The Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) both filed fraud charges against Nishad Singh, an FTX senior executive on Tuesday. The complaint filed in the US District Court for the Southern District of New York charges Singh with fraud by misappropriation and with aiding and abetting fraud committed by Samuel Bankman-Fried, FTX Trading Ltd., and Alameda Research LLC.
Singh was a shareholder and senior executive at FTX and served as the crypto exchange’s director of engineering at the time it collapsed in November 2022.
There are similar charges already filed against FTX founder Bankman-Fried and two FTX and Alameda executives, Gary Wang Caroline Ellison. The last two already pleaded guilty.
According to the court filings, between May 2019 and November 2022, FTX’s customer assets were not separated from the company’s as represented to the customers. Furthermore, they were “routinely held by FTX’s sister digital asset trading company, Alameda” and misappropriated for “luxury real estate purchases, political contributions, and high-risk, liquid digital asset industry investments.”
The CFTC alleges that Singh created and maintained software code that aided Bankman-Fried’s in transferring FTX.com customer assets to Alameda.
The US commodities regulator stated:
Among other things, these features in the FTX code favored Alameda and allowed it to execute transactions even when it did not have sufficient funds available, including, critically, a “can withdraw below borrow” functionality that allowed Alameda to withdraw billions of dollars in customer assets from FTX.
Additionally, SEC said that near the collapse of FTX, Singh withdrew around $6 million from FTX for personal use, including for the purchase of a multi-million-dollar house and donations to charitable causes.
The CFTC noted that Singh does not contest the charges and has agreed to forfeit certain assets he received from FTX and Alameda. Additionally, he has also plead guilty to commodities fraud and other charges in a separate, parallel action against him in the Southern District of New York.
