In the ongoing federal criminal trial against Sam Bankman-Fried, the chief executive of Alameda Research, recordings of an employee meeting were played in court, revealing allegations of a raid on FTX customer money to repay the trading firm’s loans. CEO Caroline Ellison disclosed during the meeting that Bankman-Fried authorized the use of FTX client funds to pay off Alameda’s debts. The audio files were anticipated evidence that prosecutors hope will demonstrate that Ellison had knowledge of the alleged fraud even before she pleaded guilty and began cooperating with the government. Bankman-Fried, who faces potential decades in prison, maintains his innocence.
The recordings came from a covert tape of an all-hands meeting at Alameda’s office, where employees demanded answers from Bankman-Fried regarding FTX’s inability to meet customer withdrawal demands and the potential sale of the company to rival Binance. In the recording, Ellison acknowledged that the loans to Alameda had been made through a special back channel, which alarmed employees who later quit. Ellison, in her testimony, explained that her initial intention was not to assign blame to anyone and clarified that her use of the phrase “I guess” was merely a vocal tick.
During her testimony, Ellison also admitted to misleading her staff about Alameda’s finances for months before finally disclosing the truth in early November. One employee expressed appreciation for her openness, to which Ellison replied that the situation had been “kind of fun.” Following Ellison’s testimony, employee Christian Drappi took the stand for an hour, and the court is set to hear from Zac Prince, the CEO of crypto lender BlockFi, next.
