On Monday, the criminal trial of Sam Bankman-Fried, the founder of FTX, continued, with former engineering director Nishad Singh giving evidence in court. He declared that he had often told Bankman-Fried that the company was wasting too much money, and that he had owned a sizable amount of stock in FTX, which had earned him the title of paper billionaire before the organization went bankrupt.
On Monday, former director of engineering at FTX, Nishad Singh, appeared before jurors in Manhattan Federal Court, as the third week of Sam Bankman-Fried's criminal trial kicked off. Singh reported that Bankman-Fried, the founder of the now failed crypto exchange, spent profuse amounts of money on real estate investments, venture capital, campaign donations, and celebrity endorsements. Singh went on to tell Assistant U.S. Attorney Nicolas Roos that he would voice his disapproval to Bankman-Fried over what he felt was an excessive level of spending and "flashiness." How Bankman-Fried, 31, spent FTX resources is a major part of the prosecution's argument as they allege that Bankman-Fried misused billions of dollars of customer funds that were intended to be held in client accounts. Bankman-Fried has pleaded not guilty to seven criminal counts, including wire fraud, securities fraud, and money laundering, all of which could have him facing life in prison. His ex-girlfriend, Caroline Ellison, and former close friend and college roommate, Gary Wang, who was a co-founder of FTX, also testified in court last week. Like Ellison, Singh is assisting the prosecution in this case, and in February he pleaded guilty to six offenses, including conspiracy to commit securities fraud, conspiracy to commit money laundering, and conspiracy to violate campaign finance laws. Singh met Bankman-Fried during his sophomore or junior year of high school, through the defendant's younger brother, Gabe. After studying electrical engineering and computer science at the University of California at Berkeley, he worked at Facebook for some time before he joined Alameda Research in 2017.
Regarding the technology at FTX and Alameda, Singh said that although Sam did not participate in the actual coding, he was very involved in the process and knew the details of the architecture. According to Singh, Sam "designed all the rules for margin system and the liquidation engine," which he said were "core to FTX." Singh said he was living with Bankman-Fried in late 2021 at FTX's luxurious property in the Bahamas. He divulged that he initially "always been intimidated by Sam," referring to him as a "formidable character," but that his admiration and respect for him "eroded over time."In mid-2022, Singh said he first heard of the hole in the balance sheet and the huge sums of money Bankman-Fried had spent on real estate, startup investments, speculative bets, and political donations.
The court presented a spreadsheet of investments made in 2021, such as $1 billion to Genesis for a mining company, $499 million to startup Anthropic and $200 million to investment firm K5. Singh stated that the K5 outlay was the most problematic. He explained that Bankman-Fried had sent him a term sheet that specified millions in bonuses for the owners Michael Kives and Bryan Baum, and that the decision to invest in K5 was made after an evening attended by Bankman-Fried, Hillary Clinton, Katy Perry, Orlando Bloom, Leonardo DiCaprio, and Kris and Kylie Jenner. Singh spoke of his concerns and noted that he asked Bankman-Fried if the investment was out of his own pocket, as opposed to FTX's. Alameda was listed on the spreadsheet as having provided the funds.
The jury was further presented with another spreadsheet outlining celebrity sponsorship deals amounting to a total of $1.13 billion, such as the $205 million FTX arena in Miami, $150 million to Major League Baseball, $28.5 million to Stephen Curry, $50 million to Tom Brady and Giselle Bundchen, and $10 million to Larry David. Despite his knowledge of customer funds being involved, Singh still implicitly and explicitly gave the okay for related transactions.
Singh claimed to possess 6-7% of FTX, which had been evaluated at $32 billion by private investors in early 2022, making him an instrumental-billionaire. He said he repeatedly expressed his worries about unnecessary spending to Bankman-Fried, but often received no response. If replied to, Bankman-Fried would brush aside Singh's grievances, noting that he lacked understanding, according to Singh's testimony. He gave a concrete case wherein he voiced his outrage over having been 'fleeced for $20 million' and Bankman-Fried called him out, accusing those 'like him' of disseminating distrust and being the true culprits. Ahead of Monday's trial resumption at 9:30 a.m., Bankman-Fried's lawyers filed an emergency appeal to U.S. District Judge Lewis Kaplan late Sunday, asking for their client to be administered Adderall before being transported to the courtroom. Back in December, Bankman-Fried informed a Bahamian judge that he takes medication to cope with depression and attention deficit hyperactivity disorder (ADHD), a typical neurodevelopment disorder affecting children. The trial is anticipated to stretch right through November.WATCH: Caroline Ellison details SBF's involvement in running Alameda Research.
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