{"id":85710,"date":"2023-10-13T17:24:43","date_gmt":"2023-10-13T14:24:43","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=85710"},"modified":"2025-09-13T00:57:25","modified_gmt":"2025-09-12T21:57:25","slug":"former-alameda-ceo-reveals-details-of-a-meeting-ahead-of-the-firms-collapse","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/former-alameda-ceo-reveals-details-of-a-meeting-ahead-of-the-firms-collapse\/","title":{"rendered":"Former Alameda CEO reveals details of a meeting ahead of the firm’s collapse"},"content":{"rendered":"

On the third day of testimony in court, former head of Alameda Research Caroline Ellison presented a recording of a meeting held several days before the FTX collapse. During the meeting she told employees about a backdoor to client funds of the exchange and illiquid investments, according to Cointelegraph<\/a> citing court papers.<\/p>\n

Bad News<\/strong><\/h2>\n

In Alameda’s Hong Kong office on 9 November 2022, nearly half of the company’s staff were present. Primarily, Ellison said the firm had borrowed money from FTX for a year.<\/p>\n

Subsequently, Alameda made several ‘ill-fated’ investments with those funds, she added. Because of the ongoing market downturn, the exchange faced a balance-sheet shortfall and, as a consequence, a need to return the borrowed assets.<\/p>\n

The resulting situation forced Alameda to borrow additional funds, even from FTX itself, using client deposits. After messages about illiquid investments<\/a> by the company, users of the partner exchange began panicking and withdrawing funds, which led to the collapse of the trading platform, Ellison explained.<\/p>\n

When asked by one of the employees how long Alameda had used client funds from FTX to plug balance-sheet holes, Ellison replied \u2014 ‘almost always’.<\/p>\n

Compensation plan<\/strong><\/h2>\n

To reimburse users, the former Alameda CEO proposed raising additional investments.<\/p>\n

\n

‘Essentially, FTX is trying to raise funds, but after the collapse no one wanted to invest. I don\\’t know, looking back, the plan was to wait a few months for better market conditions, and then rally,’ she said.<\/p>\n<\/blockquote>\n

Former Alameda software engineer Christian Drappi noted that Ellison’s reply immediately alarmed him, as neither staff nor clients knew what funds were used for external trades. A day after the meeting, he decided to resign.<\/p>\n

Nervous laughter<\/strong><\/h2>\n

Drappi also noted that during her testimony Ellison kept giggling. He speculated it was ‘nervous laughter,’ since the head of the company often did so in difficult situations.<\/p>\n

Another employee dared to ask whose idea it had been to compensate Alameda’s loan losses with funds from FTX’s customers.<\/p>\n

\n

‘I think it was Sam [Bankman-Fried],’ Ellison said, then she giggled again.<\/p>\n<\/blockquote>\n

Towards the end of the session, the head of the trading firm said she had wanted to resign many times, but Bankman-Fried talked her out of it.<\/p>\n

As reported on October 11, former Alameda software engineer Aditya Baratvadj told<\/a> how the firm lost at least $190 million due to a lax approach to security. Many company employees fell for phishing and fraud.<\/p>\n","protected":false},"excerpt":{"rendered":"

During the meeting, the former Alameda Research CEO Caroline Ellison told staff about a backdoor to customer funds of the exchange and illiquid investments.<\/p>\n","protected":false},"author":1,"featured_media":85711,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[3],"tags":[1435,1162,1236,1150],"class_list":["post-85710","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-and-analysis","tag-alameda-research","tag-court-cases","tag-ftx","tag-news-plus"],"aioseo_notices":[],"amp_enabled":true,"views":"30","promo_type":"1","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/85710","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/comments?post=85710"}],"version-history":[{"count":1,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/85710\/revisions"}],"predecessor-version":[{"id":85712,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/85710\/revisions\/85712"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media\/85711"}],"wp:attachment":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media?parent=85710"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/categories?post=85710"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/tags?post=85710"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}