Former FTX Executive Testifies Against Founder at Fraud Trial
A former FTX executive testifies against the cryptocurrency exchange's founder at a fraud trial, exposing reckless expenditures and a $13 billion shortfall.
NEW YORK — A former FTX executive, Nishad Singh, provided damning testimony against the cryptocurrency exchange's founder, Sam Bankman-Fried, on Monday. Singh, who once admired Bankman-Fried, revealed his disillusionment as he witnessed reckless expenditures on investments, properties, and celebrities. This excessive spending ultimately led to a staggering $13 billion shortfall, leaving Singh feeling "blindsided and horrified."
Singh, who held the position of head of engineering at FTX, was part of Bankman-Fried's trusted inner circle until the cryptocurrency empire collapsed in November. Bankman-Fried was subsequently arrested in the Bahamas. Meanwhile, Singh pleaded guilty to fraud charges and agreed to testify against his former high school acquaintance.
During his testimony in a Manhattan federal court, Singh shared a private conversation he had with Bankman-Fried in September 2022 on the balcony of their penthouse apartment. It was during this conversation that Singh discovered there were insufficient assets to cover the $13 billion expenditure, which had mainly been allocated to investments, properties, advertising, and donations.
"I felt really betrayed," Singh revealed. The revelation left him feeling shocked and personally tormented. He found it devastating that five years of hard work seemed unrewarding and that something he had considered a force for good had turned out to be so corrupt.
Singh further criticized the excessive spending trend, describing it as "too large or didn't make sense." The lavishness and superficiality of it all were unmistakable.
Unsurprisingly, Singh's experience with the crimes and the subsequent collapse of FTX took a significant toll on his mental well-being. He admitted to feeling suicidal for several days.
Bankman-Fried, currently 31 years old, has been behind bars since August after a judge determined that he had attempted to interfere with potential trial witnesses. The judge revoked his $250 million personal recognizance bond, which had allowed Bankman-Fried to reside with his parents in Palo Alto, California, following his extradition from the Bahamas in December. Bankman-Fried has pleaded not guilty to all charges against him.
As the trial progresses into its third week, Singh becomes the third former member of the inner circle to testify against Bankman-Fried. All three individuals have reached cooperation deals, hoping for leniency during their sentencing.
Singh, a native of the San Francisco area, reflects on his journey with Alameda Research and FTX, sharing his evolving perception of Bankman-Fried. Despite initially finding Bankman-Fried intimidating yet admirable, Singh's admiration gradually eroded over time, leading to a growing sense of distrust.
Singh pinpointed Bankman-Fried's extravagant spending as a significant factor in his shifting attitude during the year 2022. As Singh observed the escalation of his boss's opulent tendencies, such as the acquisition of luxurious properties and a billion-dollar partnership with a California investment firm associated with renowned individuals like Amazon founder Jeff Bezos and actor Leonardo DiCaprio, his level of respect diminished.
Singh shed light on the staggering amounts poured into various ventures by Bankman-Fried. A staggering $205 million was allocated to rename the Miami venue that hosted the Miami Heat's home games as FTX. Additionally, $150 million went towards a Major League Baseball endorsement deal. Further millions were invested in advertising campaigns featuring renowned figures like star quarterback Tom Brady and comedian Larry David.
Singh expressed frustration over his limited influence in decision-making processes alongside Bankman-Fried. Recounting a specific incident, Singh described his discomfort when Bankman-Fried purchased an ostentatious luxury residence in the Bahamas. Although Singh voiced his concerns, Bankman-Fried dismissed them, offering to pay "$100 million for the drama to just go away." This response left Singh with the impression that he should remain silent, and they should proceed.
Meanwhile, Judge Lewis A. Kaplan denied Bankman-Fried's lawyers' request to administer medication to their client to aid him during the trial. Judge Kaplan emphasized that he could not allow lawyers to provide drugs to individuals solely based on a claim of necessity, stating firmly that such action was not admissible in the courtroom.