‘Holy s**t, the company is probably broke’: Former FTX employee reveals the moment he realized the business was collapsing – after he tried to order takeout and the card got declined

A former software engineer who worked at Alameda Research, the sister trading company of cryptocurrency exchange FTX, has told of the moment he realized it was on the verge of collapse after a company credit card used to make takeout orders fell through.

It was November last year when Aditya Baradwaj was working in the company’s Hong Kong offices awaiting news of FTX’s fate after the $32 billion company filed for bankruptcy.

The company’s employees have long been showered with extravagant benefits thanks to 31-year-old FTX CEO Sam Bankman-Fried.

As colleagues anxiously waited for news of what was happening, the group decided to order food on November 9, 2022, but to their horror the card was declined.

It marked the beginning of the end for the struggling trading company.

‘We ordered our lunch in the afternoon, as usual. When we went to order our food in the evening, the app said ‘credit card declined’. That’s when we realized, ‘Damn, the company is probably bankrupt,'” Baradwaj told the New York Post.

‘We were afraid. This thing made international news. My friends and family were calling me, I’m getting all these calls. I’m in a hotel in Hong Kong and I don’t want to end up in Chinese prison.’

Just how desperate the situation had become was made shockingly clear when Caroline Ellison, CEO of Alameda Research and Bankman-Fried’s ex-girlfriend, held a company-wide meeting.

Some employees joined in via video link, while others sat on beanbags in the office as Ellison broke down in tears.

‘I think what I mainly want to say is: I’m sorry. This really sucks,” Baradwaj remembers Ellison, 28, crying.

“I think my current default plan is that Alameda will probably wind down once we can pay off all of our creditors and reduce some of our remaining liabilities,” Ellison explained to the assembled workers. .

“Who made the decision about using (FTX) user deposits?” an Alameda employee asked Ellison.

“Um…Sam, I guess,” she replied.

Ellison’s conversation with the employees will likely play a crucial role in the upcoming federal trial accusing Bankman-Fried of embezzling billions of dollars in customer funds.

“We all left the office after that meeting and never spoke to Caroline again,” Baradwaj said. ‘Caroline even tried to strike up a conversation with someone, but she was ignored. Nobody wanted to talk to her.’

‘He is certainly guilty. We know he’s guilty because Caroline basically admitted it, and this was in mid-November, in the heat of the moment, before she had consulted lawyers, even before the bankruptcy. She confessed to us, and there is a recording of the confession,” Baradwaj explained to The Post.

“In my mind there was one central event, and that is Caroline’s confession,” Baradwaj emphasized.

On the day of the meeting, no capital was available for transactions and no advice was forthcoming from Bankman-Fried on how to proceed.

As soon as the meeting ended, Baradwaj, along with his blinded colleagues, quickly made plans to leave the country and leave Hong Kong.

Two days later, on November 11, FTX, Alameda and their affiliated entities filed for bankruptcy.

Up until the last meeting, Baradwaj said Ellison had been a kind person and an effective manager, who forgave mistakes and was someone who strove to create a pleasant social environment within the company.

“My impression of Caroline, until the end when she admitted to us what they had done, was that she was a good boss,” Baradwaj said. “She seemed like a nice person.”

Ellison has since pleaded guilty to fraud charges and is expected to testify against Bankman-Fried.

In her writings, she describes feeling “unhappy and overwhelmed” with her job and “hurt/rejected” by a breakup with Bankman-Fried.

Ellison told a New York court last year that she headed Alameda Research and effectively had access to an “unlimited” amount of FTX client money.

She admitted that she agreed with Bankman-Fried to issue “materially misleading financial statements” to conceal the scheme – which she knew was illegal.

The first signs of trouble came a week earlier, on November 2, when a leaked balance sheet from Alameda Research raised questions about the FTX and the solvency of its subsidiaries, triggering a wave of withdrawals.

At some point, Ellison would be demanded Alameda’s traders raise capital from other exchanges to ensure FTX can meet withdrawal requests.

“Her urgency in delivering this message was unlike anything we had ever seen from her before. We could feel something was wrong. “We have never before had to withdraw capital from the exchanges we were trading on and essentially halt our trading activities,” Baradwaj explains.

Bankman-Fried was arrested at his home in the Bahamas and indicted on charges of securities fraud, money laundering and campaign finance violations.

He has pleaded not guilty to seven counts of fraud and conspiracy stemming from the collapse of FTX.

‘Mr. Bankman-Fried maintains his innocence and looks forward to his day in court,” Bankman-Fried spokesman Mark Botnick said in a statement.

Bankman-Fried allegedly siphoned corporate funds to make lavish real estate purchases, spend political donations and finance risky trades at Alameda Research, his cryptocurrency hedge fund.

Prosecutors accuse him of plundering billions of dollars of FTX client funds to plug losses at Alameda, buying luxury real estate and donating to U.S. political campaigns.

His federal fraud trial is scheduled to begin Oct. 3 in Manhattan. If convicted, he faces more than 100 years behind bars.

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 law professor, participated in the misconduct that led to FTX’s collapse and resulted in both criminal and civil investigations.