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New revelations from former Alameda Research CEO Caroline Ellison surfaced today regarding the crypto hedge fund's financial relationship with FTX prior to the exchange's collapse.
Speaking to Alameda staff in Hong Kong last November, Ellison acknowledged the firm borrowed large sums from FTX customer accounts to fund its investments, according to an audio recording obtained by Cointelegraph.
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This reliance on FTX loans ultimately left the exchange with a shortfall in user funds when Alameda could not repay the debts.
The 75-minute recording captured Ellison admitting to employees that Alameda had leaned heavily on the deposits to sustain its operations.
“We ended up borrowing a bunch of funds from FTX,” she conceded, portraying it as an open secret.
Ellison's candid remarks offered staff insight into Alameda's inner workings for the first time.
Former software engineer Christian Drappi told the court he was caught off guard by the extent of borrowing Ellison described. He pressed for details on who approved the loans, only to be met with evasion from Ellison.
The recording surfaced this week in the trial of FTX founder Sam Bankman-Fried, where prosecutors allege Bankman-Fried secretly transferred customer funds to Alameda. While the audio provides evidence of Alameda's reliance on FTX deposits, it is unclear who authorized the transactions.
Ellison struck a defeated tone in the recording, suggesting she knew the practices that had sustained Alameda were unraveling.
"Most of Alameda's loans got called in," she told staff, precipitating the liquidity crunch that toppled FTX in November.
Her admissions cast doubt on the future of Alameda and FTX
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