A Shocking Revelation

A recent audio recording lasting 75 minutes has shed light on the moment 15 ex-employees of Alameda Research realized their trading firm was using user funds borrowed from FTX. This recording, obtained by Cointelegraph, offers a rare peek into the rising anxiety within the company as it approached a catastrophic collapse.

The All-Hands Meeting

On November 9, 2022, in a Hong Kong meeting saturated with tension, Caroline Ellison candidly described Alameda’s precarious financial maneuvers. “Alameda was kind of borrowing a bunch of money via open-term loans and using that to make various illiquid investments,” she carefully stated, inadvertently dropping a bombshell that would leave the room silent with disbelief.

The Borrowing Binge

Ellison further elaborated, stating, “We ended up borrowing a bunch of funds from FTX, which led to FTX having a shortfall in user funds.” This was not just a run-of-the-mill meeting; it was a moment where reality hit the staff like a ton of bricks.

Unraveling the Truth

During the trial of Sam Bankman-Fried, the court played segments of this audio recording, during which Christian Drappi, a former software engineer at Alameda, had some burning questions for Ellison. Drappi asked, “When did you realize that Alameda was misusing FTX user deposits?” His persistence revealed the earlier ignorance among the team regarding their firm’s misdoings, as many were completely blindsided by their exposure to such risky practices.

Drappi’s Disbelief

In his testimony, Drappi described Ellison’s demeanor as “sunken,” devoid of confidence amidst the alarming disclosures. He frankly admitted, “I was stunned” to uncover the magnitude of Alameda’s relationship with FTX, which led to his immediate resignation the very next day.

The Tension in the Room

Aditya Baradwaj, another engineer at Alameda who was present during the meeting, recounted the palpable tension. He noted that Ellison revealed numerous critical points that had never been discussed internally before, including an earlier attempt to have FTX acquired by Binance, its largest competitor.

The Inevitable Exit

Realizing the inevitable downfall of their firm, Baradwaj recalled the collective sentiment: “It became pretty clear that there was no future for the company and that we all had to leave. And we did that right after.” Talk about a dramatic exit!

A Piece of History

In a twist of irony, Cointelegraph has invited readers to collect this article as an NFT, suggesting that this moment serves as a significant entry in the tumultuous chronicle of cryptocurrency journalism.