A secret recording reveals Alameda Research’s borrowing of user funds
A leaked audio clip from an internal meeting at Alameda Research has exposed the fact that the company had been borrowing user funds through open-term loans. Former CEO Caroline Ellison admitted that they used these borrowed funds to make illiquid investments, primarily in FTX and FTX US equity. She also revealed that FTX had always allowed Alameda to borrow users’ funds, which eventually resulted in a shortfall in user funds for FTX.
Testimony provides context to the recording
Christian Drappi, a former software engineer at Alameda, provided testimony that shed light on the recording. He disclosed that he and many other employees were unaware of their hedge fund’s misuse of FTX customer deposits prior to the meeting. During the meeting, Ellison expressed her belief that cryptocurrency prices would rise enough to resolve the financial situation.
Evidence presented during Bankman-Fried’s trial
The audio clips from the meeting were presented as evidence during Sam Bankman-Fried’s criminal trial. The defense argued over their admissibility, but a compromise was reached where six clips could be played by the government and one by the defense. In the defense’s clip, Ellison thanked an employee for appreciating her transparency but went beyond what Bankman-Fried had intended her to convey. Bankman-Fried has pleaded not guilty to charges of fraud and conspiracy.
Hot Take: Caroline Ellison’s Revelations Shake Alameda Research
A leaked audio recording from an internal meeting at Alameda Research has exposed the company’s practice of borrowing user funds through open-term loans. Former CEO Caroline Ellison revealed that they used these borrowed funds for illiquid investments and admitted that FTX had always allowed them to borrow users’ funds. This revelation has raised concerns about the management of user funds and the transparency of Alameda Research. The recording was presented as evidence during Sam Bankman-Fried’s trial, where he faces charges of fraud and conspiracy. The defense argued that Ellison’s statements went beyond Bankman-Fried’s intentions, further complicating the case.
Insa’s extensive background in the financial realm encompasses roles as a writer, trader, and personal finance coach. Her proficiency spans a wide spectrum, ranging from commodities and indices to forex and cryptocurrencies. Insa’s specialization lies in furnishing strategic investment advice tailored to the fintech investment niche.