Nishad Singh, a former director of engineering at FTX, has pleaded guilty to criminal charges related to his involvement in a multi-year fraud scheme that aimed to deceive investors on the crypto exchange, according to a press release.
The Securities and Exchange Commission (SEC) alleges that Singh was an active participant in the plan. The plan included withdrawing millions of dollars from FTX for personal use, including a multi-million dollar house and charitable donations.
Singh has consented to a bifurcated settlement regarding the SEC charges, which awaits a court’s approval. The Commodity Futures Trading Commission has also charged Singh with fraud by misappropriation and aiding and abetting fraud.
Singh did not contest the agency’s claims and agreed to the entry of a proposed consent order of judgment. In addition to the SEC charges, Singh also pleaded guilty to six criminal charges brought by federal prosecutors in a court hearing on Tuesday.
Singh’s Involvement With Alameda Research
The SEC alleges that Singh created a software code that allowed FTX customer funds to go to Alameda Research. Alameda Research is a crypto hedge fund founded by Sam Bankman-Fried and Gary Wang.
Therefore, Bankman-Fried provided false assurances that FTX was a safe trading platform with sophisticated risk mitigation measures. Despite this, Singh knew or should have known that those statements were misleading.
The SEC also claims that Singh backdated a series of fraudulent transfers and lied to auditors about the transfers, creating false documentation to support those lies.
Singh’s Opposition To Ambitious FTX Projects
The SEC’s filing indicates that Singh opposed some of FTX’s ambitious projects that lacked sufficient resources, extravagant marketing spending, and the firm’s acquisitions.
Despite these concerns, Singh continued to work at FTX and support Bankman-Fried. Alameda and FTX shared office space, personnel, technology, intellectual property, and other resources, including some personnel and resources that Singh supervised.
Singh’s Cooperation With Regulators & Prosecutors
Singh’s cooperation is a significant development for regulators and prosecutors in their ongoing cases against Bankman-Fried. Elliptic and Wang have already pleaded guilty or settled in their respective criminal and civil cases.
The SEC’s director of enforcement, Gurbir Grewal, called the fraud scheme “pure and simple” and stated that while FTX touted its effective risk mitigation measures to investors, Singh, and his co-defendants were stealing customer funds using software code he helped create.
In conclusion, the guilty plea of Nishad Singh sheds new light on the fraud scheme. The scheme aimed to deceive investors on the crypto exchange.
Singh’s involvement with Alameda Research, opposition to ambitious FTX projects, and cooperation with regulators and prosecutors make him a significant figure in the ongoing cases against FTX’s former CEO and other co-defendants.