- Nishad Singh was the top engineer at FTX.
- He testified at the Sam Bankman-Fried trial that he was ‘suicidal’ over the crypto scam.
- At one point, he said, Alameda borrowed $13 billion from FTX — which it didn’t have.
Nishad Singh thought he misunderstood.
It was September 2022 and he was in a small groupchat with FTX executive Gary Wang, Alameda Research CEO Caroline Ellison, and the owner of both companies, Sam Bankman-Fried.
In the chat, Wang had just said that Alameda, the cryptocurrency trading firm, was borrowing $13 billion from FTX, the popular cryptocurrency exchange.
Singh thought that couldn’t possibly be right, he testified Monday in the criminal trial against Bankman-Fried.
FTX didn’t even have $13 billion.
Alarmed, Singh, the top engineer at FTX, called for an emergency meeting with the group. He turned to Bankman-Fried, who was sitting next to him in their office in the Bahamas.
Bankman-Fried appeared unsurprised to hear about the $13 billion figure and made “a false excuse for dodging the meeting,” Singh said.
Singh met with Bankman-Fried’s other lieutenants in the groupchat. His fears were confirmed.
According to Wang and Ellison — both of whom have also testified in the trial in the downtown Manhattan courtroom this month — Alameda Research had been taking money not just from FTX’s profits, but from the deposits of ordinary customers. Wang, Ellison, and Bankman-Fried had known for months, according to court testimony.
If those customers wanted to withdraw their money from the exchange, FTX wouldn’t have the funds to make them whole.
That evening, Singh said in court, he met with Bankman-Fried privately on the balcony of their shared penthouse in a luxury resort in the Bahamas, which had been purchased for $35 million by Alameda Research. Bankman-Fried sat on a chaise lounge chair while Singh paced between the towering columns that framed towering views of the Atlantic Ocean.
Bankman-Fried expressed regret at even bringing up the topic in the groupchat, Singh said. He said he’d been living with the stress over the billions of dollars in funds for about a year.
“Yeah, this has been taxing me some 5 to 10% of my productivity,” Bankman-Fried said, according to Singh’s testimony Monday.
“I think this is going to be doing a lot more damage to me, hitting me a lot harder,” Singh responded.
Singh pleaded guilty in the plot to take money from FTX customers
Singh is set to continue answering questions under oath Tuesday under cross-examination from Bankman-Fried’s legal team.
In his testimony so far, Singh has described his time working for Bankman-Fried, first as a software engineer for Alameda and later for FTX.
Singh was close with Bankman-Fried’s family, befriending his brother Gabe Bankman-Fried, in high school. Unlike most other FTX employees, Singh had a stake in the company, accepting shares instead of bonuses on top of his $200,000 annual salary starting in 2020.
He ultimately accrued a 6 to 7% ownership share in FTX, he said, making him an on-paper billionaire. Starting in December 2021, he moved to the Bahamas to live in the penthouse, which was shared with his girlfriend, Bankman-Fried, and other members of Bankman-Fried’s inner circle, including Wang, Ellison, and developer Adam Yedidia.
According to prosecutors, Bankman-Fried defrauded FTX’s customers and investors, and Alameda’s lenders, through the scheme where he siphoned money from FTX customers into Alameda Research, which he owned.
Singh — along with Ellison, Wang, and another FTX executive, Ryan Salame — all pleaded guilty to the conspiracy. Singh’s guilty plea includes six criminal counts, and he said he was testifying as part of a cooperation agreement in hopes of getting a lighter sentence than the 75-year maximum for the charges.
“I’ve always been intimidated by Sam,” Singh testified Monday. “Sam’s a formidable character. Brilliant. And so I had a lot of respect for him.”
“Over time, that eroded, and I became distrustful,” he continued.
Before the September 2022 realization that Alameda was taking FTX customer money, Singh had participated in fraudulent activity in other ways.
At the end of 2021, FTX had made around $950 million in revenue, Singh said. He testified Monday that, at the end of December in 2021, Bankman-Fried asked him to juice FTX’s revenues by about $50 million by making new transactions and then backdating them in the company’s transaction history. Those falsified figures were given to investors to make it seem like the company had $1 billion in revenue that year, Singh said.
In another instance, also in 2021, a flaw in FTX’s margin trading system had led to a $1 billion loss. At Bankman-Fried’s direction, Singh transferred the losses to Alameda to hide it from FTX’s investors, Singh testified.
Earlier in 2022, Singh had some inkling that things weren’t all right with how Alameda’s funds were accounted for on FTX’s platform. That June, he was roped into a project to figure out the true value of Alameda’s balances on FTX after a bug misrepresented the number by about $8 billion. Alameda was billions of dollars in the red, but Singh testified that he believed the company had assets elsewhere and that the company was still solvent and customer funds were untouched.
