During a secret recording obtained by prosecutors, former Alameda Research CEO Carolyn Ellison revealed details of financial improprieties within the organization and its subsidiary FTX.
Ellison’s frank admission came during a bi-monthly “all-hands” meeting held on November 9, 2022, at Alameda Research’s Hong Kong office, just two days before FTX filed for bankruptcy.
Former Alameda CEO drops bombshell at meeting
At the beginning of the meeting, Ellison, who had recently resigned as CEO, began the meeting saying“I think I’ll start by saying a few things.” What followed was a revelation that sent shockwaves through the cryptocurrency industry. According to the audio recording, Ellison alleged that Sam Bankman-Fried, the founder of both Alameda and FTX, used FTX clients’ money to repay the loans.
The secret recording, made by an employee who had only been with the company for three days, has become pivotal evidence in the ongoing legal proceedings.
The government provided excerpts of the recording during questioning of Christian Drape, a former Alameda employee who provided the audio recording to prosecutors. The recorded confession starkly contrasted with Ellison’s earlier, more subdued testimony during cross-examination of Bankman-Fried by the defense team.
After Ellison’s questioning was completed, Darabi took the witness stand. Drappi had been an Alameda developer for more than a year and was unaware of Bankman-Fried’s alleged plot to siphon customer funds from FTX until one night in November.
X Post reveals FTX’s troubling financial situation
On November 8, 2022, around 11 p.m., Darabi’s colleague Tony Qian came across a tweet from Bankman-Fried announcing a “strategic transaction with Binance for FTX.com.” Qian stood shoulder to shoulder with Drape and Ellison in the Hong Kong office and sought confirmation from Ellison.
It acknowledged the announcement and revealed that FTX used Alameda funds to cover shortfalls in user funds, primarily to repay billions of dollars in loans. Darabi testified that he was “completely shocked” by the revelation.
During a regular biweekly meeting with Alameda staff the next day, Ellison explained the situation. Sitting on a beanbag chair, she looked visibly sad and calm and matter-of-fact as she explained, “Alameda borrowed a bunch of money to make illiquid investments…and we ended up, like, borrowing a bunch of money,” according to Darabi. From FTX.”
Inevitably, employees had questions, including Darabi. He pressured Ellison to reveal who else within Alameda or FTX knew about the withdrawal of customer funds. Ultimately, Ellison revealed that Sam Bankman-Fried, Gary Wang, and Nishad Singh, who have all since agreed to plea deals, knew about it.
Featured image courtesy of The Daily Beast
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