- FTX’s former Director of Engineering, Nishad Singh, yesterday pleaded guilty to fraud charges brought by U.S. prosecutors
- Singh has admitted one count of wire fraud, one count of conspiracy to commit wire fraud on FTX customers
- Singh was instrumental in giving Alameda Research a “virtually unlimited line of credit”
FTX’s former Director of Engineering, Nishad Singh, yesterday pleaded guilty to fraud charges brought by U.S. prosecutors investigating the collapse of the exchange in another example of wrongdoing at the company. Singh’s lawyer announced to a Manhattan federal court that his client had agreed to admit one count of wire fraud, one count of conspiracy to commit wire fraud on FTX customers, and one count of conspiracy to commit commodities fraud. His admission will reduce his sentence, but it will still likely be many years in length.
Singh Instrumental in “Unlimited” Alameda Credit Line
Singh was reportedly a close friend of FTX founder Sam Bankman-Fried’s younger brother in high school, and became FTX’s director of engineering in 2019. However, in 2020, he allegedly modified FTX’s software to help Alameda, his former employer, avoid automatic liquidation – i.e. asset sales when it was losing too much borrowed money. This modification allowed Alameda to continue borrowing from FTX regardless of how much collateral secured its loans, resulting in a “virtually unlimited line of credit.”
As we know from previous filings on the matter, billions of dollars lent by FTX to Alameda over the next two years came from FTX customers.
“I Am Unbelievably Sorry”
Although Singh had been out of the public eye for a while compared to other FTX executives, he reappeared in January to participate in a proffer session at the United States Attorney’s office in the Southern District of New York. These are sessions where individuals may proffer information that prosecutors may find useful and which may result in partial protection for the individual.
Singh expressed remorse for his involvement in the FTX scandal, stating, “I am unbelievably sorry for my role in all of this.” He further admitted to being aware since mid-2022 that Bankman-Fried’s hedge fund, Alameda Research, had been borrowing funds from FTX customers without their knowledge. As a result, he has committed to forfeiting the proceeds gained from the scheme.