But when Singh saw that Alameda had taken customer funds, he believed that crossed a line, he said.
“I was blindsided and horrified,” he said on the witness stand Monday. “I felt really betrayed, that five years of blood, sweat, and tears from me and so many employees, driving towards something that I thought was a beautiful force for good, had turned out to be so evil.”
‘Sam has some physical twitches for when he gets angry’
Singh considered leaving the company “every day,” he said in court. But he stuck around, believing the best approach would be to make FTX as successful as possible, hoping that its profits could fill the hole created by Alameda’s borrowing. He believed FTX would have to fake it ’til it made it.
“How could I live with myself if my departure precipitated a fall that might have been avoidable?” he said.
Singh pressed Bankman-Fried to wind down what he saw as precipitous spending, cut back on investments, and find new sources of funds.
A month after the September meeting, Bankman-Fried went on a trip to several Gulf states in the Middle East with Anthony Scaramucci, who had invested in FTX, to try to raise more funds. When he returned, the FTX CEO told Singh that he believed he could get $5 billion more in investments, Singh testified.
But the hole at that point was $13 billion deep. Meeting in Bankman-Fried’s room in their Bahamas apartment, Singh asked what else they could do to get more money quickly.
“Sam was on edge, and I felt he was very mad at me for talking about this,” Singh said. “It was tense. There were long periods of silence.”
He was visibly upset, according to Singh.
“Sam has some physical twitches for when he gets angry,” he said.
The “physical tells for when he is thinking hard or is upset” were “on display,” Singh said.
“Puffed out his chest, had his hands back, he was grinding his finger, closing his eyes, grinding his teeth or tongue in his mouth,” Singh said. “When he opened them to respond, he would sort of glare at me with some intensity.”
“This didn’t happen for the whole conversation, but it did happen at specific points,” Singh continued. “Like when I asked, ‘Dear god, what else is there? Give me some updates.'”
Singh said Bankman-Fried handled the meeting poorly.
“I ended up apologizing to him at the end for asking for the meeting because I could tell it was so unwelcome,” he said.
In her own testimony earlier in the trial, Ellison said that Bankman-Fried didn’t raise any money from the trip.
Singh got sucked into Bankman-Fried’s efforts to burnish FTX’s reputation in other ways. In October and November, he participated in a straw donor scheme to give money to Democratic candidates and political action committees.
In reality, Singh testified, Salame — who himself later pleaded guilty to breaking campaign finance laws by funneling FTX funds to Republican candidates — had access to one of his bank accounts and made the donations with political consultants. All Singh did was press buttons to approve wire transfers and write blank checks for donations, he testified. (Prosecutors have charged Bankman-Fried with campaign finance violations; a separate trial on those charges is scheduled for next year.)
I’d been suicidal’
By November, Singh’s fears were coming through. The crypto news publication Coindesk published an article about a leaked copy of Alameda’s balance sheet, which illustrated some of the unusually close ties between it and FTX — although Ellison testified earlier this month that the companies were even more closely integrated than it appeared.
FTX customers began to withdraw their funds from the platform en masse, and FTX didn’t have their money.
Singh suggested freezing withdrawals until they could figure out another step, like persuading Binance, a bigger cryptocurrency exchange that Bankman-Fried considered a rival, to purchase FTX.
Bankman-Fried and Ellison dismissed the idea “in a kind of annoyed way and proceeded” to draft tweets falsely claiming that FTX and Alameda were solvent.
In the chaos, Singh said, he asked Bankman-Fried to forgive all of the loans he had taken from FTX.
Bankman-Fried appeared inclined to grant the request, according to text messages shown as evidence in the trial. But Singh decided not to go through with it.
“It felt wrong. I mean, I was fine giving up my personal assets. I’d taken on debts and given up my assets for the company countless times,” Singh said. “But I understood the purpose of this exercise to be, you know, to fool a US regulator and to fool employees of the company, and I wasn’t comfortable with that.”
As the chaos continued to roil FTX, Bankman-Fried, Ellison, and other executives pointed fingers at each other while employees and customers demanded answers, Singh said. Singh urged them to come clean, even if it meant disclosing his own role in the cover-up. He had little to lose.
“I’d been suicidal for some days,” Singh said.
Besides, he wanted them to focus on the problem at hand.
“People weren’t being productive,” Singh said. “Now more than ever, to salvage whatever we could, FTX employees needed to be productive, and resolving the blame game quickly and definitively seemed like it would be a path towards that.”
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