The ongoing trial of former FTX CEO Sam Bankman-Fried has uncovered a series of explosive revelations in the form of testimonies from former key FTX and Alameda Research executives.
The latest court proceedings on Oct. 12 saw former Alameda CEO Caroline Ellison testify for the third day, following which the jury was presented with a recording of a meeting she held with Alameda staffers on Nov. 9, 2022, just days before the collapse of the FTX empire.
The meeting, held in Hong Kong and joined by nearly half of Alameda’s employees, was the key moment Ellison came clean about the ongoing scenario with the crypto exchange to her colleagues. This admission was accompanied by explosive revelations about Alameda’s financial relationship with FTX. Cointelegraph has obtained access to the secret recording, and we have curated a list of four striking elements it revealed.
Alameda’s bad investments led to the financial crisis at FTX
The first and most crucial revelation came early in the meeting when Ellison revealed that Alameda had borrowed money from FTX for a year. She admitted that Alameda had made several illiquid investments using the borrowed funds.
Due to the market downturn, Alameda’s loan positions were called in, creating a shortfall in FTX’s balance sheet. Here’s an excerpt from the discussion:
“Most of Alameda’s loans got called in in order to meet those loan recalls. We ended up borrowing a bunch of funds on FTX, which led to FTX having a shortfall in user funds. And so with the, once there started being like FUD about this and users started withdrawing funds.”
Ellison revealed that Alameda’s bad loans created market panic around FTX, causing users to withdraw their funds. FTX then paused withdrawals to contain the situation, and the exchange came crashing down within days.
FTX planned to raise more funds to compensate users
When one of the employees attending the meeting asked Ellison how FTX intended to pay back its customers, Ellison said that the crypto exchange was planning to raise further funds to fill the gap.
“Basically, FTX is trying to raise in order to do this [compensate users], but yeah, after the crash, no one wanted to invest. I don’t know, obviously, in retrospect, the plan of waiting around for several months and like for the market environment to get better and then raise.”
During the court proceedings on Thursday, Christian Drappi, a former software engineer at Alameda who was present during the meeting, told the court that Ellision’s response about paying back customers sounded concerning to him because he wasn’t aware of a scenario where investors have contributed to making customers whole due to bad financial decisions of the company.
The nervous laughter
As the secret recording was played in the court, the former Alameda employee also pointed out that Ellison had giggled during the meeting. The employee suggested this was Ellison’s “nervous laughter,” something she often did when in a tight spot.
When Ellison was asked by a staffer at the meeting whose idea it was to plug Alameda’s loan losses with FTX customer money, she responded with, “Um, Sam, I guess,” and giggled.
Alameda almost always had access to user’s funds at FTX
Another staffer enquired about the backdoor access of Alameda to FTX and asked how long Alameda had been using FTX customers’ funds to bridge holes in its balance sheet. Ellison responded, “FTX basically always allowed Alameda to borrow user funds, as far as I know.”
Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.
The new leader of the Green Party has revealed he spoke to Jeremy Corbyn this week amid suggestions there could be a pact between their two parties.
Zack Polanski, who comfortably beat his rivals Adrian Ramsay and Ellie Chowns to win the Green Party’s leadership election, told the Politics Hub with Sophy Ridge that he spoke to the former Labour leader on Monday.
There have been suggestions that the Greens could join forces with Mr Corbyn’s new party – which does not yet have a formal name – to avoid splitting the vote on the left.
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11:58
Polanski on Corbyn, NATO and flags
The question of a future potential pact with Mr Corbyn and his co-leader, the independent MP Zarah Sultana, became an issue in the Green Party’s leadership election, with Mr Polanski more keen on the idea than his co-leadership rivals.
The former Labour leader had tabled a private members’ bill calling for an independent public inquiry into the UK’s involvement in Israeli military operations in Gaza, but it did not progress in the House of Commons.
He said Mr Corbyn’s inquiry was “the exact kind of example where even if someone is from a different party, but I’m absolutely aligned with what they’re doing, then I’ll always call out what I think is good for this country and good for our global politics”.
My Corbyn congratulated Mr Polanski for his “stunning victory” after the results were announced, and added: “Your campaign took on the rich and powerful, stood up for the dignity of all marginalised communities, and gave people hope! Real change is coming. I look forward to working with you to create a fairer, kinder world.”
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Mr Polanski, who is currently serving as deputy leader, won the election on a platform of “eco-populism”, which he says will make the Greens a real alternative to Labour and Reform UK.
The London Assembly member, who is not an MP, will now become the party’s only leader, after Bristol MP Carla Denyer stepped down from her joint role with Mr Ramsay, triggering the contest.
