“I am unbelievably sorry for my role in all of this."
FTX’s former director of engineering Nishad Singh has pleaded guilty to six counts of fraud and conspiracy.
The counts include one count of wire fraud, three counts of conspiracy to commit wire fraud, one count of conspiracy to commit money laundering and one count of conspiracy to defraud the United States by violating campaign finance laws.
US District Judge Lewis Kaplan, who serves the Southern District of New York, accepted the plea.
In court, Singh said: “I am unbelievably sorry for my role in all of this.”
It is reported that Singh also admitted that he knew about former FTX CEO Sam Bankman-Fried’s hedge fund, Alameda Research, borrowing FTX customer funds behind customers’ backs.
Nishad Singh was allegedly a close friend of Bankman-Fried’s younger brother when the two were in high school.
After working at FTX’s affiliated trading firm Alameda Research, Singh moved to FTX as director of engineering in 2019.
Following his guilty plea, the US Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) charged Nishad Singh with fraud allegations.
According to the CFTC complaint, Singh once moved $8 billion in Alameda liabilities to a customer account to “prevent Alameda from paying interest on its large outstanding balance”.
Singh was also allegedly among a group of FTX executives who workshopped Bankman-Fried’s tweets claiming FTX was fine and its customers could be made whole.
This was just prior to FTX collapsing in November 2022 as it could not meet the withdrawal demand of its users.
According to the SEC, Singh allegedly moved funds around at Bankman-Fried’s request to make it appear that FTX generated more revenue than it actually did in 2021.
The complaint said: “In late 2021, when Bankman-Fried realised that FTX was $50 million short of his goal of earning [$1 billion] in annual revenue, he instructed Singh to transfer funds from another entity that he controlled and to falsely characterise the $50 million as revenue that FTX earned throughout 2021.
“Singh then backdated a series of fraudulent transfers, and later lied to auditors about the transfers and created false documentation to support those lies.
“He did so knowing that this information would later also be presented to investors and potential investors.”
In a statement, SEC Director of Enforcement Gurbir Grewal said:
“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.”
CFTC Chief Counsel and Deputy Enforcement Director Gretchen Lowe said:
“Today’s filing reflects the CFTC’s commitment to protecting the U.S. digital commodity markets.
“Today’s filing also includes a concession of liability by an individual who, as charged, engaged in and aided significant violations of the Commodity Exchange Act and CFTC regulations.”
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