Former Alameda chief knew of a multi-billion-dollar deficit long before the FTX collapse

In March 2022, former Alameda Research CEO Caroline Ellison wrote in an internal memo about a $10 billion deficit at FTX, which collapsed in November. This is stated in court filings.

In August that year, company executives estimated that the crypto exchange owed clients more than $8 billion that it could not repay.

According to court filings, the current leadership of FTX is now trying to recover “millions of dollars” in cash and move more than $1 billion from allegedly fraudulent deals.

Earlier, Ellison and the exchange’s chief technology officer Gary Wang pleaded guilty to charges related to the collapse of FTX and agreed to cooperate with investigators. The former Alameda Research head described price manipulation of the FTT utility token.

Ellison also admitted to deliberately deceiving creditors. According to her, she “knew that this was wrong.” The head of Alameda, together with former FTX CEO Sam Bankman-Fried, concealed agreements from investors and falsified financial reports.

At the same hearing, FTX co-founder and, concurrently, the exchange’s chief technology officer Gary Wang said that he was directed to make changes to the platform’s code that granted Alameda special privileges.

In November 2022, the exchange’s new CEO, John Ray, said that there were absolutely no controls over cash movements and no reliable financial information.

In March 2023, it emerged that Bankman-Fried received $2.2 billion from FTX and Alameda Research.

The US prosecutors indicted Bankman-Fried on 13 criminal charges. He pleaded not guilty to none of the counts.