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At a court hearing on Tuesday, Nishad Singh, the former director of engineering of the now-defunct cryptocurrency exchange FTX, pleaded guilty to six U.S. criminal counts as U.S. prosecutors intensify their inquiry into individuals in Sam Bankman-inner Fried’s circle.
Singh admitted guilt to one count of wire fraud, three counts of conspiring to conduct fraud, one count of conspiring to launder money, and one count of conspiring to defraud the US by breaking campaign funding rules. U.S. District Judge Lewis Kaplan accepted the plea.
The creator of FTX, Bankman-Fried, was accused of eight charges of fraud and conspiracy. Authorities allege that he defrauded lenders and investors about the financial health of his businesses while also stealing billions in deposits from FTX customers to cover losses at his hedge fund Alameda Research.
He has asserted his innocence. Those with knowledge of misconduct at FTX have been invited to come forward by federal prosecutors in Manhattan on numerous occasions.
Bankman-Fried, 30, benefited from a rise in the value of bitcoin and other digital assets to build up an estimated $26 billion net worth and establish himself as a significant political donor in the United States.
Singh also became a major donor to Democratic politicians, contributing $8 million to campaigns in the 2022 election cycle, according to OpenSecrets.
Prosecutors allege in additional allegations brought against Bankman-Fried last week that he and two other ex-FTX executives planned to donate tens of millions of dollars to persuade lawmakers to pass laws benefiting the company.
Prosecutors said that the donations were unlawful because they were made via “straw” donors or business finances. They claimed Bankman-Fried gave the order to FTX executive CC-1 to provide more than $21 million to an organisation that supports homosexuality.
According to Federal Election Commission records, Singh gave the LGBTQ Victory Fund, a national group devoted to electing Gay persons openly, $1.1 million on July 7, 2022.
Singh’s plea came after two of Bankman-Fried’s closest associates agreed to cooperate with prosecutors in December.
Gary Wang, the chief technology officer of FTX, and Caroline Ellison, the CEO of Alameda, respectively, entered guilty pleas to seven and four felony offenses.
In a blog post that has since been deleted, Bankman-Fried claimed that Singh was a close friend of her younger brother in high school. According to CNBC, Singh, who previously worked at Alameda, was appointed director of engineering at FTX in 2019.
According to Reuters’ December article, Singh modified the FTX program in 2020 to exempt Alameda from having its assets automatically auctioned if it were losing too much borrowed money.
The exception allowed Alameda to continue borrowing money from FTX regardless of the amount of collateral used to secure its loans.
Singh left a note in the platform’s code that Reuters could see that read, “Be especially careful not to liquidate.”
Alameda was given a “nearly unlimited line of credit” at FTX as a result of the code change, according to civil fraud allegations filed against Bankman-Fried by the U.S. Securities and Exchange Commission.
The billions of dollars that FTX secretly financed to Alameda during the following two years came from FTX clients.
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