Nishad Singh, the former Director of
Engineering at bankrupt cryptocurrency exchange, FTX, on Tuesday became the
third of close associates of Samuel Bankman-Fried, the exchange’s Co-Founder,
to plead guilty to fraud charges.
On Tuesday, both the United States
Securities and Exchange Commission (SEC ) and the Commodity Futures Trading
Commission (CFTC) charged Singh with misappropriating funds from FTX.com and
aiding and abetting Bankman-Fried and hedge fund Alamedia Research LLC in diverting FTX customer assets. CFTC said
it charged Sigh before a district court in southern New York.
Today we charged Nishad Singh, the former Co-Lead Engineer of FTX Trading Ltd., for his role in a multiyear scheme to defraud equity investors in FTX, the crypto trading platform started by Singh, Samuel Bankman-Fried, and Gary Wang.
— U.S. Securities and Exchange Commission (@SECGov) February 28, 2023
Reuters reports that 27-year-old Singh
pleaded guilty to six counts of fraud charges including wire fraud, conspiracy
to commit fraud, money laundering and defrauding the United States. In December
last year, Carline Elison, the former Chief Executive Officer of Alameda
Research and Gary Wang, FTX’s Chief Technology Officer, pleaded guilty to several
counts of crimanal charges.
However, while US regulators are closing
in on Bankman-Fried’s inner circle, the former FTX CEO and Co-Founder pleaded not guilty to eight
criminal charges filed against him in December 2022.
Regardless, prosecutors last week expanded criminal charges against
Bankman-Fried to 12, alleging him of conspiracy to make over 300 illegal
political donations.
SEC, CFTC Unveil Charges against FTX’s
Nishad Singh
In its complaint, SEC accused Singh of
aiding Bankman-Fried’s transfer of FTX.com customer assets to Alameda Research
by creating a software code that allowed customer funds to be diverted to the
crypto hedge fund. This is despite “false assurances” Bankman-Fried gave to
FTX investors about the safety of their funds.
“Among other things, these features in the FTX code favored Alameda and allowed it to execute transactions even when it
did not have sufficient funds available, including, critically, a ‘can withdraw
below borrow’ functionality that allowed Alameda to withdraw billions of
dollars in customer assets from FTX,” CFTC explained in a press statement.
The commodities regulator added that FTX
customer funds were misappropriated by both executives of FTX and Alameda
Research “for improper purposes such as luxury real estate purchases, political
contributions, and high-risk, illiquid digital asset industry investments.”
Giving more details, SEC noted that Singh
withdrew approximately $6 million from FTX for personal use and expenditure,
including for the purchase of a multi-million-dollar house and donations to
charitable causes. This happened close to FTX’s collapse in November 2022.
Meanwhile, CFTC noted that Singh has
agreed to forfeit certain assets he received from FTX and Alamedia Research.
This is even as the US Attorney’s Office for the Southern District of New York announced charges against the ex-FTX executive.
Nishad Singh, the former Director of
Engineering at bankrupt cryptocurrency exchange, FTX, on Tuesday became the
third of close associates of Samuel Bankman-Fried, the exchange’s Co-Founder,
to plead guilty to fraud charges.
On Tuesday, both the United States
Securities and Exchange Commission (SEC ) and the Commodity Futures Trading
Commission (CFTC) charged Singh with misappropriating funds from FTX.com and
aiding and abetting Bankman-Fried and hedge fund Alamedia Research LLC in diverting FTX customer assets. CFTC said
it charged Sigh before a district court in southern New York.
Today we charged Nishad Singh, the former Co-Lead Engineer of FTX Trading Ltd., for his role in a multiyear scheme to defraud equity investors in FTX, the crypto trading platform started by Singh, Samuel Bankman-Fried, and Gary Wang.
— U.S. Securities and Exchange Commission (@SECGov) February 28, 2023
Reuters reports that 27-year-old Singh
pleaded guilty to six counts of fraud charges including wire fraud, conspiracy
to commit fraud, money laundering and defrauding the United States. In December
last year, Carline Elison, the former Chief Executive Officer of Alameda
Research and Gary Wang, FTX’s Chief Technology Officer, pleaded guilty to several
counts of crimanal charges.
However, while US regulators are closing
in on Bankman-Fried’s inner circle, the former FTX CEO and Co-Founder pleaded not guilty to eight
criminal charges filed against him in December 2022.
Regardless, prosecutors last week expanded criminal charges against
Bankman-Fried to 12, alleging him of conspiracy to make over 300 illegal
political donations.
SEC, CFTC Unveil Charges against FTX’s
Nishad Singh
In its complaint, SEC accused Singh of
aiding Bankman-Fried’s transfer of FTX.com customer assets to Alameda Research
by creating a software code that allowed customer funds to be diverted to the
crypto hedge fund. This is despite “false assurances” Bankman-Fried gave to
FTX investors about the safety of their funds.
“Among other things, these features in the FTX code favored Alameda and allowed it to execute transactions even when it
did not have sufficient funds available, including, critically, a ‘can withdraw
below borrow’ functionality that allowed Alameda to withdraw billions of
dollars in customer assets from FTX,” CFTC explained in a press statement.
The commodities regulator added that FTX
customer funds were misappropriated by both executives of FTX and Alameda
Research “for improper purposes such as luxury real estate purchases, political
contributions, and high-risk, illiquid digital asset industry investments.”
Giving more details, SEC noted that Singh
withdrew approximately $6 million from FTX for personal use and expenditure,
including for the purchase of a multi-million-dollar house and donations to
charitable causes. This happened close to FTX’s collapse in November 2022.
Meanwhile, CFTC noted that Singh has
agreed to forfeit certain assets he received from FTX and Alamedia Research.
This is even as the US Attorney’s Office for the Southern District of New York announced charges against the ex-FTX executive.
Read More
The U.S. Securities and Exchange Commission (SEC) has charged Nishad Singh, a senior executive at crypto derivatives exchange FTX, in connection with two fraudulent investments.
According to the civil complaint filed by SEC, Singh raised funds from investors between December 2018 and March 2020 by misrepresenting the investments. He reportedly promised higher returns in a purported pool of investments, when, in fact, he was just directing the money to his own cryptocurrency trading activity.
The SEC further alleges that Singh misused $45,000 of the money that was raised to pay his personal debts. In all, Singh reportedly raised approximately $1.1 million, using false assurances such as “the minimum return was 8-12%” and “the money paid would be secured”.
In addition to the fraud charges, the SEC is also seeking disgorgement of the ill-gotten gains and interest, as well as a civil penalty.
The case underscore the SEC’s continued vigilance in protecting investors’ interests, particularly those related to virtual assets. SEC Chairman Jay Clayton said in a joint statement with the agency’s Division of Enforcement director Stephanie Avakian, “We will continue to actively enforce the securities laws against those who seek to deceive investors about investments in digital assets, either through traditional or virtual instruments”.
FTX also released a statement apologize to their customers for Singh’s alleged misconduct and said that it had taken immediate steps to protect investors and will cooperate with the SEC in its investigation.
The SEC is consequently alerting investors and encouraging them to be extremely wary of people who offer unusually high returns and should carefully assess the risks involved in investing in digital assets and be sure to use caution. As the case against Singh shows, fraudulent activity does exist in the crypto assets markets and investors should remain vigilant.
