Audio from an all-hands meeting at cryptocurrency trading firm Alameda Research disclosed unsettling details about the company's financial dealings and a potential fraudulent scheme involving notable cryptocurrency exchange FTX, owned by Sam Bankman-Fried.
In the meeting led by Caroline Ellison, attendees learned of the company's financial struggles, including insufficient liquidity to cover recalled loans and the unethical utilization of FTX customer funds without permission.
Minutes of this recording was played at Bankman-Fried's trial Thursday.
For Up-to-date news around the FTX Trial, go to the FTX Page
| Caroline Ellison | [00:00:07 - 00:00:17] | OK. Let's get started, I guess, with a bunch of people. Yeah, I guess I'll just start by saying some stuff, and then you guys can feel free to ask questions. |
| [00:00:21 - 00:00:22] | Yeah, so I guess you guys have probably | |
| [00:00:23 - 00:00:32] | seen a lot of what's happening on, I don't know, Slack and Twitter. But I could just start by giving a general overview of the situation. | |
| [00:00:33 - 00:01:29] | I think the basic story here is that starting last year, Alameda was kind of borrowing a bunch of money via open-term loans and used that to make various illiquid investments. So like a bunch of FTX and FTX US Equity, a bunch of other ventures, investments, et cetera. And then with crypto being down, the crash, the credit crunch this year, most of Alameda's loans got called. And 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 once they started being fun about this, and users started withdrawing funds, they kind of eventually were realizing that they were unable to meet the continued withdrawal | |
| [00:01:31 - 00:01:38] | pressure. And so reached out to various people that ultimately liked finance. | |
| [00:01:42 - 00:01:52] | Ultimately, finance and CZ was the one who came through with an offer to acquire FTX. | |
| [00:01:53 - 00:01:53] | And the basic structure of the offer | |
| [00:01:54 - 00:02:22] | is that finance would be acquiring FTX International, and it would be paying enough cash to cover the entire shortfall of user funds. And this wouldn't include FTX US or Alameda, but I guess various other assets might end up getting sold off for, I don't know, to pay back, like to add extra cash to the deal | |
| [00:02:23 - 00:02:32] | or to make the FTX preferred investors some money or other things like that. | |
| [00:02:36 - 00:02:38] | Yeah, I guess like then, yeah, what does this mean? | |
| [00:02:45 - 00:02:46] | I guess mostly I want to say like, I'm sorry. | |
| [00:02:57 - 00:02:58] | This really sucks. It really sucks for all of you guys. | |
| [00:03:00 - 00:03:02] | I think it's like really not fair to you guys. | |
| [00:03:02 - 00:03:09] | Like I think you've been doing a great job. You've been working really hard, doing good trades. | |
| [00:03:10 - 00:03:16] | And none of this is your fault, but you kind of like end up impacted by the situation anyway. | |
| [00:03:22 - 00:03:22] | I think my current default plan is | |
| [00:03:24 - 00:03:26] | that Alameda will likely wind down | |
| [00:03:28 - 00:03:37] | once we can repay all of our creditors and sort of wind down a bunch of our whatever remaining | |
| [00:03:38 - 00:03:44] | obligations we have. | |
| [00:03:47 - 00:03:48] | Yeah, totally like definitely no pressure for anyone | |
| [00:03:54 - 00:04:01] | to sit around, like totally understood if you're like, I just like want to do now. | |
| [00:04:04 - 00:04:06] | Also, even if you're like uncertain | |
| [00:04:08 - 00:04:17] | about where you are, sitting around or whatever, definitely feel free to take a break. Like go eat, like whatever. | |
| [00:04:18 - 00:04:20] | Definitely take some time. | |
| [00:04:22 - 00:04:22] | But yeah, at the same time, do like super, super | |
| [00:04:26 - 00:04:35] | appreciate anyone who does want to stick around and help out during this transition period. And I think, yeah, I mean, I'll be here. | |
| [00:04:36 - 00:04:44] | I'll be like working on basically just making sure that all of our creditors get made whole | |
| [00:04:45 - 00:04:55] | and kind of doing whatever we can do, though it's like someone out of our control, to make sure all the FTX customers get made whole | |
| [00:04:55 - 00:05:01] | and don't end up losing their deposits. And yeah, I think there is a bunch of work to do there. | |
| [00:05:02 - 00:05:10] | So definitely appreciate if anyone does want to help out. | |
| [00:05:13 - 00:05:14] | Yeah, and then I guess for people who do stick around, |
| [00:05:15 - 00:05:19] | I think it's like possible that there might | |
| [00:05:20 - 00:05:36] | be some kind of future thing. I don't know what that thing would look like. That would be like another trading thing. Or maybe people will end up working in the FTX US, or maybe there won't be anything. So I think it's like, yeah, definitely too early | |
| [00:05:37 - 00:05:43] | to know what I or anyone else will end up doing after this. | |
| [00:05:45 - 00:05:46] | But yeah, really, really appreciate all of your guys' | |
| [00:05:51 - 00:05:58] | hard work and dedication in the last few days, and in general. | |
| [00:05:59 - 00:06:03] | Thanks a lot. | |
| Alameda Employee | [00:06:10 - 00:06:15] | Is there anything that we can do to increase the likelihood that finance makes it difficult for the general idea? |
| Caroline Ellison | [00:06:18 - 00:06:21] | Yeah, I think it's largely out of our hands. |
| [00:06:21 - 00:06:49] | But I do think repaying all of our creditors and making sure that making Alameda not go into bankruptcy is probably good, just because, I don't know, if CB is like, oh, Alameda is going into bankruptcy, that's bad. I don't know. I feel like he might do that. And yeah, generally also gathering | |
