SEC indicts former FTX CTO

Nishad Singh, who served as CTO of FTX, was “an active participant” in the plan to defraud the platform’s customers. This is stated in the statement on the settlement of claims by the SEC.

Singh developed the platform code that allowed sister company Alameda Research to use FTX user funds.

Ex-CEO of the company Sam Bankman-Fried (SBF) assured that the exchange is safe due to complex risk mitigation mechanisms, and Alameda was just one of the clients. The former technical lead knew, or should have known, that the claims were misleading, the paper said.

“It was pure fraud,” said Gurbir Grewal, director of enforcement for the SEC.

The commission also accused Singh of organizing “a series of fictitious transfers within a group of firms and creating false documentation for auditors.” He took this step to satisfy the request of the SBF to show revenue of $1 billion at the end of 2021, to which $50 million was missing.

Singh was involved in transferring hundreds of millions more dollars in FTX client funds to Alameda accounts for additional venture capital investments and loans.

The former top manager continued to work despite speaking out against some of the “ambitious projects” of the platform, which lacked resources after active purchases of startups and large spending on marketing, the SEC emphasized.

Singh was among those who knew about Alameda Research’s use of the exchange’s client funds and did not quit, as most of the market maker’s employees did after ex-CEO Caroline Allison disclosed this information.

As FTX neared collapse, the former top executive withdrew $6 million from the platform for personal purposes – “a multi-million dollar house and donations.”

At the request of the Commission, the court will determine whether and to what extent the annulment of ill-gotten gains plus bias interest and/or penalty is appropriate.

In another civil case, the CFTC also pointed to Singh’s involvement in “fraud by misappropriation.” The former top manager did not dispute the agency’s claims and “agreed to the proposed procedure for deciding on his responsibility.”

Singh pleaded guilty to six criminal charges in a parallel lawsuit filed by prosecutors for the Southern District of New York.

Earlier, Bloomberg reported on the discussion by the former technical head of FTX admitting his guilt in fraud.

In December 2022, two other SBF associates, ex-CEO of Alameda Research Caroline Ellison and co-founder of the exchange Gary Wang, pleaded guilty to charges related to the collapse of FTX. Bankman-Fried did not make a deal with the investigation. In February 2023, the number of ex-CEO charges increased to 12.


Comments (No)

Leave a Reply