FTX Executive Nishad Singh Pleads Guilty In Fraud Probe

Topline

The co-founder of the bankrupt cryptocurrency company FTX, Nishad Singh, pleaded guilty on Tuesday to six charges of criminal fraud for his role in a scheme to defraud investors, becoming the third company executive to plead guilty amid a federal investigation into the crypto giant following its high-profile collapse and the fall of its beleaguered former leader, Sam Bankman Fried.

FTX co-founder Nishad Singh pleaded guilty to federal fraud charges on Tuesday, becoming the third … [+] crypto executive to enter a guilty plea amid a federal investigation.

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Key Facts

Singh pleaded guilty in a federal District Court in New York to three counts of conspiracy to commit fraud, one count of wire fraud, one count of conspiracy to commit money laundering and one count of conspiracy to violate federal campaign finance laws.

Singh is the third FTX executive to plead guilty: former Alameda CEO Caroline Ellison and FTX’s third co-founder, Gary Wang, had both pleaded guilty and agreed to cooperate with prosecutors in December.

All three are cooperating with the federal investigation into Bankman-Fried’s alleged scheme to divert billions of dollars of FTX customer funds to pay expenses at its sister trading firm Alameda Research.

Singh, who also served as the crypto giant’s director of engineering, admitted to falsifying the company’s revenue and making illegal contributions to political candidates with funds diverted from FTX to Alameda, admitting he learned last summer that Alameda was using FTX customer funds and falsified FTX’s revenues at the request of Bankman-Fried to make it seem more attractive to investors.

Singh, 27, also agreed to cooperate with federal prosecutors as part of his plea deal and said he plans to forfeit proceeds from the scheme.

Big Number

75 years. That’s the maximum number of years in prison Singh could face as a result of the charges brought against him, though his plea deal will likely reduce that sentence significantly.

Crucial Quote

Speaking in a federal district court in Manhattan, Singh told U.S. District Judge Lewis Kaplan” he was “unbelievably sorry for my role in all of this and the harm it has caused,” the Wall Street Journal reported.

Key Background

Bankman-Fried, the former billionaire head of FTX, came under scrutiny since FTX filed for bankruptcy last November when rival Binance abruptly backed out of a plan to purchase FTX and sold off its FTX tokens. He pleaded not guilty last month to eight criminal counts, including committing wire fraud and conspiracy to commit money laundering, after he was extradited from a jail in Nassau, Bahamas, to the U.S. last December. Prosecutors brought additional charges against Bankman-Fried in another indictment unsealed last week in Manhattan, alleging he conspired to commit wire fraud, defraud the Federal Election Commission and violate campaign funding laws by attempting to buy influence in Congress through illegal political donations with FTX customers’ money. Bankman-Fried, who previously denied the “improper use” of customer funds, claiming he was not aware of the details and that the company lacked “proper oversight,” is scheduled to go to trial in October.

Tangent

The Securities and Exchange Commission and Commodity Futures Trading Commission also filed civil complaints against Singh on Tuesday, alleging he created software code that enabled customer funds to be diverted to Alameda Research. According to the SEC complaint, Singh was an “active participant” in the scheme and withdrew roughly $6 million from FTX for “personal use and expenditures,” including on a multi-million-dollar house. The SEC also alleges Singh “knew or should have known” that assurances from Bankman-Fried to investors that FTX was a “safe crypto asset trading platform with sophisticated risk mitigation measures to protect customer assets” were misleading. Singh’s attorneys did not immediately respond to a Forbes request for comment, though they told the New York Times Singh is “deeply sorry for his role in this and has accepted responsibility for his actions.”