July 16, 2024
Leaked Alameda Recording Captures Staff's Reaction to FTX Deposits News
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Leaked Alameda Recording Captures Staff’s Reaction to FTX Deposits News

A 75-minute secretly recorded audio clip featuring Caroline Ellison has unveiled the moment 15 former Alameda Research staff members discovered that the hedge fund was utilizing user funds from FTX. The recording sheds light on the tension felt by Ellison and the Alameda staff in the lead-up to the collapse of FTX. Ellison explained during an all-hands meeting in Hong Kong on Nov. 9, 2022.

“Alameda was kind of borrowing a bunch of money via open-term loans and using that to make various illiquid investments. So like a bunch of FTX and FTX US equity […] Most of Alameda’s loans got called in in order to meet those recalls”

“We ended up like borrowing a bunch of funds from FTX, which led to FTX having a shortfall in user funds.” “[FTX] basically always allowed Alameda to borrow users’ funds,” she added, speaking to the 15 or so staff members in the meeting.

Segments of the audio recording were also presented in court on the eighth day of Sam Bankman-Fried’s criminal trial on Oct. 12, as part of the testimony from Christian Drappi, a former software engineer at Alameda.

Before the meeting, Drappi and many other Alameda employees were unaware of the alleged use of FTX customer deposits to support Alameda’s trading activities. In the recording, Drappi is heard asking Ellison when she became aware of this and who else at the company had knowledge of it. Initially, Ellison hesitated to answer, but Drappi persisted:

“I’m sure this wasn’t, like, a YOLO thing, right?”

In the trial, the playback of this audio led to a humorous moment where Drappi had to explain the term “YOLO” to everyone present, clarifying that he wanted confirmation that the use of FTX deposits was not a spontaneous decision.

In his testimony, Drappi described Ellison’s conduct at the meeting as “sunken” and lacking confidence. He stated that he was “stunned” by the extent of the relationship between FTX and Alameda and quit the next day.

Alameda Research engineer Aditya Baradwaj, who was also present at the meeting, said the room was “extremely tense.” Ellison revealed new information that had “never been discussed internally,” including the abandoned acquisition of FTX by its then-largest competitor, Binance. Baradwaj added that it became clear that there was no future for the company, and they all left shortly after.

Image by pvproductions on Freepik

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