Employees from Alameda Research huddled in a circle to listen to CEO Caroline Ellison during an all-hands meeting on the evening of November 9, 2022.
At Sam Bankman-Fried’s cryptocurrency hedge firm, about half of the staff, or 15 people, were there at 11 p.m. in Hong Kong. One of them was former Alameda software developer Christian Drappi. Ten other people joined by video from the Bahamas. The FTX crypto exchange, run by Bankman-Fried, was directly across the street from the Alameda headquarters.
Drappi testified as a government witness in the criminal prosecution against Bankman-Fried on Thursday. The trial is being held 11 months after Alameda and FTX went bankrupt. Seven federal fraud accusations and a possible life sentence await Bankman-Fried. His defence is innocence.
At the conclusion of Ellison’s third day of testimony, Drappi took the witness stand in Manhattan, where he played a recording of the Hong Kong conference. Directly to Ellison’s right was Rick Best, a trader who had recently joined Alameda, who was covertly capturing the meeting’s audio.
During cross-examination, the defence team played one clip while the prosecution played many from the recording.
Ellison’s behaviour that evening was “sunken,” according to Drappi, who spoke to a crowded courtroom. He claimed that she “did not demonstrate confident body language” and was “kind of slouching.”
According to Ellison on the audio, “Alameda borrowed a bunch of money” to utilise for investments. But as the value of cryptocurrencies dropped, “FTX faced a shortfall of user funds,” after which “people started withdrawing their monies” and “realised they would not be able to continue.”