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  • Writer's pictureThe San Juan Daily Star

Top FTX executive says Sam Bankman-Fried used customer money for ‘excess’ spending


Nishad Singh, a former top executive of the FTX crypto exchange, leaves federal court after his first day of testimony in the fraud trial of Sam Bankman-Fried in New York, Oct. 16, 2023.

By Matthew Goldstein, J. Edward Moreno and David Yaffe-Bellany


Nishad Singh, a former top executive at the once high-flying FTX crypto exchange, testified earlier this week that his former boss, Sam Bankman-Fried, had used customer money to engage in large and extravagant spending sprees that “reeked of excess.”


At Bankman-Fried’s criminal fraud trial, which has become a referendum on the cryptocurrency industry’s volatility and risk-taking, Singh said he had clashed with the FTX founder over the hundreds of millions of dollars that the company used to buy lavish real estate, invest in startups, and sign celebrities and sports stars including Tom Brady, Steph Curry and Larry David.


“I felt embarrassed and ashamed,” Singh, 28, said of one investment that FTX made in a firm, K5, that had ties to many celebrities.


Speaking for more than five hours in Manhattan federal court, Singh said that he had learned about an “enormous” $8 billion hole in FTX customer deposits about two months before the firm collapsed in November and that much of the missing money had financed Bankman-Fried’s lavish spending and other expenses.


Singh said he was “blindsided and horrified” by the deficit and did not feel better after discussing the situation with Bankman-Fried in two private meetings. “I felt really betrayed,” he said. “Five years of blood, sweat and tears for a force for good that had become so evil.” As FTX unraveled, he said, he even felt suicidal.


Bankman-Fried, 31, has been charged with orchestrating a scheme to funnel billions of dollars of FTX customer accounts into a trading firm he also owned, Alameda Research. Prosecutors claim that he also used the money for political contributions, venture capital investments and real estate purchases.


Singh is one of three key executives in Bankman-Fried’s business empire who have pleaded guilty to fraud and, hoping for leniency in return, agreed to work with prosecutors investigating FTX’s collapse. The others, Gary Wang and Caroline Ellison, testified last week that Bankman-Fried had directed them to commit crimes that led to FTX’s implosion. A fourth top executive, Ryan Salame, has also pleaded guilty but declined to cooperate with authorities.


Singh has known Bankman-Fried and his family since he was a teenager in the San Francisco Bay Area. He was a close friend of Bankman-Fried’s younger brother, Gabe, and had a rapport with his mother, Stanford law professor Barbara Fried.


At FTX, Singh served as the head of engineering. Prosecutors have said that Bankman-Fried instructed Singh and Wang to design computer code that allowed Alameda to borrow virtually limitless amounts of money from FTX customers. Singh was also part of an inner circle of Bankman-Fried’s advisers who lived with the founder in a penthouse in the Bahamas, where FTX was based.


On the witness stand, Singh, who said he was a billionaire while at FTX, testified that he conspired with Bankman-Fried, Ellison, Wang and Salame in committing the crimes to which he had pleaded guilty. He said Bankman-Fried had wielded great authority at FTX and Alameda, and made most of the final business decisions for the companies.


“I’ve always been intimidated by Sam,” Singh said. “Sam is a formidable character, and I had a lot of respect for him. But over time, that eroded.”


Bankman-Fried spent “excessive” amounts of Alameda’s funds, Singh said. When he pushed back in one instance, Bankman-Fried “got visibly mad” and told Singh it was “people like me sowing seeds of doubt in the company that are the real problem here,” he testified. “It was pretty humiliating.”


Singh also detailed Bankman-Fried’s interest in teaming up with K5, a California investment company led by a former Hollywood agent, Michael Kives, who had close ties to celebrities. Bankman-Fried raved about a Super Bowl party organized by K5 that he had attended, Singh said, and the “impressive” guest list that included Jeff Bezos, Hillary Clinton, Leonardo DiCaprio, Kris Jenner and Kendall Jenner.


Bankman-Fried described it as “the most impressive group of people he ever met in one location,” Singh testified.


But when Bankman-Fried shared with him the terms of a possible investment in K5, Singh said, he was shocked by the amount of money involved and voiced his concerns. The investment totaled several hundred million dollars, Singh said.


“I was worried about partnering with K5 and giving them this much money would be toxic to FTX and Alameda culture,” he said.


Singh was also part of a group of FTX executives, including Salame, who contributed more than $90 million to political campaigns over several years, backing Democrats and Republicans. Singh said many of the contributions to political candidates were made from loans he got from Alameda, which he later learned were funded with FTX customer money.


Singh has pleaded guilty to participating in a “straw donor” scheme designed to circumvent campaign finance rules by obscuring the source of donations. On the stand, Singh described how the scheme worked. He said he tended to be as “uninvolved as possible” in the donation process, following instructions in a text chat that involved Bankman-Fried, Salame and others associated with a political action committee run by Gabe Bankman-Fried, he said.


Singh said he signed “a bunch of blank checks” from his personal account and gave them to Gabe Bankman-Fried so the committee could make political donations in his name to Democratic candidates.


Judge Lewis Kaplan, who is presiding over the case, also weighed in on Monday about Sa, Bankman-Fried’s dosage of the stimulant medication Adderall. Defense lawyers had written to the judge Sunday, saying their client was not receiving the amount he had been prescribed. They argued that Bankman-Fried’s decision to testify at trial might rest on whether he could get the proper dosage at the Metropolitan Detention Center in Brooklyn, where he is being held. Adderall is often used to treat ADHD.


“The defense has a growing concern that because of Bankman-Fried’s lack of access to Adderall, he has not been able to concentrate at the level he ordinarily would and that he will not be able to meaningfully participate in the presentation of the defense case,” his lawyers told the judge.


As the trial wrapped up Monday, Kaplan said he was not inclined to up Bankman-Fried’s dosage.

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