Among many critical revelations about Alameda and FTX’s relationship, Caroline Ellison confirmed that Alameda always had access to customers’ funds at FTX.
News The ongoing trial of former FTX CEO Sam Bankman-Fried has uncovered a series of explosive revelations in the form of testimonies from former key FTX and Alameda Research executives. The latest court proceedings on Oct. 12 saw former Alameda CEO Caroline Ellison testify for the third day, following which the jury was presented with a recording of a meeting she held with Alameda staffers on Nov. 9, 2022, just days before the collapse of the FTX empire. The meeting, held in Hong Kong and joined by nearly half of Alameda’s employees, was the key moment Ellison came clean about the ongoing scenario with the crypto exchange to her colleagues. This admission was accompanied by explosive revelations about Alameda’s financial relationship with FTX. Cointelegraph has obtained access to the secret recording, and we have curated a list of four striking elements it revealed. The first and most crucial revelation came early in the meeting when Ellison revealed that Alameda had borrowed money from FTX for a year. She admitted that Alameda had made several illiquid investments using the borrowed funds. Due to the market downturn, Alameda’s loan positions were called in, creating a shortfall in FTX’s balance sheet. Here’s an excerpt from the discussion: Ellison revealed that Alameda’s bad loans created market panic around FTX, causing users to withdraw their funds. FTX then paused withdrawals to contain the situation, and the exchange came crashing down within days. When one of the employees attending the meeting asked Ellison how FTX intended to pay back its customers, Ellison said that the crypto exchange was planning to raise further funds to fill the gap. During the court proceedings on Thursday, Christian Drappi, a former software engineer at Alameda who was present during the meeting, told the court that Ellision’s response about paying back customers sounded concerning to him because he wasn’t aware of a scenario where investors have contributed to making customers whole due to bad financial decisions of the company. As the secret recording was played in the court, the former Alameda employee also pointed out that Ellison had giggled during the meeting. The employee suggested this was Ellison’s “nervous laughter,” something she often did when in a tight spot.
When Ellison was asked by a staffer at the meeting whose idea it was to plug Alameda’s loan losses with FTX customer money, she responded with, “Um, Sam, I guess,” and giggled. Another staffer enquired about the backdoor access of Alameda to FTX and asked how long Alameda had been using FTX customers’ funds to bridge holes in its balance sheet. Ellison responded, “FTX basically always allowed Alameda to borrow user funds, as far as I know.” 
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Alameda’s bad investments led to the financial crisis at FTX
FTX planned to raise more funds to compensate users
The nervous laughter
Alameda almost always had access to user’s funds at FTX
