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According to a covert recording made by a worker who joined the company three days earlier, Caroline Ellison revealed herself to the Alameda staff during that meeting


On Nov. 9, just two days before the crypto exchange FTX declared bankruptcy, almost all 30 employees from Alameda Research gathered both virtually and in person at the crypto hedge fund’s office in Hong Kong.

“I guess I’ll just start by saying some stuff,” said Caroline Ellison, the former CEO of Alameda, at the beginning of the biweekly “all-hands” meeting. She proceeded to tell staff how Sam Bankman-Fried, the founder of both Alameda and FTX, took FTX customer funds to pay back loans, according to audio secretly recorded by an employee who had just started three days beforehand.

The government introduced snippets of the muffled recording during its questioning of Christian Drappi, a former Alameda employee who gave a copy of the audio to prosecutors. These snippets were the most vivid evidence to surface on Thursday—in contrast to the muted testimony from Ellison as Bankman-Fried’s lawyers cross-examined her for all of the morning and most of the afternoon.

After the defense ended its cross-examination of Ellison on Thursday afternoon, the government called Drappi, who was a developer at Alameda for more than a year, to the witness stand.

Prior to November, Drappi had no knowledge of Bankman-Fried’s alleged conspiracy to withdraw customer funds from FTX to spend—through Alameda—on venture investments, loan repayments, and risky crypto bets. That changed on Nov. 8, at approximately 11 p.m.

In the Hong Kong office, Tony Qian, a colleague of Drappi’s, was scrolling through Twitter (now X) and saw a tweet from Bankman-Fried that announced “a strategic transaction with Binance for FTX.com.” Qian asked Ellison, who was standing near both Drappi and Qian, whether Bankman-Fried’s announcement was true. Ellison confirmed it, and explained that it was because FTX had a shortfall of user funds that were taken from Alameda to pay back billions of dollars in loans. “I was utterly shocked,” testified Drappi.

‘Borrowed a bunch of money’

VIDEO: Inside the meeting where Caroline Ellison came clean to Alameda staff, per a secret recording from a
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The next day, at what happened to be a regular biweekly meeting with all Alameda staff, Ellison came clean. Reports of this “all-hands meeting”—a key plot point in the fall of FTX—have been extensive. However, the recording of Ellison, who sounded quiet and matter-of-fact as she detailed what prosecutors allege is fraud, is the most detailed account yet.

Sitting on a beanbag chair, Ellison appeared “sunken, slouching,” according to Drappi. After some brief opening words, she relayed to colleagues the crux of the matter: “Alameda borrowed a bunch of money to make illiquid investments,” she said. “We ended up, like, borrowing a bunch of funds from FTX.”

Staff members inevitably had questions, including Drappi. He asked Ellison about who else at either Alameda or FTX knew that customer funds were being withdrawn from the exchange, per the audio, which was recorded by Rick Best, an employee who joined Alameda three days earlier. Ellison initially dodged the question, but Drappi pushed back and asked who explicitly knew. “I’m sure this wasn’t, like, a YOLO thing, right?” he added.

Ellison copped that Bankman-Fried, herself, Gary Wang, and Nishad Singh—the latter three all since agreeing to plea deals—were in the know. And who said to use FTX customer funds? With a nervous giggle, she replied: “Um…Sam, I guess?”

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