Federal prosecutors said that Caroline Ellison, a top affiliate and ex of FTX founder Sam Bankman-Fried, blamed the embattled cryptocurrency mogul for using FTX customer deposits in a recording from a company meeting.
In a revelatory new court filing laying out evidence on Monday, prosecutors said that they had obtained and planned to use a covert recording made by an Alameda Research employee during an all-hands meeting, where Ellison directly blamed Bankman-Fried for using customer money as the company imploded.
The recording was made days before crypto platform FTX went bankrupt. Prosecutors claim it adds to the evidence that Bankman-Fried held decision-making power while Ellison helmed Alameda Research, his hedge fund.
Ellison told Alameda employees about the impending bankruptcy in the recording, prosecutors claimed.
"Alameda will likely wind down once we can, like, repay all of our creditors and sort of wind down a bunch of our, like, whatever remaining obligations we have," Ellison said in the meeting, per prosecutors. "I guess, mostly I wanna say, like, I'm sorry. This really sucks."
Federal prosecutors said that one employee pushed back, asking who decided to use FTX customer deposits.
"Um…Sam, I guess," Ellison said in response, per the doc.
Prosecutors will also introduce a memo authored by Ellison, titled, "Things Sam Is Freaking Out About," per the court filing. The memo tracks bad press around Alameda and FTX, but also shows Ellison's reflections on the alleged scheme between FTX and Alameda, prosecutors said.
They argued that the memo reinforced that she was acting on Bankman-Fried's behalf. They plan to introduce the document at trial, per the filing.
The pair dated on and off after Bankman-Fried made her co-CEO of Alameda.
Bankman-Fried's attorney did not immediately return Insider's request for comment.
In January, Bankman-Fried was charged with illegally siphoning money from FTX customers to Alameda. He pleaded not guilty to eight criminal charges ranging from securities fraud to money laundering.
The disgraced crypto figure was initially kept under a $250 million bail on house arrest, but last Friday he was remanded to a New York prison known for its poor conditions, for witness tampering. Bankman-Fried leaked Ellison's diary entries in July, which prosecutors said constituted witness tampering.
Ellison pleaded guilty to charges of wire fraud and money laundering in December 2022, and prosecutors said she will be a key witness for the case, along with other Alameda colleagues.
"Ellison will also describe the events in November 2022 when FTX began to unravel and customer withdrawals surged, and how the defendant tried to maintain his charade," prosecutors said in court documents.
Bankman-Fried's trial is set for October 2.
