Leaked Audio Shows Moment Alameda Learned of FTX Fund Misuse

• Leaked 75-minute recording reveals improper lending of FTX user funds to Alameda Research.
• November 9, 2022, staff meeting took place after FTX halted withdrawals.
• The trading firm had borrowed heavily from FTX for its investing activities, causing a user fund shortfall.

A leaked 75-minute recording obtained by CoinTelegraph captured the tense moment Caroline Ellison informed Alameda Research staff that FTX user funds were improperly lent to the trading firm.

In a November 9, 2022, staff meeting after FTX halted withdrawals, Ellison admitted Alameda had borrowed heavily from FTX to cover its investing activities. This led to a user fund shortfall at FTX.

Also read: CFTC Commissioner Slams Voyager’s Failure to Protect Customers

Ellison said FTX had always allowed the trading firm to tap into client deposits. Her admission left employees stunned that customer money was being used to finance Alameda speculations.

Audio was played at Sam Bankman-Fried’s trial

The audio was played at Sam Bankman-Fried’s criminal trial during former Alameda engineer Christian Drappi’s testimony. Drappi described Ellison as sunken and lacking confidence while breaking the news.

Drappi pressed Ellison on whether misusing FTX deposits was a spontaneous “YOLO” decision. The courtroom had to pause to explain the slang term to attendees.

The leaked recording provides a fly-on-the-wall view as Alameda staff absorbed the enormity of FTX and Alameda’s unethical entanglement for the first time.

It exemplified the chaos and opacity around FTX’s liquidity disaster, even for insiders like Alameda employees. The realization led many present to promptly resign.

The audio affirms allegations that Alameda leaned on FTX customer funds because its investments were massively undercollateralized. It offers another dent in SBF’s defense against fraud charges as his trial continues.