US Regulators Charge FTX’s Senior Executive Nishad Singh with Fraud

On Tuesday, Nishad Singh, the former Director of Engineering at the bankrupt cryptocurrency exchange FTX, became the third of close associates of Samuel Bankman-Fried, the exchange’s Co-Founder, to plead guilty to fraud charges.

Both the United States Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) charged Singh with misappropriating funds from FTX.com and aiding and abetting Bankman-Fried and hedge fund Alamedia Research LLC in diverting FTX customer assets. The CFTC said it charged Singh before a district court in southern New York.

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.

Reuters reports that 27-year-old Singh pleaded guilty to six counts of fraud charges including wire fraud, conspiracy to commit fraud, money laundering and defrauding the United States. In December last year, Caroline Elison, the former Chief Executive Officer of Alameda Research and Gary Wang, FTX’s Chief Technology Officer, pleaded guilty to several counts of criminal charges.

However, while US regulators are closing in on Bankman-Fried's inner circle, the former FTX CEO and Co-Founder pleaded not guilty to eight criminal charges filed against him in December 2022. Regardless, last week prosecutors expanded criminal charges against Bankman-Fried to 12, alleging that he conspired to make over 300 illegal political donations.

SEC, CFTC Unveil Charges against FTX’s Nishad Singh

In its complaint, the SEC accused Singh of aiding Bankman-Fried’s transfer of FTX.com customer assets to Alameda Research by creating a software code that allowed customer funds to be diverted to the crypto hedge fund. This is despite the “false assurances” Bankman-Fried gave to FTX investors about the safety of their funds.

“Among other things, these features in the FTX code favored Alameda and allowed it to execute transactions even when it did not have sufficient funds available, including, critically, a ‘can withdraw below borrow’ functionality that allowed Alameda to withdraw billions of dollars in customer assets from FTX,” the CFTC explained in a press statement.

The commodities regulator added that FTX customer funds were misappropriated by both executives of FTX and Alameda Research “for improper purposes such as luxury real estate purchases, political contributions, and high-risk, illiquid digital asset industry investments.”

Providing more details, the SEC noted that Singh withdrew approximately $6 million from FTX for personal use and expenditure, including for the purchase of a multi-million-dollar house and donations to charitable causes. This happened close to FTX’s collapse in November 2022.

Meanwhile, the CFTC noted that Singh has agreed to forfeit certain assets he received from FTX and Alamedia Research. This is even as the US Attorney’s Office for the Southern District of New York announced charges against the ex-FTX executive.