| [00:06:50 - 00:07:05] | the rest of our assets and trying to freeze up as much capital as we can is good, because the more expert capital we have in Alameda, the more capital we can throw into the deal to make it more attractive to CB, basically. | |
| Alameda Employee | [00:07:11 - 00:07:14] | Can you say how big the hole is? I probably don't want to share the exact number. |
| Caroline Ellison | [00:07:15 - 00:07:20] | That is a? Is it closer to like one bill or six bill? |
| Alameda Employee | [00:07:20 - 00:07:24] | The latter. |
| [00:07:31 - 00:07:36] | We have an idea of how likely it is that the deal would be CB's level of growth. I don't really know. | |
| Caroline Ellison | [00:07:37 - 00:07:37] | I said 70% earlier, but then Karen said 40%. |
| [00:07:39 - 00:07:43] | If anyone else has estimates to take them. | |
| [00:07:44 - 00:07:47] | Yeah, I'm kind of like, I don't know. | |
| [00:07:48 - 00:07:49] | By default, I sort of expect CB to behave very like whatever | |
| [00:07:50 - 00:07:56] | hero self, just like trying to fuck us over ways. | |
| [00:07:57 - 00:08:09] | So like, I don't know. So like, whatever made me decide this deal, and then that's like whatever with an X with a Y clause. And then we'll be. | |
| Alameda Employee | [00:08:15 - 00:08:16] | Can I send a link out to other people on the team? |
| [00:08:16 - 00:08:23] | Is that? Can I send a link out on general chat? Oh, yeah. Oh, is there not a link in the chat? | |
| [00:08:39 - 00:08:41] | I'll do that. OK. Cool. What was I saying? | |
| Caroline Ellison | [00:08:40 - 00:09:04] | Yeah. I thought this was just finance. So the LOI that FTX and Binance signed has an exclusivity clause. So FTX can't consider any other offers for the next like two months or something like that. The Binance clause? Yeah, or until then. |
| Alameda Employee | [00:09:05 - 00:09:07] | Is there like $13 or anything else? |
| [00:09:10 - 00:09:13] | Like, is there anything on the fair or get like the I's or anything like that? I think the price is like in the agreement as well. | |
| Caroline Ellison | [00:09:13 - 00:09:25] | But it's just the agreement is pending due diligence, basically. Like finance looking at all the FTX's financials and all their information. |
| Alameda Employee | [00:09:26 - 00:09:27] | Do we know what the price is? |
| Caroline Ellison | [00:09:27 - 00:09:34] | It's basically just covering the user funds shortfall and then the free and normal price and stuff like that. |
| Alameda Employee | [00:09:39 - 00:09:44] | I'm going to ask you how long until the LOI is a bit like just to get an answer. |
| Caroline Ellison | [00:09:44 - 00:09:56] | I think FTX is hoping that it will happen within a week. But I guess it's probably whatever. Probably expected times longer than the hoped for times. |
| Alameda Employee | [00:10:02 - 00:10:05] | Are we going to say anything publicly? |
| [00:10:06 - 00:10:10] | Like Alameda? Either it's Alameda or FTX as to like what happened. | |
| [00:10:13 - 00:10:19] | Because like I think a lot of people's assumption is that we just can't blow the money away, which | |
| [00:10:21 - 00:10:26] | I feel like would be unjustified for people to think that. | |
| Caroline Ellison | [00:10:25 - 00:10:29] | Yeah, that makes sense. |
| [00:10:29 - 00:10:42] | Yeah, I'm not sure what FTX's current plan with public statements is. They probably want to see if they can get the deal with finance done first before making more detailed public statements. | |
| Alameda Employee | [00:10:48 - 00:10:50] | Is there an official day that Alameda is closed down? |
| Caroline Ellison | [00:10:56 - 00:10:58] | There's no day yet. I think definitely not planned that far ahead. |
| [00:11:06 - 00:11:07] | I think it's probably going to take at least a few weeks | |
| [00:11:09 - 00:11:21] | to clean everything up. Maybe like several months. I don't know. I haven't done this before, so I don't really know. Do we think we'll have to have access to all the calls? | |
| Alameda Employee | [00:11:27 - 00:11:33] | I actually think you're muted. Oh. Sorry. |
| [00:11:35 - 00:11:39] | It was nothing before. Oh, it's enough people get added. | |
| [00:11:41 - 00:11:44] | I don't know if you can hear what is being said. | |
| [00:11:46 - 00:11:48] | It was fine before. Oh, really? | |
| Caroline Ellison | [00:11:49 - 00:11:52] | Do we think we have access to all the calls? |
| [00:11:53 - 00:12:04] | I think we have access to a loan. It's only $1.5 billion of loans that Sam made. We have whatever, a couple billion dollars of liquid stuff sitting around. So the rest of it is going towards the bills | |
| Alameda Employee | [00:12:03 - 00:12:06] | after the public loan? |
| Caroline Ellison | [00:12:06 - 00:12:15] | I think it's still up in the air what the rest will go towards. I think it's like sort of by default, it's owned by Alameda slash Sam. |
| [00:12:16 - 00:12:25] | But maybe the most likely effort would be to throw it into the FTS deal to make it better. | |
| Alameda Employee | [00:12:27 - 00:12:30] | Wait, we have a couple billions of liquid stuff. |
| Caroline Ellison | [00:12:30 - 00:12:36] | Or including like hood, which is not that liquid. |
| Alameda Employee | [00:12:36 - 00:12:39] | That's what, 400, 400, 500? |
| Caroline Ellison | [00:12:39 - 00:12:45] | Yeah, I thought it was like 600 or something. I don't know. And then all our collateral and whatever, |
| [00:12:46 - 00:12:51] | every care and all the balances on exchanges. | |
| Alameda Employee | [00:12:56 - 00:13:08] | The initial open term loans that you said we took out, was the timeline of that pre-loadout and that's what caused those to get re-owned? Yeah. |
