Third Bankman-Fried Associate Nishad Singh Met With Prosecutors

Jan 9, 2023


(Bloomberg) -- Former FTX engineering chief Nishad Singh met with federal prosecutors in a bid to become the third member of Sam Bankman-Fried’s inner circle to seek a cooperation deal in the fraud case over the cryptocurrency exchange’s collapse.

Singh, who has not been accused of wrongdoing, attended a so-called proffer session last week at the Southern District of New York US Attorney’s Office, according to people familiar with the matter. At such meetings, individuals are usually granted a limited immunity to share what they know with prosecutors.

A proffer session doesn’t automatically lead to a cooperation agreement. Prosecutors must weigh the value of Singh’s information before deciding whether to offer him a deal that could see him plead guilty and cooperate in exchange for possible leniency. 

A Singh cooperation deal would leave Bankman-Fried, who pleaded not guilty to eight criminal counts last week, increasingly isolated. Caroline Ellison, who was the chief executive of FTX’s hedge fund arm Alameda Research, and Gary Wang, FTX’s co-founder, have pleaded guilty to fraud charges and are working with authorities. 

A spokesman for the US Attorney’s Office and Singh’s lawyer, Andrew D. Goldstein, declined to comment. 

Prosecutors have accused Bankman-Fried of laundering customer funds through political and charitable donations as part of a yearslong fraud of “epic proportions” at FTX. The indictment against Bankman-Fried also alleges campaign finance violations. 

Campaign Finance

Singh, a Democrat mega-donor who lived with Bankman-Fried in the Bahamas, could offer an insight into the campaign finance side of FTX. He has given more than $9.3 million to Democratic candidates and committees since 2020. In the last election cycle, he shelled out $8 million alone. Among the largest recipients was Mind The Gap, a political action committee founded by Bankman-Fried’s mother that received $1 million from Singh in April, 2021.

Singh also received hundreds of millions of dollars in loans from Alameda Research, according to bankruptcy court filings. 

The Securities and Exchange Commission and the Commodity Futures Trading Commission are also probing Singh, Bloomberg previously reported.

Bankman-Fried frequently met with regulators and visited the White House during his long-running public relations blitz championing the crypto cause. At least $73 million in political donations were tied to FTX and Bankman-Fried himself pledged to give as much as $1 billion in the 2024 presidential election cycle. 

Read More: FTX’s Millions in Political Gifts at Risk of Bankruptcy Clawback

The new management at FTX wants to claw back those donations. The team publicly appealed last month to the “recipients of contributions” to return the money voluntarily. The alternative will involve using the bankruptcy court to force organizers to repay the donations – with interest.

Key Figure

Aside from his political donations, Singh was a key figure in FTX’s management circle and decision making. 

He was hired to Alameda Research in 2017 before establishing FTX two years later with Wang and Bankman-Fried. Singh helped write the software that the exchange was built on and contributed to the launch of FTX US in 2020. 

Singh’s name was also tied to a GitHub account that created a code to hide Alameda’s ballooning liabilities in the lead up to FTX filing for bankruptcy on Nov. 11, Bloomberg previously reported.

As FTX began to crumble and an $8 billion hole emerged on its balance sheet, Ellison told her Alameda employees that she, Singh, Bankman-Fried and Wang were aware FTX funds had been used by the trading house, according to a SEC complaint. 

The SEC has filed civil charges against Ellison, Wang and Bankman-Fried over their respective roles commingling funds and in the alleged fraud at FTX and Alameda.

Stern Warning

After announcing the pleas of Ellison and Wang, US Attorney Damian Williams issued a stern warning to those who prosecutors had not yet heard from. “If you participated in misconduct at FTX or Alameda, now is the time to get ahead of it,” he said on Dec. 21. “We are moving quickly, and our patience is not eternal.”

But not everyone who was intrinsically involved in FTX before its disastrous downfall can cut a favorable deal. When it comes to deciding who gets a cooperation agreement, it’s often who reaches the negotiation table first.

“The first person in the door is often going to have a much greater chance of being accepted as a cooperator because there will usually be a greater need for their testimony,” former Manhattan prosecutor Sarah Paul said.

The government expects potential witnesses to detail their own conduct as well as everyone else’s. Former Manhattan federal prosecutors said that office typically requires cooperating witnesses to plead guilty to all of their misconduct. 

“You want to make sure the jury understands you are not trying to give the witness a free pass,” Paul, a New York-based defense attorney, said. “Giving someone a cooperation agreement is a great benefit but they have to own up to everything they did.”

--With assistance from Bill Allison.

(Adds more details on Singh in graph 12)

©2023 Bloomberg L.P.