FTX’s Nishad Singh pleads guilty, tightens legal screws on Sam Bankman-Fried

Getting your Trinity Audio player ready...

Nishad Singh has pleaded guilty to criminal charges over his role in the downfall of the FTX exchange, while America’s securities and commodities regulators have hit Singh with civil fraud charges.

On Tuesday, Singh, the former head of engineering at both FTX and its affiliated market-maker Alameda Research, entered guilty pleas to six criminal charges, including wire fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering, and conspiracy to violate campaign finance laws.

Damian Williams, U.S. Attorney for the Southern District of New York, released a statement saying the 27-year-old Singh’s guilty plea “underscores once again the crimes at FTX were vast in scope and consequence.” Williams added that “these crimes demand swift and certain justice and that is exactly what we are seeking.”

Singh was released on a $250,000 personal recognizance bond and reportedly received assurances from prosecutors that they would seek a custodial sentence below the 75-year maximum that his charges allow. Singh’s attorneys issued a statement saying their client “wants to do everything he can to make things right for victims, including by assisting the government to the best of his ability in this case.”

Singh was reportedly seeking a plea deal as early as mid-January, following in the footsteps of former Alameda CEO Caroline Ellison and former FTX CTO Zixiao ‘Gary’ Wang, both of whom were charged last December.

The fact that so many FTX/Alameda alumni have agreed to dish the dirt on their criminal antics spells serious trouble for Sam Bankman-Fried (SBF), the capo di tutti capi of all things FTX/Alameda. SBF is facing multiple criminal charges, including a superseding indictment filed just last week, as well as civil charges filed by both the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

Those civil charges have been put on hold until after SBF’s criminal trial, which is slated to get underway in October. SBF is (for the moment) out on his own bond, but his refusal to abide by the rules of his release may see him (finally) clapped in irons to ensure he can’t intimidate potential witnesses or move any assets that rightfully belong to FTX’s customers.

It’s perhaps worth remembering that SBF’s infamous text chat with a Vox reporter last November included SBF’s view that Singh was among the FTX principals who were “scared” by what the future held. SBF added that FTX’s collapse had hit Singh “HARD” and that Singh felt “ashamed and guilty” over his role in the debacle.

The sheer number of former FTX/Alameda bigwigs who have been dishing SBF’s darker secrets to the feds has to be wearing on him. With each new guilty plea, SBF loses more leverage. Should the day finally come when he realizes he has no defense left to make, he’ll only have a couple of entities on which he can fink to spare him the full 115 years he’s currently facing.

Emotionally distressed by reality

On Tuesday, the SEC and CFTC chimed in with their own fraud charges against Singh. The SEC is seeking various penalties, including disgorgement of ill-gotten gains, additional financial penalties, and keeping Singh away from other corporate boardrooms or trading platforms.

The SEC’s complaint lays out the now-standard litany of eye-rolling anecdotes, including SBF’s late-2021 realization that FTX was $50 million shy of his publicly declared goal of $1 billion in annual revenue. To make good on his boast, SBF had Singh transfer $50 million from another entity under SBF’s control, claim it as revenue, backdate a series of fraudulent transfers, and then lie about it to auditors.

The SEC says Singh was fully aware that Alameda was a truly inept trading unit and was dipping into billions’ worth of FTX customer deposits to paper over Alameda’s losses. Singh helped create the software that exempted Alameda from FTX’s ‘auto-liquidation’ feature, allowing Alameda to carry a negative balance on the exchange. Throughout, Singh repeatedly lied to investors and others regarding FTX’s financial health.

In 2020 and 2021, Singh executed promissory notes—‘Founders Loans’ in FTX parlance—with Alameda worth $577.5 million, most of which SBF used for venture capital investments. But in 2021, Singh took out an undocumented loan worth $10 million that he distributed to friends and family.

As FTX’s façade of solvency crumbled in the summer of 2022, Singh withdrew around $6 million via his FTX line of credit and spent it on “a multi-million-dollar house”—reportedly a 7,000-square-foot mansion in Saratoga, California—and donations to charitable causes. Even as FTX neared its bankruptcy denouement, Singh did what he was asked to do to keep customers and investors in the dark about the reality of FTX’s plight.

On November 7, 2022, Singh gathered with other FTX execs at SBF’s apartment as SBF worked the phones, trying to raise billions to stave off the inevitable. Singh was “emotionally distressed” but nonetheless stayed and offered what assistance he could. Singh resigned on November 10, one day before FTX filed for bankruptcy protection.

Sorry/Not sorry

The CFTC’s complaint charges Singh with fraud by misappropriation and with aiding and abetting fraud committed by SBF et al. Singh isn’t contesting his liability and has agreed to the entry of a proposed consent order of judgment as to his liability on the charges.

While the SEC accused Singh of using FTX customer cash for “charitable” donations, the CFTC adds that Singh used some of those “poorly-documented ‘loans’” for “making political donations.” Singh was previously exposed as donating over $13 million to Democratic candidates starting with the 2020 presidential campaign. Around $1 million of this largesse went to Mind the Gap, the pro-Dem super PAC co-founded by SBF’s mother, Barbara Fried.

The CFTC lays out how, in June 2022, Singh, Ellison, and SBF discussed granting Alameda access to “large quantities of FTX assets … to cover Alameda’s debt obligations.” In September, Singh participated in discussions as to how Alameda was ever going to repay these ‘borrowed’ billions. Later that same month, Singh, SBF, and others discussed whether Alameda “should be shut down in light of its significant losses.”

On November 6, Singh texted SBF seeking authorization to “unwind” and “get rid of” the loans he owed the companies, saying, “one thing that’d seriously help me is if I didn’t have debts.” Singh proposed backdating a transaction to “sell [FTX’s in-house FTT token] or [SRM, a token on the Solana blockchain] earlier in 2022” as one solution. Singh later asked another FTX exec about erasing his loan obligations.

Singh ultimately did not proceed with either of these criminal gambits. But you know, so much for feeling ‘ashamed.’ Guilty? Yes. Scared? Hell, yes. But apparently not so ‘ashamed’ as to avoid thinking of ways to avoid responsibility for the ‘loans’ he took from FTX customers’ accounts.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple,
Ethereum, FTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.