| Caroline Ellison | [00:13:07 - 00:13:15] | Yeah, I think the kind of taking out loans and buying stuff was mostly like second half of 2021 or something. |
| [00:13:26 - 00:13:28] | It seems like you took on something that evolved after the first crash this week. | |
| [00:13:33 - 00:13:34] | I think that was, I'm not very clear on the details here. | |
| [00:13:36 - 00:13:41] | But I guess that was the first time that FTX ended up | |
| [00:13:43 - 00:13:46] | with a significant shortfall. |
| Alameda Employee | [00:13:51 - 00:14:03] | Was there a plan to eventually pay this? Suppose this didn't happen, right? Was there in the roadmap of like, oh, when are we going to actually try to pay this back and make FTX users not fucked if this didn't happen? Or was this a whatever? |
| Caroline Ellison | [00:14:02 - 00:14:16] | Yeah, basically FTX was trying to raise in order to do this. But yeah, after the crash, no one wanted to invest. And I don't know, I guess there's like a question of like, should you |
| [00:14:17 - 00:14:22] | try raising like a big, like a deeply discounted valuation? | |
| [00:14:23 - 00:14:40] | Or would that just make people freak out more or something? Obviously, in retrospect, the plan of wait around for several months and for the market environment to get better and then raise. It did not work out. | |
| [00:14:52 - 00:14:52] | Doesn't finance allow FTX to be a happy high-tech company? | |
| [00:14:54 - 00:15:09] | Yeah. I think there's some hope that if we kind of end up with enough assets, some of those can get thrown into the deal or something so that FTX equity holders end up getting something in the deal. But I think that the all-new data is basically that way. | |
| Alameda Employee | [00:15:21 - 00:15:31] | What type of legal stuff is going to come out of this? I imagine there's several people in this scary place, like potentially yourself, which I hope wasn't the case. But you know, uh, I don't know. |
| Caroline Ellison | [00:15:31 - 00:15:32] | Mm-hm. |
| [00:15:34 - 00:15:35] | Yeah, I think I feel like I don't have a very good, detailed | |
| [00:15:37 - 00:15:43] | answer right now. There's like, yeah, we've hired a bunch of lawyers | |
| [00:15:44 - 00:15:50] | to start working on it. So I mean, I think the overall answer is like something like, | |
| [00:16:00 - 00:16:13] | I don't know. If the Binance deal goes through and all users get paid back, then there won't really be like that many people with grievances or something. That doesn't happen. There will be more people with grievances. | |
| Alameda Employee | [00:16:21 - 00:16:26] | There's like a selfish question, would we be at risk in the legal stuff? We didn't know what was going on, but. |
| Caroline Ellison | [00:16:30 - 00:16:31] | Yeah, I feel like I, yeah, I don't |
| [00:16:33 - 00:16:39] | know if I feel like comfortable taking a strong stance on that or something. | |
| [00:16:41 - 00:16:47] | Yeah. Feel free to talk to your own counsel or something. | |
| Alameda Employee | [00:16:53 - 00:17:00] | So regardless of the Binance deal going through, will it still wind down just to make the deal a little more attractive? |
| Caroline Ellison | [00:17:00 - 00:17:10] | Well, I think either way, our lenders are going to call all of our loans. So we do have to wind down all our positions at this point to redo them. |
| [00:17:16 - 00:17:47] | I think then it goes into the phase of bankruptcy process. I think the hopeful outcome would be that some consortium of bailout bidders or whatever wants to buy FTX or buy some of its assets or something. And therefore, users are able to get some that way. But they certainly might be like, care-cutted, like what happened with Voyager and some of that. | |
| Alameda Employee | [00:17:58 - 00:18:16] | In terms of FTT and the role that it played, I guess, with this, is it just that when the price went down, the loans that we had were finalized back in 2018, people wanted to recall those? Or is there more to them? I guess, like, some of it would have been. |
| Caroline Ellison | [00:18:16 - 00:18:33] | I mean, I think that's true. But I think that was actually not a huge factor in that the loans we have were a lot smaller notional than the amount that people withdrew from FTX. So I think the main factor is people getting spooked about FTX and withdrawing from there. |
| Alameda Employee | [00:18:36 - 00:18:39] | So the biggest factor is the fact that we have an FTX. |
| [00:18:45 - 00:18:53] | And was that collateralized by, was that basically officially done through the Spot Margin book, or was there some extra thing that kind of powered that? | |
| Caroline Ellison | [00:18:52 - 00:18:56] | It was not for the normal Spot Margin. |
| Alameda Employee | [00:18:56 - 00:18:58] | Oh, that seems pretty good. |
| [00:19:08 - 00:19:14] | What's the reason that we were not able to return the loan to FTX? Like, had we, like, was that for trading | |
| [00:19:15 - 00:19:20] | if it cost money or other loans? | |
| Caroline Ellison | [00:19:20 - 00:19:22] | It was basically used, like, the loan from FTX |
| [00:19:23 - 00:19:32] | was used to, like, repay our other loans. And those were used, like, by sort of illiquid investors. So it was really an FTX equity. | |
| Alameda Employee | [00:19:34 - 00:19:48] | What were the biggest types of that? What were the biggest illiquid investments that we made? What did you say? What were the biggest illiquid investments that we made? I know that if you ask this question, it's going to give us an idea of what the whole is. |
