FTX Director Singh Pleads Guilty to Criminal Charges, Sued For Fraud By SEC

Former FTX Director of Engineering Nishad Singh pleaded guilty to federal fraud charges on Tuesday according to Reuters and was then sued for fraud by the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), who alleged he wrote code that helped misappropriate customer funds.

Pleading Guilty To Federal Fraud Charges

Singh, also an FTX shareholder when the firm collapsed in November. The charges against Singh are related to claims against CEO Sam Bankman-Fried, FTX, Alameda Research, FTX Co-Founder Gary Wang, and Alameda Co-CEO Caroline Ellison.

Singh pleaded guilty to one count of wire fraud, three counts of conspiracy to commit fraud, one count of conspiracy to commit money laundering and one count of conspiracy to defraud the U.S. by violating campaign finance laws, in a case brought by the Southern District of New York.

Singh Wrote Software Code to Divert Customer Funds

The CFTC complaint accused Singh of overseeing the misappropriation of customer funds with loans and special treatment to sister company Alameda. At the time, Alameda didn't have sufficient funds and the CFTC said Singh, "personally misappropriated millions of dollars of assets, including FTX customer assets, through poorly documented 'loans' from Alameda and other improper withdrawals of funds from FTX for various personal expenditures."

"Singh does not contest his liability on the CFTC’s claims, and has agreed to the entry of a proposed consent order of judgment as to his liability on the charges in the complaint," said the CFTC.

The SEC complaint said Singh "created software code that allowed FTX customer funds to be diverted to Alameda Research." The regulator also alleged that as FTX teetered on the verge of a collapse, Singh withdrew $6 million for "personal use and expenditures, including the purchase of a multi-million-dollar house and donations to charitable causes."

The SEC' also alleged that Singh helped Bankman-Fried inflate FTX revenue by $50 million in 2021 to ensure the company met its $1 billion target. Singh so by transferring those funds from a related entity and backdating those transactions.

Singh 'Aided and Abetted Fraud by SBF, FTX'

The CFTC named Bankman-Fried as being involved in fraud, saying he was complicit in "fraud by misappropriation and with aiding and abetting fraud committed by Samuel Bankman-Fried, FTX Trading Ltd. d/b/a FTX.com (FTX), and Alameda Research LLC (Alameda)." Bankman-Fried pleaded not guilty, ahead of his own trial, which is scheduled for October 2.

Last week, Department of Justice attorneys added four counts to the eight previously lodged against Bankman-Fried, for fraud, money laundering, and campaign finance violations. The new charges include bank fraud, securities fraud, and fraud involving derivatives. He's also been criticized for his use of technology during house arrest on a $250 million bond.