On Nov. 8, 2022, as the FTX crisis unfolded, sister trading firm Alameda Research CEO Caroline Ellison gathered around fifteen employees for an all-hands meeting in the Hong Kong office. It was around 11 p.m. local time, about 24 hours after an announcement by Sam Bankman-Fried, FTX's CEO at the time, that he would be selling the company to Binance and its CEO Changpeng "CZ" Zhao, his longtime rival. Around ten to fifteen more employees joined the meeting via teleconference in the Bahamas, where it was 10 a.m. 

In the meeting, seemingly unburdened by the prospect of CZ's bailout, Ellison told her employees exactly what, in her view, went wrong: Alameda had borrowed large amounts of capital via open-term loans from third-party lenders in order to buy out Binance's original equity stake in FTX and make a series of illiquid venture investments. When those loans were called following the crypto market downturn in May 2022, they borrowed from FTX customers in order to repay their lenders, causing the shortfall in deposits. When asked who decided that borrowed customer funds be used to repay the loans, Ellison responded, "Sam, I guess." 

Unknown to Ellison, the meeting was being recorded. Though the existence of the recording has been known since a court filing in August, clips from the recording of the meeting were played in court today for the first time. They were made available to The Block by the United States Attorney's Office for the Southern District of New York.

Clip 1: FTX FUD

Clip 2: Filling the hole

Clip 3: Spot margin

Clip 4: Nervous laughter

Clip 5: Like, a YOLO thing

Clip 6: Sam, I guess