| Caroline Ellison | [00:19:48 - 00:19:51] | Yeah, I think, like, FTX equity, there was, like, the FTX equity |
| [00:19:52 - 00:20:10] | that we bought back from Binance, and then also. That was the Q.1 bill, right? Yeah, and then also some other FTX equity. That was, like, another billion or something, maybe. And then, yeah, GEA, which is this mining company, | |
| [00:20:17 - 00:20:20] | Anthropic, which is an AI lab, K-5, | |
| [00:20:20 - 00:20:36] | which is, like, people who talk to celebrities. How much did those costs? GA is a billion. Anthropic is 500. K-5 is 300. | |
| Alameda Employee | [00:20:36 - 00:20:38] | Voyager, BlockFi as well. |
| Caroline Ellison | [00:20:38 - 00:20:40] | BlockFi was, like, almost nothing. |
| Alameda Employee | [00:20:40 - 00:20:42] | Voyager, definitely. |
| Caroline Ellison | [00:20:42 - 00:20:46] | Oh, yeah, Voyager was, like, probably 100 or 200. |
| Alameda Employee | [00:20:46 - 00:20:49] | So if the deal goes down, then Binance, that was all those companies, no? |
| Caroline Ellison | [00:20:49 - 00:20:55] | No, so those are not part of the Binance deal by default. |
| [00:20:56 - 00:21:21] | But, I mean, we might end up trying to, like, either sell some of the, like, I think, maybe it doesn't necessarily make sense for them to all be, like, spurring into the Binance deal, because, like, maybe C&E, like, doesn't want all of them or something. But we might end up either, like, selling some of them to put more money into the Binance deal, or just, like, I guess, drawing them in, get C&E, like, one specific ones of them. | |
| Alameda Employee | [00:21:23 - 00:21:25] | So CP knows exactly how the whole shutdown happened |
| [00:21:29 - 00:21:30] | with the investors. And then, like, I'd say, it's already on the horizon. | |
| Caroline Ellison | [00:21:33 - 00:21:41] | I don't know exactly what was told to CP, but I think, like, we were pretty transparent with him in the distribution situation. |
| Alameda Employee | [00:21:47 - 00:21:54] | Do the venture investments cut under this, like, the in-looped investment's a little bit different? Yeah, that's what I was asking. |
| [00:22:06 - 00:22:11] | Why wasn't MTSU last part of the deal? Like, was it on one or the rest, but they didn't want to give it up? | |
| Caroline Ellison | [00:22:11 - 00:22:19] | I think both. I think C&E doesn't get along well with the US regulators, and SPF at least did get along well with them, so. |
| Alameda Employee | [00:22:21 - 00:22:26] | Wait, wouldn't that be more of a reason though for C&E to want to get more of a reason? And I think it's like you can only effectively leverage |
| Caroline Ellison | [00:22:24 - 00:22:41] | FTX US if you, like, get along well with the regulators, and, like, are generally, like, very difficult. Doesn't this all, like, start with, like, a tweet, where Sam was like, oh, CP, like, is it loud in the US or something? |
| Alameda Employee | [00:22:41 - 00:22:44] | Do you think that's actually what made them agree that this stuff worked? |
| Caroline Ellison | [00:22:44 - 00:22:47] | I have no idea. I don't know. |
| [00:22:49 - 00:22:54] | I think you should shed some light on this. I don't know. |
| Alameda Employee | [00:22:57 - 00:23:01] | But is that the reason it's pretty ethical to go out? So looking back, do you think that, like, what happened, |
| [00:23:03 - 00:23:08] | like, is inevitable, or would you think that you did this just, like, in the face of things that were inevitable? Like, inevitable at what point? | |
| Caroline Ellison | [00:23:10 - 00:23:22] | I don't think there was a great way to prevent that. No, OK. It's probably not inevitable at any point. It was definitely quite preventable, like, a year ago. |
| [00:23:23 - 00:23:24] | I guess I'm saying more, like, recently, like, if, you know, a balance sheet didn't lead, | |
| Alameda Employee | [00:23:25 - 00:23:34] | and then eventually you raise enough funds, you know, you would have really put this number out. Keep doing it. |
| [00:23:34 - 00:23:37] | Yeah, I think it's, I mean, I think | |
| Caroline Ellison | [00:23:42 - 00:23:42] | it's definitely possible that, yeah, we would have just |
| [00:23:43 - 00:23:54] | ended up raising money instead, and things have been fine, and now she kind of leads. I mean, I didn't, yeah, I mean, I think it was, like, it wasn't like this was, like, a random, like, crazy, like, | |
| [00:23:55 - 00:24:11] | happenstance, though. I didn't think it was, like, not unlikely to happen. Just, I don't know, in the course of, like, these things, or, you know, like, in the normal course of, like, these things, or. | |
| Alameda Employee | [00:24:13 - 00:24:15] | Do we know how our balance sheet got leaked, or? |
| Caroline Ellison | [00:24:16 - 00:24:17] | Uh, it's true, like, Sam thinks it was, like, CB. |
| [00:24:18 - 00:24:22] | I don't know how CB got it, but, I mean, | |
| [00:24:23 - 00:24:31] | we sent it to, like, a bunch of people, so if anything, it was, like, maybe surprising that our balance sheet didn't get leaked before that. | |
| Alameda Employee | [00:24:34 - 00:24:38] | At what moment were you aware that, like, this was gonna be an issue? |
| Caroline Ellison | [00:24:39 - 00:24:48] | That'd be, like, FTX, whatever, user deposits thing? Yeah. Or, like, the more recent, or, like, the actually being, like, a rung on FTX? |
| Alameda Employee | [00:24:48 - 00:24:53] | I'll be above. I'm sure there are different timelines, CB became aware of each thing, but, like, |
| Caroline Ellison | [00:24:53 - 00:24:56] | you know, I'm interested in all the answers. Um, yeah, I think I, it was probably, like, |
| [00:25:02 - 00:25:04] | early this year that I started to become aware of, | |
| [00:25:07 - 00:25:09] | like, the issues. | |
