In a startling revelation, a secret recording has surfaced, exposing alleged financial misconduct within Alameda Research and its affiliate, FTX. The recording, obtained by prosecutors, captures former Alameda CEO Caroline Ellison candidly admitting to impropriety during a pivotal meeting held at Alameda Research’s Hong Kong office on November 9, 2022, just days before FTX declared bankruptcy.
During the meeting, Ellison, who had recently resigned as CEO, confessed that Sam Bankman-Fried, the founder of Alameda and FTX, had utilized FTX customer funds to repay loans. The secret recording, made by an employee who had been with the company for only three days, became a crucial piece of evidence in the ongoing legal proceedings. This evidence was introduced by the government during the questioning of Christian Drappi, a former Alameda employee who provided the audio to prosecutors.
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Drappi, an Alameda developer for over a year, was unaware of Bankman-Fried’s alleged conspiracy until a tweet by Bankman-Fried on November 8, 2022, hinted at a “strategic transaction with Binance for FTX.com.” The tweet prompted Drappi to seek confirmation from Ellison, who confirmed that FTX had used Alameda funds to cover a shortfall in user funds, primarily for repaying billions of dollars in loans. Drappi testified that he was “utterly shocked” by this revelation.
Caroline Ellison, visibly distressed, revealed during a subsequent meeting with Alameda staff that the company had borrowed significant amounts of money for illiquid investments and had used funds from the exchange to cover the shortfall. When pressed by staff members, Caroline Ellison disclosed that Bankman-Fried, herself, Gary Wang, and Nishad Singh were aware of the withdrawal of customer funds, all of whom had since agreed to plea deals.