Former Alameda CEO's Testimony Reveals Alarming Financial Relationship with FTX
The ongoing trial of former FTX CEO Sam Bankman Fried has taken a dramatic turn with testimonies from former key FTX and Alameda executives. Caroline Elisson, former Alameda Research CEO, testified for the third day and presented a recording of a meeting held just days before the collapse of the FTX empire. The meeting, joined by nearly half of Alameda's employees, exposed explosive revelations about Alameda's financial relationship with FTX.
Alameda's Bad Investments Led to FTX's Financial Crisis
In the recording, Elisson admitted that Alameda had been borrowing money from FTX for a year and had made illiquid investments using the borrowed funds. When the market downturn hit, Alameda's loan positions were called in, creating a shortfall in FTX's balance sheet. This led to market panic and users started withdrawing their funds, ultimately causing the collapse of the exchange.
FTX Planned to Raise More Funds to Compensate Users
During the meeting, Elisson revealed that FTX planned to raise further funds to compensate users. However, the market crash and lack of investor interest made it difficult to execute this plan. This raised concerns among employees, as they were unaware of a scenario where investors would cover a company's bad financial decisions.
The Nervous Laughter
As the secret recording was played in court, it was noted that Elisson giggled during the meeting, which was interpreted as "nervous laughter" in a tight spot. When asked whose idea it was to use FTX customer money to cover Alameda's losses, Elisson responded with a giggle, suggesting it was Sam Bankman Fried's idea.
Alameda's Backdoor Access to FTX User Funds
Another employee questioned the backdoor access Alameda had to FTX and how long they had been using customer funds to bridge holes in their balance sheet. Elisson responded that FTX had always allowed Alameda to borrow user funds.
These shocking revelations have shed light on the financial relationship between FTX and Alameda, providing crucial evidence in the ongoing trial. Collecting this article as an NFT will not only preserve this moment in history but also support independent journalism in the crypto space.
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