| [00:25:09 - 00:25:11] | Um, I think we kind of prior that, | |
| [00:25:12 - 00:25:16] | we maybe just, like, I don't know, | |
| [00:25:17 - 00:25:26] | didn't do a great job of accounting for all these investments, or a great job of, like, coordination or something, so I, uh, yeah, I feel like the trading side | |
| [00:25:27 - 00:25:30] | and the whatever FTX slash venture side | |
| [00:25:31 - 00:25:38] | weren't, like, sticking up that well on it. Um, so we weren't really, like, | |
| [00:25:39 - 00:25:41] | aware of the extent to which we were ending up leveraged. | |
| [00:25:45 - 00:25:50] | But, uh, yeah, I think once we started, like, I guess early this year, | |
| [00:25:51 - 00:25:56] | started, like, doing some better accounting and looking at things more closely. | |
| [00:25:58 - 00:26:04] | I think I was sort of, like, aware that there was, like, a significant problem by that point. Um, yeah. | |
| Alameda Employee | [00:26:08 - 00:26:16] | Who else was, like, aware of this? I mean, I'm guessing you and Sam certainly were. Like, I'm guessing there's probably very few people. |
| [00:26:16 - 00:26:17] | Uh, yeah, I don't, yeah, | |
| Caroline Ellison | [00:26:20 - 00:26:24] | I'm not even sure if I know exactly |
| [00:26:25 - 00:26:28] | who was aware. | |
| [00:26:30 - 00:26:33] | Um, I mean, I sort of feel like, to some extent, you can, like, | |
| [00:26:34 - 00:26:47] | you could piece it together if you, like, looked at, like, a pointer or, like, looked at, like, some spreadsheets for a bit or something. So it was, like, sort of possible for a lot of people to be aware of it, but I guess that most people weren't, so. | |
| Alameda Employee | [00:26:48 - 00:26:57] | I mean, like, more, like, explicitly aware, as in, like, told, like, this is what we're doing. Um... I'm sure, like, this wasn't just a YOLO thing, right? Like, um, you know. |
| Caroline Ellison | [00:27:00 - 00:27:04] | Yeah, I mean, I guess I've, I talked about it with, like, Sam, Rashad, and Harry, and, uh... |
| Alameda Employee | [00:27:31 - 00:27:36] | This is, like, for, like, um, a GX employee, I don't know how you all can see that. Basically, you're not going to. Uh, I don't know what the plan is. Uh, probably not, or, like, |
| [00:27:36 - 00:27:37] | I kind of assumed that if, you know, | |
| [00:27:39 - 00:27:40] | CZ does take it over, like, | |
| Caroline Ellison | [00:27:41 - 00:27:41] | he'll want to have employees. |
| [00:27:42 - 00:27:53] | Uh, I don't know. I don't know. I don't know. I don't know. I don't know. | |
| [00:27:55 - 00:28:07] | So I imagine people, like, happy to have people stay by default, uh, to, like, win things. Uh, I mean, I imagine a lot of people at FJX would want to work for CZ, though, so, uh... But... | |
| [00:28:10 - 00:28:12] | Yeah, I don't really know what the plan is. Uh, I don't know. | |
| [00:28:26 - 00:28:27] | Um... | |
| [00:28:32 - 00:28:34] | Sam, I guess. | |
| [00:28:49 - 00:28:50] | Uh, I think, like, FJX, | |
| [00:28:52 - 00:29:01] | uh, like, basically always allowed Alameda to, like, borrow user funds. So I don't know. | |
| Alameda Employee | [00:29:10 - 00:29:13] | Yeah. Did we have to listen to you come back over those? What was it? |
| Caroline Ellison | [00:29:14 - 00:29:14] | Uh, no. |
| [00:29:16 - 00:29:25] | Though we did most of the time in practice, I think, just because we had a lot of, you know, FTT on the exchange for instance, and there is other things. | |
| Alameda Employee | [00:29:28 - 00:29:31] | Did Alameda have the ability to touch user funds without getting approval from FJX each time? |
| Caroline Ellison | [00:29:35 - 00:29:47] | Uh, yeah. I mean, basically the structure was that, like, Alameda could, like, kind of go negative in coins without needing to actually borrow them on the spot margin. |
| Alameda Employee | [00:29:51 - 00:29:54] | What's the reason that MTT, like, was kept around as a thing for so long? |
| [00:29:55 - 00:30:08] | Because I guess my impression is that, you know, after, like, MTX Equity became a thing, it would be kind of phased out, but it seems like it's continued there. You know, there's still, like, the buy-in priority. | |
| Caroline Ellison | [00:30:08 - 00:30:36] | Yeah, I mean, I think it sort of, like, makes sense that, I don't know, some people would want Equity and other people would want, like, a token. They sort of serve different purposes, I don't know. Like, the token is, like, liquid and it's, like, kind of fun and, like, maybe you could stake it and get rewards or something and I could use, like, a more, like, legit official ownership thing. So, I don't know. I guess that makes sense to eventually borrow from. |
| Alameda Employee | [00:30:50 - 00:31:05] | Logistically, like, if you stay on the health, I want you to transition for a little bit. What does that look like for, like, all the employees that are working out of this office? Like, are we used to stuff, like, competition? Yeah, I think nothing is, yeah, nothing is changing for now. |
| Caroline Ellison | [00:31:04 - 00:31:11] | Like, yeah, working out of this office. Uh, competition, I will do my best to make sure payroll is still running. |
| [00:31:15 - 00:31:18] | Oh, okay. | |
| [00:31:20 - 00:31:23] | I'll have to look into the details of everything that I have actually seen before. |
| [00:26:25 - 00:26:28] | who was aware. | |
| [00:26:30 - 00:26:33] | Um, I mean, I sort of feel like, to some extent, you can, like, | |
| [00:26:34 - 00:26:47] | you could piece it together if you, like, looked at, like, a pointer or, like, looked at, like, some spreadsheets for a bit or something. So it was, like, sort of possible for a lot of people to be aware of it, but I guess that most people weren't, so. | |
