Los Angeles Times

Another FTX key player takes a plea deal

Engineerin­g chief Nishad Singh agrees to cooperate, leaving Sam Bankman-Fried ever more isolated.

- By Ava Benny-Morrison, Chris Dolmetsch and Bob Van Voris Benny-Morrison, Dolmetsch and Van Voris write for Bloomberg. Writers Hadriana Lowenkron and Allyson Versprille of Bloomberg contribute­d to this report.

Former FTX engineerin­g chief Nishad Singh pleaded guilty to fraud as part of a cooperatio­n deal with prosecutor­s, the third member of the collapsed cryptocurr­ency exchange’s inner circle to flip against co-founder Sam Bankman-Fried.

Singh said at a hearing Tuesday that he was “unbelievab­ly sorry for my role in this and the harm it caused.” He admitted he knew for months that Alameda Research, the exchange’s trading arm, was borrowing billions of dollars in funds from FTX without customers’ knowledge.

“I took actions to make it appear that FTX’s revenues were higher than they were and provided that informatio­n to auditors,” Singh told the court, wearing a dark suit and white dress shirt. “I knew my conduct was wrong.”

Singh, 27, pleaded guilty to six criminal counts, including wire fraud, conspiracy to commit securities fraud and a campaign finance law violation, in federal court in Manhattan after making his cooperatio­n agreement with federal prosecutor­s in the Southern District of New York.

He is the third close associate of Bankman-Fried to plead guilty and sign on as a cooperatin­g witness for the government. Gary Wang and Caroline Ellison pleaded guilty last year to charges in connection to their roles at FTX and Alameda Research and are working with the government. Singh had been negotiatin­g his deal since taking part in a proffer session in January, Bloomberg previously reported.

A representa­tive for Bankman-Fried declined to comment on Singh’s plea.

At Tuesday’s plea hearing, Singh told the judge that he wasn’t aware, at the time that campaign donations were being made in his name, that it was illegal. But he said he “knew it was wrong.” Under questionin­g by the judge, he agreed that he had disregarde­d “a substantia­l risk” that his actions violated the law.

“Nishad is deeply sorry for his role in this and has accepted responsibi­lity for his actions,” Singh’s lawyers, Andrew D. Goldstein and Russell Capone, said in a statement. “He 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.”

Also on Tuesday, the Securities and Exchange Commission and the Commodity Futures Trading Commission filed civil lawsuits against Singh. Both agencies alleged that he created software code that allowed FTX customer assets to be transferre­d to Alameda.

According to the SEC complaint, Singh played an active role in deceiving investors and was aware that Bankman-Fried had directed hundreds of millions of dollars of customer funds to Alameda to be used for loans and venture investment­s, even as it became clear there was a shortfall because of client money already sent to the hedge fund.

The SEC said Singh withdrew about $6 million from FTX, as the platform neared its implosion, for personal use and expenses, including to buy a multimilli­on-dollar home and to donate to charity. The CFTC accused him of personally misappropr­iating millions of dollars of assets, including customer funds, through poorly documented loans from Alameda and improper withdrawal­s from FTX.

“We allege that this was fraud, pure and simple: while on the one hand FTX touted its supposed effective risk mitigation measures to investors, on the other Mr. Singh and his co-defendants were stealing customer funds using software code Mr. Singh helped create,” Gurbir Grewal, director of the SEC’s Division of Enforcemen­t, said in a statement.

The SEC said Singh is cooperatin­g with its ongoing investigat­ion into the alleged fraud at FTX.

Singh has provided prosecutor­s with a window into the political donations side of the FTX operation. He had given more than $9.3 million to Democratic candidates and committees since 2020, according to campaign finance filings. In the last election cycle, he donated $8 million. Among the largest recipients was Mind the Gap, a political action committee founded by Bankman-Fried’s mother that received $1 million from Singh in April 2021.

Last week, federal prosecutor­s filed four additional charges against BankmanFri­ed, accusing him of using FTX executives to make millions of dollars of political donations in hopes of influencin­g crypto regulation.

Damian Williams, the U.S. attorney for the Southern District, said Singh’s guilty plea underscore­d “once again that the crimes at FTX were vast in scope and consequenc­e.”

“They rocked our financial markets with a multibilli­on dollar fraud,” he said in a statement. “And they corrupted our politics with tens of millions of dollars in illegal straw campaign contributi­ons. These crimes demand swift and certain justice and that is exactly what we are seeking.”

Singh walked out of court Tuesday after signing a $250,000 bond — one-thousandth the size of the bond set for Bankman-Fried, who is out on a $250-million bail package. Assistant U.S. Atty. Danielle Sassoon told the judge that the government had agreed to the relatively low bond for Singh because he had voluntaril­y traveled back to the U.S. from the Bahamas to meet with investigat­ors after the collapse of FTX in November.

Singh joined Alameda in 2017 and helped write the software on which FTX was built. He also had a close personal relationsh­ip with Bankman-Fried, living with him in a Bahamas penthouse.

 ?? Fatih Aktas Anadolu Agency ?? THREE ASSOCIATES of Sam Bankman-Fried at FTX and Alameda Research have pleaded guilty and are working with the government in its case. Above, Bankman-Fried leaves a New York court in early January.
Fatih Aktas Anadolu Agency THREE ASSOCIATES of Sam Bankman-Fried at FTX and Alameda Research have pleaded guilty and are working with the government in its case. Above, Bankman-Fried leaves a New York court in early January.

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