A Secretly Recorded Audio Reveals Alameda Research’s Use of User Funds from FTX
A 75-minute audio clip secretly recorded by Caroline Ellison has exposed the moment when 15 former Alameda Research employees discovered that the hedge fund was utilizing user funds from FTX. During an all-hands meeting in Hong Kong on November 9, 2022, Ellison explained that Alameda had borrowed money through open-term loans to make illiquid investments, leading to a shortfall in user funds at FTX. She revealed that FTX had always allowed Alameda to borrow users’ funds. Segments of the audio recording were played during Sam Bankman-Fried’s criminal trial, revealing witness testimony from Christian Drappi, a former software engineer at Alameda.
Employees Unaware of Alameda’s Misuse of User Deposits
Christian Drappi and many other Alameda employees were unaware of the alleged misuse of FTX customer deposits by the hedge fund until the all-hands meeting. Drappi is heard in the recording asking Ellison when she became aware of this misuse and who else at the company knew about it. The playback of this audio led to a humorous moment in court where Drappi had to explain the term “YOLO” to everyone present, emphasizing that he wanted confirmation that the use of FTX deposits was not a spontaneous decision.
Revelations Lead to Shock and Resignations
In his testimony, Drappi described Ellison’s demeanor during the meeting as “sunken” and lacking confidence. He was stunned by the extent of the relationship between FTX and Alameda and quit the next day. Aditya Baradwaj, an engineer at Alameda Research, also present at the meeting, stated that it was tense and filled with previously undisclosed information, including the abandoned acquisition of FTX by Binance, its largest competitor at the time. Baradwaj emphasized that it became evident there was no future for the company, leading to the departure of all employees.
Hot Take: Alameda Research’s Misuse of Funds Exposed
The secretly recorded audio clip of an all-hands meeting at Alameda Research has unveiled the hedge fund’s practice of borrowing user funds from FTX to make illiquid investments. The revelations have shocked former employees and led to resignations. This exposé highlights the importance of transparency and trust in the cryptocurrency industry, as users’ funds should be safeguarded and not used without their knowledge or consent. It also raises questions about FTX’s role in allowing Alameda to borrow these funds and calls for stricter regulations to prevent such misuse in the future. The incident serves as a reminder for investors and users to carefully choose platforms and entities they entrust with their funds.
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