| Alameda Employee | [00:26:48 - 00:26:57] | I mean, like, more, like, explicitly aware, as in, like, told, like, this is what we're doing. Um... I'm sure, like, this wasn't just a YOLO thing, right? Like, um, you know. |
| Caroline Ellison | [00:27:00 - 00:27:04] | Yeah, I mean, I guess I've, I talked about it with, like, Sam, Rashad, and Harry, and, uh... |
| Alameda Employee | [00:27:31 - 00:27:36] | This is, like, for, like, um, a GX employee, I don't know how you all can see that. Basically, you're not going to. Uh, I don't know what the plan is. Uh, probably not, or, like, |
| [00:27:36 - 00:27:37] | I kind of assumed that if, you know, | |
| [00:27:39 - 00:27:40] | CZ does take it over, like, | |
| Caroline Ellison | [00:27:41 - 00:27:41] | he'll want to have employees. |
| [00:27:42 - 00:27:53] | Uh, I don't know. I don't know. I don't know. I don't know. I don't know. | |
| [00:27:55 - 00:28:07] | So I imagine people, like, happy to have people stay by default, uh, to, like, win things. Uh, I mean, I imagine a lot of people at FJX would want to work for CZ, though, so, uh... But... | |
| [00:28:10 - 00:28:12] | Yeah, I don't really know what the plan is. Uh, I don't know. | |
| [00:28:26 - 00:28:27] | Um... | |
| [00:28:32 - 00:28:34] | Sam, I guess. | |
| [00:28:49 - 00:28:50] | Uh, I think, like, FJX, | |
| [00:28:52 - 00:29:01] | uh, like, basically always allowed Alameda to, like, borrow user funds. So I don't know. | |
| Alameda Employee | [00:29:10 - 00:29:13] | Yeah. Did we have to listen to you come back over those? What was it? |
| Caroline Ellison | [00:29:14 - 00:29:14] | Uh, no. |
| [00:29:16 - 00:29:25] | Though we did most of the time in practice, I think, just because we had a lot of, you know, FTT on the exchange for instance, and there is other things. | |
| Alameda Employee | [00:29:28 - 00:29:31] | Did Alameda have the ability to touch user funds without getting approval from FJX each time? |
| Caroline Ellison | [00:29:35 - 00:29:47] | Uh, yeah. I mean, basically the structure was that, like, Alameda could, like, kind of go negative in coins without needing to actually borrow them on the spot margin. |
| Alameda Employee | [00:29:51 - 00:29:54] | What's the reason that MTT, like, was kept around as a thing for so long? |
| [00:29:55 - 00:30:08] | Because I guess my impression is that, you know, after, like, MTX Equity became a thing, it would be kind of phased out, but it seems like it's continued there. You know, there's still, like, the buy-in priority. | |
| Caroline Ellison | [00:30:08 - 00:30:36] | Yeah, I mean, I think it sort of, like, makes sense that, I don't know, some people would want Equity and other people would want, like, a token. They sort of serve different purposes, I don't know. Like, the token is, like, liquid and it's, like, kind of fun and, like, maybe you could stake it and get rewards or something and I could use, like, a more, like, legit official ownership thing. So, I don't know. I guess that makes sense to eventually borrow from. |
| Alameda Employee | [00:30:50 - 00:31:05] | Logistically, like, if you stay on the health, I want you to transition for a little bit. What does that look like for, like, all the employees that are working out of this office? Like, are we used to stuff, like, competition? Yeah, I think nothing is, yeah, nothing is changing for now. |
| Caroline Ellison | [00:31:04 - 00:31:11] | Like, yeah, working out of this office. Uh, competition, I will do my best to make sure payroll is still running. |
| [00:31:15 - 00:31:18] | Oh, okay. | |
| [00:31:20 - 00:31:23] | I'll have to look into the details of everything that I have actually seen before. |
| Alameda Employee | [00:31:30 - 00:31:36] | Do you have any bonuses or null in any class? Like, FTX International Equity is null? |
| Caroline Ellison | [00:31:36 - 00:31:44] | Uh, yeah, FTX International Equity is null. FTX US is, yeah, it is a good end of year. |
| Alameda Employee | [00:32:00 - 00:32:12] | Did Alameda take any steps, like, other than sort of wait and see to, like, proactively start winding down as the problems started mounting? Or were we kind of putting all our chips on market conditions just to improve it? Um, we, I wouldn't exactly say we proactively started winding down. |
| Caroline Ellison | [00:32:16 - 00:32:58] | I think that, well, I guess the problem, like, in terms of the problems mounting, I guess they sort of, maybe they mounted in, like, May and June and then were sort of flat and then, like, the balance sheet came out and then, like, kind of spiraled in a couple days. So, like, yeah, I mean, once the, whatever, once the balance sheet came out, there was not very much time after that. Right. In terms of, like, yeah, after, like, May and June, I mean, we did, like, kind of hedge more of our exposure, which, like, turned out to actually be bad. Well, I don't know, I guess the thinking being that, like, oh, if crypto goes down, then we're more likely to have, like, withdrawal issues. |
| [00:32:59 - 00:33:11] | But then, in fact, crypto didn't go down, but then we had to really, really withdraw issues anyway, and then also they got a little tight on the edges. Yeah. | |
| Alameda Employee | [00:33:36 - 00:33:38] | John? |
| Caroline Ellison | [00:33:43 - 00:33:51] | I joined a little bit late, so sorry if this question has already been asked earlier, but is there anything being done for employees who kept funds in their employee accounts? |
| [00:33:52 - 00:33:53] | Yeah, that's a good question. | |
| [00:33:54 - 00:34:06] | I guess my current hope is that FTX users will have their deposits made whole, and so that would include employees. | |
