveals the underlying tension ahead of FTX's failure, Alameda's illicit investments, and the huge FTX fund shortage resulting from it. The recording also has a part where a former Alameda engineer was questioning Ellison about the improper usage of the user funds, leading to revelations about the unethical use of FTX deposits. The engineer then resigned following the meeting, which was described as 'incredibly strained.'
A clandestine 75-minute audio recording featuring Caroline Ellison reveals when 15 ex-Alameda Research workers discovered the company was inappropriately using FTX user funds. The comprehensive tape, which Cointelegraph obtained, offers new details about the tension between Ellison and Alameda personnel in advance of FTX's downfall. During a company-wide meeting in Hong Kong on November 9, 2022, Ellison revealed, "Alameda was essentially leveraging open-term loans to make several illiquid investments illegally. They relied heavily on FTX and FTX US equity... Most of these loans were called in to meet the recall demands." She continued, "As a result, we ended up misappropriating a lot of FTX's funds, leading to a significant deficit in FTX's user funds."
Ellison further shared that Alameda had always been permitted to borrow from FTX user funds. The audio clip played during the court proceedings on Sam Bankman-Fried’s criminal trial's eighth day, when former Alameda software engineer Christian Drappi testified. Interestingly, Drappi and several other Alameda workers were previously unaware of the alleged misuse of FTX customer deposits to fuel Alameda's trading activity.
During the meeting, captured in the audio recording, Drappi questioned when Ellison discovered the wrongful use of FTX user funds and who else in the company was privy to the information. Though initially reluctant to respond, Ellison finally confirmed that the funds' use hadn't been a whimsical decision after Drappi probed further. The court found it amusing when Drappi had to define the term "YOLO," explaining he wanted to ensure the funds' misuse wasn't a sudden, impulsive call.
Drappi also noted Ellison appeared defeated and lacked confidence during the meeting, which left him astonished about FTX and Alameda's intense connection. This led him to resign the next day. Aditya Baradwaj, another Alameda engineer present at the meeting, described the atmosphere as incredibly strained and said Ellison brought up many never-before-discussed issues. These revelations made it clear that the company had no foreseeable future, which led to their collective departure.
Published At
10/14/2023 3:03:14 AM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.