US SEC continues its crackdown on FTX executives, charges Nishad Singh with fraud
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It has been nearly four months since FTX, once a major and respected crypto exchange, filed for bankruptcy. The investigation into the matter revealed all kinds of scandals, including the mismanagement of customer funds, fraud allegations, and more. Yesterday, the US SEC (Securities and Exchange Commission) and CFTC (Commodity Futures Trading Commission) charged yet another former FTX executive with fraud.
FTX executives plead guilty to fraud charges
The two regulators filed charges against Nishad Singh, the former Director of Engineering at FTX, and after he pleaded guilty to fraud charges, he officially became the third associate of Sam Bankman-Fried to do so.
The regulators charged Singh with misappropriation of funds from the exchange, in addition to aiding and abetting the platform’s former CEO and Alameda Research — FTX’s sister company that operated as a hedge fund — with diverting customer assets.
Commenting on the matter, the CFTC noted that it charged Singh before the New York district court for his role in a “multiyear scheme to defraud equity investors in FTX.”
Today we charged Nishad Singh, the former Co-Lead Engineer of FTX Trading Ltd., for his role in a multiyear scheme to defraud equity investors in FTX, the crypto trading platform started by Singh, Samuel Bankman-Fried, and Gary Wang.
— U.S. Securities and Exchange Commission (@SECGov) February 28, 2023
Reports say that Singh (27) pleaded guilty to all six counts of fraud charges. These include conspiracy to commit fraud, wire fraud, money laundering, and even defrauding the US. As mentioned, Singh is not the only former executive to plead guilty. In December 2022, Alameda Research’s former CEO, Caroline Elison, as well as FTX’s CTO, Gary Wang, also pleaded guilty to multiple counts of criminal charges.
These individuals, now considered Sam Bankman-Fried’s “inner circle,” may have pleaded guilty, but the former CEO and co-founder of the platform himself — did not. Bankman-Fried, who was returned to the US to be prosecuted, and who is currently at house arrest, pleaded not guilty to eight criminal charges that the US authorities filed against him back in December.
While there were originally eight criminal charges, the prosecutors recently expanded the number to 12, further accusing him of conspiring to make more than 300 illegal political donations.
Charges against Nishad Singh
As for Singh himself, he was accused by the SEC of aiding Bankman-Fried in the transfer of customer assets to Alameda Research. Singh allegedly developed a software code that allowed the former CEO to divert customer assets to FTX’s sister company. Bankman-Fried did this after falsely assuring FTX investors that their assets remain safe in FTX’s custody.
The code allowed Alameda to execute transactions even when it lacked the funds, as it could simply withdraw and use billions of dollars in customer assets. The CFTC explained that the funds were misappropriated by both executives, and used for improper purposes, such as acquiring luxury real estate, political contributions, illiquid digital asset industry investments, and more.
