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Alameda CEO Carolyn Ellison told her staff that Sam Bankman-Fried authorized the raid on FTX client funds, according to recordings of staff meetings from the company’s final days played in court on Thursday. raid to repay the trading company’s loan.
“I’m sure this isn’t just a Yolo thing,” Alameda software developer Christian Drappi told Ellison, using an acronym for “You Only Live Once.” Leeson pressed who had advance knowledge of the details of the plan. Secretly repaying Alameda’s debts with FTX customer money.
The grainy audio files are among the most anticipated pieces of evidence in Bankman-Fried’s federal criminal trial. Prosecutors hope the tape will show jurors that Ellison told the same story about the alleged fraud even before she pleaded guilty and began cooperating with the government against her former boss and on-again, off-again boyfriend.
Bankman-Fried faces decades in prison if convicted, but he maintains his innocence.
When asked who approved the use of FTX client funds to repay Alameda’s loans, Allison said at the meeting: “Well… Sam, I guess,” before bursting into nervous giggles. She later said that FTX “basically always allowed Alameda to borrow user funds.”
“The word ‘I guess’ is a sound,” she explained in testimony to the court earlier in the day. She said she didn’t hold the meeting “to accuse anyone.”
The audio clip comes from a secret tape of an all-hands meeting of Alameda employees on November 9, 2022. An employee of the trading firm Bankman-Fried saw that his FTX exchange was unable to meet customer withdrawal requests and he was preparing to sell the company to archrival Binance. They demand answers from their bosses.
Delapy said in court testimony Thursday that Ellison sat “listlessly” on a bean bag in Alameda’s Hong Kong office as 15 employees gathered around him and others participated via video link . An employee who had been hired three days earlier recorded the tense, deadpan conversation between the frightened employees.
In the recording, Drappi asked Ellison Alameda if he borrowed money from FTX through a normal “spot margin book,” a program that allows customers to lend their deposits to other customers for trading. Ellison said the loan to Alameda was provided through a special behind-the-scenes channel.
“It looks bad,” Drappi responded, and like many employees, he resigned immediately.
Earlier Thursday, Allison told the jury that by early November, as FTX faced collapse, she felt she could finally tell employees the truth after months of misleading them about Alameda’s financial situation.
“I’m sure this isn’t that interesting to you, but I certainly appreciate your openness,” one employee said toward the end of the meeting.
“Thanks. I mean, it’s funny. I didn’t know,” Allison said.
Drappi was in court for about an hour Thursday afternoon after Allison’s testimony concluded. Next, the court will hear from Zac Prince, CEO of cryptocurrency lending company BlockFi.
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