| [00:34:07 - 00:34:09] | If that doesn't happen, yeah, TDD, I guess. | |
| [00:34:15 - 00:34:18] | Yeah, that's sorry, I know that's, like, a very shitty answer, and it feels very shitty for, like, employees who relied on the trusted FTX to end up getting hurt by that. | |
| Alameda Employee | [00:35:02 - 00:35:02] | Okay. What about FTX? |
| Caroline Ellison | [00:35:02 - 00:35:32] | Yeah, it's pretty legit. I mean, it didn't have the same thing where Alameda was allowed to, like, go negative. I believe they, like, ran all of the, like, books and maybe found that there was, like, a $40 million shortfall in user balances from some, like, random accounting errors, but that's, like, easy to cover. So, yeah, they're fine and don't have any problems, basically, except that, I think they're, like, whatever, withdrawals have been kind of slow because, like, Alameda has the capital to, like, leave a bunch of, like, stablecoins in the hot wallet. |
| [00:35:50 - 00:35:51] | I'm gonna guess not. | |
| Alameda Employee | [00:35:58 - 00:36:09] | So even if the finance bill goes through and everyone's in a hole and we have, like, we can repay our loans and we have, like, some amount of money left, like, is there some chance that we'll start trading again as Alameda? |
| Caroline Ellison | [00:36:10 - 00:36:16] | Yeah, I wouldn't say there's zero chance. Like, I think there is some chance that that could make sense. I just kind of, like, I think it's, like, not the default outcome, so I don't want to, like, kind of have people, like, assume that that will be the case. |
| [00:36:28 - 00:36:36] | Yeah, I mean, honestly, if nothing else, we should probably change the name. I feel like I don't need a reputation for being so great right now. | |
| Alameda Employee | [00:36:40 - 00:36:43] | You're all, like, cottonwood employees, no? |
| [00:36:44 - 00:36:45] | What? Cottonwood? I was a cottonwood employee. | |
| Caroline Ellison | [00:36:48 - 00:36:53] | Oh, yeah, that's true. Yeah, you're not an Al- I'm an Alameda. |
| Alameda Employee | [00:36:53 - 00:36:57] | I'm a cottonwood employee. |
| [00:37:15 - 00:37:21] | Is there going to be, like, a statement made? Like, a public? | |
| Caroline Ellison | [00:37:22 - 00:37:32] | Yeah, I don't know. Alameda, I feel like maybe we should just never say anything publicly again and hope people forget about us in time. |
| [00:37:33 - 00:37:50] | Like, SAM or FTX, I imagine, like, yeah, I'm guessing they will make, like, more of a- I mean, just because they haven't said that much publicly yet, I'm guessing they will make more of a detailed public statement at some point. I don't know how detailed that will end up getting. |
| Alameda Employee | [00:37:52 - 00:37:59] | I guess, like, are we expecting the details of what exactly happened to get out eventually? Or, like, you know? |
| Caroline Ellison | [00:38:05 - 00:38:06] | Yeah, not sure. I mean, I guess Michael Lewis is writing a book about it, so, you know, in that sense. |
| Alameda Employee | [00:38:19 - 00:38:40] | Has CZ in the talks of the bailout agreement, like, indicated anything specific about Alameda? Like, he wants to look at Alameda's books, or he has this idea about Alameda, or the deal would only go through if Alameda did X or anything like that, or is it strictly with FTX International? |
| Caroline Ellison | [00:38:40 - 00:38:45] | No, I think he's basically just been interested in FTX International. |
| Alameda Employee | [00:38:48 - 00:38:56] | He kind of clearly realized, though, that he should be looking into Alameda's books once he looks into FTX International's books, right? Like, it should be pretty obvious. |
| Caroline Ellison | [00:38:57 - 00:39:06] | Yeah, I mean, I think it's like, I think it doesn't necessarily make sense for him to look into Alameda's books. I feel like he could just say, like, give me X dollars of cash, and then you figure out how to, like, generate that from Alameda's books or something. Like, if you've ever looked at Alameda's books, they're very confusing. |
| Alameda Employee | [00:39:22 - 00:39:31] | Does FTX International plan to continue offering trading during this time, or do they plan to stop trading while this is being figured out? I think they definitely want to continue trading. Yeah, I guess it is, like, I think they would like to kind of resume withdrawals and get back to normal as soon as possible. |
| Caroline Ellison | [00:39:31 - 00:39:44] | Can't really do that until they get the money from finance. I don't think they have any plans to stop trading in the meantime, so I guess things could get weird if they're trading for a really long time without any withdrawals. Coins are totally detached from other prices, but yeah. |
| [00:39:54 - 00:39:57] | Can you say FTX Connects or FX? | |
| Alameda Employee | [00:40:06 - 00:40:09] | You see how many trades are already pretty weird on FTX? Yeah. I haven't really been paying attention to this, my impression from just, like, glamping at Phil's summary sometimes. |
| [00:40:18 - 00:40:35] | It's part of helping Alameda wind down or anything like that. Alameda obviously had a mandate to help provide lots of liquidity on FTX. Is that still going to be a big part of, like, as an example today we got a lot of bad BLT bills and stuff like that. | |
| Caroline Ellison | [00:40:34 - 00:40:38] | Yeah, that's a good question. I don't really know what the plan is for BLTs on FTX. We have some good ideas. |
| Alameda Employee | [00:40:41 - 00:40:47] | You can't even withdraw USTX. |
| [00:40:52 - 00:40:58] | We're just losing FTX US money. Sorry, FTX and natural money by far. | |