While Mr Polanski has strongly criticised the policies of Nigel Farage, he has acknowledged his cut-through with voters, and has argued that the Green Party needs to offer a bolder message to voters, in the guise of wealth taxes and net zero policies.
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In full: Tuesday’s Politics Hub
The new Green leader also weighed into the debate about flying the St George’s Cross, after the prime minister Sir Keir Starmer said he had one in his office – while also cautioning against the flag being used as a political statement.
Asked what he thought of the St George’s Cross, Mr Polanski said: “I think that migration is at the heart of this country. Migrants contribute a huge amount. That’s not a new thing – that has been traditionally throughout our history and that the English flag means different things to different people.
“And I think if people want to wave it because they’re being patriotic, particularly at football tournaments, I think there’s a huge space for patriotism in this country.
“But I’m also aware that for lots of people who have arrived in this country or people who aren’t even migrants, to be frank, Black and Asian communities, the flag can mean very different things around colonialism and empire. And that’s the thing about flags. It means different things to different people.”
Image: Zack Polanski. Pic: PA
He said he believed the idea of flying the English flag outside homes not in the context of sport was “quite imported from America”.
“If people want to do that then I think that’s up to people what they want to do.
“But I think at times of heightened tensions, I would say patriotism is actually about loving your neighbour, whether they’re from this country or not.”
Zack Polanski, the new leader of the Green Party, has been studying one politician closely this summer – Nigel Farage.
The 42-year-old, who stormed his party’s leadership contest by a large margin, calls himself an “eco-populist” (he used to be involved in Extinction Rebellion), and thinks the Greens could learn a lot from the media-savvy tactics of Reform which have seen them surge ahead of Labour in the polls.
Can the former actor and hypnotherapist, who rails against corporations and wants to tax the rich, take his party into the big leagues?
Image: Zack Polanski. Pic: PA
Speaking to him after his win was announced, Mr Polanski told me: “I despise Nigel Farage’s politics and I’d never copy what he does, but it’s undeniable that he cuts through; everyone knows who he is and that bold messaging – but for the truth, not the lies and misinformation he spins – that’s what you’ll hear more of from the Green Party.”
Mr Polanski is not an MP – he’s been on the London Assembly since 2021 and served as the party’s deputy leader. His two rivals in the leadership contest Adrian Ramsay, one of the party’s current leaders, and Ellie Chowns, were elected last year, but are not well-known to the public.
His more aggressive style and punchy social media clips appealed to party members impatient for results. His videos target “corporations who are destroying our democracy”; warn that “fascism is at our doorstep” and “call bullshit” – as he puts it – on the debate about asylum.
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As one of the members at the event summed it up: “People don’t know what we stand for, we need to be loud and clear about what we’re for and what we’re against, and Zac will do that.”
He’s put some noses out of joint within the party, and the tabloid press has called him the “boob whisperer” after The Sun reported in 2013 that, while working as a hypnotherapist, he told a woman who wanted bigger breasts that she could do so with the power of her mind. Mr Polanski apologised and says he is focused on the future.
Image: Pic: PA
His ambitions are high for the fifth party in British politics – currently polling at around 10%.
“Thirty to forty MPs at the next election”, he says. Enough to deny Labour a majority if it’s close, or to be kingmakers. As politics fractures, he hopes they could have a big impact for the first time in decades.
The Green Party in the UK – unlike its counterparts in other European countries – has struggled electorally until very recently. It was formed in a pub in Coventry in 1972 by activists inspired by the US environmentalist Paul Ehrlich, who warned that the world was overpopulated, spelling disaster for nature.
Its biggest success was in the 1989 European elections, gaining 15% of the vote, but representation in parliament was not achieved until 2010 when Caroline Lucas took Brighton Pavilion from Labour. She became an influential campaigner on the climate, fracking and animal rights, also warning against economic growth at any cost.
After she stood down, the party struggled to find its voice, with Jeremy Corbyn’s Labour Party pursuing a radical left-wing agenda. Now, after winning four MPs last year, Mr Polanski believes that with Labour in government and Reform at its coat tails, their moment has come.
He told members: “We can, and we will lower your bills. We will nationalise the water companies. We will hold this Labour government to account.
“Because when we look at Keir Starmer and what this government have been doing; whether it’s the two-child benefit cap, the disability cuts, the genocide in Gaza, my message to Labour is very clear: we are not here to be disappointed by you. We are not here to be concerned by you. We’re here to replace you.”
All of that may not endear him to all the Green Party’s potential supporters. The party now has 860 councillors, but some are in rural areas where they’ve won seats from the Tories.
There is a political opportunity on the left. Mr Polanski says he knows what will get his party into the spotlight. But it’s a far bigger task to deliver seats in parliament – including one he’ll need for himself.