October 3, 2023

A former senior associate of Sam Bankman-Fried became the third person on Tuesday to plead guilty to criminal charges stemming from the collapse of cryptocurrency exchange FTX and will cooperate with federal prosecutors.

Nishad Singh, 27, the founder and later director of engineering at FTX, pleaded guilty to charges of wire fraud, commodities fraud, securities fraud, money laundering and campaign finance violations. The request calls for him to cooperate with federal prosecutors as they pursue a multibillion-dollar fraud case against Mr. Bankman-Fried.

“Today’s guilty plea demonstrates once again that FTX’s crimes were wide-ranging and had serious consequences,” U.S. Attorney for the Southern District of New York Damian Williams said in a statement. “They rocked our financial markets with billions of dollars in fraud. They corrupted our politics with tens of millions of dollars in illegal campaign contributions.”

Singer’s attorney, Andrew D. Goldstein, did not immediately respond to a request for comment. The charges against Singer carry a maximum sentence of 75 years in prison, but plea deals typically result in significantly reduced sentences.

Mr Singh’s cooperation has heightened the pressure on Mr Bankman-Fried, 30, who is accused of orchestrating a scheme to defraud clients and investors. Mr. Bankman-Fried was extradited to the United States on December 21 following his arrest in the Bahamas, where FTX is headquartered. That night, federal prosecutors announced that two executives in his inner circle, Gary Wang and Caroline Ellison, were cooperating with the investigation and pleaded guilty to fraud.

Mr. Singh is a key figure at FTX, working closely with Mr. Bankman-Fried, Mr. Wang and Ms. Ellison. In the plea agreement, authorities said Mr. Singh knew or participated in activities that “artificially inflated FTX’s revenue” and provided false or misleading information to auditors and regulators.

FTX filed for bankruptcy in November after the cryptocurrency equivalent of a bank run exposed an $8 billion hole in its accounts. Its implosion fueled the collapse of the crypto industry, sending the market into a spiral and costing investors billions in deposits. Authorities accused Mr. Bankman-Fried of using client funds to fund political contributions, buy luxury real estate and invest in more than 300 companies and other ventures.

In recent weeks, the investigation has progressed. On February 23, federal prosecutors announced an amended indictment against Mr. Bankman-Fried that includes multiple new charges and details alleged defrauding clients and investors and providing tens of millions of dollars to political candidates and political action committees. Schemes for illegal campaign contributions.

Mr. Bankman-Fried pleaded not guilty to the original indictment in January and is expected to return to New York in the coming months to face the amended charges, according to a court document. A spokesman for Mr. Bankman-Fried declined to comment.

Mr. Singer is a graduate of the University of California, Berkeley. He worked as a software engineer on Facebook’s Applied Machine Learning team before joining Alameda Research, a crypto hedge fund founded and owned by Mr. Bankman-Fried. Mr. Singh is also a close friend of Mr. Bankman-Fried’s younger brother, Gabe, who runs an organization called Guarding Against Pandemics, which receives most of its financial support from FTX.

In 2019, Mr. Bankman-Fried, Mr. Wang and Mr. Singh founded FTX in Hong Kong and relocated the company to the Bahamas two years later. The three founders and Ms. Ellison are active in the Effective Altruism movement, a philanthropy that urges donors to use data to maximize the long-term impact of their giving. They both sit on the board of Mr Bankman-Fried’s charity, the FTX Foundation, and live together in a luxury penthouse in the Bahamas resort of Albany on New Providence Island.

As FTX grew, Mr. Bankman-Fried became its public face, while Mr. Wang and Mr. Singh played key roles behind the scenes, writing the software code for FTX.

According to the bankruptcy filing, Mr. Singer received a $543 million loan from Alameda. The hedge fund also paid law firm Sullivan & Cromwell to advise him on tax matters and estate planning, the filing shows.

As FTX took off, Singer was one of a handful of executives, led by Bankman-Fried and Ryan Salam, who suddenly became big political donors.

In total, FTX employees and others associated with the cryptocurrency exchange have contributed $93 million to political campaigns over the past few years. Mr. Singh and Mr. Bankman-Fried mainly support Democratic candidates, while Mr. Salame mainly supports Republicans. FTX’s bankruptcy lawyers recently sent letters to political campaigns and political action committees demanding that the money be returned by the end of the month.

Beginning in the weeks leading up to the 2020 election, Mr. Singer has donated nearly $9.7 million, most of it to Democratic-linked super PACs. Last summer, he donated $1.1 million to the LGBTQ Victory Fund federal political action committee, accounting for most of the money raised by the group, campaign records show.

The amended indictment against Mr. Bankman-Fried includes an allegation that a political consultant working for the cryptocurrency entrepreneur pressured an unnamed co-conspirator to give money to someone who “appeared to be related to pro-LGBTQ issues.” PAC donations of at least $1 million”

The charging document against Mr. Singer did not detail the nature of his campaign finance violations.

After Mr. Bankman-Fried was indicted, federal prosecutors began seeking information about donations from him, Mr. Singh, Mr. Salame, FTX and Alameda, including requests for records from attorneys representing beneficiaries. Some campaigns have given back or donated to charities an amount equivalent to the donation, while others set aside funds for potential compensation to victims of the FTX crash.

Kenneth P Vogel and Benjamin Weiser Contribution report.

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