Alameda Research CEO Caroline Ellison said that the trading firm used customer funds from crypto exchange FTX to repay loans.

According to an article published on Monday, Ellison and FTX CEO Sam Bankman-Fried, who also owns Alameda, admitted to underestimating the risks of Alameda’s large margin position on FTX.

Speaking about the events that ultimately led to the collapse, Ellison said Alameda had taken out loans to make venture capital investments and meet other expenses. She said that lenders recalled the loans they had made to Alameda after LUNA’s downfall triggered a crypto market crash in May. Following the crash, Ellison explained that Alameda no longer held enough funds to pay for the loans.

In a company meeting, Ellison reportedly said that Alameda used FTX customer deposits to make the payments – an arrangement that only two FTX executives knew about besides herself and Bankman-Fried. These executives were the exchange’s head of engineering, Nishad Singh, and its chief technology officer, Gary Wang.

Bankman-Fried said Alameda’s large position of borrowed funds was “substantially larger” than he thought it was. The FTX CEO did not disclose the size of the position but said it was in “the billions of dollars”.

While the open admission by the FTX executives in the New York Times article shocked members of the crypto community, many were also angered by the tone used to describe their likely criminal activities.

“Why would you write a puff piece about the biggest scammer in crypto’s history? Like what was the logic here exactly?” tweeted The Daily Gwei founder Anthony Sassano.

“NYTimes piece on SBF is bizarre. It describes a series of scams / fraud in the fraudsters words (intended to whitewash the incident), w/ almost no interjection or explanation. Should explain VC investments w/ loaned $ and paying off loans w/ customer funds are crimes w/ victims,” tweeted Uniswap founder Hayden Adams.

Market participants were unsatisfied with Ellison’s explanation of where these customer funds actually went. Jacob Franek of AllianceDAO said that the “venture investments” she described fails to account for the extent of the loss on the entity’s balance sheet.

Thursday, November 17, 2022, 4:15pm ET: An earlier version of this article stated Caroline Ellison told the NYT that the trading firm used customer funds to pay Alameda’s loans, when she instead stated this in a company meeting.