FTX Top Executive Pleads Guilty to Fraud

Nishad Singh – the former head of engineering at bankrupt crypto exchange giant FTX – pleaded guilty to six criminal charges related to his activity with the firm during a court hearing on Tuesday.

The ex- executive’s crimes include wire fraud, conspiracy to commit wire fraud, conspiracy to commit money laundering, and violation of campaign finance laws. 

Another Guilty FTX Executive

The plea, reported by Reuters,  was accepted by U.S. District Judge Lewis Kaplan and is the next in a list of similar guilty admissions from fellow higher-ups in Sam Bankman-Fried’s crypto empire. Alameda Research CEO Caroline Ellison and FTX co-founder Gary Wang pleaded guilty to multiple charges related to a years-long fraud scheme at FTX in December. 

Word began to spread that Singh was planning a guilty plea earlier this month, as part of a plea deal with federal prosecutors. This followed the executive’s entrance into a proffer session with the SDNY attorney’s office in January – a semi-formal discussion in which Singh had limited immunity, and where the court could determine if he had useful information related to the case. 

After determining that he could assist, Singh would then be granted the opportunity for a plea deal – whereby a defendant pleads guilty and agrees to cooperate with prosecutors in return for a lesser sentence. 

Singh’s involvement with the alleged FTX fraud appears steep: After moving from Alameda to FTX in 2019, the engineering chief tweaked FTX’s software in 2020 to prevent Alameda’s assets from being automatically liquidated if their value fell below a certain price. According to Reuters, Singh included a comment in the platform’s code that read “Be extra careful not to liquidate.”

This mechanism is related to charges against Bankman-Fried from the Securities and Exchange Commission (SEC), in which the agency said Alameda held a “virtually unlimited line of credit” with FTX. The exchange’s new CEO, John Ray, has claimed that FTX shared a balance sheet with Alameda, and lost billions of dollars while trading with customer assets. 

Bankman-Fried maintains that he is not guilty of any crime relating to the fall of FTX. 

Singh’s Involvement

Besides exempting Alameda from liquidation, Singh helped mask the trading desk’s liabilities, shunting them into a secret Korean account that was not easily identifiable. This account enjoyed the same advantages as Alameda’s main and sub-accounts at FTX.

Like Bankman-Fried, Singh was also entrenched in an illegal donation scheme spanning various U.S. political candidates and action committees, with his total contributions amounting to over $8 million. Much of that money now must be returned to FTX as part of its bankruptcy proceedings, as much of it is expected to be customer money.