- A former software engineer working at a trading firm affiliated with FTX realized the company was on the verge of collapse when he couldn’t order food
- Days later, the $32 billion company filed for bankruptcy — its employees were accustomed to receiving generous perks from 31-year-old CEO Sam Bankman-Fried
- The meeting by Caroline Ellison, CEO of Alameda Research and ex-girlfriend of SBF, confirmed how he had allowed Alameda to use FTX users’ deposits
A former software engineer who worked at cryptocurrency exchange FTX’s sister trading firm, Alameda Research, recounted the moment he realized the exchange was on the verge of collapse after a company credit card used for food orders failed was accepted.
It was November last year when Aditya Baradwaj was working in the company’s offices in Hong Kong, waiting for news about FTX’s fate after the $32 billion company filed for bankruptcy.
Thanks to 31-year-old FTX CEO Sam Bankman-Fried, the company’s employees have long been showered with extravagant perks.
On November 9, 2022, while colleagues anxiously awaited news, the group decided to order food – but to their shock, the card was declined.
It was the beginning of the end for the troubled trading company.
Aditya Baradwaj, a former software engineer who worked at a trading firm affiliated with FTX, realized the company was on the verge of collapse when they couldn’t order food using the company credit card. In a meeting with Caroline Ellison, 28, the CEO of Alameda Research and SBF’s ex-girlfriend, confirmed how Bankman-Fried had allowed Alameda to use FTX users’ deposits
“We ordered our lunch in the afternoon, as always.” When we tried to order our food in the evening, the app said “credit card declined”. “That was the moment we realized the company was probably bankrupt,” Baradwaj told the New York Post.
“We were afraid. This thing made international headlines. My friends and family have been calling me, I’m getting all these calls. “I’m sitting in a hotel in Hong Kong and I don’t want to be thrown into Chinese prison.”
How desperate the situation had become became shockingly clear when Caroline Ellison, CEO of Alameda Research and Bankman-Fried’s ex-girlfriend, held a company-wide meeting.
Some workers tuned in via video link while others sat on bean bags in the office as Ellison broke down in tears.
“I think most of the time I want to say, I’m sorry. “This really sucks,” Baradwaj remembers 28-year-old Ellison crying.
Bankman-Fried has pleaded not guilty to charges that he siphoned off company money to make lavish real estate purchases, make political contributions and prop up his hedge fund. “In my opinion, there was one pivotal event, which was Caroline’s confession,” Baradwaj said that Caroline Ellison, 28, the CEO of Alameda Research, was a good boss and “seemed to be a kind person.”
“I think my current standard plan is that Alameda will likely be dissolved once we can repay all of our creditors and settle a number of our remaining obligations,” Ellison told the assembled workers.
“Who made the decision about its use?” [FTX] User deposits?’ an Alameda employee asked Ellison.
“Um…Sam, I guess,” she replied.
Ellison’s conversation with employees will likely play a crucial role in the upcoming federal trial in which Bankman-Fried is charged with allegedly embezzling billions of dollars in customer funds.
“After that meeting, we all left the office and never spoke to Caroline after that,” Baradwaj said. “Caroline even tried to strike up a conversation with someone but was ignored. “Nobody wanted to engage with her.”
“He’s definitely guilty.” We know he’s guilty because Caroline basically admitted it, back in mid-November, in the heat of the moment, before she’d consulted any lawyers, even before the bankruptcy. She confessed to us and there is a recording of the confession,” Baradwaj told the Post.
“For me there was one central event, which was Caroline’s confession,” Baradwaj emphasized.
On the day of the meeting there was no capital available for business and Bankman-Fried gave no guidance on how to proceed.
As soon as the meeting ended, Baradwaj, along with his blind colleagues, quickly made plans to leave the country and leave Hong Kong.
Two days later, on November 11th, FTX, Alameda and their affiliates filed for bankruptcy.
Until the last meeting, Baradwaj said Ellison was a friendly person and an effective manager who was forgiving of mistakes and worked to create a pleasant social environment in the company.
Disgraced FTX founder Sam Bankman-Fried is expected to remain in prison ahead of his trial in October after a US appeals court upheld a judge’s decision to deny his release
“My impression of Caroline until the end, when she confessed to us what they had done, was that she was a good boss,” Baradwaj said. “She seemed like a friendly person.”
Ellison has since pleaded guilty to fraud charges and is expected to testify against Bankman-Fried.
In her writings, she described feeling “dissatisfied and overwhelmed” with her job and “hurt/rejected” by the breakup with Bankman-Fried.
Ellison told a New York court last year that she ran Alameda Research and had access to essentially an “unlimited” amount of FTX customer funds.
Ellison admitted that she agreed with Bankman-Fried to make “materially misleading financial reports” to conceal the arrangement – which she knew was illegal.
She confessed that she agreed with Bankman-Fried to make “materially misleading financial reports” to conceal the arrangement – which she knew was illegal.
The first signs of trouble emerged a week earlier, on November 2, when a leaked financial statement from Alameda Research raised questions about the solvency of FTX and its subsidiaries and triggered a wave of withdrawals.
At one point, Ellison reportedly asked Alameda traders to withdraw capital from other exchanges to ensure FTX could meet withdrawal requests.
“Her urgency in delivering this message was unlike anything we had ever seen from her before.” We could sense something was wrong. “We have never had to withdraw capital from the exchanges on which we traded and essentially stop our trading activities,” Baradwaj explained.
Bankman-Fried was arrested at his home in the Bahamas and charged with securities fraud, money laundering and campaign finance violations.
He pleaded not guilty to seven counts of fraud and conspiracy related to the collapse of FTX.
‘Mister. Bankman-Fried maintains his innocence and looks forward to his day in court,” Bankman-Fried spokesman Mark Botnick said in a statement.
Bankman-Fried is being held at the Metropolitan Detention Center in Brooklyn
Bankman-Fried is alleged to have siphoned off corporate funds to make lavish real estate purchases, make political donations and fund risky trades at Alameda Research, his cryptocurrency hedge fund.
Prosecutors accuse him of looting billions of dollars of FTX customer funds to offset losses at Alameda, buying luxury real estate and donating to political campaigns in the US.
His trial on federal fraud charges is scheduled to begin Oct. 3 in Manhattan. If convicted, he could face more than 100 years in prison.
Several other former FTX executives have pleaded guilty to fraud and conspiracy charges and are cooperating with investigators.
The lawsuit alleges that Bankman, a Stanford University law professor and tax law expert, and Fried, a retired Stanford University law professor, were involved in the misconduct that led to FTX’s collapse and both criminal and civil investigations resulted.