“I was blindsided and horrified.”
That’s how Nishad Singh recalled feeling after a fateful September 2022 meeting with FTX founder Sam Bankman-Fried where his boss laid bare the full scope of the exchange’s financial problems. Singh was the head of engineering at FTX before it imploded in November 2022 and lost billions of dollars worth of its users’ funds.
Singh told a jury on Monday that his September meeting with Bankman-Fried was the first time he realized that Alameda, FTX’s sister trading firm, had spent billions of dollars of FTX user deposits, and had left a gaping hole in both companies’ balance sheets.
“I felt betrayed,” said Singh.
You're reading The SBF Trial, a CoinDesk newsletter bringing you daily insights from inside the courtroom where Sam Bankman-Fried will try to stay out of prison. Want to receive it directly? Sign up here.
Singh is a key witness in the government’s case against Sam Bankman-Fried, and – like other star witnesses – he’s pleaded guilty to a slate of fraud and conspiracy charges that he says he committed hand-in-hand with the FTX founder. Singh told the jury he was driven by purpose in building FTX, but he realized after his meeting with Bankman-Fried that “five years of blood, sweat, and tears turned out to be for something evil.”
Monday’s testimony from Singh was perhaps the strongest evidence yet from prosecutors that Bankman-Fried was the key decision maker at FTX, and the main culprit behind the firm’s alleged crimes.
Singh was, by his own admission, culpable for much of what went wrong at FTX. He admitted to making key changes to FTX’s code that gave Alameda special privileges. Once he eventually became privy to the firms’ theft of FTX user funds in September 2022, he stayed on with the company even as it made more big expenditures and courted investors to plug the hole in its balance sheet.
In presenting Singh’s testimony – and to portray Bankman-Fried as the key wrongdoer who helmed FTX – prosecutors leaned into Singh’s apparent knack for storytelling. In addition to an admitted co-conspirator, Singh – according to his and the government’s telling – was himself a sort of tragic victim of the Bankman-Fried saga.
When Singh recounted the time he confronted Bankman-Fried on the balcony of their Bahamas apartment, prosecutors splashed an image on the screen of the FTX team’s Caribbean rooftop balcony and its sparkling swimming pool at dusk – when Singh said the conversation took place.
Singh and other top FTX/Alameda executives noticed a shortfall in FTX’s balance sheet two months earlier, and they’d grown more worried in the time since. “Caroline is really freaked out,” Singh recalled telling Bankman-Fried, “and so am I.” According to Singh, his boss eventually revealed that FTX had borrowed around $13 billion but only had $5 billion on-hand to pay back depositors.
Afterwards, when Singh asked exactly “how much are we short?” Bankman-Fried apparently retorted that this was “the wrong question.” The right question? “How can we deliver?”
“Jesus f’ing Christ,” Singh recalled saying in response.
“This has cost 5-10% of my productivity… for the last year,” Bankman-Fried said, referring to the shortfall, according to Singh. Singh recalled feeling more concerned, responding “this is going to be doing a lot more damage to me.”
Singh said he agreed to stay on at FTX despite his misgivings about its use of customer deposits – swayed by Bankman-Fried’s insistence that his friend and deputy was instrumental to FTX’s operations and uniquely positioned to aid in its survival. “How could I live with myself if my departure precipitated a fall that could’ve been avoidable?” Singh reflected.
Singh recounted several more confrontations with Bankman-Fried – these centering around the firm’s continued use of FTX user funds on expenditures which were, in Singh’s view, unnecessary.
Like Ellison, who sobbed as she recounted FTX’s final days, Singh’s testimony veered darker as he played through the events of November 2022 – when FTX ultimately collapsed.
As his testimony closed, Singh remarked on the heavy toll that the FTX saga took on his mental health: “I had been suicidal for some days.”
While Bankman-Fried isn’t charged with campaign finance violations or defrauding the Federal Election Commission in this trial, prosecutors have spent quite a bit of time demonstrating the evidence they have toward that charge – first with former Alameda Research CEO Caroline Ellison, and again Monday with Singh.
Monday’s testimony, however, is the first to really demonstrate the extent to which Bankman-Fried (allegedly) had a sophisticated operation for funneling money to political candidates and causes. Singh testified that there was a group chat, where hired political consultants made recommendations on where to move funds. Ryan Salame, the former FTX Digital Markets CEO who pleaded guilty to campaign finance charges last month, executed wire transfers from Singh’s account at Prime Trust (which he repeatedly referred to as a bank account, even though Prime Trust wasn’t a bank) to move the funds to recipients.
Singh also testified that he signed literal “blank checks” from his Wells Fargo account, which he sent to Gabriel Bankman-Fried (Sam’s brother) through an assistant. These checks would be signed in bulk by Singh, and distributed by Gabriel Bankman-Fried to choice political causes.
Sam Bankman-Fried also funded Guarding Against Pandemics, the political action committee his brother ran, Singh said.
Prosecutors said in August they folded campaign finance allegations into a wire fraud charge that Bankman-Fried already faces, after having to drop an explicit campaign finance-related charge due to extradition treaty obligations with the Bahamas.
— Sam Kessler, Nikhilesh De
- Bankman-Fried continued tapping away at his laptop Monday. During one section of Singh’s testimony, the former head of product described a conversation he had with Bankman-Fried, where the then-FTX CEO was angry with Singh, saying there were certain physical tics that indicated Bankman-Fried’s anger: Bankman-Fried “puffed out his chest, had his hands back, he was … closing his eyes, grinding his teeth and when he opened them to respond he would sort of glare at me.” The defendant did not look up during this part.
- Sam Bankman-Fried’s parents looked anxious when Singh testified about the campaign finance scheme, a reporter for another outlet who was in the courtroom told CoinDesk. (Our reporters were all in the courthouse overflow room at the time.)
- Judge Lewis Kaplan rejected the defense’s motion to either adjourn court temporarily or administer Sam Bankman-Fried his prescription Adderall for ADHD, saying he had not received any recent reports from physicians on Bankman-Fried’s needs. “I can’t have lawyers coming in and giving drugs to people on trial because somebody says they need it,” the judge said.
- This CoinDesk reporter was seen frantically digging through his backpack for a pen after the one he was using ran dry, the second in as many weeks to die in service of covering this trial.
— Nikhilesh De
What we're expecting
The prosecution wrapped up its questioning of Singh at the end of the trial day on Monday, meaning the defense team will open up Tuesday with its cross-examination of the former product lead. We also heard from Tareq Morad, an FTX customer, on Monday, meaning several others named last Friday have yet to testify.
We otherwise still seem to be on track for the DOJ resting its case by Oct. 26 (next Thursday). The defense continues to estimate that its case will take about a week and a half, suggesting that we may move to closing statements by Nov. 7 or 8.
Bankman-Fried also can’t bring up the success of his investment in the company Anthropic during the trial, Judge Kaplan said in a written ruling published after Monday’s court session. Last week, the judge likened the plan to boasting about spending stolen funds on a winning Powerball lottery ticket.
— Nikhilesh De
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.