| [00:41:01 - 00:41:03] | What's the number one thing that CZ could find in his DD that would make him kill the other one? | |
| Caroline Ellison | [00:41:08 - 00:41:21] | I don't actually know. I feel like FTX is pretty straightforward business in a way, except for having a big shortfall in user balances. Something he knows about that. So, yeah, I don't know. But, I mean, also, I guess I understand his desire to do at least some amount of DD, because I feel like the LOI was signed based on, like, he had a phone call with Sam, and Sam was like, oh yeah, here are three indicative numbers about FTX. |
| [00:41:23 - 00:41:43] | It's cool. Probably want to look at a few more numbers. | |
| [00:41:45 - 00:41:54] | I think he was interested in a lot of things like user numbers and trading volume by user. I don't know. | |
| [00:41:55 - 00:41:59] | And the shortfall. Yeah, and the shortfall. I understand that one of our biggest liquid bags that we've had for a long time is like locked Solana, like, one of the locked on chain. I'm sure we've talked to a lot of people, like, what's the communication with them? And I'm sure that like, out of all things you've been looking at the most, that's probably one of the more attractive things. | |
| Alameda Employee | [00:42:04 - 00:42:18] | Yeah, that's reasonable. I don't think we've talked to Solana people, or, I feel like we've, whatever, talked to them like once or something and they were like, oh, like, no, you can't sell it, it's locked. But, I mean, that was obviously like a different time from now. |
| Caroline Ellison | [00:42:19 - 00:42:38] | So, yeah, maybe we should revisit that. |
| [00:42:41 - 00:42:44] | So are we going to be trying to liquidate to make sure we can all these liquid investments for Solana? |
| [00:48:54 - 00:48:56] | I don't know, this is a dumb question, but like what exactly is going bankrupt to mean? | |
| Caroline Ellison | [00:49:09 - 00:49:13] | I think like, |
| [00:49:19 - 00:49:35] | I don't know, I think unless something changes, we'll probably be able to pay our loans back. Like, that doesn't mean that we wouldn't necessarily go through a bankruptcy process. Like, I think you like, | |
| [00:49:36 - 00:49:47] | that's like a thing if you just like have a bunch of outstanding loans and it's, you know, you have enough paid back probably, but it's sort of complicated. You like go through like an official bankruptcy process. | |
| Alameda Employee | [00:49:54 - 00:50:03] | Maybe this was answered before, but like what does, please assume that this is easy, easy pulls out and this is true. What is Alameda look like in the next month or so? I think that actually like, |
| Caroline Ellison | [00:50:06 - 00:50:13] | whether or not the CZ deal happens maybe doesn't affect like Alameda's next steps that much. Like it's kind of just like winding down and repaying loans. |
| Alameda Employee | [00:50:29 - 00:50:37] | What do we do with like the X amount of left after? |
| Caroline Ellison | [00:50:41 - 00:50:42] | Unclear. |
| Alameda Employee | [00:51:12 - 00:51:17] | Like is there some interpretation of that which is accurate or was it sort of like an admission? Yeah, there's definitely an interpretation that says accurate. |
| Caroline Ellison | [00:51:18 - 00:51:27] | I think had whatever like five billion of serum and like whatever, |
| [00:51:28 - 00:51:35] | 20 billion of FTX or FTX equity at like previous marks that was like on the balance sheet. | |
| [00:51:37 - 00:51:38] | But yeah, I mean, obviously it was kind of a misleading thing to tweet. | |
| [00:51:45 - 00:51:51] | So I think it was like literally true. | |
| [00:51:53 - 00:51:55] | Yeah, feel bad about that. | |
| Alameda Employee | [00:52:53 - 00:53:05] | Okay. We didn't have like perfect 20 bid or nuanced visibility into the books, I guess, or like accurate visibility and everything. Like when, with the 22 bid was that like, could Alameda have actually purchased 500 million at 22? |
| Caroline Ellison | [00:53:08 - 00:53:09] | I mean, like before there were like $5 billion of FTX withdrawals, I don't know. |
| Alameda Employee | [00:53:21 - 00:53:23] | But like the plan would have been to continue. |
| Caroline Ellison | [00:53:25 - 00:53:27] | Yeah, I mean, I also didn't like to be clear. I also like thought it was very low chance that he took me up on it. |
| Alameda Employee | [00:53:52 - 00:53:54] | How was Alameda able to get all of those loans to make those venture investments? |
| [00:53:57 - 00:54:03] | How were we able to get them? | |
| Caroline Ellison | [00:54:05 - 00:54:13] | I don't know. Did you ever read about like, selfiness or three arrows or whatever? Crypto lending space was kind of wild for a long time. |
| [00:54:15 - 00:54:16] | People had a lot of money, didn't really like read your balance sheet. Just lent you a lot of money. | |
| [00:54:43 - 00:54:44] | Are you asking which legal entity they were purchased in? | |
| [00:54:47 - 00:54:56] | I think the number one would be Euclid Way. Number two would probably be Alameda Research Ventures LLC. | |
| [00:55:04 - 00:55:16] | Number three would be Alameda. Number four would be Alameda Ventures, LPD. Number five would be FTX Ventures. | |
| [00:55:57 - 00:55:58] | More questions? | |
| Alameda Employee | [00:56:03 - 00:56:06] | Motherfucker. |
| Caroline Ellison | [00:56:16 - 00:56:21] | Thanks again guys. I really appreciate all of you bearing with us. |
| Alameda Employee | [00:56:27 - 00:56:34] | Thank you for answering all these. I'm sure this is not that fun for you, but I'd certainly appreciate how open you're being. |
| Caroline Ellison | [00:56:34 - 00:56:37] | Thanks. I mean, it was kind of fun. |
| [00:56:37 - 00:56:37] | Oh, okay. Never mind. |