Indian American FTX executive pleads guilty in billion-dollar fraud

A former Indian American top executive of failed cryptocurrency trading platform FTX has pleaded guilty and is cooperating with federal prosecutors investigating the alleged billion-dollar fraud at the now collapsed exchange.

Nishad Singh, the former director of engineering at FTX, pleaded guilty Tuesday to six conspiracy charges, including conspiracy to commit wire fraud, conspiracy to commit money laundering and conspiracy to violate federal campaign finances laws.

Singh is the third top executive and close confidante of FTX founder Sam Bankman-Fried to plead guilty and cooperate with prosecutors, CNN reported.

Gary Wang, co-founder of FTX, and Caroline Ellison, the former head of FTX’s sister hedge fund Alameda Research, both pleaded guilty last year and are cooperating against Bankman-Fried.

“Today’s guilty plea underscores once again that the crimes at FTX were vast in scope and consequence,” said Damian Williams, US attorney for the Southern District of New York.

“They rocked our financial markets with a multibillion-dollar fraud. And they corrupted our politics with tens of millions of dollars in illegal straw campaign contributions. These crimes demand swift and certain justice and that is exactly what we are seeking in the Southern District of New York.”

The Securities and Exchange Commission and Commodity Futures Trading Commission also filed civil fraud charges against Singh, which he agreed to settle.

As part of the SEC deal, Singh agreed to be barred from serving as an officer or director. A judge will need to sign off on the deal and decide how much in penalties and disgorgement Singh will be required to pay, in addition to the length of the officer or director ban.

The CFTC said Singh doesn’t contest his liability. The agency seeks restitution, disgorgement, and permanent trading bans.

Lawyers for Singh said in a statement Tuesday that the former FTX executive apologizes.

“Nishad is deeply sorry for his role in this and has accepted responsibility for his actions. He wants to do everything he can to make things right for victims, including by assisting the government to the best of his ability in this case,” attorneys Andrew Goldstein and Russell Capone said in a statement to CNN.

Bankman-Fried is facing 12 criminal charges for his alleged role in what prosecutors say is one of the largest financial frauds in history.

Bankman-Fried has pleaded not guilty to some of the charges and will appear in court in the future to be arraigned on some of the charges. He is released on a $250 million bond.

According to the SEC’s complaint, Singh created software code that allowed FTX customer funds to be diverted to Alameda Research, a crypto hedge fund owned by Bankman-Fried and Wang.

He did so despite false assurances by Bankman-Fried to investors that FTX was a safe crypto asset trading platform with sophisticated risk mitigation measures to protect customer assets and that Alameda was just another customer with no special privileges. The complaint alleges that Singh knew or should have known that such statements were false and misleading.

The complaint also alleges that Singh was an active participant in the scheme to deceive FTX’s investors. The complaint further alleges that, even as it became clear that Alameda and FTX could not make customers whole for the funds already unlawfully diverted, Bankman-Fried, with the knowledge of Singh, directed hundreds of millions of dollars more in FTX customer funds to Alameda, which were used for additional venture investments and loans to Bankman-Fried, Singh, and other FTX executives.

Moreover, according to the complaint, as FTX neared collapse, Singh withdrew approximately $6 million from FTX for personal use and expenditures, including the purchase of a multi-million-dollar house and donations to charitable causes.

“We allege that this was fraud, pure and simple: while on the one hand FTX touted its supposed effective risk mitigation measures to investors, on the other Mr. Singh and his co-defendants were stealing customer funds using software code Mr. Singh helped create,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.

“A pillar of our securities laws is that when companies and their representatives decide to speak on an issue, they can’t lie to investors on matters that are core to their investment decisions. That’s true when it comes to crypto asset securities, just as it is in connection with any other securities.”