The confession of the former CEO of Alameda Research was recorded in secret.

The confession of the former CEO of Alameda Research was recorded in secret.

In a direct meeting, Caroline Ellison revealed financial misconduct at FTX and Alameda Research.

Caroline Ellison, the former Chief Executive Officer of Alameda Research, disclosed financial irregularities at the company and its subsidiary, FTX, in a covert audio recording that was obtained by law enforcement.

Just two days before FTX filed for bankruptcy, on November 9, 2022, at Alameda Research's Hong Kong office, Ellison made his open admission during a biweekly "all-hands" meeting.

At a meeting, the former CEO of Alameda drops a bombshell.

"I guess I'll just start by saying some stuff," said Ellison, who had recently resigned as CEO, to open the meeting. After that, the cryptocurrency industry was rocked by a revelation. Ellison claimed on the audio recording that Sam Bankman-Fried, the creator of FTX and Alameda, had repaid loans with FTX customer funds.

A crucial piece of evidence in the ongoing legal proceedings was the covert recording, which was created by a worker who had only been with the company for three days.

During the questioning of Christian Drappi, the former employee of Alameda who had given the audio to prosecutors, the government played short clips from the recording. The recorded confession was in sharp contrast to Ellison's previous, more reserved testimony given by the defense team for Bankman-Fried during cross-examination.

Drappi went to the witness stand following the end of Ellison's cross-examination. Prior to one evening in November, Drappi, an Alameda developer of more than a year, was not aware of the purported plan by Bankman-Fried to remove client funds from FTX.

X Post Exposes the Distressing Financial Predicament of FTX.

November 8, 2022, approximately at 11:00 p.m. me. A tweet from Bankman-Fried announcing a "strategic transaction with Binance for FTX . com" was discovered by Drappi's colleague Tony Qian. Qian approached Ellison in the Hong Kong office, standing with Drappi and asking for clarification.

She reported that FTX had utilized Alameda funds to make up for a shortage of user funds, mainly for loan repayments totaling billions of dollars, and she acknowledged the recent announcement. In his testimony, Drappi expressed his shock at this discovery.

The following day, at the regular biweekly meeting with Alameda staff, Ellison disclosed the circumstances. "Alameda borrowed a bunch of money to make illiquid investments... We ended up, like, borrowing a bunch of funds from FTX," the visibly distressed woman said, sitting on a beanbag chair and sounding calm and matter-of-fact. ".

Those on staff, including Drappi, naturally had questions. He demanded to know from Ellison who else at FTX or Alameda knew about the customer money withdrawal. Ellison eventually revealed that those in the know included herself, Sam Bankman-Fried, Gary Wang, and Nishad Singh (all of whom had since accepted plea agreements).

Thanks to The Daily Beast for the featured image.

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