Inside the Testimony: Explosive Revelations from the Alameda Staff Meeting in the Bankman-Fried Trial

In the wake of Caroline Ellison’s testimony during the Sam Bankman-Fried trial last Thursday, the jury was presented with a recording of a crucial meeting she had with Alameda staffers on November 9th in Hong Kong.

This meeting was held at a time when both Alameda and FTX, the crypto exchange associated with Bankman-Fried, were facing a crisis.

During the recording, Ellison made a significant statement, revealing that FTX had allowed Alameda to borrow user funds.

On the evening of November 9, 2022, employees from Alameda Research congregated for an all-hands meeting, with CEO Caroline Ellison addressing them while seated on a beanbag.

The meeting took place in Hong Kong, and approximately half of the attendees, numbering 15 people, were employees of Sam Bankman-Fried’s crypto hedge fund.

Ten others joined the meeting remotely from the Bahamas.

It’s worth noting that Alameda’s office was located just across the street from FTX, Bankman-Fried’s crypto exchange.

During the trial, Christian Drappi, a former software engineer at Alameda, took the stand as a government witness.

This trial occurred eleven months after the collapse of both Alameda and FTX, leading to Bankman-Fried facing seven federal fraud charges, potentially resulting in a life sentence.

He maintains his innocence.

Drappi’s testimony followed three days of testimony by Ellison, which included the playing of a recording of the Hong Kong meeting.

During this meeting, Rick Best, a trader who had recently joined Alameda, covertly recorded the proceedings.

The prosecution played various clips from this recording, and the defense team also presented one during cross-examination.

In the courtroom, Drappi described Ellison’s demeanor on that fateful night as “sunken” with a noticeable lack of confident body language.

On the recording, Ellison mentioned that “Alameda borrowed a bunch of money” for investments, but as crypto prices fell, FTX faced a shortage of user funds, leading to withdrawals and the realization that they could not continue.

Drappi voiced his concerns about FTX’s plan to repay customers, as it seemed unusual to raise outside funds for that purpose.

He also questioned Ellison about whether Alameda’s loans were collateralized through the spot margin group, to which she responded negatively.

Drappi expressed his concern, stating, “That seems pretty bad.”

He went on to inquire if this was a “YOLO thing,” which stands for “you only live once.”

Drappi explained that a YOLO decision is spontaneous and not premeditated.

He wanted Ellison to confirm that there were deliberate decisions made during meetings, which was his suspicion.

At one point in the recording, Ellison giggled, which Drappi, who had known her for over a year, described as her “nervous laughter.”

When asked whose idea it was to use FTX customer money to cover Alameda’s loan losses, she responded, “Um, Sam, I guess,” and giggled again.

Ellison also mentioned that “FTX basically always allowed Alameda to, like, borrow user funds, as far as I know.”

Drappi resigned within 24 hours of these events.

Drappi began working at Alameda on May 31, 2021, and spent the next 18 months in various offices, including Hong Kong, the Bahamas, and San Francisco.

He was in Hong Kong when the business started to unravel.

In his testimony, Drappi told that Bankman-Fried was in the Hong Kong office and that both had also socialized after work, participating in games of padel, which combines elements of tennis and squash

Drappi further emphasized that Bankman-Fried maintained direct communication with Alameda employees through the Signal messaging app and was actively involved in large trades, with access to Alameda’s internal interface, “pointer,” and the firm’s backend data.

He also mentioned an instance where a senior trader cited Sam’s involvement in a trade related to Japanese bonds and currency exchange.

The night before the all-hands meeting, on November 8, Drappi was in the office with Ellison and two traders when Bankman-Fried tweeted about Binance’s potential acquisition of FTX.

This tweet sparked shock among the employees, but the agreement eventually fell through, and FTX declared bankruptcy a few days later.

Ellison Unveils Shocking Trial Revelations: Witness Paints Grim Picture in Case Against Crypto Mogul